SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
☒ Filed by the Registrant ☐ Filed by a Party other than the Registrant
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☐ | Preliminary Proxy Statement | |
☐ | Confidential, for Use of the Commission Only (as permitted by Rule14a-6(e)(2)) | |
☒ | Definitive Proxy Statement | |
☐ | Definitive Additional Materials | |
☐ | Soliciting Material under §240.14a-12 |
RECRO PHARMA, INC.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box
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Fee computed on table below per Exchange Act Rules14a-6(i)(1)and 0-11. | |||||
1) | Title of each class of securities to which transaction applies: | ||||
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☐ | Fee paid previously with preliminary materials. | ||||
☐ | Check box if any part of the fee is offset as provided by Exchange ActRule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | ||||
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2) | Form, Schedule or Registration Statement No.: | ||||
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490 Lapp Road
Malvern, PA 19355
20172020 ANNUAL MEETING OF SHAREHOLDERS
To be Held on May 12, 20177, 2020
March 28, 201727, 2020
Dear Shareholder:
We are pleased to invite you to attend Recro Pharma, Inc.’s, 2017or Recro’s, or the Company’s, 2020 Annual Meeting of Shareholders, or Annual Meeting, which will be held at 9:00 a.m., Eastern Time,time, on Friday,Thursday, May 12, 2017,7, 2020, at The Desmond Hotel Malvern, 1 Liberty Blvd., Malvern,the offices of Pepper Hamilton LLP, 400 Berwyn Park, 899 Cassatt Road, Berwyn, PA 19355.19312. Depending on concerns about the Coronavirus, or COVID-19, we may hold a virtual Annual Meeting. We would publicly announce a determination to hold a virtual Annual Meeting in a press release available at www.recrogainesville.com as soon as practicable before the meeting. In that event, the Annual Meeting would be conducted solely virtually, on the above date and time, via live audio webcast.
Throughout 2019, our board of directors, or Board, worked together with management and in consultation with its outside advisors to provide oversight of corporate strategy, business objectives and potential risks facing the Company.
Details regarding admission to the meetingAnnual Meeting and the business to be conducted are more fully described in the accompanying Notice of 20172020 Annual Meeting of Shareholders, or Notice, and 20172020 Annual Meeting Proxy Statement, or Proxy Statement. Other than the proposals described in the Proxy Statement, the Board of Directors is not aware of any other matters to be presented for a vote at the Annual Meeting.
We are pleased to take advantage of the Securities and Exchange Commission, or SEC, rules that allow companies to furnish their proxy materials over the Internet. We are mailing to many of our shareholders a Notice of Internet Availability of Proxy Materials instead of a paper copy of our proxy materials and our Annual Report on Form 10-K for the year ended December 31, 2016, or 2016 Annual Report. The Notice contains instructions on how to access those documents and to cast your vote via the Internet. The Notice also contains instructions on how to request a paper copy of our proxy materials and our 2016 Annual Report. All shareholders who do not receive a Notice will receive a paper copy of the proxy materials and our 2016 Annual Report by mail. This process allows us to provide our shareholders with the information they need on a more timely basis, while reducing the environmental impact and lowering the costs of printing and distributing our proxy materials.internet.
Your vote is important. Whether or not you plan to attend the Annual Meeting, we hope you will vote as soon as possible. Information about voting methods is set forth in the accompanying Notice of 2017 Annual Meeting of Shareholders and Proxy Statement.
On behalf of Recro Pharma, Inc., we thank you for your ongoing interest and investment in our company. We are committed to acting in your best interests. If you have any questions with respect to voting, please call our Chief Financial Officer, Michael Celano,Ryan D. Lake, at (484) 395-2413.395-2436.
Sincerely,SINCERELY,
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Wayne Weisman |
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| Gerri Henwood Director, President and Chief Executive Officer |
THIS PROXY STATEMENT AND ENCLOSED PROXY CARD ARE
FIRST BEING MADE AVAILABLE ON OR ABOUT MARCH 28, 2017.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Dear Shareholders:
You are invited to attend Recro Pharma, Inc.’s 2017Recro’s Annual Meeting of Shareholders.Meeting. At the Annual Meeting, shareholders will vote:
to approve, on an advisory basis, the compensation of our named executive officers as disclosed in this Proxy Statement;
to indicate on an advisory basis, the preferred frequency of future shareholder advisory votes on the compensation of our named executive officers; and
Shareholders also will transact any other business that may properly come before the Annual Meeting or any adjournment or postponement of the Annual Meeting.
MEETING INFORMATION:
Date: |
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Time: | 9:00 a.m. | |
Location: | Pepper Hamilton LLP | |
Record Date: | You can vote if you were a shareholder of record on March | |
*Depending on concerns about COVID-19, we may hold a virtual Annual Meeting. We would publicly announce a determination to hold a virtual Annual Meeting in a press release available at www.recrogainesville.com as soon as practicable before the meeting. In that event, the Annual Meeting would be conducted solely virtually, on the above date and time, via live audio webcast.
Your vote matters. Whether or not you plan to attend the Annual Meeting, please ensure that your shares are represented by voting, signing, dating and returning your proxy in the enclosed envelope, which requires no postage if mailed in the United States.
By Order of the Board of Directors
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Carla Lusby
Corporate Secretary
March 27, 2020
IMPORTANT NOTICE REGARDING AVAILABILITY OF PROXY MATERIALS. This proxy statementProxy Statement and the proxy card are being furnished to our shareholders on or about March 28, 2017.27, 2020. This proxy statementProxy Statement and our 2016Annual Report on Form 10-K for the
fiscal year ended December 31, 201, or 2019 Annual Report, are available to holders of our common stock atwww.proxyvote.com.www.proxyvote.com. If you would like to receive, without charge, a paper copy of our 20162019 Annual Report, including the financial statements, please send your request to Chief AccountingFinancial Officer, Recro Pharma, Inc.Inc., 490 Lapp Road, Malvern, PA 19355.
Notice of Annual Meeting of Shareholders and 2020 Proxy Statement | i
To assist you in reviewing this year’s proposals, we call your attention to the following proxy summary. This is only a summary; please review this proxy statementProxy Statement and our 20162019 Annual Report in full.
