UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.DC 20549
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SCHEDULE 14A
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INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of thethe Securities Exchange Act of 1934
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☐ | Definitive Additional Materials | |||
☐ | Soliciting Material Pursuant to |
Aptose Biosciences Inc.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Notice and Proxy Statement
For the
Annual and Special Meeting of Shareholders
to be held on May 31, 202223, 2023
April 19, 2022, 2023
Letter From our Chairman, President, and CEO
Dear Fellow Shareholders,
In 2021,During 2022, Aptose a clinical-stage precision oncology company, moved closer toadvanced its goal of deliveringdeveloping new precision therapeutics for the treatment of patients with hematologic malignancies resistant andor refractory to current standard of care. Despitecare therapies. While the biotech market has been, and continues to be, extraordinarily challenging, Aptose maintained a challenging market for biotechnology companies,steady march forward and we successfully executedwere able to execute on multiplemany key fronts, and our careful planning and disciplined approach to how we run our business and our clinical studies have placed us in a favorable position for 2022 and beyond.initiatives:
· | We controlled expenses and extended our cash runway to the end of Q1 2024, |
· | We continued building a talented and commercially experienced team, |
· | We added pharmaceutical expertise and diversity to our Board of Directors, |
· | We updated succession planning and risk mitigation strategies for all executives, |
· | We upgraded cybersecurity and financial analytic tools, |
· | We created and began testing the new G3 formulation for luxeptinib, and |
· | We made significant strides in the clinical development of tuspetinib for the treatment of acute myeloid leukemia, AML. |
The key event for 20212022 was the culminationcompletion of a deliberate asset search begun more than two years ago that led to an exclusive worldwide license agreement with Hanmi Pharmaceutical Company to developsuccessful Phase 1/2 dose escalation and commercializedose exploration trial of tuspetinib, formerly HM43239, a myeloid kinomekinase inhibitor thatand our most advanced and primary asset being developed as a once daily oral treatment for AML. Tuspetinib potently and simultaneously suppresses kinases operative in acute myeloid leukemia, or AML. HM43239 is a highly effective FLT3 inhibitor, inhibiting boththe SYK kinase, the mutant and wildtype and all other forms of FLT3 tested,kinase, the JAK1 and it inhibits other oncogenic signaling pathways includingJAK2 kinases, the downstream SYK, JAK/STATmutant forms of KIT kinase, and ERK/MAPK pathways. AsRSK1 and RSK2 kinases. This kinase targeting pattern allows tuspetinib to deliver clinical responses across AML populations with a more advanced, de-risked asset with proven clinical activity, oral HM43239, or just “239” as we refer to our new lead molecule, addeddiverse array of adverse mutations while maintaining a well-tolerated and effective drug with significant value to our pipeline – and 239 continues to demonstrate value to patients and to impress us and our clinical investigators.favorable safety profile.
HM43239 already hasDuring the Phase 1/2 dose escalation and dose exploration clinical trial, tuspetinib delivered complete and partial remissions (CRs and PRs) and dramatically reduced bone marrow leukemic blasts across four dose levels as a single agent with no dose-limiting toxicities in a diversity ofheavily pre-treated relapsed or refractory (R/R) AML patients in an ongoing international Phase 1/2 clinical trial. Importantly, 239harboring a wide range of highly adverse mutations. Tuspetinib delivered meaningful clinical benefit to all responders, either through bridging them to a stem cell transplant, or by providing a durable remissionresponse over time. LeadBefore enrollment in the Aptose clinical trial, these patients had been treated with the best available approved therapies, and in many cases had failed various investigational drugs and prior hematopoietic stem cell transplants. These are exceedingly sick patients, and to reverse disease progression with a once daily oral tablet is a remarkable accomplishment.
At the American Society of Hematology (ASH) meeting in December 2022, lead investigator for the HM43239 trial, Naval Daver, MD, Associate Professor in the Department of Leukemia, MD Anderson Cancer Center, highlighted some of these results in an oral presentation atpresented data from the American Society of Hematology (ASH) meeting in December. These data also allow us to identifyPhase 1/2 dose escalation and exploration trial. The findings revealed that tuspetinib can effectively treat certain genotypically-defined AML populations with high unmet need, for potential accelerated development and to establishthe data established that 239tuspetinib has strikingly broad activity across patients with diverse genotypic backgrounds. AIn addition, tuspetinib distinguished itself as a highly safe and well tolerated drug for AML with no observed drug related adverse events, deaths, QTc prolongation, or differentiation syndrome – and no myelosuppression to date. Collectively, these findings place tuspetinib in a class of its own.
The completed Phase 1/2 dose escalation and exploration monotherapy trial was essential to identify AML populations that may be pursued for registrational studies and approvals. Indeed, our understanding of the safety, efficacy, roles in AML treatment, and market potential minimum therapeutically effectivefor tuspetinib have evolved significantly. We now believe tuspetinib has paths for accelerated approvals as a monotherapy to treat specific subpopulations of R/R AML with high unmet needs, and that its superior safety profile and potency position tuspetinib as a potential drug of choice for doublet and triplet combination in earlier lines of therapy, as well as maintenance therapy. Combination therapy offers the greatest promise for deep and durable remissions in AML patients, and we believe tuspetinib is positioned to be a major player in that role.
The next step in the progression of tuspetinib is to collect sufficient data as a monotherapy and in drug combination to guide the design of registrational studies in the appropriate patient populations and to justify those trials to the key regulatory bodies. This led us to kick off the APTIVATE dose alreadyexpansion trial earlier this year with tuspetinib. Throughout 2023, APTIVATE is expected to deliver up to 100 patients on study, to demonstrate single agent activity to support accelerated approval trials in patients with specific adverse mutations, and to demonstrate potent activity in combination therapies. Enrollment for APTIVATE has been identified to take into expansion trials. However, because of the favorable safely profile to date,brisk – we now we are exploring dose expansions across a diverse set ofenrolling and treating AML patients that will allow us to identify the breadth of AML populations treatable with 239. In 2022 we look to advance 239 into an expansion clinical program covering several AML genotypesfor tuspetinib as a single agentmonotherapy and in combination treatment with existing therapies.venetoclax, and we look forward to delivering data from the APTIVATE trial as they become available throughout 2023.
Also during 2021, Aptose continued to dose escalate2022, we began testing the G3 formulation of luxeptinib, (Lux,our first-in-class, non-covalent and potent FLT3/BTK inhibitor, which many of you know as CG-806 our lymphoid and myeloid kinome inhibitor) in the Phase 1 a/b clinical trials in both AML and B-cell cancer patient populations. With our participation at the European Hematology Association (EHA) 2021 Virtual Congress, we presented data for both programs.or Lux. We already had reported that luxeptinib administered orally as our original first generation formulation delivered a complete remission in an AML patient and in a DLBCL lymphoma patient, demonstrating luxeptinib is a clinically active agent in different types of hematologic malignancies. In single dose administrations in patients, we determined the new G3 formulation achieved up to 18-fold greater absorption than the original G1 formulation. Because the highest dose of the original formulation was set at 900 mg, we initiated continuous dosing of G3 with an 18-fold lower dose of 50 mg. We continue to collect PK and safety data with G3 in AML patients, and a preliminary review suggests 50 mg of G3 delivers roughly equivalent plasma exposures as 900 mg of the first two cohorts delivered encouraging anti-leukemic activity in multiple patients, includingoriginal formulation. That was the target we hoped to achieve with 50 mg of G3, and we are now planning to administer a heavily pretreated AML patient that experienced a durable MRD-negative complete remission (or CR). In B-cell cancers, intermediate doses had delivered clear signalshigher dose of clinical activity, including tumor reductions across different B-cell malignancies. The reversal of disease growth upon intra-patient dose-escalation and longer times on drug suggested thatG3 to determine if it can deliver even aggressive disease may be successfully challenged with highergreater plasma exposure levels of luxeptinib.
levels. I remind you that in preclinical studies of AML, Luxluxeptinib triggered profound apoptosis and demonstrated in vivo tumor eradication. So while luxeptinib is behind tuspetinib in development, it still is an important part of our pipeline. We havewill keep you posted on our findings.
In addition to clinical activities, we continued to pushexpand the dosecapabilities of Luxour Board of Directors. Our two most recent recruitments to the Board of Directors include Ms. Carol Ashe, a pharmaceutical legal and business development expert, and Bernd Seizinger, M.D., Ph.D., a highly accomplished senior executive with global expertise in an effort to reach exposure levels that consistently would demonstrate this kindoncology drug development, business development, management and Board experience. Our Board respectfully challenges management and each other, ensures risks are aired and mitigated, scrutinizes financial, clinical, HR and governance matters, and requires third party guidance on compensation related matters. While I serve as the CEO of activitythe corporation and the Chairperson of the Board, all other directors and committees are independent and engage in patients. But as we movedExecutive Sessions and In-Camera Sessions without the original Lux formulation throughpresence of management. All directors act in the clinic – while demonstrating its clear activity – we also recognizedbest interest of the potential need for an improved formulation for Lux to demonstrate greater exposureCorporation and more responses.ensure the Corporation abides by the requirements of relevant regulatory bodies.
A new, better absorbed “G3” formulation of Lux may help deliver on that promise. In preclinical studies G3 has been shown, depending on the species and the dose, to deliver from 10 to 30-fold greater exposures of drug than the original formulation. The “behind the scenes” work we have conducted appearsWe also are fortunate to be leading to improvementssupported by a stellar Scientific Advisory Board, headed by distinguished hematologist Brian Druker, M.D, well-known for his role in drug formulationdeveloping Gleevec® for patients with chronic myeloid leukemia. Our scientific advisors work closely with our resident KOL and manufacturing processes,Chief Medical Officer, Rafael Bejar, M.D., Ph.D., also an internationally recognized physician scientist with extensive research and significantly expanding our drug substance manufacturing capabilities. We have startedclinical experience in the clinical evaluationarea of single doses of the G3 formulation of the drughematologic malignancies.
From a comprehensive perspective, Aptose made significant progress in patients from the ongoing studies in AML2022 and B-cell malignancies andwe look forward to providing you with further updates.
Aptose is in the fortunate position of having two well differentiated oral kinase inhibitors for the treatment of hematologic malignancies, and we will allow the clinical data, the patient needs, and the maturity of the agentsa 2023 that promises to drive the paths forward.
Also during the year, even with a strong balance sheet we began a meticulous process to focus resources on value-driving programs and to streamline expenses, not by cutting corners, but by carefully evaluating the essential needs of our programs. In December, we announced the discontinuation of clinical development of APTO-253. This was implemented strategically to extend cash runway, but without undermining company capabilities or value. Through re-prioritization of our kinome inhibitors 239 and Lux, our most actionable programs, we have extended our cash runway into the fourth quarter of 2023, which we believe goes well beyond a series of potential value building updates from our clinical programs.
I am exceptionally proud of our accomplishments during 2021 and with the position we have created for Aptose during the first part of 2022. I thank our entire Aptose organization and all of you who have participated in advancing our essential work.be an exciting year. We are especially grateful for the patients, families and investigators who supportingare participating in advancing our essential work and support our efforts to create bettersuperior therapeutics. ThankI thank our entire Aptose organization and thank you, too, to our shareholders, for your support and for being part of our journey. We look forwardare eager to reportingreport our progress to you throughout the coming year.
Sincerely,
William G. Rice, Ph.D.
Chairman, President and Chief Executive Officer
Letter from Our Lead Independent Director
Dear Fellow Shareholders:
I have had the privilege of working closely with an active and diverse group of executives and directors at Aptose over the past several years. As Lead Independent Director, my most important responsibility is to act on the behalf of all shareholders, and with my fellow directors, we take our oversight responsibilities very seriously. The Aptose Board of Directors is committed to representing your interests and believes that sound governance is key to creating long-term value for all shareholders.
On behalf of the Board, I’m pleased to provide an update on some of our priorities:
Strategic oversight
The Board not only evaluates company strategy but also shares perspectives, provides advice, and oversees and assesses management’s implementation of company objectives. Each quarter we discuss and debate topics critical to the Corporation’s long-term success and we are available to provide guidance as necessary.
Company performance
The Board remains focused on company performance and meeting clinical development goals. Aptose is committed to developing unique targeted therapies for hematological malignancies and we were pleased with the progress we made in 2022, particularly in the clinical development of our lead asset, tuspetinib, in acute myeloid leukemia, AML. The management team was able to complete a successful dose escalation and exploration trial of tuspetinib in very ill AML patients, while extending its cash runway into 2024 during challenging market conditions.
Risk oversight
We have a coordinated, comprehensive approach to overseeing the Corporation’s enterprise risk management. The Board regularly reviews strategic threats, opportunities, and key risks, including financial, product, cybersecurity, privacy, regulatory, and reputational risk. Both your Board and your management team are fully engaged in risk management and have made it a fundamental aspect of company strategy.
Talent and succession planning
Our role in talent and succession planning applies to both company leadership and the Board. We remain committed to regular Board refreshment, striving for balance between introducing new perspectives and maintaining continuity. In 2022, we added Bernd R. Seizinger, M.D., Ph.D., to the Board of Directors. An accomplished biotechnology and pharmaceutical executive leader in Europe and the U.S., Bernd brings 25 years of industry experience and oncology drug discovery expertise to Aptose. Another of our most recent directors, Carol Ashe brings notable biotech and pharmaceutical experience with a background that includes venture capital, corporate development and legal experience in mergers, acquisitions, and equity investments. Leadership on our Board committees continues to evolve; our corporate governance, Board committees and respective charters are all available to view on Aptose’s website. Our board is now composed of 7 directors, 6 of whom are independent, with broad expertise, skills, and viewpoints to help the Corporation advance and execute its strategy.
Let me close by thanking you for your continued support. We are always open to hearing from you with your questions and thoughts. On behalf of all of us on the Board of Directors, thank you for your investment in the success of Aptose.
Sincerely,
Denis R. Burger, Ph.D.
Lead Independent Director
Aptose Biosciences Inc.
Suite 120, 12770 High Bluff Drive, San Diego, California, 92130
Notice of 20222023 Annual and Special Meeting of Shareholders
NOTICE IS HEREBY GIVEN that the annual and special meeting (the “Meeting”) of shareholders of Aptose Biosciences Inc. (the “Corporation”) will be held on May 31, 202223, 2023 at 10:9:00 a.m. (Pacific time). The Meeting will be conducted as an online only annual and special meeting. There will be no physical location forin a hybrid format. Therefore shareholders and duly appointed proxyholdersare invited to attend. Shareholders and duly appointed proxyholders may attend the virtual Meetingin person at Highlands Corporate Center - Conference Room, 12730 High Bluff Drive, Cantina Ste, San Diego, 92130 or by live webcast accessible directly online at https://web.lumiagm.com/421602377,472428776, where they will be able to listen, vote, and submit questions during the Meeting’s live webcast.Meeting.
What the Meeting is About
The following items of business will be covered at the Meeting:
1. | receiving the financial statements of the Corporation for the fiscal year ended December 31, |
2. | Proposal No. 1 – electing |
3. | Proposal No. 2 – appointing KPMG LLP as the independent registered public accounting firm of the Corporation for the fiscal year ending December 31, |
4. | Proposal No. 3 – passing an ordinary resolution, the full text of which is set forth in the accompanying proxy statement (the “Proxy Statement”), approving an amendment to the Corporation’s 2021 stock incentive plan to increase the number of common shares (the “Shares”) reserved for issuance thereunder by |
5. | Proposal No. 4 – passing a special resolution, the full text of which is set forth in the Proxy Statement, approving the adoption of an amendment to the Corporation’s articles to effect a reverse stock split of the Corporation’s outstanding Shares at a ratio in the range of 1-for-10 to 1-for-20 (the “Reverse Stock Split”), such amendment to become effective at an exact ratio and a date to be determined by the board of directors of the Corporation (the “Board”) if the Board considers it to be in the best interests of the Corporation to implement such Reverse Stock Split, all as more particularly described in the Proxy Statement; |
6. | Proposal No. 5 – passing a resolution, the full text of which is set forth in the Proxy Statement, approving one or more adjournments of the Meeting, if necessary or appropriate, if a quorum is present, to permit further solicitation of proxies if there are not sufficient votes at the time of the Meeting to approve Proposals No. 3 and 4; |
7. | Proposal No. 6 – passing an advisory (non-binding) resolution on the compensation of the Corporation’s named executive officers, as more particularly described in the Proxy Statement; and |
transacting such other business as may be properly brought before the Meeting. |
The shareholders may also consider other business that properly comes before the Meeting or any adjournment of the Meeting. The Proxy Statement provides additional information relating to the matters to be dealt with at the Meeting and forms part of this notice.
You have the right to vote.
You are entitled to receive notice of and vote at the Meeting, or any adjournment, if you are a holder of common shares of the CorporationShares at the close of business on April 18, 2022.3, 2023.
You have the right to vote your shares on items 2 through 57 listed above and any other items that may properly come before the Meeting or any adjournment.
The Notice of Meeting, Proxy Statement and the form of proxy will be mailed to you on or around May 2, 2022.April 26, 2023. Detailed instructions regarding shareholders’ voting process are also available on our website at https://www.aptose.com/investors/news-events/ir-calendar.
Your vote is importantimportant.
If you are not able to attend the virtual Meeting, please exercise your right to vote by signing and returning the enclosed form of proxy to Computershare Investor Services Inc., 100 University Avenue, 8th Floor, Toronto, Canada M5J 2Y1, so as to arrive not later than 5:00 p.m. (Toronto time) on May 27, 202218, 2023 or, if the Meeting is adjourned, 48 hours (excluding Saturdays, Sundays and holidays) before any adjournment of the Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
William G. Rice, Ph.D.
Chairman, President and Chief Executive Officer
April 19, 2022
, 2023
IMPORTANT NOTICE REGARDING THE INTERNET AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 31, 2022.23, 2023.
Our Notice of 20222023 Annual and Special Meeting of Shareholders, Proxy Statement and Annual Report to Shareholders are available on the Corporation’s website at https://www.aptose.com/investors/news-events/ir-calendar.
Copies are also available upon written request to the Senior Vice President, Chief Financial Officer and Corporate Secretary (i) at our principal executive and registered office located at 251 Consumers Road, Suite 1105, Toronto, Ontario, Canada, M2J 4R3; or (ii) at our executive headquarters located at Suite 120, 12770 High Bluff Drive, San Diego, California, 92130.
TABLE OF CONTENTS
GENERAL INFORMATION ABOUT THE PROXY STATEMENT | 1 |
QUESTIONS ABOUT THE ANNUAL AND SPECIAL MEETING AND VOTING YOUR SHARES | 1 |
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS | |
VOTING SECURITIES AND PRINCIPAL HOLDERS OF VOTING SECURITIES | |
SHARE OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, MANAGEMENT AND DIRECTORS | |
RECEIPT OF FINANCIAL STATEMENTS | |
PROPOSAL NO. 1—ELECTION OF DIRECTORS | |
Board Recommendation | |
CORPORATE GOVERNANCE | |
Board Mandate | |
Composition and Independence of the Board | |
Board Leadership | |
Board Oversight of Risk | |
Nomination of Directors | |
Diversity | |
Director Term Limits and Other Mechanisms of Board Renewal | |
Position Descriptions | |
Orientation and Continuing Education | |
Assessments | |
Meeting Attendance | |
Executive Sessions | |
Ethical Business Conduct | |
Conflicts of Interest | |
Shareholder Communications with the Board | |
Board Committees | |
PROPOSAL NO. 2—APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | |
Board Recommendation |
Audit, Audit-Related, Tax and Other Fees | |
Pre-Approval Policies and Procedures | |
Audit Committee Report |
PROPOSAL NO. 3—Approval of Amendment to The Corporation’s 2021 Stock Incentive Plan | |
2021 Stock Incentive Plan Highlights, as proposed to be amended, and Certain Important Provisions | |
Summary of the 2021 Stock Incentive Plan | |
New Plan Benefits | |
U.S. Federal Income Tax Consequences | |
Canadian Federal Income Tax Consequences | |
Approval | |
Board Recommendation | |
PROPOSAL NO. 4—APPROVAL OF REVERSE STOCK SPLIT | 46 |
Effects of the Reverse Stock Split | 47 |
Accounting Consequences | 49 |
Interests of Directors and Executive Officers | 49 |
Certain U.S. Federal Income Tax Consequences of the Reverse Stock Split | 49 |
Certain Canadian Federal Income Tax Consequences of the Reverse Stock Split | 51 |
Certain Risks Associated with the Reverse Stock Split | 52 |
Approval | 53 |
Board Recommendation | 54 |
PROPOSAL NO. 5—APPROVAL TO ADJOURN THE MEETING, IF NECESSARY, TO SOLICIT ADDITIONAL PROXIES | 55 |
Approval | 55 |
Board Recommendation | 55 |
PROPOSAL NO. 6—Advisory (non-binding) vote on the compensation of our named executive officers | |
Board Recommendation | |
EXECUTIVE COMPENSATION | |
Information About Our Executive Officers | |
Compensation Philosophy | |
Independent Advice | |
Comparator Group | |
Summary Compensation Table | |
Outstanding Equity Awards at Fiscal Year-End | |
Retirement Benefits |
Termination and Change of Control Benefits | |
Pay versus Performance | 68 |
Pay versus Performance Table | 68 |
DIRECTOR COMPENSATION | |
Overview | |
Cash Compensation | |
Option Awards | |
EQUITY COMPENSATION PLAN INFORMATION | |
General | |
2021 Stock Incentive Plan | |
Share Option Plan | |
Employee Share Purchase Plan | |
ESPP Highlights |
ESPP Benefits | |
Summary of Material Provisions of the ESPP | |
Equity Compensation Plan Information | |
Annual Burn Rate | |
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON | |
INTEREST OF RELATED PERSONS IN TRANSACTIONS | |
DELINQUENT section 16(A) REPORTS | 78 |
Householding of Annual Proxy Materials | |
INDEBTEDNESS | |
DIRECTORS AND OFFICERS’ LIABILITY | |
MANAGEMENT CONTRACTS | |
ADDITIONAL INFORMATION | |
DIRECTORS’ APPROVAL |
GENERAL INFORMATION ABOUT THE PROXY STATEMENT
The information contained in this proxy statement (the “Proxy Statement”) is furnished in connection with the solicitation of proxies by Aptose Biosciences Inc. (the “Corporation”, “Aptose”, “we” or “our”) to be used at the annual and special meeting (the “Meeting”) of holders (the “Shareholders”) of common shares (the “Shares”) of Aptose Biosciences Inc. (the “Corporation”, “Aptose”, “we” or “our”)the Corporation to be held on May 31, 202223, 2023 at 10:9:00 a.m. (Pacific time) and at all adjournments thereof, for the purposes set forth in the accompanying notice of meeting (the “Notice of Meeting”). The Meeting will be held at Highlands Corporate Center - Conference Room, 12730 High Bluff Drive, Cantina Ste, San Diego, 92130 as well as online at https://web.lumiagm.com/421602377. There472428776, where Shareholders will be no physical location for shareholdersable to listen, vote and duly appointed proxyholders to attend.submit questions during the Meeting.
The information contained in this Proxy Statement is given as at April 19, 20223, 2023 except where otherwise noted. All references to “dollar” or the use of the symbol “$” are to United States dollars and use of the symbol “CA$” refers to Canadian dollars, unless otherwise indicated.
QUESTIONS ABOUT THE ANNUAL AND SPECIAL MEETING
AND VOTING YOUR SHARES
What are the date, time and place of the Meeting?
The Meeting will be held on May 31, 202223, 2023 at 10:9:00 a.m. (Pacific time). The Meeting will be held in person at Highlands Corporate Center - Conference Room, 12730 High Bluff Drive, Cantina Ste, San Diego, 92130 as well as online at https://web.lumiagm.com/421602377. There will be no physical location for shareholders and duly appointed proxyholders to attend.472428776. The meetingonline Meeting will be accessible 15 minutes prior tobefore the start time.
How can I access the Meeting virtually?
To participate in the Meeting virtually, visit at https://web.lumiagm.com/421602377.472428776. Registered Shareholders and duly appointed and registered proxyholders will be able to listen, vote and ask questions via the virtual meeting platform. It is to be noted, however, that questions cannot be submitted prior to the Meeting. Non-registered Shareholders who have not appointed themselves as proxy holdersproxyholders will only be able to attend the online Meeting as “Guests” and will not be able to vote or ask questions at the Meeting. To access the Meeting virtually, registered Shareholders and duly appointed proxyholders will need an Internet connection and an Internet connectedInternet-connected device (such as a desktop, laptop, tablet or cell phone) running the most updated version of applicable software and plugins. The virtual meeting platform is fully supported across browsers (Microsoft Edge, Chrome, Firefox and Safari). Participants in the online Meeting must be connected to Internet at all times during the Meeting in order to vote when balloting commences. A summary of the information Shareholders will need to attend the Meeting virtually is provided below:
1. Registered Shareholders and duly appointed proxyholders can participate in the Meeting virtually by clicking “I have a login” and entering a Username and Password before the start of the Meeting.
a. | Registered Shareholders – The 15-digit control number located on the form of proxy or in the email notification you received is the Username and the Password is |
b. | Duly appointed proxyholders – Following the registration of the proxyholder with Computershare Investor Services Inc. (“Computershare”), Computershare will provide the proxyholder with a Username after the voting deadline has passed. The Password to the online Meeting is |
2. Voting at the Meeting will only be available for registered Shareholders and duly appointed and registered proxyholders. Non-registered Shareholders who have not appointed themselves may attend the Meeting virtually by clicking “I am a guest” and completing the online form. This will allow them to listen to the online Meeting; however, they will not be able to vote or submit questions.
3. Registered Shareholders who use a 15-digit control number to login to the online Meeting and who accept the terms and conditions will be revoking any and all previously submitted proxies. However, in such a case, registered Shareholders will be provided the opportunity to vote by ballot on the matters put forth at the Meeting. If registered Shareholders do not wish to revoke all previously submitted proxies, they should not accept the terms and conditions, in which case they can only enter the online Meeting as a guest.
If you attend the Meeting virtually, it is important that you remain connected to the internet at all times during the online Meeting in order to vote when balloting commences. It is your responsibility to ensure connectivity for the duration of the Meeting. You will be able to access the online Meeting 15 minutes before the start time and should allow ample time for online check-in, which will begin at 9:8:45 a.m. (Pacific time) on May 31, 2022.23, 2023.
Why is the Meeting held virtually?in hybrid format?
By conducting our Meeting in person as well as online, the Board aims to provide Shareholders a safe and convenient opportunitywith the option to choose to attend the Meeting in person if their circumstances allow it but also with an effective way to participate in the Meeting without incurring significant travel costs or being restricted by time constraints.if they cannot attend in person.
The format of the Meeting has been designed to ensure that Shareholders who attend the Meeting online will be afforded the same rights and opportunities to participate as they havethe Shareholders who attend in previous annual shareholders’ meetings. Directors will also attend the Meeting via the virtual platform.person.
Can I submit questions prior or at the Meeting?
Registered Shareholders and duly appointed and registered proxyholders can ask questions during the online Meeting via the virtual meeting platform. Registered Shareholders attending the Meeting in person will also have the opportunity to ask questions. It is to be noted, however, that questions cannot be submitted prior to the Meeting. Questions pertinent to the Meeting matters will be answered at a designated time during the Meeting, subject to time constraints. The chair of the Meeting reserves the right to edit or reject questions it deems irrelevant to meeting matters, profane or inappropriate.
The chair of the Meeting has broad authority to conduct the Meeting in an orderly manner. To ensure the Meeting is conducted in a manner that is fair to all Shareholders, the chair of the Meeting may exercise its discretion in recognizing Shareholders who wish to participate, in determining the order in which questions are answered, and the amount of time devoted to each question. However, consistent with prior annual shareholders’ meetings, questions submitted in accordance with the rules of conduct generally will be addressed in the order received during the allotted time for questions.
Who can vote at the Meeting?
Only Shareholders as of the close of business on the record date, being April 18, 2022,3, 2023, are entitled to receive notice of and vote on matters to be presented at the Meeting, or any adjournment or postponement thereof, in the manner and subject to the procedures described in this Proxy Statement and the accompanying form of proxy.
At the close of business on the record date, 92,229,18993,005,278 Shares were issued and outstanding.
Each Shareholder is entitled to one vote per Share held on all matters to come before the Meeting. Common sharesShares of Aptose are the only securities of Aptose which will have voting rights at the Meeting.
What is the quorum for the Meeting?
The presence at the opening of the Meeting of two persons who are entitled to vote either as Shareholders or as proxy holdersproxyholders and holding or representing not less than 33⅓% of the outstanding Shares entitled to vote at the Meeting as of the record date will constitute a quorum for the transaction of business at the Meeting. In general, Shares represented by a properly signed and returned form of proxy, or properly voted by Internet or telephone, or voted by your broker will be counted as Shares present and entitled to vote at the Meeting for purposes of determining a quorum. Shares represented by proxies marked “Abstain” and “broker non-votes” are also counted in determining whether a quorum is present.
What does it mean to vote by proxy?
Voting by proxy means that you are giving the person or people named on your form of proxy (the “proxyholder”) the authority to vote your Shares for you at the Meeting or any adjournment. A form of proxy is included with this Proxy Statement.
The management representatives named on the form of proxy will vote your Shares for you, unless you appoint someone else to be your proxyholder. You have the right to appoint a person to represent you at the Meeting other than the persons named on the form of proxy. If you appoint someone else, he or she must be present at the Meeting to vote your Shares. If you want to appoint someone else, you can insert that person’s name in the blank space provided in the form of proxy. That other person does not need to be a Shareholder of the Corporation.
If you are voting your Shares by proxy, our transfer agent, Computershare, must receive your completed form of proxy by 5:00 p.m. (Toronto time) on May 27, 202218, 2023 or, if the Meeting is adjourned, 48 hours (excluding Saturdays, Sundays and holidays) before any adjournment of the Meeting.
What’s the difference between registered and non-registered (beneficial) Shareholders?
The voting process is different depending on whether you are a registered or non-registered (beneficial) Shareholder:
Registered Shareholders
You are a registered Shareholder if your name appears on your Share certificate or in the registers of the Corporation maintained by Computershare. Your form of proxy tells you whether you are a registered Shareholder. We mail copies of the Notice of Meeting, this Proxy Statement and the form of proxy (collectively, the “proxy materials”) directly to registered Shareholders. We have previously mailed our annual report to all registered Shareholders.
Non-Registered (or Beneficial) Shareholders
You are a non-registered (or beneficial) Shareholder if your bank, trust company, securities broker or other financial institution holds your Shares for you (as your nominee). For most of you, your voting instruction form or proxy tells you whether you are a non-registered (or beneficial) Shareholder.
In accordance with Canadian securities law and SEC rules, we have distributed copies of the proxy materials and the annual report to CDS Clearing and Depository Services Inc. (“CDS”) and intermediaries (such as securities brokers or financial institutions) for onward distribution to those non-registered or beneficial Shareholders to whom we have not sent the proxy materials and the annual report directly.
The intermediaries are required to forward proxy materials and the annual report to non-registered or beneficial Shareholders unless a non-registered or beneficial Shareholder has waived the right to receive them. Very often, intermediaries will use a service company such as Broadridge Investor Communication Solutions to forward the proxy materials to non-registered or beneficial Shareholders.
How do I vote?
Most non-registered or beneficial Shareholders who have not waived the right to receive proxy materials will receive a voting instruction form (“VIF”). Registered Shareholders will, and some non-registered (beneficial) Shareholders may receive a form of proxy. Shareholders should follow the additional procedures set out below, depending on what type of form they receive. Detailed instructions regarding shareholders’Shareholders’ voting process are also available on the Investors page of our website at https://www.aptose.com/investors/news-events/ir-calendar.
1. | Voting Instruction Form. If the non-registered Shareholder does not wish to attend and vote at the Meeting (or have another person attend and vote on the non-registered Shareholder’s behalf), the voting instruction form must be completed, signed and returned in accordance with the directions on the form, so that the intermediary may vote on the non-registered Shareholder’s behalf. |
If a non-registered Shareholder wishes to attend and vote at the Meeting (or have another person attend and vote on the non-registered Shareholder’s behalf), the non-registered Shareholder must complete, sign and return the VIF in accordance with the directions provided. If the non-registered Shareholder wishes to attend and vote at the Meeting, they must appoint themselves as proxyholder. Otherwise, the non-registered Shareholder will only be able to attend the Meeting as a “Guest”, and will not be able to vote or ask questions at the Meeting. Non-registered Shareholders should visit our website at https://www.aptose.com/investors/news-events/ir-calendar to obtain additional instructions on how to vote online during the Meeting.
Non-registered Shareholders who wish to appoint themselves as a proxy holder in order to attend the Meeting virtually or who wish to appoint a proxyholder other than a management representative to represent them at the online Meeting must submit their VIF prior to registering themselves or their proxyholder, as applicable. Registering themselves or the proxyholder, as applicable, is an additional step once a non-registered Shareholder has submitted their VIF. Failure to register themselves or another person other than a management representative as duly appointed proxyholder will result in the non-registered Shareholder or the proxyholder not receiving a Username to participate in the Meeting. To register a proxyholder (be it themselves or another person other than a management representative), non-registered Shareholders must visit https://www.computershare.com/aptose by 5:00 p.m. (Toronto time) on May 27, 202218, 2023 or, if the Meeting is adjourned, 48 hours (excluding Saturdays, Sundays and holidays) before any adjournment of the Meeting, and provide Computershare with their information or their proxyholder’s contact information, as applicable, so that Computershare may provide them or the proxyholder, as applicable, with a Username via email. Without a Username, non-registered Shareholders who appointed themselves as proxyholders and proxyholders will only be able to attend the Meeting as “Guests” and will not be able to vote or ask questions at the Meeting.
4 |
Or
2. | Form of Proxy. A registered Shareholder will receive a form of proxy to be completed, signed and returned in accordance with the directions on the form, if the registered Shareholder does not wish to attend and vote at the Meeting virtually (or have another person attend and vote on the registered Shareholder’s behalf). |
Registered Shareholders who wish to appoint a proxyholder other than a management representative to represent them at the online Meeting must submit their form of proxy prior to registering their proxyholder. Registering the proxyholder is an additional step once a registered Shareholder has submitted their proxy. Failure to register a duly appointed proxyholder will result in the proxyholder not receiving a Username to participate in the Meeting. To register a proxyholder, registered Shareholders must visit https://www.computershare.com/aptose by 5:00 p.m. (Toronto time) on May 27, 202218, 2023 or, if the Meeting is adjourned, 48 hours (excluding Saturdays, Sundays and holidays) before any adjournment of the Meeting, and provide Computershare with their proxyholder’s contact information, so that Computershare may provide the proxyholder with a Username via email. Without a Username, proxyholders will only be able to attend the Meeting as “Guests” and will not be able to vote or ask questions at the Meeting.
Registered Shareholders may also attend and vote at the Meeting. Registered Shareholders wishing to attend the Meeting virtually should visit our website at https://www.aptose.com/investors/news-events/ir-calendar to obtain additional instructions on how to vote online during the Meeting. The 15-digit control number provided on the registered Shareholder’s form of proxy will be required.
Less frequently, a non-registered Shareholder will receive, as part of the proxy materials, a form of proxy that has already been signed by the intermediary (typically by a facsimile or stamped signature), which is restricted as to the number of Shares beneficially owned by the non-registered Shareholder, but which is otherwise uncompleted. If the non-registered Shareholder does not wish to attend and vote at the Meeting (or have another person attend and vote on the non-registered Shareholder’s behalf), the non-registered Shareholder must complete the form of proxy and deposit it with Computershare, 100 University Avenue, 8th Floor, Toronto, Canada, M5J 2Y1 as described above.
If a non-registered Shareholder wishes to attend and vote at the Meeting (or have another person attend and vote on the non-registered Shareholder’s behalf), the non-registered Shareholder must strike out the names of the persons named in the proxy and if they intend to participate in the Meeting virtually, insert the non-registered Shareholder’s (or such other person’s) name in the blank space provided. The non-registered Shareholder must then register themselves or the other person, as applicable, as proxyholder. Registering themselves or the other person, as applicable, is an additional step once a non-registered Shareholder has submitted their completed form of proxy. Failure to register themselves or the other person, as applicable, as duly appointed proxyholder will result in the non-registered Shareholder or the proxyholder, as applicable, not receiving a Username to participate in the online Meeting. To register a proxyholder (be it themselves or another person), non-registered Shareholders must visit https://www.computershare.com/aptose by 5:00 p.m. (Toronto time) on May 27, 202218, 2023 or, if the Meeting is adjourned, 48 hours (excluding Saturdays, Sundays and holidays) before any adjournment of the Meeting, and provide Computershare with their information or their proxyholder’s contact information, as applicable, so that Computershare may provide them or the proxyholder, as applicable, with a Username via email. Without a Username, non-registered Shareholders who appointed themselves as proxyholders and proxyholders will only be able to attend the Meeting as “Guests” and will not be able to vote or ask questions at the Meeting.
3. | United States non-registered (beneficial) Shareholders. If a non-registered Shareholder in the United States wishes to attend and vote at the online Meeting, they must first obtain a valid legal proxy from their broker, bank or other agent and then register in advance to attend the Meeting. The U.S. non-registered Shareholder should follow the instructions from their broker or bank included with these proxy materials, or contact their broker or bank to request a legal form of proxy. After first obtaining a valid legal proxy from their broker, bank or other agent, the U.S. non-registered Shareholder must then register to attend the online Meeting by submitting a copy of their legal proxy to Computershare. Requests for registration should be directed to: |
Computershare
100 University Avenue
8th Floor
Toronto, Ontario
M5J 2Y1
OR
Email at: uslegalproxy@computershare.com
Requests for registration must be labeledlabelled as “Legal Proxy” and be received no later than by 5:00 p.m. (Toronto time) on May 27, 2022.18, 2023. U.S. non-registered Shareholders will receive a confirmation of their registration by email receipt of their registration materials by Computershare. U.S. non-registered Shareholders will then be able to attend the Meeting and vote and ask questions at https://web.lumiagm.com/421602377.472428776. U.S. non-registered Shareholders are required to register their appointment at www.computershare.com/appointee. If U.S. non-registered Shareholders do not follow the procedures set out above, they will only be able to attend the Meeting virtually as “Guests” and will not be able to vote or ask questions at the online Meeting.
Shareholders should follow the instructions on the forms they receive, and non-registered Shareholders should contact their intermediaries promptly if they need assistance.
How do I request a copy of proxy materials?
To request a printed copy of the proxy materials, please contact your broker, if you are a non-registered Shareholder, or if you are a registered Shareholder, contact our Chairman,Senior Vice President, Chief Financial Officer and Chief Executive OfficerCorporate Secretary at Aptose Biosciences Inc., Suite 120, 12770 High Bluff Drive, San Diego, California, telephone: 858-926-2730.
The proxy materials are being sent or made available to both registered and non-registered owners of Shares. The Corporation is sending proxy materials indirectly to non-objecting beneficial owners (as defined in National Instrument 54-101 - Communication with Beneficial Owners of Securities of a Reporting Issuer (“NI 54-101”)). The Corporation intends to pay for intermediaries to forward to objecting beneficial owners (as defined in NI 54-101) the proxy materials.
What am I voting on at the Meeting?
The following items of business will be covered at the Meeting:
1. | receiving the financial statements of the Corporation for the fiscal year ended December 31, |
2. | Proposal No. 1 – electing |
3. | Proposal No. 2 – appointing KPMG LLP as the independent registered public accounting firm of the Corporation for the fiscal year ending December 31, |
4. | Proposal No. 3 – passing an ordinary resolution approving an amendment to the Corporation’s 2021 stock incentive plan to increase the number of Shares reserved for issuance thereunder by |
5. | Proposal No. 4 - passing a special resolution approving the adoption of an amendment to the Corporation’s articles to effect a reverse stock split of the Corporation’s outstanding Shares at a ratio in the range of 1-for-10 to 1-for-20 (the “Reverse Stock Split”), such amendment to become effective at an exact ratio and a date to be determined by the board of directors of the Corporation (the “Board”) when the Board considers it to be in the best interests of the Corporation to implement such Reverse Stock Split, all as more particularly described in the Proxy Statement; |
6. | Proposal No. 5 - Passing a resolution, the full text of which is set forth in the Proxy Statement, approving one or more adjournments of the Meeting, if necessary or appropriate, if a quorum is present, to permit further solicitation of proxies if there are not sufficient votes at the time of the Meeting to approve Proposals No. 3 and 4; |
7. | Proposal No. 6 – passing an advisory (non-binding) resolution on the compensation of the Corporation’s named executive officers; and |
transacting such other business as may be properly brought before the Meeting. |
As of the date of this Proxy Statement, the Board of Directors (the “Board”) is not aware of any such other business.