Summary of Shareholder Voting Matters
Proposal | For More Information |
| Board of Directors | ||
Item 1: Election of Class III Directors for a Three-Year Term Expiring in | Page 31 | ✓ FOR Each Nominee | |||
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Item 2: Approval, on an Advisory Basis, of the Compensation of the Company’s Named Executive Officers | Page 31 | ✓ FOR | |||
Item 3: Indication, on an Advisory Basis, of the Preferred Frequency of Future Shareholder Advisory Votes on the Compensation of the Company’s Named Executive Officers | Page 31 | ✓ FOR One Year | |||
Item 4: Ratification of Appointment of KPMG LLP as 2020 | Page 32 | ✓ FOR | |||
Our Director Nominees
You are being asked to vote on the election of Alfred Altomari, William L. Ashton and Dr. Michael Berelowitz as Class III directors, each to serve each for a three-year term expiring at our 20202023 Annual Meeting of Shareholders. The number of members of our Board is currently set at eightseven members and is divided into three classes, each of which has a three-year term. Class I consists of twohas three directors and both of ClassClasses II and Class III consist of threetwo directors.
The term of office of our Class III directors expires at the Annual Meeting. We are nominating Alfred Altomari, William L. Ashton and Dr. Michael Berelowitz for re-election at the Annual Meeting to serve until the 20202023 Annual Meeting of Shareholders and until their successors, if any, are elected or appointed, or their earlier death, resignation, retirement, disqualification or removal. Directors are elected by a plurality of the votes cast by our shareholders at the Annual Meeting. The threetwo nominees receiving the most FOR votes (among votes properly cast in person or by proxy) will be elected. If no contrary indication is made, shares represented by executed proxies will be voted FOR the election of Mr. Altomari, Mr. Ashton and Dr. Berelowitz. Each nominee has agreed to serve as a director if elected, and we have no reason to believe that any nominee will be unable to serve.
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| Name | Age | Director Since | Occupation | Independent | AC | CC | NGCC | Other Current
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Alfred Altomari | 58 | 2014 | Chairman, President and Chief Executive Officer of Agile Therapeutics
| Yes | C | M | Agile Therapeutics; Insmed Incorporated | |||||||||
William Ashton | 66 | 2009 | Consultant | Yes | M | Galena Biopharma, Inc.
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Dr. Michael Berelowitz
| 72 | 2014 | Consultant | Yes | M | M | Kamada Ltd. | |||||||||
Notice of Annual Meeting of Shareholdersand 20172020 Proxy Statement| ii
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SUMMARY INFORMATION (continued)
Age | Director Since | Occupation | Independent | Committee Memberships | Other Current Public Company Boards | |||
AC | CC | NCGC | ||||||
William Ashton | 69 | 2009 | Director | Yes |
| C | M | Spectrum Pharmaceuticals, Inc.; Baudax Bio, Inc. |
Dr. Michael Berelowitz | 75 | 2014 | Director | Yes | M |
| M | None |
AC = Audit Committee |
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| C = Chair |
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NCGC = Nominating and Corporate Governance Committee |
| M = Member |
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CORPORATE GOVERNANCE SUMMARY FACTS
The following table summarizes our current Board structure and key elements of our corporate governance framework:
Governance | |||
Size of Board (set by the Board) | 7 | ||
Number of Independent Directors | 6 | ||
Independent Chairman of the Board | Yes | ||
Board Self-Evaluation | Annual | ||
Review of Independence of Board | Annual | ||
Independent Directors Meet Without Management Present | Yes | ||
Voting Standard for Election of Directors in Uncontested Elections | Plurality | ||
Diversity of Board background, experience and skills | Yes | ||
Recent Corporate Highlights
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SUMMARY INFORMATION (continued)
On November 5, 2019, we announced our plan to separate our acute care segment from our contract development and manufacturing, or CDMO, segment, creating two independent, publicly traded companies.
On November 21, 2019, Baudax Bio, Inc., or Baudax Bio, became an independent publicly traded company as a result of a pro rata distribution of its common stock to our shareholders, which we refer to herein as the Separation. In the Separation, our shareholders of record as of November 15, 2019 received one share of Baudax Bio common stock, par value $0.01 per share, for every two and one-half shares of our common stock, par value $0.01 per share and cash in lieu of any fractional shares of Baudax Bio common stock.
Following the Separation, we have concentrated our efforts on driving growth and building on the strength and commercial success of our CDMO business. The Separation is further described in our 2019 Annual Report.
We continue to achieve consolidated operating profitability and we set an annual revenue record for the year ended December 31, 2019, generating revenues of $99.2 million.
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Notice of Annual Meeting of Shareholdersand 2017 Proxy Statement | iv
PROXY STATEMENT
This proxy statement,Proxy Statement, with the enclosed proxy card, is being furnished to shareholders of Recro Pharma, Inc. in connection with the solicitation by our Board of proxies to be voted at our Annual Meeting and at any postponements or adjournments thereof. The Annual Meeting will be held on Friday,Thursday, May 12, 2017,7, 2020, at 9:00 a.m., Eastern time, at The Desmond Hotel Malvern, 1 Liberty Blvd., Malvern,the offices of Pepper Hamilton LLP, 400 Berwyn Park, 899 Cassatt Road, Berwyn, PA 19355.19312. Depending on concerns about COVID-19, we may hold a virtual Annual Meeting. We would publicly announce a determination to hold a virtual Annual Meeting in a press release available at www.recrogainesville.com as soon as practicable before the meeting. In that event, the Annual Meeting would be conducted solely virtually, on the above date and time, via live audio webcast.
This proxy statementProxy Statement and the enclosed proxy card are first being furnished to our shareholders on or about March 28, 2017.27, 2020. The Notice of Internet Availability of Proxy Materials being mailed to the shareholders is not part of the proxy statement.Proxy Statement.
Notice of Annual Meeting of Shareholdersand 20172020 Proxy Statement| v
PROXY SOLICITATION
Our Board is soliciting your vote on matters that will be presented at the Annual Meeting and at any adjournment or postponement thereof. This proxy statementProxy Statement contains information on these matters to assist you in voting your shares.
This proxy statementProxy Statement and the proxy card are being furnished to our shareholders on or about March 28, 2017.27, 2020. This proxy statementProxy Statement and our 20162019 Annual Report are available to holders of our common stock at www.proxyvote.com.www.proxyvote.com. If you would like to receive, without charge, a paper copy of our 20162019 Annual Report, including the financial statements, please send your request to Chief AccountingFinancial Officer, Recro Pharma, Inc., 490 Lapp Road, Malvern, PA 19355.
SHAREHOLDERS ENTITLED TO VOTE
All shareholders of record of our common stock par value $0.01 per share, at the close of business on March 24, 2017,16, 2020, or the Record Date, are entitled to receive the Notice and to vote their shares at the Annual Meeting. As of that date, 19,050,96623,455,226 shares of our common stock were outstanding. Each share is entitled to one vote on each matter properly brought to the meeting.
VOTING METHODS
You may vote at the Annual Meeting by delivering a proxy card in person or you may cast your vote in any of the following ways:
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Mailing your signed proxy card or voter instruction | Using the | Calling toll-free from the United States, U.S. territories and Canada to | ||
HOW YOUR SHARES WILL BE VOTED
In each case, your shares will be voted as you instruct. If you return a signed card, but do not provide voting instructions, your shares will be voted FOR each of the proposals.proposals in Items 1, 2 and 4, and FOR ONE YEAR for the proposal in Item 3. If you are the record holder of your shares, you may revoke or change your vote any time before the proxy is exercisedexercised. To do so, you must do one of the following:
Vote over the internet or by filing with our Corporate Secretary a notice of revocationtelephone as instructed above. Only your latest internet or a duly executed proxy bearing a later date.telephone vote is counted. You may alsonot revoke or change your vote over the internet or by telephone after 11:59 p.m., Eastern time, on May 6, 2020;
Sign a new proxy card and submit it by mail, which must be received no later than May 6, 2020. Only your latest dated proxy card will be counted;
Attend the Annual Meeting and vote in person atas instructed above (attending the meeting, although attendance at the meetingAnnual Meeting will not by itself revoke a previously granted proxy); or
Give our Corporate Secretary written notice before or at the meeting that you want to revoke your proxy.
If your shares are held by your broker, bank or other holder of record as a nominee or agent (i.e., the shares are held in “street name”), you should follow the instructions provided by your broker, bank or other holder of record.
Deadline for Voting. The deadline for voting by telephone or Internetinternet is 11:59 PMp.m., Eastern Timetime on May 11, 2017.6, 2020. If you are a registered shareholder and attend the meeting,Annual Meeting, you may deliver your completed proxy card in person. “Street name” shareholders who wish to vote at the meetingAnnual Meeting will need to obtain a proxy form from the institution that holds their shares.
BROKER VOTING AND VOTES REQUIRED FOR EACH PROPOSAL
If your shares are held in a stock brokerage account or by a bank or other holder of record, you are considered the “beneficial owner” of shares held in street name. The Notice has been forwarded to you by your broker,
Notice of Annual Meeting of Shareholdersand 2017 Proxy Statement | 1
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bank or other holder of record who is considered
Notice of Annual Meeting of Shareholders and 2020 Proxy Statement | vi
the shareholder of record of those shares. As the beneficial owner, you may direct your broker, bank or other holder of record on how to vote your shares by using the proxy card included in the materials made available or by following their instructions for voting on the Internet.internet.
A broker non-vote occurs when a broker or other nominee that holds shares for another does not vote on a particular item because the nominee does not have discretionary voting authority for that item and has not received instructions from the beneficial owner of the shares. The following table summarizes how broker non-votes and abstentions are treated with respect to our proposals:
Proposal | ||||||
Votes Required | Treatment of Abstentions and Broker Non-Votes | Broker Discretionary Voting | ||||
Item | Plurality of the votes cast | Abstentions and broker non-votes will not be taken into account in determining the outcome of the proposal | No | |||
Item 2: Approval, on an Advisory Basis, of the Compensation of the Company’s Named Executive Officers | Majority of the votes cast | Abstentions and broker non-votes will not be taken into account in determining the outcome of the proposal | No | |||
Item | Majority of the votes cast | Abstentions and broker non-votes will not be taken into account in determining the outcome of the proposal | No | |||
Item 4: Ratification of Appointment of KPMG LLP as our Independent Registered Public Accounting Firm for 2020 | Majority of the | Abstentions and broker non-votes will | Yes |
QUORUM
We must have a quorum to conduct business at the Annual Meeting. A quorum consists of the presence at the meeting either in person or represented by proxy of the holders of a majority of the outstanding shares of our common stock entitled to vote. For the purpose of establishing a quorum, abstentions, including brokers holding customers’ shares of record who cause abstentions to be recorded at the meeting,Annual Meeting, and broker non-votes are considered shareholders who are present and entitled to vote, and count toward the quorum. If there is no quorum, the holders of a majority of shares present at the meetingAnnual Meeting in person or represented by proxy or the chairman of the meetingAnnual Meeting may adjourn the meeting to another date.
PROXY SOLICITATION COSTS
We pay the cost of soliciting proxies. Proxies will be solicited on behalf of the Board by mail, telephone, and other electronic means or in person. Directors and employees will not be paid any additional compensation for soliciting proxies. We may also reimburse brokerage firms, banks and other agents for the cost of forwarding proxy materials to beneficial owners.
Notice of Annual Meeting of Shareholdersand 20172020 Proxy Statement| 21
GENERAL INFORMATION ABOUT THE MEETING (continued)
Our Board has nominated Alfred Altomari, William L. Ashton and Dr. Michael Berelowitz forre-election as Class III directors at our Annual Meeting to hold office until our 2020 annual meeting2023 Annual Meeting of shareholders.Shareholders.
Our Board is our company’sthe Company’s ultimate decision-making body, except with respect to those matters reserved to the shareholders. Our boardBoard selects the members of our senior management team, who in turn are responsible for the day-to-day operations of our company.the Company. Our Board acts as an advisor and counselor to senior management and oversees its performance.