How does the Board recommend that I vote?
Our Board recommends that each Shareholder vote “FOR” each of Proposals No. 1 through No. 4.6.
What votes may I cast with regard to each proposal?
You can choose to vote “For” or “Withhold” for Proposal No. 1, and “For”, “Against” or “Abstain”, for Proposals No. 21s through No. 4.6. The Shares represented by the form of proxy will be voted in accordance with the instructions of the Shareholder on any ballot that may be called for and, if the Shareholder specifies a choice with respect to any matter to be acted upon, the Shares will be voted accordingly.
If you return your form of proxy and do not tell us how you want to vote your Shares, your Shares will be voted in accordance with Board recommendations for each proposal by the management representatives named in the Proxy Statement.form of proxy.
The enclosed form of proxy confers discretionary authority upon the management representatives designated in the form of proxy with respect to amendments to or variations of matters identified in the Notice of Meeting and with respect to other matters that may properly come before the Meeting. At the date of this Proxy Statement, management of the Corporation knows of no such amendments, variations or other matters.
What vote is required in order to approve each proposal?
• | Proposal No. 1: |
What impact does a “Withhold” or “Abstain” vote have?
What is the effect if I do not cast my vote?
If as a registered Shareholder you do not cast your vote at the Meeting or by proxy, no votes will be cast on your behalf on any of the proposals.
If you are a U.S. beneficial shareholder with an intermediary, you must instruct your U.S. intermediary how to vote your shares. If, as a U.S. non-registered or beneficial Shareholder, you do not instruct your intermediary on how to vote on any of the proposals at the Meeting, the intermediary has discretionary authority to vote your shares on Proposal No. 2, but the intermediary does not have discretionary authority to vote your shares on Proposal No. 1, Proposals No. 3 and No. 4 or any unusual item, so a “broker non-vote” will be recorded with respect to such item. Broker non-votes will be treated as not entitled to vote on any such matter and will not be counted as having been voted in respect of any such matter. Shares represented by such broker “non-votes” will, however, be counted in determining whether there is a quorum for the Meeting.
How do I change my vote?
A registered Shareholder who has given a proxy may revoke that proxy and change a vote by:
A non-registered or beneficial Shareholder may revoke a voting instruction form or a waiver of the right to receive proxy materials and to vote given to an intermediary or to the Corporation, as the case may be, at any time by written notice to the intermediary or the Corporation, except that neither an intermediary nor the Corporation is required to act on a revocation of a voting instruction form or on a waiver of the right to receive materials and to vote that is not received by such intermediary or the Corporation, at least seven days prior to the Meeting.
What does it mean if I receive more than one set of proxy materials?
This means that you own Shares that are registered under different accounts. For example, you may own some Shares directly as a registered Shareholder and other Shares as a non-registered beneficial Shareholder through an intermediary, or you may own Shares through more than one such organization. In these situations, you will receive multiple sets of proxy materials. It is necessary for you to complete and return all forms of proxy and VIFs in order to vote all of the Shares you own. Please make sure you return each form of proxy or VIF in the accompanying return envelope. You may also vote by Internet, telephone, facsimile or email, as applicable, by following the instructions on your proxy materials.
How will proxies be solicited and who will pay the cost of the proxy solicitation?
The solicitation of proxies will be primarily by mail, but Aptose’s directors, officers and regular employees may also solicit proxies personally or by telephone. Aptose will bear all costs of the solicitation, including the printing, handling and mailing of the Meeting materials. Aptose has arranged for intermediaries to forward the Meeting materials to non-registered or beneficial Shareholders of record, and Aptose may reimburse the intermediaries for their reasonable fees and disbursements in that regard.
We have engaged Morrow Sodali LLC to help us solicit proxies from shareholders for a fee of $10,000 plus reimbursement for out-of-pocket expenses.
How can I make a Shareholder proposal for the 2023 Annual General Meeting of Shareholders?
For a proposal to be valid, it must comply with the requirements if the Canada Business Corporations Act (the “CBCA”(“CBCA”), as well as thosethere is a statutory voting requirement for uncontested directors elections whereby Shareholders are allowed to vote “for” or “against” (as opposed to “for” and “withhold”) nominees for the Board. If a nominee does not receive a majority of the Securities Exchange Actvotes cast for their election, the nominee will not be elected and the Board position will remain open or, if in the case of 1934 (United States) (the “Exchange Act”).incumbent directors, such director may continue in office until the earlier of (i) the 90th day after the election, or (ii) the day on which his or her successor is appointed or elected. Abstentions and broker non-votes will not be included in the total votes cast and will not affect the results.
What impact does an “Abstain” vote have?
If you select “Abstain,” your vote will have no effect on the votes cast for the purposes of approving each proposal.
What is the effect if I do not cast my vote?
If, as a registered Shareholder, you do not cast your vote at the Meeting or by proxy, no votes will be cast on your behalf on any of the proposals.
If you are a U.S. beneficial Shareholder with an intermediary, you must instruct your U.S. intermediary how to vote your shares. If, as a U.S. non-registered or beneficial Shareholder, you do not instruct your intermediary on how to vote on any of the proposals at the Meeting, we believe that the intermediary has discretionary authority to vote your shares on Proposals No. 2 and No. 4, but the intermediary does not have discretionary authority to vote your shares on Proposal No. 1, Proposals No. , No. 5 and No. 6 or any unusual item, so a “broker non-vote” will be recorded with respect to such item. Broker non-votes will be treated as not entitled to vote on any such matter and will not be counted as having been voted in respect of any such matter. Shares represented by such broker “non-votes” will, however, be counted in determining whether there is a quorum for the Meeting.
How do I change my vote?
A registered Shareholder who has given a proxy may revoke that proxy and change a vote by:
In order for
(a) | completing and signing a |
(b) | depositing an instrument in
|
(c) | using your 15-digit control number and voting online at the |
What if amendments are made to the proposals or if other matters are brought before the Meeting?
With respect to any amendments or variations
(d) | in any
|
A non-registered or beneficial Shareholder may revoke a voting instruction form or a waiver of the right to receive proxy materials and to vote given to an intermediary or to the Corporation, as the case may be, at any time by written notice to the intermediary or the Corporation, except that neither an intermediary nor the Corporation is required to act on a revocation of a voting instruction form or on a waiver of the right to receive materials and to vote that is not received by such intermediary or the Corporation, at least seven days prior to the Meeting.
What does it mean if I receive more than one set of proxy materials?
This means that you own Shares that are registered under different accounts. For example, you may own some Shares directly as a registered Shareholder and other Shares as a non-registered beneficial Shareholder through an intermediary, or you may own Shares through more than one such organization. In these situations, you will receive multiple sets of proxy materials. It is necessary for you to complete and return all forms of proxy and VIFs in order to vote all of the Shares you own. Please make sure you return each form of proxy or VIF in the accompanying return envelope. You may also vote by Internet, telephone, facsimile or email, as applicable, by following the instructions on your proxy materials.
Who is soliciting the proxies, how will proxies be solicited and who will pay the cost of the proxy solicitation?
Aptose is soliciting proxies to be used at the Meeting. The solicitation of proxies will be primarily by mail, but Aptose’s directors, officers and regular employees may also solicit proxies personally or by telephone. Aptose will bear all costs of the solicitation, including the printing, handling and mailing of the Meeting materials. Aptose has arranged for intermediaries to forward the Meeting materials to non-registered or beneficial Shareholders of record, and Aptose may reimburse the intermediaries for their reasonable fees and disbursements in that regard.
In addition, we have engaged Morrow Sodali LLC to help us solicit proxies from Shareholders for a fee of $12,500 plus reimbursement for out-of-pocket expenses.
How can I make a Shareholder proposal for the 2024 Annual General Meeting of Shareholders?
For a proposal to be valid, it must comply with the requirements if the CBCA, as well as those of the Securities Exchange Act of 1934 (United States) (the “Exchange Act”).
In order for a Shareholder proposal to be eligible for inclusion in the Proxy Statement under the Exchange Act, the Shareholder must submit the proposal in accordance with Rule 14a-8, by no later than December 28, 2023, and the Shareholder must follow the procedures of Rule 14a-8 including having continuously held at least US$2,000 in market value of the Shares entitled to be voted on the proposal at the Meeting, for at least three years; at least US$15,000 in market value of the Shares entitled to vote on the proposal for at least two years; at least US$25,000 in market value of the Shares entitled to vote on the proposal for at least one year by the date the Shareholder submits the proposal. The Shareholder must continue to hold those Shares through the date of the Meeting. A shareholder proposal submitted pursuant to the rules of the SEC under the Exchange Act must be received at our principal executive office at 251 Consumers Road, Suite 1105, Toronto, ON M2J 4R3 by December 28, 2023 and must comply with the requirements of Rule 14a-8 of the Exchange Act.
Shareholders who do not wish to use the mechanism provided by the Exchange Act may submit proposals to be considered at the 2024 annual general meeting of Shareholders under the provisions of the CBCA. In order for a Shareholder proposal to be eligible under the CBCA, it must be in writing, accompanied by the requisite declarations and signed by the submitter and qualified Shareholders who at the time of signing are the registered or beneficial owners of Shares that, in the aggregate: (a) constitute at least 1% of our issued Shares that have the right to vote at general meetings; or (b) have a fair market value in excess of CA$2,000. For the submitter or a qualified Shareholder to be eligible to sign the proposal, that Shareholder must have been the registered or beneficial owner of our Shares that carry the right to vote at general meetings for an uninterrupted period of at least six months before the date the proposal is submitted. To be considered for inclusion in the proxy materials for the 2024 annual general meeting of Shareholders, any such Shareholder proposal under the CBCA must be received by Aptose by no later than February 23, 2024.
A Shareholder wishing to nominate an individual to be a director, other than pursuant to a requisition of a meeting made pursuant to the CBCA or a Shareholder proposal made pursuant to the CBCA or Exchange Act provisions described above, is required to comply with Section 3.1 of By-Law 2015-01 – Advance Notice By-Law of Aptose Biosciences Inc. (the “Advance Notice Bylaw”).
Shareholders who wish to suggest a candidate for our Board in compliance with Section 3.1 of the Advance Notice Bylaw may submit a written recommendation to our Secretary at 251 Consumers Road, Suite 1105, Toronto, ON M2J 4R3 along with the Shareholder’s name, setting forth, among other things:
• the name, age, and province or state, and country of residence of the proposed nominee;
• the principal occupation, business or employment of the proposed nominee, both at present and within the five years preceding the recommendation;
• the number of securities of each class of voting securities of the Corporation or its subsidiaries which are beneficially owned, or controlled or directed, directly or indirectly, by the proposed nominee as of the record date for the meeting of Shareholders (if such date shall then have been made publicly available and shall have occurred) and as of the date of such notice;
• a description of any agreement, arrangement or understanding (financial, compensation or indemnity related or otherwise) between the nominating Shareholder and the proposed nominee, or any affiliates or associates of, or any person acting jointly or in concert with the nominating Shareholder or the proposed nominee, in connection with the proposed nominee’s election as director; and
• whether the proposed nominee is party to any existing or proposed relationship, agreement, arrangement or understanding with any competitor of the Corporation or its affiliates or any other third party which may give rise to a real or perceived conflict of interest between the interests of the Corporation and the interests of the proposed nominee.
The corporate governance and nominating committee of the Board (the “Corporate Governance and Nominating Committee” may also request that the Shareholder provide certain additional information.
For the Board to consider a candidate for nomination at the 2024 Annual Meeting, Shareholders should submit the required information to the Secretary by the date not less than 30 days before the 2024 Annual Meeting; provided, however, that if the 2024 annual general meeting of Shareholders is to be held on a date that is fewer than 50 days after the date (the “Notice Date”) on which the first public announcement of the meeting was made, notice by the nominating Shareholder may be given not later than the close of business on the tenth day following the Notice Date. The foregoing is merely a summary of provisions contained in Section 3.1 of the Advance Notice Bylaw, and is not comprehensive and is qualified by the full text of such provisions. The full text of such provisions is set out in Section 3.1 of the Advance Notice Bylaw, a copy of which is filed under the Corporation’s profile at www.sedar.com or www.sec.gov.
These advance notice provisions are in addition to, and separate from, the requirements that a stockholder must meet in order to have a proposal included in the proxy statement under the rules of the SEC and the CBCA. For such Shareholder’s director nominee to be eligible for inclusion in the proxy statement, please refer to the deadlines pursuant to the Exchange Act and the CBCA set out above.
To comply with the universal proxy rules set forth in Rule 14a-19 of the Exchange Act, shareholders who intend to solicit proxies in support of director nominees other than the Corporation’s nominees must provide notice to the Corporate Secretary that sets forth the information required by Rule 14a-19(b) under the Exchange Act, which shall be postmarked or transmitted electronically to the Corporation at the Corporation’s principal executive offices no later than March 24, 2024.
What if amendments are made to the proposals or if other matters are brought before the Meeting?
With respect to any amendments or variations in any of the proposals shown in the Proxy Statement, or any other matters which may properly come before the Meeting, the Shares will be voted by the appointed proxyholder as he or she in their sole discretion sees fit.
As of the date of this Proxy Statement, the Board is not aware of any such amendments, variations or other matters to come before the Meeting. However, if any such changes that are not currently known to the Board should properly come before the Meeting, the Shares represented by your proxyholders will be voted in accordance with the best judgment of the proxyholders.
Who will tabulate the votes?
We currently expect that Computershare will tabulate the votes, and the secretary of the Meeting will be our inspector of elections for the Meeting.
When will voting results be disclosed?
Preliminary voting results will be announced at the Meeting. Final voting results will be filed with the Canadian provincial securities regulatory authorities on SEDAR at www.sedar.com promptly following the Meeting, and will also be published in a Current Report on Form 8-K filed with the SEC on EDGAR at www.sec.gov within four business days of the Meeting.
Whom do I contact if I have questions regarding the Meeting?
If you have any questions or require assistance in voting your Shares, please call Mr. Fletcher Payne, Senior Vice President, Chief Financial Officer and Corporate Secretary, at 858-926-2730.
Who may adjourn the Meeting?
The Meeting may be adjourned to any other time and any other place by the Shareholders who attend the Meeting or who are represented at the Meeting and entitled to vote even when such Shareholders do not constitute a quorum.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Proxy Statement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act, and are subject to the safe harbor created by those sections. This Proxy Statement also contains “forward-looking information” within the meaning of applicable Canadian securities laws. We refer to such forward-looking statements and forward-looking information collectively as “forward-looking statements”. We have identified some of these forward-looking statements with words like “believe,” “may,” “could,” “would,” “might,” “possible,” “potential,” “will,” “should,” “expect,” “intend,” “plan,” “predict,” “anticipate,” “estimate,” “contemplate” and “continue”, the negative of these words, other words and terms of similar meaning and the use of future dates. Forward-looking statements involve risks and uncertainties. These uncertainties include factors that affect all businesses as well as matters specific to us.
Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Uncertainties and risks may cause our actual results to be materially different than those expressed in or implied by our forward-looking statements. For us, particular uncertainties and risks include those described in our filings with the Securities and Exchange Commission (the “SEC”), including our most recent Annual Report on Form 10-K for the year ended December 31, 2022. A copy of this document can be found by accessing the SEC’s EDGAR filing database at www.sec.gov and on SEDAR at www.sedar.com; however we will promptly provide a copy of this document to any Shareholder of the Corporation free of charge upon request. All forward-looking statements in this Proxy Statement speak only as of the date of this Proxy Statement and are based on our current beliefs and expectations. We undertake no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as otherwise required by law.
VOTING SECURITIES AND PRINCIPAL HOLDERS OF VOTING SECURITIES
As of the record date April 3, 2023, 93,005,278 Shares are issued and outstanding. Each holder of Shares of record at the close of business on April 3, 2023 will be entitled to one vote for each Share held on all matters proposed to come before the Meeting, except to the extent that the Shareholder has transferred any Shares after the record date and the transferee of such Shares establishes ownership of them and makes a written demand, not later than 10 days prior to the Meeting, to be included in the list of Shareholders entitled to vote at the Meeting, in which case the transferee will be entitled to vote such Shares.
SHARE OWNERSHIP OF CERTAIN BENEFICIAL OWNERS,
MANAGEMENT AND DIRECTORS
The table below sets forth information known to us regarding the beneficial ownership of our Shares as of April 3, 2023 for:
The number of Shares beneficially owned by a person includes shares subject to options held by that person that are currently exercisable or that become exercisable within 60 days of April 3, 2023. Percentage calculations assume, for each person and group, that all Shares that may be acquired by such person or group pursuant to options currently exercisable or that become exercisable within 60 days of April 3, 2023 are outstanding for the purpose of computing the percentage of Shares owned by such person or group. However, such unissued Shares described above are not deemed to be outstanding for calculating the percentage of Shares owned by any other person.
The number of Shares beneficially owned by a person includes shares subject to options held by that person that are currently exercisable or that become exercisable within 60 days of April 19, 2022. Percentage calculations assume, for each person and group, that all Shares that may be acquired by such person or group pursuant to options currently exercisable or that become exercisable within 60 days of April 19, 2022 are outstanding for the purpose of computing the percentage of Shares owned by such person or group. However, such unissued Shares described above are not deemed to be outstanding for calculating the percentage of Shares owned by any other person.
Except as otherwise indicated, the persons in the table below have sole voting and investment power with respect to all Shares shown as beneficially owned by them, subject to community property laws where applicable and subject to the information contained in the notes to the table.
Name of Beneficial Owner | Amount and | Percent of | ||||||
Named Executive Officers and Directors | ||||||||
Carol G. Ashe | 242,500 | * | ||||||
Dr. Rafael Bejar | 1,138,669 | 1.22% | ||||||
Dr. Denis Burger | 444,005 | * | ||||||
Philippe Ledru | 400,500 | * | ||||||
Fletcher Payne | 110,000 | * | ||||||
Dr. Erich Platzer | 887,500 | * | ||||||
Dr. William G. Rice | 4,830,511 | 5.19% | ||||||
Dr. Bernd R. Seizinger | - | * | ||||||
Mark D. Vincent | 422,500 | * | ||||||
Warren Whitehead | 387,500 | * | ||||||
All Executive Officers and Directors as a Group (10 persons) | 8,863,685 | 9.53% | ||||||
Beneficial Owners of More Than 5% | ||||||||
Nantahala Capital Management, LLC(2) | 6,052,867 | 6.51% | ||||||
DRW Holdings, LLC(3) | 8,892,437 | 9.56% | ||||||
Aaron G.L. Fletcher(4) | 6,246,788 | 6.72% | ||||||
*Does not exceed one percent of Shares outstanding | ||||||||
(1) Includes for the persons listed below the following Shares subject to options held by such persons that are currently exercisable or become exercisable within 60 days of April 3, 2023: Ms. Carol G. Ashe: 242,500; Dr. Rafael Bejar: 1,028,669; Dr. Denis Burger: 422,334; Mr. Philippe Ledru: 300,000; Dr. Erich Platzer: 382,500; Mr. Fletcher Payne: nil; Dr. William G. Rice: 4,317,299; Dr. Bernd R. Seizinger: nil; Dr. Mark Vincent: 416,000; and Mr. Warren Whitehead: 372,500.