Our Board consists of directors divided into three classes, with each class holding office for a three-year term. Alfred Altomari, William L. Ashton and Dr. Michael Berelowitz, current Class III Directors,directors, have been nominated by our Board for election at the Annual Meeting for three-year terms that will expire at the 20202023 Annual Meeting of Shareholders and until their successors, if any, are elected or appointed, or their earlier death, resignation, retirement, disqualification or removal. Each of the nominees has agreed to be named and to serve, and we expect each nominee to be able to serve if elected. If any nominee is unable to serve, the Nominating and Corporate Governance Committee, or the Governance Committee, of our Board will recommend to our Board a replacement nominee. The Board may then designate the other nominee to stand for election. If you voted for the unavailable nominee, your vote will be cast for his or her replacement.
BOARD STRUCTURE AND COMPOSITION
The Governance Committee of our Board is responsible for recommending the composition and structure of our Board and for developing criteria for Board membership. ThisThe Governance Committee regularly reviews director competencies, qualities and experiences, with the goal of ensuring that our Board is comprised of an effective team of directors who function collegially and who are able to apply their experience toward meaningful contributions to general corporateour business strategy and oversight of corporateour performance, risk management, organizational development and succession planning.
Our Third Amended and Restated Bylaws, or Bylaws, provide that the number of members of our Board shall be fixed by the Board from time to time. Our Board is currently fixed at eight members andseven members. Our Board is divided into three classes with staggered three-year terms. The Governance Committee is responsible for identifying individuals that the Committeeit believes are qualified to become Board members.
The Governance Committee has identified certain criteria that it will consider in identifying director nominees. TheseImportant general criteria and considerations for Board membership include:
General Criteria |
➢Ability to contribute to the Board’s range of talent, skill and experience to provide sound and prudent guidance with respect to the Company’s strategy and operations, including, but not limited to: Experience at senior levels in public companies; Technology and financial expertise; Experience in leadership roles in the life sciences, healthcare or public health fields, including experience in the areas of development and commercialization of drug products and pharmaceutical manufacturing and quality control, including oversight and expansion of contract manufacturing and development operations; Personal integrity and ethical character, commitment and independence of thought and judgment; Capability to fairly and equally represent our shareholders; Confidence and willingness to express ideas and engage in constructive discussion with other Board members and management, to actively participate in the Board’s decision-making process and make difficult decisions in the best interest of the Company; Willingness and ability to devote sufficient time, energy and attention to the affairs of the Company and the Board; and Lack of actual and potential conflicts of interest. |
Notice of Annual Meeting of Shareholders and 2020 Proxy Statement 2
The Governance Committee also considers, on an ongoing basis, the background, experience and skills of the incumbent directors that are important to fairlyour current and equally represent our shareholders;future business needs, including, among others, the combined mix of experience in the following areas:
Director Skills and Experience | |||
| Business Leadership & Operations |
| International Business |
| Medicine & Science |
| Risk Management |
| Life Sciences, Healthcare & Public Health |
| Government, Regulatory & Public Policy |
| Pharmaceutical Product Reimbursement |
| Pharmaceutical Manufacturing & Supply |
| Pharmaceutical Marketing & Sales |
| Technology |
| Financing & Accounting |
| Academia |
Director Skill Set Considerations; Use of Matrix
In recruiting and selecting Board candidates, the Governance Committee takes into account the size of the Board and considers a skills matrix. This skills matrix helps the Governance Committee determine whether a particular Board member or candidate possesses one or more fields of business, professional, governmental, communal, scientific the skill sets, as well as whether those skills and/or education endeavor;
particular committee. The Governance Committee also considers a wide range of additional factors, including each director’s and candidate’s projected retirement date, to assist in Board succession planning; other positions the director or candidate holds, including other boards of directors on which he or she serves; and the independence of each director and candidate, to ensure that a substantial majority of the Board is independent. While the Company does not have a formal policy on Board diversity, the Governance Committee considers the value of diversity on the Board in evaluating director nominees. Accordingly, the Governance Committee’s evaluation of director nominees includes consideration of their ability to contribute to the diversity of personal and professional experiences, opinions, perspectives and backgrounds on the Board.
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SHAREHOLDER-RECOMMENDEDPOTENTIAL DIRECTOR CANDIDATES
TheOn an ongoing basis, the Governance Committee considers nominationspotential director candidates identified on its own initiative as well as candidates referred or recommended to it by other directors, members of management, search firms, shareholders and others (including individuals seeking to join the Board). Shareholders who wish to recommend candidates for electionmay contact the Governance Committee in the manner described under the heading “Shareholder Communications to the Board. The Governance Committee evaluates nominees recommended by shareholdersBoard” in the same manner as it evaluates other nominees. A shareholder seeking to recommend a prospective candidate for the Committee’s consideration may do so by writingthis Proxy Statement. Shareholder nominations must be made according to the Corporate Secretary, Recro Pharma, Inc., 490 Lapp Road, Malvern, PA 19355. Recommendations submitted for consideration by the Committee in preparation for the 2018 Annual Meeting of Shareholders must be received no later than the close of business on November 28, 2017, which is the 120th day prior to the first anniversary of the date on which this Proxy Statement was first made available to our shareholders in connection with the Annual Meeting. If we change the date of the 2018 Annual Meeting of Shareholders by more than 30 days from the anniversary of this year’s Annual Meeting, recommendations of director candidates must be received a reasonable time before we begin to print and mail the proxy materials for the 2018 Annual Meeting. Each notice of recommendation must contain the informationprocedures required under our Bylaws including: (a)and described in this Proxy Statement under the name and address of the shareholder; (b) the name and address of the person to be nominated; (c) a representation that the shareholder is a holder of our common stock and entitled to vote at the meeting; (d) a statement in support of the shareholder’s recommendation, including a description of the candidate’s qualifications; (e) information regarding the candidate that would be required to be included in a proxy statement filed in accordance with the rules of the Securities and Exchange Commission, or the SEC; and (f) the candidate’s written, signed consent to serve if elected. The Governance Committee will follow the process described above in considering nominees proposed by shareholders in accordance with the foregoing requirements.
Alternatively, as discussed underheading “Requirements for Submission of Shareholder Proposals for Next Year’s Annual Meeting,Meeting.” in orderShareholder-recommended candidates and shareholder nominees whose nominations comply with these procedures and who meet the criteria referred to nominate a candidate for electionabove will be evaluated by the shareholders atGovernance Committee in the 2018same manner as the Governance Committee’s nominees.