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(2) Based on information contained in a schedule 13G filed with the SEC on February 14, 2023 by Nantahala Capital Management, LLC, Wilmot B. Harkey and Daniel Mack, 130 Main St. 2nd Floor, New Canaan, CT, 06840, United States of America. The filing indicates that, as of December 31, 2022, Nantahala Capital Management, LLC may be deemed to be the beneficial of 6,052,867 shares held by funds and separately managed accounts under its control, and as the managing members of Nantahala Capital Management, LLC, each of Wilmot B. Harkey and Daniel Mack may be deemed to be a beneficial owner of those shares.
| ||||||||
(3) Based on information contained in a schedule 13G filed with the SEC on August 3, 2021 by DRW Investments, LLC, DRW Commodities, LLC, DRW Securities, LLC, DRW Holdings, LLC, Donald R. Wilson, Jr., 540 West Madison Street, Suite 2500, Chicago, Illinois 60661, United States of America. The filing indicates that, as of August 3, 2021, each of DRW Holdings, LLC and Donald R. Wilson, Jr. could be deemed to beneficially own the 8,888,275 shares beneficially owned by DRW Investments, LLC and the 4,162 shares beneficially owned by DRW Commodities, LLC. |
(4) Based on information contained in a schedule 13G filed on January 17, 2023 by Bios Special Opportunity Fund II, LP, Bios Special Opportunity Fund, LP, Bios Equity Partners SOF I, LP, Precise Bios Special Opportunities LLC, Joseph O’Donnell Kleinheinz Family Foundation for the Arts and Education, Robert Vernon Vanman, Vanman Charitable Foundation, Bios Advisors GP, LLC and Aaron G.L. Fletcher, 1751 River Run, Suite 400, Fort Worth, Texas, 76107, United States of America. The filing indicates that, as of January 17, 2023, Aaron G.L. Fletcher holds 1,136,188 Shares and has sole voting and dispositive power over an additional 5,110,600 Shares in his capacity as Manager of Bios Advisors GP, LLC, the general partner of Bios Capital Management, LP, the general partner of each Bios Equity Partners SOF I, LP, which is the general partner of each of Bios Special Opportunity Fund II, LP and Bios Special Opportunity Fund, LP. Bios Capital Management LP also act as the investment
RECEIPT OF FINANCIAL STATEMENTS At the Meeting, Shareholders will receive and consider the financial statements of the Corporation for the fiscal year ended December 31, 2022 and the auditor’s report thereon, but no vote by the Shareholders with respect thereto is required or proposed to be taken. PROPOSAL NO. 1—ELECTION OF DIRECTORS Pursuant to the articles of the Corporation, the number of directors of the Corporation is set at a minimum of three and a maximum of eleven, and the Board is authorized to determine the actual number of directors to be elected from time to time. The Corporation currently has seven directors, all of whom are being proposed for nomination at the Meeting. Unless they resign, all directors elected at the Meeting will hold office until our next annual meeting of Shareholders or until their successors are elected or appointed. Pursuant to recent changes to the CBCA, there is a statutory voting requirement for uncontested directors elections whereby shareholders are allowed to vote “for” or “against” (as opposed to “for” and “withhold”) nominees for the Board. The required vote to elect a nominee to the Board is the majority of the votes cast for their election. If a nominee does not receive a majority of the votes cast for their election, the nominee will not be elected and the Board position will remain open or, if in the case of incumbent directors, such director may continue in office until the earlier of (i) the 90th day after the election, or (ii) the day on which his or her successor is appointed or elected. The following incumbent directors of the Corporation are nominated for election at the Meeting.
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Dr. Erich Platzer(2)
Basel, Switzerland Director Since 2014 | Dr. Platzer, age 72, served as a board certified physician in internal medicine, hematology and medical oncology between 1979 and 1991. In 2001, Dr. Platzer co-founded HBM Healthcare Investments (formerly HBM BioVentures), a global leader in healthcare investing and served as their investment advisor until 2015. Previously, he served as the business director of oncology, as well as the global strategic marketing and therapeutic area head of oncology at Roche, Basel. He also served in various other leadership roles at Roche and was responsible for various strategic corporate partnerships. He has over 12 years of experience in academic medicine and research and was a key member of the team at MSKCC that purified human G-CSF in 1983 (recombinant form: Neupogen®). He earned his M.D. from the Medical School of the University of Erlangen, where he also received his “Dr. med. habil.” (M.D., Ph.D.). Dr. Platzer has served as a pharmaceutical industry expert on the board of directors of multiple biotech companies in both the U.S. and Europe. Currently he serves as chairman of Vivoryon Therapeutics NV, as well as a director of Panavance Therapeutics Inc. and of MedTech Innovation Partners, MTIP, a Swiss VC firm focusing on MedTech and eHealth. He has also served as the president of Swiss business angel group StartAngelsNetwork and remains a board member there. Dr. Platzer makes valuable contributions to the Board based on over twenty-five years’ experience in the biotechnology industry as a physician in hematology and medical oncology, as a corporate executive, and as a corporate director. |
18 |
Director
| Experience and Qualifications | |||||||||||||||||||
Dr. Bernd R. Seizinger(1)
| ||||||||||||||||||||
Warren Whitehead(1)
Ontario, Canada
Director Since 2011
|
1. | Member of the Audit Committee. |
2. | Member of the Compensation Committee. |
3. | Member of the Corporate Governance and Nominating Committee. |
4. | Lead Director of the Corporation. |
* SEC reporting issuer
Other than as described below, no proposed director is, to the knowledge of the Corporation as at the date of the Proxy Statement, or has been, within 10 years before the date of this Proxy Statement, a director, chief executive officer or chief financial officer of any company (including Aptose) that: (i) was subject to a cease trade order, an order similar to a cease trade order or an order that denied the relevant company access to any exemption under Canadian securities legislation that was in effect for a period of more than 30 consecutive days, (ii) was subject to cease trade order, an order similar to a cease trade order or an order that denied the relevant company access to any exemption under Canadian securities legislation that was in effect for a period of more than 30 consecutive days that was issued after the proposed director ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer, (iii) while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets, or (iv) become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromised with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the proposed director.
Dr. Seizinger was a non-executive independent director of Opsona Therapeutics Ltd., a private company formed under the laws of Ireland, which filed for a creditors’ voluntary liquidation under applicable Irish law in December 2018.
Moreover, no proposed director of the Corporation has been subject, to the knowledge of the Corporation, to (i) any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority, or (ii) any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable securityholder in deciding whether to vote for a proposed director.
There are no family relationships among any of the director nominees, directors and/or any of Aptose’s executive officers. In addition, no nominee has an arrangement or understanding with another person under which he or she was or is to be selected as a director or nominee.
Board Recommendation
The Board recommends a vote FOR the election of all nominees for directors named in this Proxy Statement.
CORPORATE GOVERNANCE
Corporate governance relates to the activities of the Board, the members of which are elected by and are accountable to the Shareholders, and takes into account the role of the individual members of management who are appointed by the Board and who are charged with the day-to-day management of Aptose. The Board believes that sound corporate governance practices are essential to contributing to the effective and efficient decision-making of management and the Board and to the enhancement of Shareholder value. The Board and management believe that Aptose has a sound governance structure in place for both management and the Board. Of particular note, Aptose has:
· | a Board elected annually by a |
· |
· | an independent Lead |
· | annual assessments of the Board, each committee and individual directors; |
· | established a written Disclosure and Insider Trading Policy; and |
· | established a written Code of Ethics. |
Each of the committee charters and the Code of Ethics can be found on the Corporation’s website at https://ir.aptose.com/corporate-governance.
National Instrument 58-101 — Disclosure of Corporate Governance Practices (“NI 58-101”) and National Policy 58-201 — Corporate Governance Guidelines (“NP 58-201”) requires issuers, including Aptose, to disclose the corporate governance practices that they have adopted. NP 58-201 provides guidance on governance practices. The Corporation is also subject to National Instrument 52-110 – Audit Committees (“NI 52-110”), which has been adopted in various Canadian provinces and territories and which prescribes certain requirements in relation to audit committees.
Board Mandate
The Board has adopted a mandate in which it explicitly assumes responsibility for stewardship of the Corporation. The Board is mandated to represent the Shareholders to ensure appropriate succession planning is in place, select the appropriate chief executive officer, assess and approve the strategic direction of the Corporation, ensure that appropriate processes for risk assessment, management and internal control are in place, monitor management performance against agreed benchmarks, and assure the integrity of financial reports. A copy of the Board Mandate is attached hereto as APPENDIX A.
Composition and Independence of the Board
The Corporation’s Board is currently composed of seven directors, a majority (six) of whom meet the independence standards under the listing standards of Nasdaq, the rules and regulations of the SEC, and NI 52-110. Each year the Board reviews the composition of the Board and assesses whether a Board member is “independent”.
Director | Independence |
Carol Ashe | |
Denis Burger | Yes Yes |
Erich Platzer | Yes |
William G. Rice | No |
Bernd R. Seizinger | Yes |
Mark Vincent | Yes |
Warren Whitehead | Yes |
Dr. William G. Rice, Ph.D., Chairman, President and Chief Executive Officer of the Corporation is not an independent director because of his role in the Corporation’s management team.
The following table outlines other reporting issuers where our directors serve on the board:Board:
Director | Reporting Issuer |
| |
Erich Platzer | Vivoryon Therapeutics NV |
Bernd R. Seizinger | Aprea Therapeutics, Inc. Oncolytics Biotech Inc. Nykode Therapeutics ASA BioInvent International AB |
Board Leadership
In 2014, further to the appointment of Dr. William G. Rice, Ph.D. as Chairman of the Board and Chief Executive Officer, the Corporation created the position of Lead Director to ensure that the directors have an independent leadership contact and maintain and enhance the quality of the Corporation’s corporate governance practices. Dr. Denis Burger, an independent director, is currently the Lead Director. The Lead Director provides leadership to the Board in discharging its mandate and also assists the Board in discharging its stewardship function, which includes (i) satisfying itself as to the integrity of the Chief Executive Officer and the other senior officers of the Corporation and that the Chief Executive Officer and other senior officers create a culture of integrity throughout the organization; (ii) strategic planning; (iii) identifying and managing risks; (iv) succession planning; (v) adopting a disclosure policy; (vi) internal control and management information systems; and (vii) the Corporation’s approach to corporate governance. In addition, the Lead Director provides advice, counsel and mentorship to the Chief Executive Officer.
Board Oversight of Risk
With regard to risk management, the Board will ensureensures that the business of the Corporation is conducted in compliance with applicable laws and regulations and according to the highest ethical standards; will identify and document the financial risks and other risks that the Corporation faces in the course of its business and ensure that such risks are appropriately managed; and will adopt a disclosure policy.
The Board as a whole has responsibility for risk oversight, with more in-depth reviews of certain areas of risk being conducted by the relevant Board committees that report on their deliberations to the full Board. The Board and its committees fulfill their oversight responsibilities with the support of management, whose reporting processes are designed to provide information to the Board about the identification, assessment and management of critical risks and management’s risk mitigation strategies. Areas of risk evaluated include regulatory, operational, financial (accounting, liquidity and tax), legal, cybersecurity compensation, competitive, health, safety and reputational risks.
The standing committees of the BoardAudit Committee, Corporate Governance and Nominating Committee and Compensation Committee oversee risks associated with their respective principal areas of focus. The Audit Committee’s role includes a particular focus on the qualitative aspects of financial reporting to stockholders, on our processes for the management of business and financial risk, our financial reporting obligations and for compliance with significant applicable legal, ethical and regulatory requirements. The Audit Committee, along with management, is also responsible for developing and participating in a process for review of important financial and operating topics that present potential significant risk to the Corporation. The Compensation Committee is responsible for overseeing risks and exposures associated with our compensation programs and arrangements, including our executive and director compensation programs and arrangements, and management succession planning. The Corporate Governance and Nominating Committee oversees risks relating to our corporate governance matters and policies and director succession planning.
We recognize that a fundamental part of risk management is understanding not only the risks a company faces and what steps management is taking to manage those risks, but also understanding what level of risk is appropriate for that company. Through their involvement in setting our business strategy, the Board can assess management’s appetite for risk and also determine what constitutes an appropriate level of risk for the Corporation.
We believe our current Board leadership structure is appropriate and helps ensure proper risk oversight for the Corporation. The full Board conducts general risk oversight in connection with its role in reviewing our key long-term and short-term business strategies and monitoring on an ongoing basis the implementation of our key business strategies, while our standing Board committees conduct more specific risk oversight related to their responsibilities. The Chair ensures that there is sufficient time on the Board agenda for risk management discussions.
Nomination of Directors
Directors of the Corporation are expected to bring to the Board the broadest possible knowledge and depth of experience from their chosen business or profession. Directors should evidence a demonstrated ability to deal with business, financial and social issues, both nationally and internationally. This implies a capacity to provide additional strength, diversity of views and up-to-date perceptions to the Board and its deliberations. It is the mandate of the Corporate Governance and Nominating Committee to identify and recommend qualified candidates for the Board. In assessing whether identified candidates are suitable for the Board, the Corporate Governance and Nominating Committee considers: (i) the competencies and skills considered necessary for the Board as a whole; (ii) the competencies and skills that the existing directors possess and the competencies and skills nominees will bring to the Board; and (iii) whether nominees can devote sufficient time and resources to his or her duties as a member of the Board. Potential candidates for membership on the Board will not be denied consideration by reason of race, sex, religion or affiliation with some special constituency group, nor will any candidate be selected solely for such reason.
It is the Corporate Governance and Nominating Committee’s policy to consider director candidates recommended by our Shareholders in accordance with the provisions set forth in our Advance Notice By-Law, which may be accessed on our website at www.aptose.com in the Investors section. Candidates recommended by the Corporation’s Shareholders will be considered by the Corporate Governance and Nominating Committee and, as stated in the Corporate Governance and Nominating Committee Charter, such candidates shall be evaluated in the same manner as all other director candidates. During 2021, we received no recommendations of director candidates from our Shareholders.
Shareholders who wish to suggest a candidate for our Board may submit a written recommendation to our Secretary at 251 Consumers Road, Suite 1105, Toronto, ON M2J 4R3 along with the Shareholder’s name, setting forth, among other things:
The Corporate Governance and Nominating Committee may also request that the Shareholder provide certain additional information.
For the Board to consider a candidate for nomination at the 2023 Annual Meeting, Shareholders should submit the required information to the Secretary by the date not less than 30 days before the 2023 Annual Meeting; provided, however, that if the 2023 Annual Meeting is to be held on a date that is fewer than 50 days after the date (the “Notice Date”) on which the first public announcement of the meeting was made, notice by the nominating Shareholder may be given not later than the close of business on the tenth day following the Notice Date. These advance notice provisions are in addition to, and separate from, the requirements that a stockholder must meet in order for such Shareholder’s director nominee to be eligible for inclusion in the proxy statement. Under the rules of the SEC and for such inclusion, such nomination must be received by our principal executive office by December 20, 2022. For additional details, please see above under “Questions About the Annual and Special Meeting and Voting Your Shares—How can I make a Shareholder proposal for the 20232024 Annual General Meeting of Shareholders?”
To comply with the universal proxy rules (once effective), stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide notice that sets forth the information required by Rule 14a-19 under the Securities Exchange Act of 1934 no later than April 1, 2023.
Diversity
The Corporate Governance and Nominating Committee takes diversity, including diversity of experience, perspective and education, as well as individuals from other designated groups such as women, Aboriginal people, persons with disabilities and members of visible minorities (collectively, the “Designated Groups”“Designated Groups”), into consideration as part of its overall recruitment and selection process in respect of its Board and management. The Corporation does not have a formal policy on the representation of women or other members of the Designated Groups on the Board or management of the Corporation. The Board does not believe that a formal policy will necessarily result in the identification or selection of the best candidates. As such, the Corporation does not see any meaningful value in adopting a formal policy in this respect at this time as it does not believe that it would further enhance diversity, including gender diversity, beyond the current recruitment and selection process carried out by the Corporate Governance and Nominating Committee. However, the Board is mindful of the benefit of diversity on the Board and management of the Corporation and the need to maximize the effectiveness of the Board and management and their respective decision-making abilities.
The Corporate Governance and Nominating Committee believes that having a diverse Board and management team offers a depth of perspective and enhances Board and management operations. The Corporate Governance and Nominating Committee values diversity of experience, perspective, education and race, and considers the representation of women and other members of the Designated Groups, as part of its overall annual evaluation of director nominees for election or re-election as well as candidates for management positions.
In addition, in searches for new directors or officers, the Corporate Governance and Nominating Committee will consider the level of representation of women and other members of the Designated Groups on the Board and in management and this will be one of several factors used in its search process. This will be achieved through continuously monitoring the level of representation of women and other members of the Designated Groups on the Board and in management positions and, where appropriate, recruiting qualified candidates who are members of the Designated Groups as part of the Corporation’s overall recruitment and selection process to fill Board or management positions, as the need arises, through vacancies, growth or otherwise.
The Board has not adopted targets regarding the representation of women and other members of Designated Groups on the Board and in executive officer positions due to the small size of the Corporation and the need to consider a balance of criteria in each individual appointment. It is important that each appointment to the Board or in executive officer positions be made, and be perceived as being made, on the merits of the individual and the needs of the Corporation at the relevant time. In addition, targets based on specific criteria such as gender or race, could limit the Board’s ability to ensure that the overall composition of the Board or management of the Corporation meets the needs of the Corporation. We are actively seeking additional candidates to join our Board and we strongly prioritize diverse candidates.
Currently, twoone out of seven (29%(14%) members of the Board and none of the executive officers are women. One executive officer identifies as being of “Hispanic, Latinx or Spanish origin” and there areone director identifies as being part of the LGBTQ+ group, otherwise no members of the Board or executive officers of the Corporation who self-identify as being part of any of the Designated Groups.
25 |
Board Diversity Matrix
The table below provides certain highlights of the composition of our Board members as of December 31, 2021.2022. Each of the categories listed in the table below has the meaning as it is used in Nasdaq Rule 5605(f).
Total Number of Directors | 7 | 7 | ||||||
Female | Male | Non-Binary | Did Not Disclose Gender | Female | Male | Non-Binary | Did Not Disclose Gender | Part I: Gender Identity |
Directors | 2 | 5 | - | 1 | 6 | - | Part II: Demographic Background | |
African American or Black | - | - | ||||||
Alaskan Native or Native American | - | - | ||||||
Asian | - | - | ||||||
Hispanic or Latinx | - | - | ||||||
Native Hawaiian or Pacific Islander | - | - | ||||||
White | 2 | 5 | - | 1 | 6 | - | ||
Two or More Races or Ethnicities | - | - | ||||||
LGBTQ+ | - | 1 | ||||||
Did Not Disclose Demographic Background | - | - |
Director Term Limits and Other Mechanisms of Board Renewal
The Board has not adopted term limits for directors or other mechanisms of board renewal at this time as it believes that the imposition of director term limits or other mechanisms of board renewal on a board implicitly discounts the value of experience and continuity amongst the boardBoard members and runs the risk of excluding experienced and potentially valuable board members as a result of arbitrary determination. The Board believes that it can best strike a balance between continuity and fresh perspectives without mandated term limits or other mechanisms of board renewal.
Position Descriptions
The Board has developed written position descriptions, which are reviewed annually, for the Chair and the chairs of each of the audit committee, the compensation committee and the corporate governance and nominating committee.committees. The Chief Executive Officer also has a written position description that has been approved by the Board and is reviewed annually.
Orientation and Continuing Education
It is the mandate of the Corporate Governance and Nominating Committee to ensure that a process is established for the orientation and education of new directors that addresses the nature and operation of the Corporation’s business and their responsibilities and duties as directors (including the contribution individual directors are expected to make and the commitment of time and resources that the Corporation expects from its directors).
The orientation includes an overview of the Corporation’s history and operations, a review of industry conditions and competition, an introduction to the Corporation’s management team and corporate and business information. Any further orientation is dependent on the needs of the new member and may include items such as formal training sessions and attendance at seminars.
With respect to the continuing education of directors, the Corporate Governance and Nominating Committee ensures that directors receive adequate information and continuing education opportunities on an ongoing basis to enable directors to maintain their skills and abilities as directors and to ensure their knowledge and understanding of the Corporation’s business remains current.
Assessments
It is the Board’s mandate, in conjunction with the Corporate Governance and Nominating Committee, to assess the participation, contributions and effectiveness of the Chair and the individual members of the Board on an annual basis. The Board also monitors the effectiveness of the Board and its committees and the actions of the Board as viewed by the individual directors and senior management.