Notice of Annual Meeting of Shareholders (in cases where the Board does not intend to nominate the candidate or where the Governance Committee was not requested to consider his or her candidacy), shareholders must comply with the procedures in our Bylaws, a copy of which is available upon request to the our Corporate Secretary. If the shareholder does not meet the applicable deadlines or comply with the requirements of SEC Rule 14a-4, we may exercise discretionary voting authority under proxies we solicit to vote, in accordance with our best judgment, on any such nominee.and 2020 Proxy Statement | 3
BOARD OF DIRECTORS (continued)
In each of the director nominee and continuing director biographies that follow, we highlight the specific experience, qualifications, attributes and skills that led the Board to conclude that the director nominee or continuing director should serve on our Board at this time.
CLASS III DIRECTORS— PRESENT TERMS EXPIRING AT THE ANNUAL MEETING AND PROPOSED TERMS TO EXPIRE IN 2020
All of the nominees are current directors on our Board and have been determined by our Board to be independent. Our Governance Committee reviewed the qualifications of each of the nominees and recommended to our Board that each nominee be submitted to a vote of our shareholders at the Annual Meeting. The Board approved the Committee’s recommendation at its meeting on March 3, 2017.2023
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Age: 69 Director Since: 2009 | Committee Memberships: Compensation (Chair), Nominating and Corporate Governance | Other Public Directorships: Spectrum Pharmaceuticals, Inc.; Baudax Bio, Inc. | |||
| Business Leadership & Operations Government, Regulatory & Public Policy Risk Management Academia Medicine & Science Pharmaceutical Marketing & Sales Pharmaceutical Product Reimbursement | William L. Ashton has been a member of our Board since 2009. Since the beginning of 2013, Mr. Ashton has been a principal at Harrison Consulting Group, Inc., a privately-held biopharmaceutical consulting firm. From August 2009 to June 2013, Mr. Ashton was the senior vice president of external affairs reporting to the president and an assistant professor at the University of the Sciences in Philadelphia, Pennsylvania. From August 2005 to August 2009, Mr. Ashton was the founding Dean of the Mayes College of Healthcare Business and Policy. Mr. Ashton has 29 years’ experience in the biopharmaceutical industry. From 1989 to 2005, Mr. Ashton held a number of positions at Amgen Inc., a biotechnology company, including vice president of U.S. sales and vice president of commercial and government affairs. Mr. Ashton currently serves on the boards of directors of Spectrum Pharmaceuticals, Inc. and Baudax Bio. He previously served on the board of directors of Galena Biopharma, Inc. from April 2013 until January 2018. He is also a member of the board of directors of the National Osteoporosis Foundation and Friends of the National Library of Medicine at the National Institutes of Health. Mr. Ashton holds a B.S. in Education, from the California University of Pennsylvania and an M.A. in Education, from the University of Pittsburgh.
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Alfred Altomari has been a member of our Board since 2014. Mr. Altomari has served as Chairman, President and Chief Executive Officer of Agile Therapeutics, or Agile, a specialty pharmaceutical company focused on
Notice of Annual Meeting of Shareholdersand 20172020 Proxy Statement | 4
BOARD OF DIRECTORS (continued)
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the development and commercialization of new prescription contraceptive products, since October 2010. Mr. Altomari is also a member of the board of directors of Agile and prior to being named President and Chief Executive Officer, he served as Agile’s Executive Chairman from 2004 to 2010. From 2008 to September 2010, Mr. Altomari also served as a consultant. From 2003 to 2008, Mr. Altomari held multiple senior management positions, including Chief Commercial Officer, Chief Operating Officer, and Chief Executive Officer, at Barrier Therapeutics, Inc., a pharmaceutical company that developed and marketed dermatology products. In 2008, in his role as Chief Executive Officer and as a member of Barrier’s board of directors, Mr. Altomari completed the successful sale of Barrier to Stiefel Laboratories, which was subsequently acquired by GlaxoSmithKline plc. From 1982 to 2003, Mr. Altomari held numerous executive roles in general management, commercial operations, business development, product launch preparation, and finance with Johnson & Johnson. Mr. Altomari also serves on the board of directors of Insmed Incorporated. Mr. Altomari received an M.B.A. from Rider University and his B.S. from Drexel University.
Skills & Qualifications:Mr. Altomari’s extensive experience in the pharmaceutical industry, in senior leadership positions at both large and specialty pharmaceutical companies as well as his experience in the development, commercialization and launch of numerous pharmaceutical products, contributed to our Board’s conclusion that he should serve as a director of our company.
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Director Since: 2014 | Committee | ||||
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William L. Ashton has been a member of our Board since 2009. Since the beginning of 2013, Mr. Ashton has been a principal at Harrison Consulting Group, Inc., a privately-held biopharmaceutical consulting firm. From August 2009 to June 2013, Mr. Ashton was the senior vice president of external affairs reporting to the president and an assistant professor at the University of the Sciences in Philadelphia, Pennsylvania. From August 2005 to August 2009, Mr. Ashton was the founding Dean of the Mayes College of Healthcare Business and Policy. Mr. Ashton has 29 years’ experience in the biopharmaceutical industry. From 1989 to 2005, Mr. Ashton held a number of positions at Amgen Inc., a biotechnology company, including vice president of U.S. sales and vice president of commercial and government affairs. Mr. Ashton currently serves on the boards of directors of Galena Biopharma, Inc. He is also a member of the board of directors of the Academy of Notre Dame and Loyola University. Mr. Ashton holds a B.S., Education, from the California University of Pennsylvania and an M.A., Education, from the University of Pittsburgh.
Skills & Qualifications:Mr. Ashton’s extensive experience with pharmaceutical and biological product commercialization, including developing and leading a commercial sales force, as well as his governance experience as a board member of public and privately-held companies and his reimbursement expertise contributed to our Board’s conclusion that he should serve as a director of our company.