The Board has developed a formal questionnaire to be completed by each director on an annual basis for the purpose of formally assessing the effectiveness of the Board as a whole, committees of the Board, and the contribution of individual directors. These questionnaires, and the issues arising therefrom, are intended to be reviewed and assessed by the Lead Director on an annual basis or more frequently from time to time as the need arises. The Lead Director takes appropriate action as required based on the results obtained.
Meeting Attendance
As stated in the Board Mandate, all directors are expected to attend each meeting in person, by phone or by video conference depending on the format of the meeting, to the extent practicable. The Board of Directors and its committees held 22nine meetings during 2021.2022. More specifically, the Audit Committee met four times, the Corporate Governance and Nominating Committee met sixfour times and the Compensation Committee met five times, in each case with all members in attendance, in addition to the seven meetings of the Board. Every director attended all meetings of the Board and all committees on which they served during our fiscal 2021.two times.
The following table illustrates the attendance record of each director for all Board meetings held for the year ended December 31, 2021.2022.
Director | Meetings Attended | ||||
Audit Committee | Corporate Governance and Nominating Committee | Compensation Committee | Board | ||
Carol G. Ashe | - | ||||
Denis Burger | 4 of 4 | ||||
Caroline M. Loewy(1) | - | ||||
Erich Platzer(2) | 1 of 1 | - | |||
William G. Rice | 4 of 4(3) | 2 of 2(3) | 9 of 9 | ||
Bernd R. Seizinger(4) | 1 of 1 | - | - | ||
Mark Vincent | - | - | |||
Warren Whitehead | 4 of 4 | - | - |
1. | Ms. Loewy did not stand up for re-election at the Annual and Special Meeting of Shareholders held on May 31, 2022. |
2. | Dr. Platzer was appointed to the Audit Committee on May 31, 2022 and sat on the Audit Committee until the appointment of Dr. Seizinger on September 21, 2022 and therefore attended all of the Audit Committee Meetings during his tenure. |
3. | Although not a member of the Audit Committee, Corporate Governance and Nominating Committee or Compensation Committee, Dr. Rice participated to all meetings of such committees for the year ended December 31, 2022 on invitation as a member of management. |
4. | Dr. Seizinger was appointed to the Board on September 13, 2022. |
All director nominees are expected to attend the annualMeeting. William G. Rice, Denis Burger, Carol G. Ashe, Mark Vincent and special meeting. All the current directorsWarren Whitehead attended last year’s Annual and Special Meeting of Shareholders.
Executive Sessions
The independent directors meet regularly without the presence of non-independent directors and members of management. During the year ended December 31, 2021,2022, independent directors met six times without the presence of management non-independent directors as part of meetings of the Board, and members of the Audit Committee and Corporate Governance and Nominating Committee and Compensation Committee met two six and fivefour times, respectively, without the presence of management as part of meetings of their committees.
Ethical Business Conduct
We have adopted a code of ethics for directors, officers (including our principal executive officer, principal financial officer and principal accounting officer) and employees, known as the Code of Business Conduct and Ethics. The Code of Business Conduct and Ethics is available on our website at http://www.aptose.com under the Corporate Governance section of our Investors page. We will promptly disclose on our website (i) the nature of any amendment to the policy that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions and (ii) the nature of any waiver, including an implicit waiver, from a provision of the policy that is granted to one of these specified individuals that is required to be disclosed pursuant to SEC rules and regulations, the name of such person who is granted the waiver and the date of the waiver.
The Corporate Governance and Nominating Committee regularly monitors compliance with the Code through communications with management and reports through the Disclosure and Insider Trading Policy (as described below) and ensures that management of the Corporation encourages and promotes a culture of ethical business conduct. A copy of the Code may be found by accessing the SEC’s EDGAR filing database at www.sec.gov, on SEDAR at www.sedar.com and on our website at www.aptose.com.
The Corporation has developed a Disclosure and Insider Trading Policy that covers “whistle blowing” and provides an anonymous means for employees and officers to report violations of the Code or any other corporate policies, in addition to providing guidelines on employee trading in the Corporation’s securities.
The Board has not granted any waiver of the Code in favor of a director or officer of the Corporation. No material change reports have been filed since the beginning of the Corporation’s most recently completed fiscal year that pertain to any conduct of a director or executive officer that constitutes a departure from the Code.
Conflicts of Interest
The Corporate Governance and Nominating Committee monitors the disclosure of conflicts of interest by directors and ensures that no director will vote or participate in a discussion on a matter in respect of which such director has a material interest.
Shareholder Communications with the Board
Shareholders may communicate with the Board or any one particular director by sending correspondence, addressed to Dr. William G. Rice, Ph.D., Chairman,Mr. Fletcher Payne, Senior Vice President, Chief Financial Officer and Chief Executive Officer,Corporate Secretary, 12770 High Bluff Drive, San Diego, California, 92130, with an instruction to forward the communication to the Board or one or more particular directors. He will forward promptly all such shareholder communications to the Board, or the one or more particular directors, after ascertaining whether the communications are appropriate to duties and responsibilities of the Board.
Board CommitteesDenis Burger
Yes
Yes
Dr. William G. Rice, Ph.D., Chairman, President and Chief Executive Officer of the Corporation is not an independent director because of his role in the Corporation’s management team.
The following table outlines other reporting issuers where our directors serve on the Board:
Director | Reporting Issuer |
Erich Platzer | Vivoryon Therapeutics NV
|
Bernd R. Seizinger |
Oncolytics Biotech Inc. Nykode Therapeutics ASA BioInvent International AB |
Board Leadership
In 2014, further to the appointment of Dr. William G. Rice, Ph.D. as Chairman of the Board and Chief Executive Officer, the Corporation created the position of Lead Director to ensure that the directors have an independent leadership contact and maintain and enhance the quality of the Corporation’s corporate governance practices. Dr. Denis Burger, an independent director, is currently the Lead Director. The Lead Director provides leadership to the Board in discharging its mandate and also assists the Board in discharging its stewardship function, which includes (i) satisfying itself as to the integrity of the Chief Executive Officer and the other senior officers of the Corporation and that the Chief Executive Officer and other senior officers create a culture of integrity throughout the organization; (ii) strategic planning; (iii) identifying and managing risks; (iv) succession planning; (v) adopting a disclosure policy; (vi) internal control and management information systems; and (vii) the Corporation’s approach to corporate governance. In addition, the Lead Director provides advice, counsel and mentorship to the Chief Executive Officer.
Board Oversight of Risk
With regard to risk management, the Board ensures that the business of the Corporation is conducted in compliance with applicable laws and regulations and according to the highest ethical standards; will identify and document the financial risks and other risks that the Corporation faces in the course of its business and ensure that such risks are appropriately managed; and will adopt a disclosure policy.
The Board as a whole has responsibility for risk oversight, with more in-depth reviews of certain areas of risk being conducted by the relevant Board committees that report on their deliberations to the full Board. The Board and its committees fulfill their oversight responsibilities with the support of management, whose reporting processes are designed to provide information to the Board about the identification, assessment and management of critical risks and management’s risk mitigation strategies. Areas of risk evaluated include regulatory, operational, financial (accounting, liquidity and tax), legal, cybersecurity compensation, competitive, health, safety and reputational risks.
The Audit Committee, Corporate Governance and Nominating Committee and Compensation Committee oversee risks associated with their respective principal areas of focus. The Audit Committee’s role includes a particular focus on the qualitative aspects of financial reporting to stockholders, on our processes for the management of business and financial risk, our financial reporting obligations and for compliance with significant applicable legal, ethical and regulatory requirements. The Audit Committee, along with management, is also responsible for developing and participating in a process for review of important financial and operating topics that present potential significant risk to the Corporation. The Compensation Committee is responsible for overseeing risks and exposures associated with our compensation programs and arrangements, including our executive and director compensation programs and arrangements, and management succession planning. The Corporate Governance and Nominating Committee oversees risks relating to our corporate governance matters and policies and director succession planning.
We recognize that a fundamental part of risk management is understanding not only the risks a company faces and what steps management is taking to manage those risks, but also understanding what level of risk is appropriate for that company. Through their involvement in setting our business strategy, the Board can assess management’s appetite for risk and also determine what constitutes an appropriate level of risk for the Corporation.
We believe our current Board leadership structure is appropriate and helps ensure proper risk oversight for the Corporation. The full Board conducts general risk oversight in connection with its role in reviewing our key long-term and short-term business strategies and monitoring on an ongoing basis the implementation of our key business strategies, while our standing Board committees conduct more specific risk oversight related to their responsibilities. The Chair ensures that there is sufficient time on the Board agenda for risk management discussions.
Nomination of Directors
Directors of the Corporation are expected to bring to the Board the broadest possible knowledge and depth of experience from their chosen business or profession. Directors should evidence a demonstrated ability to deal with business, financial and social issues, both nationally and internationally. This implies a capacity to provide additional strength, diversity of views and up-to-date perceptions to the Board and its deliberations. It is the mandate of the Corporate Governance and Nominating Committee to identify and recommend qualified candidates for the Board. In assessing whether identified candidates are suitable for the Board, the Corporate Governance and Nominating Committee considers: (i) the competencies and skills considered necessary for the Board as a whole; (ii) the competencies and skills that the existing directors possess and the competencies and skills nominees will bring to the Board; and (iii) whether nominees can devote sufficient time and resources to his or her duties as a member of the Board. Potential candidates for membership on the Board will not be denied consideration by reason of race, sex, religion or affiliation with some special constituency group, nor will any candidate be selected solely for such reason.
It is the Corporate Governance and Nominating Committee’s policy to consider director candidates recommended by our Shareholders in accordance with the provisions set forth in our Advance Notice By-Law, which may be accessed on our website at www.aptose.com in the Investors section. Candidates recommended by the Corporation’s Shareholders will be considered by the Corporate Governance and Nominating Committee and, as stated in the Corporate Governance and Nominating Committee Charter, such candidates shall be evaluated in the same manner as all other director candidates. During 2021, we received no recommendations of director candidates from our Shareholders.
For additional details, please see above under “Questions About the Annual and Special Meeting and Voting Your Shares—How can I make a Shareholder proposal for the 2024 Annual General Meeting of Shareholders?”
Diversity
The Corporate Governance and Nominating Committee takes diversity, including diversity of experience, perspective and education, as well as individuals from other designated groups such as women, Aboriginal people, persons with disabilities and members of visible minorities (collectively, the “Designated Groups”), into consideration as part of its overall recruitment and selection process in respect of its Board and management. The Corporation does not have a formal policy on the representation of women or other members of the Designated Groups on the Board or management of the Corporation. The Board does not believe that a formal policy will necessarily result in the identification or selection of the best candidates. As such, the Corporation does not see any meaningful value in adopting a formal policy in this respect at this time as it does not believe that it would further enhance diversity, including gender diversity, beyond the current recruitment and selection process carried out by the Corporate Governance and Nominating Committee. However, the Board is mindful of the benefit of diversity on the Board and management of the Corporation and the need to maximize the effectiveness of the Board and management and their respective decision-making abilities.
The Corporate Governance and Nominating Committee believes that having a diverse Board and management team offers a depth of perspective and enhances Board and management operations. The Corporate Governance and Nominating Committee values diversity of experience, perspective, education and race, and considers the representation of women and other members of the Designated Groups, as part of its overall annual evaluation of director nominees for election or re-election as well as candidates for management positions.
In addition, in searches for new directors or officers, the Corporate Governance and Nominating Committee will consider the level of representation of women and other members of the Designated Groups on the Board and in management and this will be one of several factors used in its search process. This will be achieved through continuously monitoring the level of representation of women and other members of the Designated Groups on the Board and in management positions and, where appropriate, recruiting qualified candidates who are members of the Designated Groups as part of the Corporation’s overall recruitment and selection process to fill Board or management positions, as the need arises, through vacancies, growth or otherwise.
The Board has not adopted targets regarding the representation of women and other members of Designated Groups on the Board and in executive officer positions due to the small size of the Corporation and the need to consider a balance of criteria in each individual appointment. It is important that each appointment to the Board or in executive officer positions be made, and be perceived as being made, on the merits of the individual and the needs of the Corporation at the relevant time. In addition, targets based on specific criteria such as gender or race, could limit the Board’s ability to ensure that the overall composition of the Board or management of the Corporation meets the needs of the Corporation. We are actively seeking additional candidates to join our Board and we strongly prioritize diverse candidates.
Currently, one out of seven (14%) members of the Board and none of the executive officers are women. One executive officer identifies as being of “Hispanic, Latinx or Spanish origin” and one director identifies as being part of the LGBTQ+ group, otherwise no members of the Board or executive officers of the Corporation who self-identify as being part of any of the Designated Groups.
25 |
Board Diversity Matrix
The table below provides certain highlights of the composition of our Board members as of December 31, 2022. Each of the categories listed in the table below has the meaning as it is used in Nasdaq Rule 5605(f).
Total Number of Directors | 7 | |||
Female | Male | Non-Binary | Did Not Disclose Gender | |
Part I: Gender Identity | ||||
Directors | 1 | 6 | - | - |
Part II: Demographic Background | ||||
African American or Black | - | - | - | - |
Alaskan Native or Native American | - | - | - | - |
Asian | - | - | - | - |
Hispanic or Latinx | - | - | - | - |
Native Hawaiian or Pacific Islander | - | - | - | - |
White | 1 | 6 | - | - |
Two or More Races or Ethnicities | - | - | - | - |
LGBTQ+ | 1 | |||
Did Not Disclose Demographic Background | - |
Director Term Limits and Other Mechanisms of Board Renewal
The Board has not adopted term limits for directors or other mechanisms of board renewal at this time as it believes that the imposition of director term limits or other mechanisms of board renewal on a board implicitly discounts the value of experience and continuity amongst the Board members and runs the risk of excluding experienced and potentially valuable board members as a result of arbitrary determination. The Board believes that it can best strike a balance between continuity and fresh perspectives without mandated term limits or other mechanisms of board renewal.
Position Descriptions
The Board has developed written position descriptions, which are reviewed annually, for the Chair and the chairs of each of the committees. The Chief Executive Officer also has a written position description that has been approved by the Board and is reviewed annually.
Orientation and Continuing Education
It is the mandate of the Corporate Governance and Nominating Committee to ensure that a process is established for the orientation and education of new directors that addresses the nature and operation of the Corporation’s business and their responsibilities and duties as directors (including the contribution individual directors are expected to make and the commitment of time and resources that the Corporation expects from its directors).
The orientation includes an overview of the Corporation’s history and operations, a review of industry conditions and competition, an introduction to the Corporation’s management team and corporate and business information. Any further orientation is dependent on the needs of the new member and may include items such as formal training sessions and attendance at seminars.
With respect to the continuing education of directors, the Corporate Governance and Nominating Committee ensures that directors receive adequate information and continuing education opportunities on an ongoing basis to enable directors to maintain their skills and abilities as directors and to ensure their knowledge and understanding of the Corporation’s business remains current.
Assessments
It is the Board’s mandate, in conjunction with the Corporate Governance and Nominating Committee, to assess the participation, contributions and effectiveness of the Chair and the individual members of the Board on an annual basis. The Board also monitors the effectiveness of the Board and its committees and the actions of the Board as viewed by the individual directors and senior management.
The Board has developed a formal questionnaire to be completed by each director on an annual basis for the purpose of formally assessing the effectiveness of the Board as a whole, committees of the Board, and the contribution of individual directors. These questionnaires, and the issues arising therefrom, are intended to be reviewed and assessed by the Lead Director on an annual basis or more frequently from time to time as the need arises. The Lead Director takes appropriate action as required based on the results obtained.
Meeting Attendance
As stated in the Board Mandate, all directors are expected to attend each meeting in person, by phone or by video conference depending on the format of the meeting, to the extent practicable. The Board of Directors and its committees held nine meetings during 2022. More specifically, the Audit Committee met four times, the Corporate Governance and Nominating Committee met four times and the Compensation Committee met two times.
The following table illustrates the attendance record of each director for all Board meetings held for the year ended December 31, 2022.
Director | Meetings Attended | |||
Audit Committee | Corporate Governance and Nominating Committee | Compensation Committee | Board | |
Carol G. Ashe | - | 4 of 4 | 2 of 2 | 9 of 9 |
Denis Burger | 4 of 4 | 2 of 2 | 2 of 2 | 9 of 9 |
Caroline M. Loewy(1) | 2 of 2 | 1 of 1 | - | 3 of 4 |
Erich Platzer(2) | 1 of 1 | - | 2 of 2 | 8 of 9 |
William G. Rice | 4 of 4(3) | 4 of 4(3) | 2 of 2(3) | 9 of 9 |
Bernd R. Seizinger(4) | 1 of 1 | - | - | 1 of 1 |
Mark Vincent | - | 4 of 4 | - | 9 of 9 |
Warren Whitehead | 4 of 4 | - | - | 9 of 9 |
1. | Ms. Loewy did not stand up for re-election at the Annual and Special Meeting of Shareholders held on May 31, 2022. |
2. | Dr. Platzer was appointed to the Audit Committee on May 31, 2022 and sat on the Audit Committee until the appointment of Dr. Seizinger on September 21, 2022 and therefore attended all of the Audit Committee Meetings during his tenure. |
3. | Although not a member of the Audit Committee, Corporate Governance and Nominating Committee
|
4. | Dr. Seizinger was appointed to the Board |
All director nominees are expected to attend the Meeting. William G. Rice, Denis Burger, Carol G. Ashe, Mark Vincent and Warren Whitehead attended last year’s Annual and Special Meeting of Shareholders.
Executive Sessions
The independent directors meet regularly without the presence of non-independent directors and members of management. During the year ended December 31, 2022, independent directors met six times without the presence of management non-independent directors as part of meetings of the Board, and members of the Audit Committee and Corporate Governance and Nominating Committee met two and four times, respectively, without the presence of management as part of meetings of their committees.
Ethical Business Conduct
We have adopted a code of ethics for directors, officers (including our principal executive officer, principal financial officer and principal accounting officer) and employees, known as the Code of Business Conduct and Ethics. The Code of Business Conduct and Ethics is available on our website at http://www.aptose.com under the Corporate Governance section of our Investors page. We will promptly disclose on our website (i) the nature of any amendment to the policy that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions and (ii) the nature of any waiver, including an implicit waiver, from a provision of the policy that is granted to one of these specified individuals that is required to be disclosed pursuant to SEC rules and regulations, the name of such person who is granted the waiver and the date of the waiver.
The Corporate Governance and Nominating Committee regularly monitors compliance with the Code through communications with management and reports through the Disclosure and Insider Trading Policy (as described below) and ensures that management of the Corporation encourages and promotes a culture of ethical business conduct. A copy of the Code may be found by accessing the SEC’s EDGAR filing database at www.sec.gov, on SEDAR at www.sedar.com and on our website at www.aptose.com.
The Corporation has developed a Disclosure and Insider Trading Policy that covers “whistle blowing” and provides an anonymous means for employees and officers to report violations of the Code or any other corporate policies, in addition to providing guidelines on employee trading in the Corporation’s securities.
The Board has not granted any waiver of the Code in favor of a director or officer of the Corporation. No material change reports have been filed since the beginning of the Corporation’s most recently completed fiscal year that pertain to any conduct of a director or executive officer that constitutes a departure from the Code.
Conflicts of Interest
The Corporate Governance and Nominating Committee monitors the disclosure of conflicts of interest by directors and ensures that no director will vote or participate in a discussion on a matter in respect of which such director has a material interest.
Shareholder Communications with the Board
Shareholders may communicate with the Board or any one particular director by sending correspondence, addressed to Mr. Fletcher Payne, Senior Vice President, Chief Financial Officer and Corporate Secretary, 12770 High Bluff Drive, San Diego, California, 92130, with an instruction to forward the communication to the Board or one or more particular directors. He will forward promptly all such shareholder communications to the Board, or the one or more particular directors, after ascertaining whether the communications are appropriate to duties and responsibilities of the Board.
Audit Committee
Warren Whitehead, Chair
Denis Burger
Caroline Loewy
Yes
Yes
Dr. William G. Rice, Ph.D., Chairman, President and Chief Executive Officer of the Corporation is not an independent director because of his role in the Corporation’s management team.
The following table outlines other reporting issuers where our directors serve on the Board:
Director | Reporting Issuer | |
PROPOSAL NO. 3—Approval of Amendment to The Corporation’s 2021 Stock Incentive PlanVivoryon Therapeutics NV
AtAprea Therapeutics, Inc.
Oncolytics Biotech Inc.
Nykode Therapeutics ASA
BioInvent International AB
Board Leadership
In 2014, further to the appointment of Dr. William G. Rice, Ph.D. as Chairman of the Board and Chief Executive Officer, the Corporation created the position of Lead Director to ensure that the directors have an independent leadership contact and maintain and enhance the quality of the Corporation’s corporate governance practices. Dr. Denis Burger, an independent director, is currently the Lead Director. The Lead Director provides leadership to the Board in discharging its mandate and also assists the Board in discharging its stewardship function, which includes (i) satisfying itself as to the integrity of the Chief Executive Officer and the other senior officers of the Corporation and that the Chief Executive Officer and other senior officers create a culture of integrity throughout the organization; (ii) strategic planning; (iii) identifying and managing risks; (iv) succession planning; (v) adopting a disclosure policy; (vi) internal control and management information systems; and (vii) the Corporation’s approach to corporate governance. In addition, the Lead Director provides advice, counsel and mentorship to the Chief Executive Officer.
Board Oversight of Risk
With regard to risk management, the Board ensures that the business of the Corporation is conducted in compliance with applicable laws and regulations and according to the highest ethical standards; will identify and document the financial risks and other risks that the Corporation faces in the course of its business and ensure that such risks are appropriately managed; and will adopt a disclosure policy.
The Board as a whole has responsibility for risk oversight, with more in-depth reviews of certain areas of risk being conducted by the relevant Board committees that report on their deliberations to the full Board. The Board and its committees fulfill their oversight responsibilities with the support of management, whose reporting processes are designed to provide information to the Board about the identification, assessment and management of critical risks and management’s risk mitigation strategies. Areas of risk evaluated include regulatory, operational, financial (accounting, liquidity and tax), legal, cybersecurity compensation, competitive, health, safety and reputational risks.
The Audit Committee, Corporate Governance and Nominating Committee and Compensation Committee oversee risks associated with their respective principal areas of focus. The Audit Committee’s role includes a particular focus on the qualitative aspects of financial reporting to stockholders, on our processes for the management of business and financial risk, our financial reporting obligations and for compliance with significant applicable legal, ethical and regulatory requirements. The Audit Committee, along with management, is also responsible for developing and participating in a process for review of important financial and operating topics that present potential significant risk to the Corporation. The Compensation Committee is responsible for overseeing risks and exposures associated with our compensation programs and arrangements, including our executive and director compensation programs and arrangements, and management succession planning. The Corporate Governance and Nominating Committee oversees risks relating to our corporate governance matters and policies and director succession planning.
We recognize that a fundamental part of risk management is understanding not only the risks a company faces and what steps management is taking to manage those risks, but also understanding what level of risk is appropriate for that company. Through their involvement in setting our business strategy, the Board can assess management’s appetite for risk and also determine what constitutes an appropriate level of risk for the Corporation.
We believe our current Board leadership structure is appropriate and helps ensure proper risk oversight for the Corporation. The full Board conducts general risk oversight in connection with its role in reviewing our key long-term and short-term business strategies and monitoring on an ongoing basis the implementation of our key business strategies, while our standing Board committees conduct more specific risk oversight related to their responsibilities. The Chair ensures that there is sufficient time on the Board agenda for risk management discussions.
Nomination of Directors
Directors of the Corporation are expected to bring to the Board the broadest possible knowledge and depth of experience from their chosen business or profession. Directors should evidence a demonstrated ability to deal with business, financial and social issues, both nationally and internationally. This implies a capacity to provide additional strength, diversity of views and up-to-date perceptions to the Board and its deliberations. It is the mandate of the Corporate Governance and Nominating Committee to identify and recommend qualified candidates for the Board. In assessing whether identified candidates are suitable for the Board, the Corporate Governance and Nominating Committee considers: (i) the competencies and skills considered necessary for the Board as a whole; (ii) the competencies and skills that the existing directors possess and the competencies and skills nominees will bring to the Board; and (iii) whether nominees can devote sufficient time and resources to his or her duties as a member of the Board. Potential candidates for membership on the Board will not be denied consideration by reason of race, sex, religion or affiliation with some special constituency group, nor will any candidate be selected solely for such reason.
It is the Corporate Governance and Nominating Committee’s policy to consider director candidates recommended by our Shareholders in accordance with the provisions set forth in our Advance Notice By-Law, which may be accessed on our website at www.aptose.com in the Investors section. Candidates recommended by the Corporation’s Shareholders will be considered by the Corporate Governance and Nominating Committee and, as stated in the Corporate Governance and Nominating Committee Charter, such candidates shall be evaluated in the same manner as all other director candidates. During 2021, we received no recommendations of director candidates from our Shareholders.
For additional details, please see above under “Questions About the Annual and Special Meeting and Voting Your Shares—How can I make a Shareholder proposal for the 2024 Annual General Meeting of Shareholders?”
Diversity
The Corporate Governance and Nominating Committee takes diversity, including diversity of experience, perspective and education, as well as individuals from other designated groups such as women, Aboriginal people, persons with disabilities and members of visible minorities (collectively, the “Designated Groups”), into consideration as part of its overall recruitment and selection process in respect of its Board and management. The Corporation does not have a formal policy on the representation of women or other members of the Designated Groups on the Board or management of the Corporation. The Board does not believe that a formal policy will necessarily result in the identification or selection of the best candidates. As such, the Corporation does not see any meaningful value in adopting a formal policy in this respect at this time as it does not believe that it would further enhance diversity, including gender diversity, beyond the current recruitment and selection process carried out by the Corporate Governance and Nominating Committee. However, the Board is mindful of the benefit of diversity on the Board and management of the Corporation and the need to maximize the effectiveness of the Board and management and their respective decision-making abilities.
The Corporate Governance and Nominating Committee believes that having a diverse Board and management team offers a depth of perspective and enhances Board and management operations. The Corporate Governance and Nominating Committee values diversity of experience, perspective, education and race, and considers the representation of women and other members of the Designated Groups, as part of its overall annual evaluation of director nominees for election or re-election as well as candidates for management positions.
In addition, in searches for new directors or officers, the Corporate Governance and Nominating Committee will consider the level of representation of women and other members of the Designated Groups on the Board and in management and this will be one of several factors used in its search process. This will be achieved through continuously monitoring the level of representation of women and other members of the Designated Groups on the Board and in management positions and, where appropriate, recruiting qualified candidates who are members of the Designated Groups as part of the Corporation’s overall recruitment and selection process to fill Board or management positions, as the need arises, through vacancies, growth or otherwise.
The Board has not adopted targets regarding the representation of women and other members of Designated Groups on the Board and in executive officer positions due to the small size of the Corporation and the need to consider a balance of criteria in each individual appointment. It is important that each appointment to the Board or in executive officer positions be made, and be perceived as being made, on the merits of the individual and the needs of the Corporation at the relevant time. In addition, targets based on specific criteria such as gender or race, could limit the Board’s ability to ensure that the overall composition of the Board or management of the Corporation meets the needs of the Corporation. We are actively seeking additional candidates to join our Board and we strongly prioritize diverse candidates.
Currently, one out of seven (14%) members of the Board and none of the executive officers are women. One executive officer identifies as being of “Hispanic, Latinx or Spanish origin” and one director identifies as being part of the LGBTQ+ group, otherwise no members of the Board or executive officers of the Corporation who self-identify as being part of any of the Designated Groups.
25 |
Board Diversity Matrix
The table below provides certain highlights of the composition of our Board members as of December 31, 2022. Each of the categories listed in the table below has the meaning as it is used in Nasdaq Rule 5605(f).
Total Number of Directors | 7 | |||
Female | Male | Non-Binary | Did Not Disclose Gender | |
Part I: Gender Identity | ||||
Directors | 1 | 6 | - | - |
Part II: Demographic Background | ||||
African American or Black | - | - | - | - |
Alaskan Native or Native American | - | - | - | - |
Asian | - | - | - | - |
Hispanic or Latinx | - | - | - | - |
Native Hawaiian or Pacific Islander | - | - | - | - |
White | 1 | 6 | - | - |
Two or More Races or Ethnicities | - | - | - | - |
LGBTQ+ | 1 | |||
Did Not Disclose Demographic Background | - |
Director Term Limits and Other Mechanisms of Board Renewal
The Board has not adopted term limits for directors or other mechanisms of board renewal at this time as it believes that the imposition of director term limits or other mechanisms of board renewal on a board implicitly discounts the value of experience and continuity amongst the Board members and runs the risk of excluding experienced and potentially valuable board members as a result of arbitrary determination. The Board believes that it can best strike a balance between continuity and fresh perspectives without mandated term limits or other mechanisms of board renewal.
Position Descriptions
The Board has developed written position descriptions, which are reviewed annually, for the Chair and the chairs of each of the committees. The Chief Executive Officer also has a written position description that has been approved by the Board and is reviewed annually.
Orientation and Continuing Education
It is the mandate of the Corporate Governance and Nominating Committee to ensure that a process is established for the orientation and education of new directors that addresses the nature and operation of the Corporation’s business and their responsibilities and duties as directors (including the contribution individual directors are expected to make and the commitment of time and resources that the Corporation expects from its directors).
The orientation includes an overview of the Corporation’s history and operations, a review of industry conditions and competition, an introduction to the Corporation’s management team and corporate and business information. Any further orientation is dependent on the needs of the new member and may include items such as formal training sessions and attendance at seminars.
With respect to the continuing education of directors, the Corporate Governance and Nominating Committee ensures that directors receive adequate information and continuing education opportunities on an ongoing basis to enable directors to maintain their skills and abilities as directors and to ensure their knowledge and understanding of the Corporation’s business remains current.
Assessments
It is the Board’s mandate, in conjunction with the Corporate Governance and Nominating Committee, to assess the participation, contributions and effectiveness of the Chair and the individual members of the Board on an annual basis. The Board also monitors the effectiveness of the Board and its committees and the actions of the Board as viewed by the individual directors and senior management.
The Board has developed a formal questionnaire to be completed by each director on an annual basis for the purpose of formally assessing the effectiveness of the Board as a whole, committees of the Board, and the contribution of individual directors. These questionnaires, and the issues arising therefrom, are intended to be reviewed and assessed by the Lead Director on an annual basis or more frequently from time to time as the need arises. The Lead Director takes appropriate action as required based on the results obtained.
Meeting Attendance
As stated in the Board Mandate, all directors are expected to attend each meeting in person, by phone or by video conference depending on the format of the meeting, to the extent practicable. The Board of Directors and its committees held nine meetings during 2022. More specifically, the Audit Committee met four times, the Corporate Governance and Nominating Committee met four times and the Compensation Committee met two times.
The following table illustrates the attendance record of each director for all Board meetings held for the year ended December 31, 2022.
Director | Meetings Attended | |||
Audit Committee | Corporate Governance and Nominating Committee | Compensation Committee | Board | |
Carol G. Ashe | - | 4 of 4 | 2 of 2 | 9 of 9 |
Denis Burger | 4 of 4 | 2 of 2 | 2 of 2 | 9 of 9 |
Caroline M. Loewy(1) | 2 of 2 | 1 of 1 | - | 3 of 4 |
Erich Platzer(2) | 1 of 1 | - | 2 of 2 | 8 of 9 |
William G. Rice | 4 of 4(3) | 4 of 4(3) | 2 of 2(3) | 9 of 9 |
Bernd R. Seizinger(4) | 1 of 1 | - | - | 1 of 1 |
Mark Vincent | - | 4 of 4 | - | 9 of 9 |
Warren Whitehead | 4 of 4 | - | - | 9 of 9 |
1. | Ms. Loewy did not stand up for re-election at the Annual and Special Meeting of Shareholders |
2. | Dr. Platzer was appointed to |
3. | Although not a member of the Audit Committee, Corporate Governance and Nominating Committee or Compensation Committee, Dr. Rice participated to all meetings of such committees for the year ended December 31, 2022 on invitation as a member of management. |
4. | Dr. Seizinger was appointed to the Board on September 13, 2022. |
All director nominees are expected to attend the Meeting. William G. Rice, Denis Burger, Carol G. Ashe, Mark Vincent and Warren Whitehead attended last year’s Annual and Special Meeting of Shareholders.
Executive Sessions
The independent directors meet regularly without the presence of non-independent directors and members of management. During the year ended December 31, 2022, independent directors met six times without the presence of management non-independent directors as part of meetings of the Board, and members of the Audit Committee and Corporate Governance and Nominating Committee met two and four times, respectively, without the presence of management as part of meetings of their committees.
Ethical Business Conduct
We have adopted a code of ethics for directors, officers (including our principal executive officer, principal financial officer and principal accounting officer) and employees, known as the Code of Business Conduct and Ethics. The Code of Business Conduct and Ethics is available on our website at http://www.aptose.com under the Corporate Governance section of our Investors page. We will promptly disclose on our website (i) the nature of any amendment to the policy that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions and (ii) the nature of any waiver, including an implicit waiver, from a provision of the policy that is granted to one of these specified individuals that is required to be disclosed pursuant to SEC rules and regulations, the name of such person who is granted the waiver and the date of the waiver.
The Corporate Governance and Nominating Committee regularly monitors compliance with the Code through communications with management and reports through the Disclosure and Insider Trading Policy (as described below) and ensures that management of the Corporation encourages and promotes a culture of ethical business conduct. A copy of the Code may be found by accessing the SEC’s EDGAR filing database at www.sec.gov, on SEDAR at www.sedar.com and on our website at www.aptose.com.
The Corporation has developed a Disclosure and Insider Trading Policy that covers “whistle blowing” and provides an anonymous means for employees and officers to report violations of the Code or any other corporate policies, in addition to providing guidelines on employee trading in the Corporation’s securities.
The Board has not granted any waiver of the Code in favor of a director or officer of the Corporation. No material change reports have been filed since the beginning of the Corporation’s most recently completed fiscal year that pertain to any conduct of a director or executive officer that constitutes a departure from the Code.
Conflicts of Interest
The Corporate Governance and Nominating Committee monitors the disclosure of conflicts of interest by directors and ensures that no director will vote or participate in a discussion on a matter in respect of which such director has a material interest.
Shareholder Communications with the Board
Shareholders may communicate with the Board or any one particular director by sending correspondence, addressed to Mr. Fletcher Payne, Senior Vice President, Chief Financial Officer and Corporate Secretary, 12770 High Bluff Drive, San Diego, California, 92130, with an instruction to forward the communication to the Board or one or more particular directors. He will forward promptly all such shareholder communications to the Board, or the one or more particular directors, after ascertaining whether the communications are appropriate to duties and responsibilities of the Board.
Board Committees
The Corporation has a standing Audit Committee, a Corporate Governance and Nominating Committee and a Compensation Committee, each of which are composed entirely of independent directors. In 2023, the Corporation established the Research and Development Committee (“R&D Committee”). Each current member of the R&D Committee, except for Dr. Rice, qualifies as “independent” under the listing standards of Nasdaq, the rules and regulations of the SEC and NI 52-110.
Audit Committee
Membership. The current members of the Audit Committee are Denis Burger, Bernd R. Seizinger and Warren Whitehead. Mr. Whitehead is the Chair of the Audit Committee. The Board has determined that all members of the Audit Committee qualify as financial experts under the listing standards of Nasdaq.
In addition, each current member of the Audit Committee qualifies as “independent” for purposes of membership on audit committees under the listing standards of Nasdaq, the rules and regulations of the SEC and NI 52-110.
Meetings. The Audit Committee met four times during the period from January 1, 2022 until December 31, 2022.
Committee Mandate. Among its responsibilities, the Audit Committee:
· | serves as an |
· | identifies and monitors the management of the principal risks that could impact our financial reporting; |
· | monitors the independence and performance of our independent auditors, including the pre-approval of all audit fees and all permitted non-audit services in accordance with federal securities laws and the rules and regulations of the SEC; |
· | provides an |
· | encourages continuous improvement of, and foster adherence to, our policies, procedures and practices at all levels. |
The Audit Committee is also responsible for implementing and overseeing our whistle-blowing procedures.
Corporate Governance and Nominating Committee
Membership. The current members of the Corporate Governance and Nominating Committee are Mark Vincent, Carol Ashe and Denis Burger. Dr. Vincent is the Chair of the Corporate Governance and Nominating Committee. Each current member of the Committee qualifies as “independent” under the listing standards of Nasdaq, the rules and regulations of the SEC and NI 52-110.
Meetings. The Corporate Governance and Nominating Committee met four times during the period from January 1, 2022 until December 31, 2022. In addition, governance matters were discussed and considered at the Board level.
Committee Mandate. Among its responsibilities, the Corporate Governance and Nominating Committee:
· | identifies qualified individuals to become Board members, consistent with criteria approved by the Board; |
· | determines the composition of the Board and its committees; |
· | selects the director nominees for the next annual meeting of shareholders; |
· | monitors a process to assess Board, committee and management effectiveness; |
· | aids and monitors management succession planning; and |
· | develops, recommends to the Board, implements and monitors policies and processes related to the Corporation’s |
Compensation Committee
Membership. The Compensation Committee is currently comprised of Carol Ashe, Denis Burger and Erich Platzer. Dr. Burger is the Chair of the Compensation Committee. Each current member of the Compensation Committee qualifies as “independent” for purposes of membership on compensation committees under the listing standards of Nasdaq, the rules and regulations of the SEC and NI 52-110, and as a “non-employee director” within the meaning of Rule 16b-3 under the Exchange Act.
Meetings. The Compensation Committee met two times during the period from January 1, 2022 until December 31, 2022. In addition, compensation matters were discussed and considered at the Board level.
Committee Mandate. Among its responsibilities, the Compensation Committee:
· | reviews and makes recommendations to |
· | evaluates the performance of the Chief Executive Officer and other senior executive officers; |
· | makes recommendations to the Board with respect to the compensation policies for the non-employee directors; |
· | makes recommendations regarding annual bonus policies for employees, the incentive-compensation plans and equity-based plans for the Corporation; and |
· | reviews executive compensation disclosure before the Corporation publicly discloses this information. |
As part of its process to make recommendations to the Board with respect of the compensation for the non-employee directors and other employees of the Corporation, the Compensation Committee consults with the President and Chief Executive Officer and other officers of the Corporation to obtain recommendations as it deems necessary.
Further information pertaining the compensation of directors and officers and the role and policies of the Compensation Committee can be found in this Proxy Statement under the heading “Executive Compensation”.
Research and Development Committee
Membership. The current members of the R&D Committee are Erich Platzer, William Rice, Bernd R. Seizinger and Mark Vincent. Dr. Seizinger is the Chair of the R&D Committee. Each current member of the R&D Committee, except for Dr. Rice, qualifies as “independent” under the listing standards of Nasdaq, the rules and regulations of the SEC and NI 52-110.
The R&D Committee was established in early 2023 and, as such, did not hold any meetings in 2022.
Committee Mandate. The R&D Committee’s responsibilities include:
· | serving in an advisory role and interacts with both management and external advisors to develop insights and recommendations regarding the Corporation’s approach to product development and technical innovation; |
· | assisting management in the identification, evaluation and oversight of appropriate technology and product development investments; |
· | overseeing the innovation strategy of the Corporation, including periodic reviews of the Corporation’s research and development portfolio and its overall competitiveness, the science and technology underlying major research and development initiatives, the competitive environment and disruptive technology impacts; |
· | providing feedback and input regarding the Corporation’s development of innovative business models, strategies and tactics; and |
· | assisting the Board with the interpretation of scientific and clinical development data. |
PROPOSAL NO. 2—APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board, on the Audit Committee’s advice, recommends the appointment of KPMG LLP, as the independent registered public accounting firm of the Corporation for the fiscal year ending December 31, 2023.
We are asking Shareholders to approve the appointment of KPMG for the fiscal year ending December 31, 2023. If Shareholders do not approve the appointment of KPMG LLP, the Audit Committee will reconsider its selection, but it retains sole responsibility for appointing and terminating our independent registered public accounting firm.