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| Other Public Directorships: None | ||
| Medicine & Science Life Sciences, Healthcare & Public Health Academia Government, Regulatory & Public Policy Risk Management | Dr. Michael Berelowitz has been a member of our Board since 2014. Since 2011, Dr. Berelowitz has served as our biopharmaceutical consultant. From 2009 to 2011, Dr. Berelowitz was Senior Vice President and Head of Clinical Development and Medical Affairs in the Specialty Care Business Unit at Pfizer, Inc., or Pfizer, a pharmaceutical company. From 1996 to 2009, he held various other roles at Pfizer, Inc., beginning as a Medical Director in the Diabetes Clinical Research team and then assuming positions of increasing responsibility. Prior to that, Dr. Berelowitz spent a number of years in academia. Dr. Berelowitz previously served on the board of directors of Oramed Pharmaceuticals Inc. from June 2010 to August 2016, Kamada Ltd. | |
Dr. Michael Berelowitz has been a member of our Board since 2014. Since 2011, Dr. Berelowitz has served as a biopharmaceutical consultant. From 2009 to 2011, Dr. Berelowitz was Senior Vice President and Head of Clinical Development and Medical Affairs in the Specialty Care Business Unit at Pfizer, Inc., a pharmaceutical company. From 1996 to 2009, he held various other roles at Pfizer, Inc., beginning as a Medical Director in the Diabetes Clinical Research team and then assuming positions of increasing responsibility. Prior to that, Dr. Berelowitz spent a number of years in academia. Dr. Berelowitz also serves on the board of directors of Kamada and Cellect Biotherapeutics Ltd. Among his public activities, Dr. Berelowitz has served on the board of directors of the American Diabetes Association and the Clinical Initiatives Committee of the Endocrine Society, and has chaired the Task Force on Research of the New York State Council on Diabetes. He has also served on several editorial boards, including the Journal of Clinical Endocrinology and Metabolism and Endocrinology, Reviews in Endocrine and Metabolic Disorders and Clinical Diabetes. Dr. Berelowitz has authored and co-authored more than 100 peer-reviewed journal articles and book chapters in the areas of pituitary growth hormone regulation, diabetes and metabolic disorders. Dr. Berelowitz holds adjunct appointments as Professor of Medicine in the Divisions of Endocrinology and Metabolism at SUNY – StonyBrook and Mt. Sinai School of Medicine in New York. Dr. Berelowitz holds a MBChB degree from University of Cape Town School of Medicine.
Skills & Qualifications: Dr. Berelowitz’s years of experience in management roles in the pharmaceutical industry, his experience in overseeing and reviewing clinical trials and drug development, as well as his vast medical skill and scientific expertise in the fields of endocrinology and diabetes, contributed to our Board’s conclusion that he should serve as a director of our Company.
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BOARD OF DIRECTORS(continued) |
public activities, Dr. Berelowitz has served on the board of directors of the American Diabetes Association and the Clinical Initiatives Committee of the Endocrine Society, and has chaired the Task Force on Research of the New York State Council on Diabetes. He has also served on several editorial boards, including the Journal of Clinical Endocrinology and Metabolism and Endocrinology, Reviews in Endocrine and Metabolic Disorders and Clinical Diabetes. Dr. Berelowitz has authored and co-authored more than 100 peer-reviewed journal articles and book chapters in the areas of pituitary growth hormone regulation, diabetes and metabolic disorders. Dr. Berelowitz holds adjunct appointments as Professor of Medicine in the Divisions of Endocrinology and Metabolism at SUNY – StonyBrook and Mt. Sinai School of Medicine in New York. Dr. Berelowitz holds a MBChB degree from University of Cape Town-School of Medicine.
Skills & Qualifications:Dr. Berelowitz’s years of experience in management roles in the pharmaceuticals industry, his experience in overseeing and reviewing clinical trials and drug development, as well as his vast medical and scientific expertise, contributed to our Board’s conclusion that he should serve as a director of our company.
CLASS I DIRECTORS —TERMS EXPIRING AT THE 20182021 ANNUAL MEETING OF SHAREHOLDERS
Winston J. Churchill | |||||
Director Since: 2008 | Committee | ||||
| Other Public | ||||
| Business Leadership & Operations Finance & Accounting Medicine & Science Risk Management Life Sciences, Healthcare & Public Health Technology | Winston J. Churchill has been a member of our Board since 2008. Since 2007, Mr. Churchill has been a director of the corporate general partner of the common general partner of SCP Vitalife Partners II, L.P. and SCP Vitalife Partners (Israel) II, L.P., collectively referred to herein as SCP Vitalife, which beneficially owns 12% of our outstanding stock as of March 19, 2020. He has also served as a managing member of SCP Vitalife Management Company, LLC, which by contract provides certain management services to the common general partner of SCP Vitalife. Mr. Churchill has also served since 1993 as the President of CIP Capital Management, Inc., the general partner of CIP Capital, L.P., an Small Business Administration-licensed private equity fund. Prior to that, Mr. Churchill was a managing partner of Bradford Associates, which managed private equity funds on behalf of Bessemer Securities Corporation and Bessemer Trust Company. From 1967 to 1983, Mr. Churchill practiced law at the Philadelphia firm of Saul Ewing, LLP, where he served as Chairman of the Banking and Financial Institutions Department, Chairman of the Finance Committee and was a member of the Executive Committee. Mr. Churchill is a director of Innovative Solutions and Support, Inc., Amkor Technology, Inc., Baudax Bio and various SCP Vitalife portfolio companies and he previously served as a director of Griffin Industrial Realty from April 1997 until May 2016. In addition, he serves as a director on the boards of a number of charities and as a trustee of educational institutions including the Gesu School and Young Scholars Charter School and is a Trustee Fellow of Fordham University. From 1989 to 1993, Mr. Churchill served as Chairman of the Finance Committee of the Pennsylvania Public School Employees’ Retirement System. He was awarded a B.S. in Physics, summa cum laude, from Fordham University followed by an M.A. in Economics from Oxford University, where he studied as a Rhodes Scholar, and a J.D. from Yale Law School. | |||
Skills & Qualifications: Mr. Churchill’s insight into financial and investment matters from his experience in private equity investing in life sciences companies, his financial and corporate governance experience from serving on numerous public and private boards of directors, as well as his long service as a director on our Board, where he gained extensive knowledge of our business and history, contributed to our Board’s conclusion that he should serve as a director of our Company. | |||||
Winston J. Churchill has been a member of our Board since 2008. Since 2007, Mr. Churchill has been a director of the corporate general partner of the common general partner of SCP Vitalife Partners II, L.P. and SCP Vitalife Partners (Israel) II, L.P., collectively referred to herein as SCP Vitalife, which beneficially owns 15.7% of our outstanding stock as of April 1, 2017. He has also served as a managing member of SCP Vitalife Management Company, LLC, which by contract provides certain management services to the common general partner of SCP Vitalife. Mr. Churchill has also served since 1993 as the President of CIP Capital Management, Inc., the general partner of CIP Capital, L.P., an SBA-licensed private equity fund. Prior to that, Mr. Churchill was a managing partner of Bradford Associates, which managed private equity funds on behalf of Bessemer Securities Corporation and Bessemer Trust Company. From 1967 to 1983, Mr. Churchill practiced law at the Philadelphia firm of Saul Ewing, LLP, where he served as Chairman of the Banking and Financial Institutions Department, Chairman of the Finance Committee and was a member of the Executive Committee. Mr. Churchill is a director of Griffin Land & Nurseries, Inc., Innovative Solutions and Support, Inc., Amkor Technology, Inc. and various SCP Vitalife portfolio companies. In addition, he serves as a director on the boards of a number of charities and as a trustee of educational institutions including the Gesu School and Scholar Academies and is a Trustee Fellow of Fordham University. From 1989 to 1993, Mr. Churchill served as Chairman of the Finance Committee of the Pennsylvania Public School Employees’ Retirement System. He was awarded a B.S. in Physics, summa cum laude, from Fordham University followed by an M.A. in Economics from Oxford University, where he studied as a Rhodes Scholar, and a J.D. from Yale Law School.