Representatives of KPMG LLP will be present at the Meeting.
Board Recommendation
The Board unanimously recommends a vote FOR the appointment of KPMG LLP as the independent registered public accounting firm of the Corporation for the fiscal year ending on December 31, 2023.
Audit, Audit-Related, Tax and Other Fees
The tables below present fees for professional services rendered by KPMG LLP for the fiscal years ended December 31, 2022 and 2021, respectively.
Aggregate Amount Billed(5) | ||||||||
2022 | 2021 | |||||||
Audit Fees(1) | $ | 390,265 | $ | 269,056 | ||||
Tax Fees(2) | 33,098 | 35,435 | ||||||
Total | $ | 423,363 | $ | 304,491 | ||||
(1) Audit fees consisted of the audit of our annual financial statements for the fiscal years ended December 31, 2022 and 2021, respectively, and interim reviews. In addition, audit fees consist of the aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit or review of the issuer’s financials and include the provision of comfort letters and consents and the review of documents filed with regulatory authorities.
(2) Tax fees include fees billed for assistance in the preparation of corporate tax returns and related filings and general tax advisory services.
(3) All fees by KPMG are invoiced and paid in Canadian dollars. Fees for 2022 have been translated to US dollars at the Bank of Canada average annual exchange rate of 0.7685 and 2021 have been translated to US dollars at the Bank of Canada average annual exchange rate of 0.7980. |
Pre-Approval Policies and Procedures
The Audit Committee has adopted procedures pursuant to which all audit, audit-related and tax services, and all permissible non-audit services provided by our independent registered public accounting firm must be pre-approved by the Audit Committee. All services rendered by KPMG LLP during our fiscal year 2022 were permissible under applicable laws and regulations and were all approved in advance by the Audit Committee in accordance with the rules adopted by the SEC in order to implement requirements of the Sarbanes-Oxley Act of 2002.
Audit Committee Report
This report is furnished by the Audit Committee of the Board with respect to our financial statements for the year ended December 31, 2022.
One of the purposes of the Audit Committee is to oversee our accounting and financial reporting processes and the audit of our annual financial statements. Our management is responsible for the preparation and presentation of complete and accurate financial statements. Our independent registered public accounting firm, KPMG LLP, is responsible for performing an independent audit of our financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) and for issuing a report on their audit.
In performing its oversight role, the Audit Committee has reviewed and discussed our audited financial statements for the year ended December 31, 2022 with our management. Management represented to the Audit Committee that our financial statements were prepared in accordance with generally accepted accounting principles. The Audit Committee has discussed with KPMG LLP, our independent registered public accounting firm, the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board and the Securities Exchange Commission. The Audit Committee has received the written disclosures and the letter from KPMG LLP required by the applicable requirements of the Public Company Accounting Oversight Board regarding communications with audit committees concerning independence. The Audit Committee has discussed with KPMG LLP its independence and concluded that the independent registered public accounting firm is independent from our company.
Based on the review and discussions of the Audit Committee described above, the Audit Committee recommended to the Board that our audited financial statements for the year ended December 31, 2022 be included in our Annual Report on Form 10-K for the year ended December 31, 2022 for filing with the Securities and Exchange Commission.
Audit Committee
Warren Whitehead, Chair
Denis Burger
Bernd R. Seizinger
PROPOSAL NO. 3—Approval of Amendment to The Corporation’s 2021 Stock Incentive Plan
At the Meeting, Shareholders will be asked to approve an ordinary resolution (the “Amendment Resolution”) approving an amendment to the Corporation’s 2021 stock incentive plan (the “2021 Stock Incentive Plan”) to increase the number of Shares reserved thereunder by 1,027,758 Shares. All other provisions of the 2021 Stock Incentive Plan remain in full force and effect. A copy of the 2021 Stock Incentive Plan, as proposed to be amended, is attached hereto as APPENDIX B.
The Board believes that our success depends, in large part, in attracting and retaining employees, officers, consultants, advisors, independent contractors and non-employee directors capable of assuring the future success of the Corporation. Accordingly, the purpose of the 2021 Stock Incentive Plan is to offer such persons incentives to put forth maximum efforts for the success of the Corporation’s business and to compensate such persons through stock-based awards in the form of stock options, stock appreciation rights (“SARs”), restricted stock, restricted stock units (“RSUs”) or dividend equivalents (collectively, “Awards”), and provide them with opportunities for stock ownership in the Corporation, thereby aligning their interests with those of the Shareholders. The 2021 Stock Incentive Plan is the only omnibus equity incentive plan under which the Corporation may grant equity awards.
As of April 3, 2023, there were 19,439,557 Shares subject to issuance upon exercise of outstanding options under all of our equity compensation plans, at a weighted average exercise price of $3.041, and a weighted average remaining life of 7.07 years. There were no issued and outstanding Awards other than stock options. As of April 3, 2023, we had 3,536,906 Shares available for future Awards under the 2021 Stock Incentive Plan.
The Board believes that the number of Shares currently remaining available for issuance pursuant to future Awards is not sufficient for future granting needs. In addition, the Compensation Committee has considered our historical annual burn rate in granting Awards and believes that our burn rate is reasonable for a clinical-stage biotechnology company that is prudently planning for success, see “Annual Burn Rate”. Accordingly, on April 6, 2023, the Board unanimously approved, subject to the approval of the Shareholders, an amendment to the 2021 Stock Incentive Plan to increase the number of Shares reserved thereunder by 1,027,758 Shares (the “Amendment”). We expect that the proposed Share pool under the 2021 Stock Incentive Plan will allow us to continue to grant equity awards at our historic rates for the next 2 years. Future circumstances may require us to change our current equity grant practices, the future price of our Shares, our future sales of equity securities, or future human capital management needs with any degree of certainty at this time, and the Share reserve under the 2021 Stock Incentive Plan, as amended, could last for a shorter or longer time.
If Shareholders approve the Amendment, subject to equitable adjustment in the event of any change in capitalization, Awards may be made under the 2021 Stock Incentive Plan for up to the sum of 10,371,000 Shares, plus the number of Shares subject to awards outstanding under such the Corporation’s share option plan (the “Prior Awards”) that are not purchased or are forfeited, paid in cash or reacquired by the Corporation, or otherwise not delivered to the participant due to termination or cancellation of such Prior Award.
The Shares available for grant, if the Amendment is approved, would facilitate our ability to continue to grant equity incentives, which is vital to our ability to fully engage, attract and retain the highly skilled individuals which are so valuable to our business. We strongly believe that the approval of the Amendment is instrumental to our continued success.
1 Canadian exercise prices have been converted to U.S. dollars based on an exchange rate as of April 3, 2023 of US$1.00 equals C$1.343003.
2021 Stock Incentive Plan Highlights, as proposed to be amended, and Certain Important Provisions
· | Overall Share Limit. The total number of Shares reserved under the 2021 Stock Incentive Plan is |
· | Outstanding Awards under Incentive Plans.As of April |
· | No Liberal Recycling Provisions. The
EQUITY COMPENSATION PLAN INFORMATION
General
As of December 31,
2021 Stock Incentive Plan
On April 20, 2021, the Board unanimously approved and adopted, subject to the approval of the Shareholders, the 2021 Stock Incentive Plan. The 2021 Stock Incentive Plan was ratified, confirmed and approved by the Shareholders at the annual and special meeting held on June 1,
For a summary of the terms of the 2021 Stock Incentive Plan, see “Proposal No. 3 – Amendment to the Corporation’s 2021 Incentive Plan.”
The Corporation currently maintains its existing Share Option Plan. However, following the approval of the 2021 Stock Incentive Plan by the shareholders at the June 1, 2021 annual shareholder meeting, no further grants were permitted to be made under the Share Option Plan, though existing grants under the Share Option Plan continue in effect in accordance with their terms.
Share Option Plan
The Share Option Plan was established to advance the interests of Aptose by:
The Compensation Committee, as authorized by the Board, administers the Share Option Plan. Further to the approval of the 2021 Stock Incentive Plan by Shareholders, the Share Option Plan no longer makes new option grants available under the Share Option Plan upon the exercise of options previously granted. A copy of the Share Option Plan was filed on SEDAR at www.sedar.com on June 12, 2015.
Under the Share Option Plan, options may be granted to any executive officer, employee, subsidiary of an executive officer or employee, or consultant or consultant entity (“Eligible Persons”). The exercise price of options granted under the Share Option Plan is established by the Board and will be equal to the closing market price of the Shares on the TSX on the last trading day preceding the date of grant. If there is no trading on that date, the exercise price will be the average of the bid and ask on the TSX on the last trading date preceding the date of grant. If not otherwise determined by the Board, an option granted under the Share Option Plan will vest as to 50% on the first anniversary of the date of grant of the option and an additional 25% on the second and third anniversaries after the date of grant. The Board fixes the term of each option when granted, but such term may not be greater than 10 years from the date of grant. If the date on which an option expires pursuant to an option agreement occurs during, or within 10 days after the last day of, a black out period or other restriction period imposed on the trading of Shares by the Corporation, the expiry date for the option will be the last day of the 10-day period. Options are personal to the participant and a participant may not transfer an option except in accordance with the Share Option Plan.
The Share Option Plan does not limit insider participation and does not provide a maximum number of Shares which may be issued to an individual under the Share Option Plan. The Corporation did not provide financial assistance to any Eligible Person to facilitate the exercise of Options during the year ended December 31, 2021.
The Board may, in its sole discretion, amend, suspend or terminate the Share Option Plan or any portion of it at any time in accordance with applicable legislation, without obtaining the approval of Shareholders. Such amendments could include: (i) amendments of a “housekeeping” nature; (ii) a change to the vesting provisions of options granted pursuant to the Share Option Plan; and (iii) a change to the termination provisions of options granted under the Share Option Plan which does not entail an extension beyond the original expiry date.
Any amendment to any provision of the Share Option Plan is subject to any required regulatory or Shareholder approval. The Corporation is, however, required to obtain the approval of the Shareholders for any amendment related to (i) the maximum number of Shares reserved for issuance under the Share Option Plan, and under any other
If an option holder is terminated without cause, resigns or retires, each option that has vested will cease to be exercisable three months after the option holder’s termination date. Any portion of an option that has not vested on or prior to the termination date will expire immediately. If an option holder is terminated for cause, each option that has vested will cease to be exercisable immediately upon the Corporation’s notice of termination. Any portion of an option that has not vested on or prior to the termination date will expire immediately.
Employee Share Purchase Plan
On April 20, 2021, the Board unanimously approved and adopted, subject to the approval of the Shareholders, the Corporation’s 2021 employee stock purchase plan (the “ESPP”), a copy of which is attached to the Corporation’s proxy statement dated April 20, 2021 as Appendix C. After being approved by the Shareholders at the annual and special meeting held on June 1, 2021, the ESPP became effective on July 2, 2021.
ESPP Highlights
The ESPP
ESPP Benefits
Participation in the ESPP is voluntary and each eligible employee will have the discretion to determine whether and to what extent to participate in and contribute to the ESPP. Accordingly, the benefits and amounts that will be received or allocated to officers and other employees under the ESPP are not determinable at this time.
Summary of Material Provisions of the ESPP
The following brief summary of the ESPP is not intended to be exhaustive and is qualified in its entirety by the terms of the ESPP, a copy of which is attached to the Corporation’s proxy statement dated April 20, 2021 as Appendix C.
Plan Administration The ESPP is administrated by the Compensation Committee, or by the Board acting in place of the Compensation Committee. Subject to the terms of the ESPP, the Compensation Committee has the authority to, among other matters determine the terms and conditions of offerings under the ESPP, determine the eligibility of participants, and construe, interpret and apply the terms of the ESPP.
Shares Reserved for Issuance Subject to customary capitalization adjustments, the maximum number of Shares reserved for issuance from treasury under the ESPP is 1,700,000.
Eligibility Any individual who is a common law employee of the Corporation and any of its subsidiaries designated by the Compensation Committee for at least 20 hours per week on any given Offering Date will be eligible to participate in the ESPP.
The Compensation Committee may, in its discretion, exclude the following categories of employees from participation: (i) employees who have not completed at least two years of service since their last hire date; (ii) employees who customarily work not more than 20 hours per week or five months per calendar year; or (iii) certain highly-compensated employees.
As of April
Offering Periods The ESPP is currently expected to be administered through consecutive six-month periods referred to as “Offering Periods”. The Offering Periods will be determined by the Compensation Committee, provided that no Offering Period may extend for a period longer than 27 months.
On the Offering Date, each eligible employee who has properly enrolled in that Offering Period will be granted an option to purchase Shares to be funded by payroll deductions, based on the participant’s elected contribution rate. Unless a participant has properly withdrawn from the Offering Period, each option granted under the ESPP will automatically be exercised on the Exercise Date. The purchase price will be equal to 85% of the lesser of the Fair Market Value of the Shares on (i) the Offering Date; and (ii) the Exercise Date.
Contribution and Purchase Limitations Unless otherwise determined by the Compensation Committee in accordance with the terms of the ESPP, no participant may (i) elect a contribution rate of more than 15% of his or her compensation for the purchase of Shares under the ESPP in any one payroll period; (ii) purchase more than 10,000 Shares under the ESPP on any one Exercise Date; or (iii) purchase Shares that have a Fair Market Value of more than $25,000, determined as of the Offering Date, in any calendar year.
Certain Corporate Transactions If the number of outstanding Shares is changed by a dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Corporation, or other change in the corporate structure of the Corporation affecting the Shares occur, the Compensation Committee, in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the ESPP will, in such manner as it may deem equitable, adjust the number and class of shares which may be delivered under the ESPP, the purchase price and the number of Shares covered by each option under the ESPP which has not yet been exercised, and the contribution and purchase limitations.
Amendments and Termination The Compensation Committee may generally amend, suspend, or terminate the ESPP at any time without Shareholder approval.
During the year ended December 31, Equity Compensation Plan Information
The following table sets forth certain details as at the end of the year ended December 31,
1. Includes share option awards, RSUs, and Dividend Equivalents that may be awarded under our 2021 Stock Incentive Plan and Share Option Plan as at December 31, 2022. Does not include additional shares whose issuance is subject to shareholder approval under Proposal No. 3.
Annual Burn Rate
The following table provides the annual burn rate associated with the 2021 Stock Incentive Plan for the year ended December 31,
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
None of the directors or executive officers of the Corporation, none of the persons who have been directors or executive officers of the Corporation at any time since January 1,
INTEREST OF RELATED PERSONS IN TRANSACTIONS
For the last two completed fiscal years, no director, proposed director, executive officer, or immediate family member of a director, proposed director or executive officer nor, to the knowledge of our directors or executive officers, after having made reasonable inquiry, any person or company who beneficially owns, directly or indirectly, Shares carrying more than 5% of the voting rights attached to all Shares outstanding at the date hereof, or any immediate family member thereof, had any material interest, direct or indirect, in any transaction or proposed transaction of the Corporation which involves an amount exceeding the lesser of $120,000 or one percent of the average of the Corporation’s total assets at year-end for the last two completed fiscal years.
DELINQUENT section 16(A) REPORTS
Section 16(a) of the Exchange Act requires our directors and executive officers and all persons who beneficially own more than 10 percent of our outstanding Shares to file with the SEC initial reports of changes in ownership of our Shares. To our knowledge, based on a review of the copies of such reports and amendments to such reports furnished to us with respect to the year ended December 31, 2022, and based on written representations by our directors and executive officers, all required Section 16(a) reports under the Exchange Act for our directors, executive officers, and beneficial owners of greater than 10 percent of our Shares were filed on a timely basis during the year ended December 31, 2022.
Householding of Annual Proxy Materials
Some banks, brokers and other nominee record holders may be participating in the practice of “householding” proxy statements and annual reports. This means that only one copy of our Notice of Internet Availability of Proxy Materials, proxy materials or annual report to Shareholders may have been sent to multiple Shareholders in each household unless otherwise instructed by such Shareholders. We will deliver promptly a separate copy of these documents to any Shareholder upon written or oral request to our
INDEBTEDNESS
As of the date hereof, there is no indebtedness owing to the Corporation by any employees, officers or directors of the Corporation. The Corporation did not provide financial assistance to any employees, officers or directors for the purchase of securities during the year ended December 31,
DIRECTORS AND OFFICERS’ LIABILITY
We purchase and maintain liability insurance for the benefit of directors and officers to cover any liability incurred by such person in such capacities. The policy provides for coverage in the amount of $30,000,000. The annual premium payable by the Corporation for directors’ and officers’ liability insurance for the year ended December 31,
MANAGEMENT CONTRACTS
The management functions of the Corporation are not, in any way, performed in a substantial degree by a person or persons other than the directors or the executive officers of the Corporation.
ADDITIONAL INFORMATION
Additional information relating to us, including our most current Annual Report on Form 10-K (together with documents incorporated therein by reference), our consolidated financial statements for the year ended December 31, DIRECTORS’ APPROVAL
The contents and sending of this Proxy Statement have been approved by our directors.
(signed) William G. Rice, Ph.D.
APTOSE BIOSCIENCES INC. BOARD MANDATE Purpose
The board of directors (the “Board”) of Aptose Biosciences Inc. (the “Corporation”) is responsible for the proper stewardship of the Corporation. The Board is mandated to represent the shareholders to select the appropriate Chief Executive Officer (“CEO”), assess and approve the strategic direction of the Corporation, ensure that appropriate processes for risk assessment, management and internal control are in place, monitor management performance against agreed
Membership and Reporting
Terms of Reference
Meetings
Meeting Preparation and Attendance
Corporate Planning and Performance
In establishing corporate performance objectives, the Board will:
Risk Management and Ethics
Shareholder Communication
Supervision of Management
Management of Board Affairs
Appendix B APTOSE BIOSCIENCES INC.
Section 1. Purpose
The purpose of the Plan is to promote the interests of the Company and its shareholders by aiding the Company in attracting and retaining employees, officers, consultants, advisors, independent contractors and non-employee Directors capable of assuring the future success of the Company, to offer such persons incentives to put forth maximum efforts for the success of the Company’s business and to compensate such persons through stock-based awards and provide them with opportunities for stock ownership in the Company, thereby aligning the interests of such persons with the Company’s shareholders.
Section 2. Definitions
As used in the Plan, the following terms shall have the meanings set forth below:
(a) “Affiliate” shall mean any entity that, directly or indirectly through one or more intermediaries, is controlled by the Company.
(b) “Award” shall mean any Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit or Dividend Equivalent granted under the Plan.
(c) “Award Agreement” shall mean any written agreement, contract or other instrument or document evidencing an Award granted under the Plan (including a document in an electronic medium) executed in accordance with the requirements of Section 9(b).
(d) “Board” shall mean the Board of Directors of the Company.
(e) “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, and any regulations promulgated thereunder.
(f) “Committee” means a committee or subcommittee of the Board appointed from time to time by the Board. Notwithstanding the foregoing, if, and to the extent that no Committee exists which has the authority to administer this Plan, the functions of the Committee shall be exercised by the Board and all references herein to the Committee shall be deemed to be references to the Board. The Committee shall be comprised of not less than such number of Directors as shall be required to permit Awards granted under the Plan to qualify under Rule 16b-3, and each member of the Committee shall be a “non-employee director” within the meaning of Rule 16b-3.
(g) “Common Share” or “Common Shares” shall mean common shares of the Company (or such other securities or property as may become subject to Awards pursuant to an adjustment made under Section 4(c) of the Plan), provided that such class is listed on a securities exchange.
(h) “Company” shall mean Aptose Biosciences Inc., a corporation incorporated under the laws of Canada and any successor corporation.
(i) “Director” shall mean a member of the Board.
(j) “Dividend Equivalent” shall mean any right granted under Section 6(b) of the Plan.
(k) “Eligible Person” shall mean any employee, officer, non-employee Director, consultant, independent contractor or advisor providing services to the Company or any Affiliate, or any such person to whom an offer of employment or engagement with the Company or any Affiliate is extended. An Eligible Person must be a natural person.