Skills & Qualifications: Mr. Churchill’s insight into financial and investment matters from his experience in private equity investing in life sciences companies, his financial and corporate governance experience from serving on numerous public and private boards of directors, as well as his long service as a director on our Board, where he gained extensive knowledge of our business and history, contributed to our Board’s conclusion that he should serve as a director of our company.
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BOARD OF DIRECTORS (continued)
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Wayne B. Weisman | |||||
Director Since: 2008 | Committee | Other Public Directorships: ReWalk Robotics Ltd., Baudax Bio, Inc. | |||
| Business Leadership & Operations Finance & Accounting Medicine & Science Life Sciences, Healthcare & Public Health International Business Risk Management Technology | Wayne B. Weisman has been a member and the chairman of our Board since 2008. Since 2007, Mr. Weisman has been a director of the corporate general partner of the common general partner of SCP Vitalife, which beneficially owns approximately 12% of our outstanding stock as of March 19, 2020. He has also served as a managing member of SCP Vitalife Management Company, LLC, which by contract provides certain management services to the common general partner of SCP Vitalife. He has also led the activities of SCP Private Equity Partners II, L.P., a venture capital fund of which he and Mr. Churchill are principals, in the life sciences area; these activities include investments in the United States and Israel. He has also led several other technology investments for SCP Private Equity Partners II, L.P. He has been a member of the investment committee of the Vitalife Life Sciences funds since their inception in 2002 and has worked closely with these funds since then. Mr. Weisman was a member of the board of directors of CIP Capital, L.P., a small business investment company licensed by the U.S. Small Business Administration since its inception in 1991 until 2017. From 1992 to 1994, Mr. Weisman was executive vice president and member of the board of a public drug delivery technology company. In addition, he also operated a management and financial advisory firm focusing on the reorganization and turnaround of troubled companies and began his career practicing reorganization law at a large Philadelphia law firm. Mr. Weisman possesses extensive experience in venture capital investing, particularly in the life sciences area. In addition to being our Chairman, Mr. Weisman serves on the board of directors of ReWalk Robotics Ltd. | |||
Wayne B. Weismanhas been and Baudax Bio and on the board of directors for a number of private companies. He is the Vice Chairman of the board of trustees of Young Scholars Charter School, and was chairman of that board from 2010 to 2017. He is also an advisory board member of the Philadelphia-Israel Chamber of Commerce and the chairman of our Board since 2008. Since 2007, Mr. Weisman has been a director of the corporate general partner of the common general partner of SCP Vitalife, whichbeneficially owns 15.7% of our outstanding stock as of April 1, 2016. He has also served as a managing memberof SCP Vitalife Management Company, LLC, which by contract provides certain management services to the common general partner of SCP Vitalife. He has also led the activities of SCP Private Equity Partners II, L.P., a venture capital fund of which he and Mr. Churchill are principals, in the life sciences area; these activities include investments in the United States and Israel. He has also led several other technology investments for SCP Private Equity Partners II, L.P. He has been a member of the investment committee of the Vitalife Life Sciences funds since their inception in 2002 and has worked closely with these funds since then. Mr. Weisman has been a member of the board of directors of CIP Capital L.P., a small business investment company licensed by the U.S. Small Business Administration since its inception in 1991. From 1992 to 1994, Mr. Weisman was executive vice president and member of the board of directors of a public drug delivery technology company. In addition, he also operated a management and financial advisory firm focusing on the reorganization and turnaround of troubled companies and began his career practicing reorganization law at a large Philadelphia law firm. Mr. Weisman possesses extensive experience in venture capital investing, particularly in the life sciences area. Mr. Weisman serves on the board of ReWalk Robotics Ltd. and on the board of directors for a number of private companies. He is the chairman of the boards of trustees of Young Scholars School, Young Scholars Frederick Douglass and Young Scholars Kenderton. He is also an advisory board member of the Philadelphia-Israel Chamber of Commerce andMid-Atlantic Diamond Ventures, the venture forum of Temple University. Mr. Weisman holds a B.A. from the University of Pennsylvania, and a J.D. from the University of Michigan Law School.
Skills & Qualifications:Mr. Weisman’s leadership as a director of various pharmaceutical and healthcare companies, his experience serving on the board of directors of life sciences companies, his insight into the legal issues facing our business, as well as his in-depth knowledge of our business and history as a long time director, contributed to our Board’s conclusion that he should serve as a director of our company.