(l) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
(m) “Fair Market Value” shall mean the closing price of the Common Shares, as reported on the NASDAQ Stock Market or Toronto Stock Exchange, whichever exchange is designated in the Award Agreement, and any successor securities exchange thereof, or, if the applicable securities exchange is not open for trading on such date, on the most recent preceding date when such exchange is open for trading. In all other cases, Fair Market Value shall mean the amount which is determined by the Committee, in good faith, to be the fair market value of one Common Share.
(n) “Incentive Stock Option” shall mean an option granted under Section 6(a) of the Plan that is intended to meet the requirements of Section 422 of the Code or any successor provision.
(o) “Non-Qualified Stock Option” shall mean an option granted under Section 6(a) of the Plan that is not intended to be an Incentive Stock Option.
(p) “Option” shall mean an Incentive Stock Option or a Non-Qualified Stock Option to purchase Common Shares of the Company.
(q) “Participant” shall mean an Eligible Person designated to be granted an Award under the Plan.
(r) “Plan” shall mean the Aptose Biosciences Inc. 2021 Stock Incentive Plan, as amended from time to time.
(s) “Prior Stock Plans” shall mean the Aptose Biosciences Inc. 2015 Stock Incentive Plan and the Aptose Biosciences Inc. Share Option Plan, as amended from time to time.
(t) “Restricted Stock” shall mean any Common Share granted under Section 6(c) of the Plan.
(u) “Restricted Stock Unit” shall mean any unit granted under Section 6(c) of the Plan evidencing the right to receive a Common Share (or a cash payment equal to the Fair Market Value of a Common Share) at some future date.
(v) “Rule 16b-3” shall mean Rule 16b-3 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, or any successor rule or regulation.
(w) “Section 409A” shall mean Section 409A of the Code, or any successor provision, and applicable Treasury Regulations and other applicable guidance thereunder.
(x) “Securities Act” shall mean the Securities Act of 1933, as amended.
(y) “Specified Employee” shall mean a specified employee as defined in Section 409A(a)(2)(B) of the Code or applicable proposed or final regulations under Section 409A, determined in accordance with procedures established by the Company and applied uniformly with respect to all plans maintained by the Company that are subject to Section 409A.
(z) “TSX Rules” means the rules of the Toronto Stock Exchange Company Manual relating to changes in the capital structure of listed companies in connection with security based compensation arrangements (currently Section 613), as those rules may be amended, renumbered or reclassified from time to time, or any successors.
(aa) “Stock Appreciation Right” shall mean any right granted under Section 6(b) of the Plan.
Section 3. Administration
(a) Power and Authority of the Committee. The Plan shall be administered by the Committee. Subject to the express provisions of the Plan and to applicable law, the Committee shall have full power and authority to: (i) designate Participants and grant Awards; (ii) determine the type or types of Awards to be granted to each Participant under the Plan; (iii) determine the number of Common Shares to be covered by (or the method by which payments or other rights are to be calculated in connection with) each Award; (iv) determine the terms and conditions of any Award or Award Agreement, including any terms relating to the forfeiture of any Award and the forfeiture, recapture or disgorgement of any cash, Common Shares or other amounts payable with respect to any Award; (v) amend the terms and conditions of any Award or Award Agreement, subject to the limitations under Sections 6 and 7; (vi) accelerate the exercisability of any Award or the lapse of any restrictions relating to any Award, subject to the limitations of Sections 6 and 7; (vii) determine whether, to what extent and under what circumstances Awards may be exercised in cash, Common Shares, other securities, other Awards or other property (but excluding promissory notes), or canceled, forfeited or suspended; (viii) determine whether, to what extent and under what circumstances amounts payable with respect to an Award under the Plan shall be deferred either automatically or at the election of the holder thereof or the Committee, subject to the requirements of Section 409A; (ix) interpret and administer the Plan and any instrument or agreement, including an Award Agreement, relating to the Plan; (x) establish, amend, suspend or waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; (xi) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan; and (xii) adopt such modifications, rules, procedures and sub-plans as may be necessary or desirable to comply with provisions of the laws of non-U.S. or Canadian jurisdictions in which the Company or an Affiliate may operate, including, without limitation, establishing any special rules for Affiliates, Eligible Persons or Participants located in any particular country, in order to meet the objectives of the Plan and to ensure the viability of the intended benefits of Awards granted to Participants located in such non-United States jurisdictions. Any sub-plan established hereunder shall be deemed a part of the Plan, except to the extent of any inconsistency between the terms of the Plan and the terms of such sub-plan, in which event the terms of such sub-plan shall prevail. Each sub-plan shall apply only to the Eligible Persons in the jurisdiction for which the sub-plan was designed. Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations and other decisions under or with respect to the Plan or any Award or Award Agreement shall be within the sole discretion of the Committee, may be made at any time and shall be final, conclusive and binding upon any Participant, any holder or beneficiary of any Award or Award Agreement, and any employee of the Company or any Affiliate.
(b) Delegation. The Committee may delegate to one or more officers or Directors of the Company, subject to such terms, conditions and limitations as the Committee may establish in its sole discretion, the authority to grant Awards; provided, however, that the Committee shall not delegate such authority (i) with regard to grants of Awards to be made to officers or directors of the Company or (ii) in such a manner as would contravene applicable law or applicable exchange rules.
(c) Power and Authority of the Board. Notwithstanding anything to the contrary contained herein, the Board may, at any time and from time to time, without any further action of the Committee, exercise all the powers and duties of the Committee under the Plan, unless the exercise of such powers and duties by the Board would cause the Plan not to comply with the requirements of Rule 16b-3; and only the Committee (or another committee of the Board comprised of directors who qualify as independent directors within the meaning of the independence rules of any applicable securities exchange where the Common Shares are then listed) may grant Awards to Directors who are not also employees of the Company or an Affiliate.
(d) Indemnification. To the full extent permitted by law, (i) no member of the Board, the Committee or any person to whom the Committee delegates authority under the Plan shall be liable for any action or determination taken or made in good faith with respect to the Plan or any Award made under the Plan, and (ii) the members of the Board, the Committee and each person to whom the Committee delegates authority under the Plan shall be entitled to indemnification and reimbursement by the Company with regard to such actions and determinations in accordance with applicable law in the manner provided in the Company’s by-laws and any indemnification agreements as they may be amended from time to time. The provisions of this paragraph shall be in addition to such other rights of indemnification as a member of the Board, the Committee or any other person may have by virtue of such person’s position with the Company.
Section 4. Common Shares Available for Awards
(a) Common Shares Available. Subject to adjustment as provided in Section 4(c) of the Plan, the aggregate number of Common Shares that may be issued under all Awards under the Plan shall equal:
On and after stockholder approval of this Plan, no awards shall be granted under the Prior Stock Plans, but all outstanding awards previously granted under the Prior Stock Plans shall remain outstanding and subject to the terms of the Prior Stock Plans.
When determining the Common Shares added to and subtracted from the aggregate reserve, the number of Common Shares added or subtracted shall be also determined in accordance with the Common Share counting rules described in Section 4(b) below.
(b) Counting Common Shares. Except as set forth in this Section 4(b) below, if an Award entitles the holder thereof to receive or purchase Common Shares, the number of Common Shares covered by such Award or to which such Award relates shall be counted on the date of grant of such Award against the aggregate number of Common Shares available for granting Awards under the Plan.
(c) Adjustments. In the event that any dividend (other than a regular cash dividend) or other distribution (whether in the form of cash, Common Shares, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Common Shares or other securities of the Company, issuance of warrants or other rights to purchase Common Shares or other securities of the Company or other similar corporate transaction or event affects the Common Shares such that an adjustment is necessary in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Committee shall, in accordance with applicable law and in such manner as it may deem equitable, adjust any or all of (i) the number and type of Common Shares (or other securities or other property) that thereafter may be made the subject of Awards, and (ii) the number and type of Common Shares (or other securities or other property) subject to outstanding Awards.
(d) Individual Limitations Under the Plan. The limitation contained in this Section 4(d) shall apply only with respect to any Award or Awards granted under this Plan, and limitations on awards granted under any other shareholder-approved incentive plan maintained by the Company will be governed solely by the terms of such other plan.
Section 5. Eligibility
Any Eligible Person shall be eligible to be designated as a Participant. In determining which Eligible Persons shall receive an Award and the terms of any Award, the Committee may take into account the nature of the services rendered by the respective Eligible Persons, their present and potential contributions to the success of the Company or such other factors as the Committee, in its discretion, shall deem relevant. Notwithstanding the foregoing, an Incentive Stock Option may only be granted to full-time or part-time employees (which term as used herein includes, without limitation, officers and Directors who are also employees) who are subject to taxation in the United States, and an Incentive Stock Option shall not be granted to an employee of an Affiliate unless such Affiliate is also a “subsidiary corporation” of the Company within the meaning of Section 424(f) of the Code or any successor provision.
Section 6. Awards
(a) Options. The Committee is hereby authorized to grant Options to Eligible Persons with the following terms and conditions and with such additional terms and conditions not inconsistent with the provisions of the Plan as the Committee shall determine:
(b) Stock Appreciation Rights. The Committee is hereby authorized to grant Stock Appreciation Rights to Eligible Persons subject to the terms of the Plan and any applicable Award Agreement. A Stock Appreciation Right granted under the Plan shall confer on the holder thereof a right to receive upon exercise thereof the excess of (i) the Fair Market Value of one Common Share on the date of exercise over (ii) the grant price of the Stock Appreciation Right as specified by the Committee, which price shall not be less than one hundred percent (100%) of the Fair Market Value of one Common Share on the date of grant of the Stock Appreciation Right; provided, however, that subject to applicable law, the Committee may designate a grant price below Fair Market Value on the date of grant if the Stock Appreciation Right is granted in substitution for a stock appreciation right previously granted by an entity that is acquired by or merged with the Company or an Affiliate. Subject to the terms of the Plan and any applicable Award Agreement, the grant price, term, methods of exercise, dates of exercise, methods of settlement and any other terms and conditions of any Stock Appreciation Right shall be as determined by the Committee (except that the term of each Stock Appreciation Right shall be subject to the term limitation in Section 6(a)(ii) applicable to Options). The Committee may impose such conditions or restrictions on the exercise of any Stock Appreciation Right as it may deem appropriate.(c)Restricted Stock and Restricted Stock Units. The Committee is hereby authorized to grant an Award of Restricted Stock and Restricted Stock Units to Eligible Persons with the following terms and conditions and with such additional terms and conditions not inconsistent with the provisions of the Plan as the Committee shall determine:
(d) Dividend Equivalents. The Committee is hereby authorized to grant Dividend Equivalents to Eligible Persons under which the Participant shall be entitled to receive payments (net of any applicable withholding tax and on terms and subject to conditions established and determined by and in the discretion of the Committee) equivalent to and in lieu of the amount of cash dividends paid by the Company to holders of Common Shares with respect to a number of Common Shares determined by the Committee. Subject to the terms of the Plan and any applicable Award Agreement, such Dividend Equivalents may have such terms and conditions as the Committee shall determine. Notwithstanding the foregoing, (i) the Committee may not grant Dividend Equivalents to Eligible Persons in connection with grants of Options and Stock Appreciation Rights and (ii) dividend and Dividend Equivalent amounts with respect to any Common Share underlying Restricted Stock or Restricted Stock Unit Award may be accrued but not paid to a Participant until all conditions or restrictions relating to such Common Share have been satisfied, waived or lapsed.
(e) General.
Section 7. Amendment and Termination; Corrections
(a) Amendments to the Plan and Awards. The Board may from time to time amend, suspend or terminate this Plan or any Award Agreement, and the Committee may amend the terms of any previously granted Award, provided that no amendment to the terms of any previously granted Award may, (except as expressly provided in the Plan) materially and adversely alter or impair the terms or conditions of the Award previously granted to a Participant under this Plan without the written consent of the Participant or holder thereof. Any amendment to this Plan, an Award Agreement or to the terms of any Award previously granted, is subject to compliance with all applicable laws, rules, regulations and policies of any applicable governmental entity or securities exchange, including receipt of any required approval from the governmental entity or stock exchange. For greater certainty and without limiting the foregoing, the Board may amend, suspend, terminate or discontinue the Plan or any Award Agreement, and the Committee may amend or alter any previously granted Award, as applicable, without obtaining the approval of shareholders of the Company in order to:
For greater certainty, prior approval of the shareholders of the Company shall be required for any amendment to the Plan or an Award that would:
(b) Corporate Transactions. In the event of any reorganization, merger, consolidation, split-up, spin-off, combination, plan of arrangement, take-over bid or tender offer, repurchase or exchange of Common Shares or other securities of the Company or any other similar corporate transaction or event involving the Company, the Committee or the Board may, in its sole discretion, provide for any of the following at the election of the applicable Participant but subject to the approval of the Board or the Committee, as the case may be, to be effective upon the consummation of the event (or effective immediately prior to the consummation of the event, provided that the consummation of the event subsequently occurs), and no action taken under this Section 7(b) shall be deemed to impair or otherwise adversely alter or impair the rights of any holder of an Award or beneficiary thereof:
Section 8. Income Tax Withholding and Tax Treatment
(a) Income Tax Withholding. In order to comply with all applicable federal, state, provincial, local or foreign income tax laws or regulations, the Company may take such action as it deems appropriate to ensure that all applicable federal, state, provincial, local or foreign payroll, withholding, income or other amounts and taxes, which are the sole and absolute responsibility of a Participant, are withheld or collected from such Participant. Without limiting the foregoing, for avoidance of doubt, the Committee, in its discretion and subject to such additional terms and conditions as it may adopt, may permit the Participant to satisfy such tax obligation by (a) electing to have the Company withhold a portion of the Common Shares otherwise to be delivered upon exercise or receipt of (or the lapse of restrictions relating to) such Award with a Fair Market Value equal to the amount of such taxes (subject to any limitations required by ASC Topic 718 to avoid adverse accounting treatment) and by the Company selling, or causing a broker to sell, on behalf of the Participant such Common Shares in the open market and use the proceeds from such sale to satisfy the amount of such taxes; (b) delivering to the Company Common Shares other than Common Shares issuable upon exercise or receipt of (or the lapse of restrictions relating to) such Award with a Fair Market Value equal to the amount of such taxes or (c) by any other means set forth in the applicable Award Agreement. For greater certainty, it is the responsibility of the Participant to complete and file any tax returns that may be required under applicable laws within the periods specified in those laws as a result of the Participant’s participation in the Plan or any Award. Notwithstanding any other provision of this Plan, a Participant shall be solely responsible for all tax withholding obligations arising as a result of the Participant’s participation in the Plan or any Award.
(b) No Guarantees Regarding Tax Treatment. Participants (and their beneficiaries) shall be responsible for all taxes with respect to any Award under the Plan. The Company, the Board and the Committee make no guarantees to any Person regarding the tax treatment in respect of the Awards or payments made under the Plan.
(c) Other Tax Matters. Each Option granted to a Participant who is a Canadian taxpayer will be construed and administered such that, in the reasonable good-faith determination of the Committee, the Participant qualifies for a deduction under paragraph 110(1)(d) of the Income Tax Act (Canada). Notwithstanding the foregoing, in no event will the Company, the Board or the Committee have any liability.
Section 9. General Provisions
(a) No Rights to Awards. No Eligible Person, Participant or other person shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Eligible Persons, Participants or holders or beneficiaries of Awards under the Plan. The terms and conditions of Awards need not be the same with respect to any Participant or with respect to different Participants.
(b) Award Agreements. No Participant shall have rights under an Award granted to such Participant unless and until an Award Agreement shall have been signed by the Participant (if requested by the Company), or until such Award Agreement is delivered and accepted through an electronic medium in accordance with procedures established by the Company. An Award Agreement need not be signed by a representative of the Company unless required by the Committee. Each Award Agreement shall be subject to the applicable terms and conditions of the Plan and any other terms and conditions (not inconsistent with the Plan) determined by the Committee. The Committee, in its sole discretion, may include such further provisions and limitations in any Award Agreement, as it may deem equitable and in the best interests of the Company that are not inconsistent with the provisions of the Plan.
(c) Plan Provisions Control. In the event that any provision of an Award Agreement conflicts with or is inconsistent in any respect with the terms of the Plan as set forth herein or subsequently amended, the terms of the Plan shall control.
(d) No Rights of Shareholders. Except with respect to Common Shares issued under Awards (and subject to such conditions as the Committee may impose on such Awards), neither a Participant nor the Participant’s legal representative shall be, or have any of the rights and privileges of, a shareholder of the Company with respect to any Common Shares issuable upon the exercise or payment of any Award, in whole or in part, unless and until such Common Shares have been issued.
(e) No Limit on Other Compensation Arrangements. Nothing contained in the Plan shall prevent the Company or any Affiliate from adopting or continuing in effect other or additional compensation plans or arrangements, and such plans or arrangements may be either generally applicable or applicable only in specific cases.
(f) No Right to Employment or Directorship. The grant of an Award shall not be construed as giving a Participant the right to be retained as an employee of the Company or any Affiliate, or the right to be retained as a Director, nor will it affect in any way the right of the Company or an Affiliate to terminate a Participant’s employment at any time, with or without cause, or remove a Director in accordance with applicable law. In addition, the Company or an Affiliate may at any time dismiss a Participant from employment, or remove a Director who is a Participant, free from any liability or any claim under the Plan or any Award, unless otherwise expressly provided in the Plan or in any Award Agreement. Nothing in this Plan shall confer on any person any legal or equitable right against the Company or any Affiliate, directly or indirectly, or give rise to any cause of action at law or in equity against the Company or an Affiliate. Under no circumstances shall any person ceasing to be an employee or Director of the Company or any Affiliate be entitled to any compensation for any loss of any right or benefit under the Plan which such employee or Director might otherwise have enjoyed but for termination of employment or directorship, whether such compensation is claimed by way of damages for wrongful or unfair dismissal, breach of contract or otherwise. By participating in the Plan, each Participant shall be deemed to have accepted all the conditions of the Plan and the terms and conditions of any rules and regulations adopted by the Committee and shall be fully bound thereby.
(g) Governing Law. The internal law, and not the law of conflicts, of the Province of Ontario shall govern all questions concerning the validity, construction and effect of the Plan or any Award, and any rules and regulations relating to the Plan or any Award.
(h) Severability. If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the purpose or intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction or Award, and the remainder of the Plan or any such Award shall remain in full force and effect.
(i) No Trust or Fund Created. Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Affiliate and a Participant or any other person. To the extent that any person acquires a right to receive payments from the Company or any Affiliate pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company or any Affiliate.
(j) Other Benefits. No compensation or benefit awarded to or realized by any Participant under the Plan shall be included for the purpose of computing such Participant’s compensation or benefits under any pension, retirement, savings, profit sharing, group insurance, disability, severance, termination pay, welfare or other benefit plan of the Company, unless required by law or otherwise provided by such other plan.
(k) No Fractional Common Shares. No fractional Common Shares shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall determine whether cash shall be paid in lieu of any fractional Common Share or whether such fractional Common Share or any rights thereto shall be canceled, terminated or otherwise eliminated.
(l) Clawback and Recoupment. All Awards under this Plan shall be subject to forfeiture or other penalties pursuant to any Company clawback policy, as may be adopted or amended from time to time, and such forfeiture and/or penalty conditions or provisions as determined by the Committee.
(m) Headings. Headings are given to the sections and subsections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof.
Section 10. Effective Date of the Plan
The Plan was adopted by the Board on April 20, 2021 and approved by the shareholders of the Company at the annual and special meeting of shareholders of the Company held on June 1, 2021, and the Plan shall be effective as of the date of such shareholder approval. An amendment to the Plan was approved by the Board on April 19, 2022 and shall be subject to approval by the shareholders of the Company at the annual and special meeting of shareholders of the Company to be held on May 31, 2022.
Section 11. Term of the Plan
No Award shall be granted under the Plan, and the Plan shall terminate, on the tenth anniversary of the earlier of the date of adoption of the Plan by the Board or date of approval by the Company’s shareholders or any earlier date of discontinuation or termination established pursuant to Section 7(a) of the Plan. Unless otherwise expressly provided in the Plan or in an applicable Award Agreement, any Award theretofore granted may extend beyond such dates, and the authority of the Committee provided for hereunder with respect to the Plan and any Awards, and the authority of the Board to amend the Plan, shall extend beyond the termination of the Plan.
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