CLASS II DIRECTORS — TERMS EXPIRING AT THE 2019 ANNUAL MEETING OF SHAREHOLDERS
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Karen Flynn has been a member of our Board since 2015. Ms. Flynn has served as Senior Vice President and Chief Commercial Officer of West Pharmaceutical Services, Inc., or West, a manufacturer of packaging components and delivery systems for healthcare products, since January 2016. Prior to that, Ms. Flynn served as President of the Pharmaceutical Packaging Systems of West from October 2014 to January 2016. Prior to her appointment as President of the Pharmaceutical Packaging Systems, Ms. Flynn served as President, Americas Region, Pharmaceutical Packaging Systems at West, where she was responsible for the Americas regional business segment, including both the manufacturing and commercial aspects of the business. From 2000 to 2008, Ms. Flynn worked in the Sales Management department of Catalent (formerly known as a division of Cardinal Health), a drug development, delivery and supply partner for drugs, biologics and consumer health products, where she ultimately served as Vice President, Global Accounts. Prior to joining Catalent, Ms. Flynn spent 15 years at West, in roles spanning Quality, R&D, Technical Services and Sales. She is a member of the Healthcare Businesswomen’s Association and the Forum of Executive Women, and she serves on the
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BOARD OF DIRECTORS (continued)
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Downingtown STEM Academy Advisory Board. Ms. Flynn holds a B.S. in Pre-Professional Studies (Pre-Med) from The University of Notre Dame, an M.S. in Business Administration from Boston University, and an M.S. in Engineering from The University of Pennsylvania.
Skills & Qualifications:Ms. Flynn’s extensive experience in the pharmaceutical industry, including her experience in senior leadership positions working at and with large pharmaceutical companies, as well as her insight into the manufacture of pharmaceutical products, contributed to our Board’s conclusion that she should serve as a director of our company.
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Age: 44 Director Since: 2019 | Committee Memberships: Audit, Compensation | Other Public Directorships: Hill International, Inc. | |||
| Business Leadership & Operations Finance & Accounting International Business Risk Management Academia
| Arnaud Ajdler has been a member of our Board since March 2019. Mr. Ajdler founded and has been the managing partner of Engine Capital L.P., a value-oriented investment firm, since 2013. Prior to that, he was a senior managing director and a partner at Crescendo Partners, a value-oriented activist investment firm, from 2003 to 2013. Before joining Crescendo Partners, Mr. Ajdler worked as a management consultant for Mercer Management Consulting and Boston Consulting Group, as well as at Deutsche Bank. He is also an adjunct professor at the Columbia Business School where he teaches a course in Value Investing. Mr. Ajdler has been a board member and chair of the compensation committee of Hill International, Inc. since October 2018. He also served as a director and on various committees on the boards of a number of companies, including Stewart Information Services Corporation, Charming Shoppes, Inc., Imvescor Restaurant Group Inc., StarTek, Inc., Destination Maternity, O'Charley's Inc., and The Topps Company. Mr. Ajdler was appointed to our Board pursuant to an agreement between the Company and Engine Capital, L.P., Engine Jet Capital, L.P., Engine Investments, LLC and Mr. Ajdler, dated March 25, 2019. Mr. Adler earned a B.Sc. in Mechanical Engineering from the Free University of Brussels, Belgium, an SM in Aeronautics from the Massachusetts Institute of Technology and an MBA from Harvard Business School. | |||
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Gerri Henwoodhas served as our President and Chief Executive Officer and a member of our Board since our inception in 2008. From 2006 to 2013, Ms. Henwood served as the President of Malvern Consulting Group, or MCG, a pharmaceutical incubator and consulting firm. From 1999 to 2006, Ms. Henwood was the President and Chief Executive Officer of Auxilium Pharmaceuticals, Inc., or Auxilium, a biopharmaceutical company she founded in late 1999. From 1985 to 1999, Ms. Henwood was the founder and Chief Executive Officer of IBAH, Inc., or IBAH, a contract research organization. IBAH reached a net revenue level of $150 million, as a NASDAQ traded company, before being acquired by Omnicare in 1998. Ms. Henwood began her career with Smith Kline & French, now part of GlaxoSmithKline plc, in the pharmaceutical management program. She rose through the ranks to be a brand manager, then the head of Regulatory and Medical Affairs for the U.S. business and then to the position of Group Director—Marketing in the International Pharmaceutical Division. Ms. Henwood currently serves on the board of directors of Tetraphase Pharmaceuticals, Inc., a clinical stage biopharmaceutical company, a position she has held since May 2015, and two private companies, and she previously served on the board of directors of Alkermes, Inc. and its successor company, Alkermes, plc, a global biopharmaceutical company, from 2003 until March 2015, and on the board of directors of MAP Pharmaceuticals, Inc., a biopharmaceuticals company, from 2004 until its acquisition by Allergan, Inc. in March 2013. Ms. Henwood also serves on the compensation committee of the board of directors of Tetraphase Pharmaceuticals, Inc. Ms. Henwood holds a B.S. in Biology from Neumann University.
Skills & Qualifications:Ms. Henwood’s strong background in clinical and product development and substantial knowledge of the pharmaceutical industry, her expertise in developing, financing and providing strong executive leadership to numerous biopharmaceutical companies, her corporate governance experience as a board member of multiple publicly-traded and privately-held companies, as well as her extensive knowledge of our business and history as a founder of our company, contributed to our Board’s conclusion that she should serve as a director of our company.
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Bryan M. Reasonshas been a director of the Company since 2017. Mr. Reasons has served as the Senior Vice President, Finance and Chief Financial Officer of Impax Laboratories, Inc., or Impax, a specialty pharmaceutical company, since December 2012. He previously served as the Acting Chief Financial Officer of Impax from June 2012 to December 2012 and as the Vice President, Finance of Impax from January 2012 to June 2012. Prior to joining Impax, Mr. Reasons served as Vice President, Finance, from January 2010 to November 2011 and as Vice President, Risk Management and General Auditor, from October 2005 to January 2010 at Cephalon, Inc., or
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BOARD OF DIRECTORS (continued)
CLASS II DIRECTORS —TERMS EXPIRING AT THE 2022 ANNUAL MEETING OF SHAREHOLDERS
Age: 67 Director Since | Committee Memberships | Other Public Directorships: Tetraphase Pharmaceuticals, Inc., Baudax Bio, Inc. | |
| Business Leadership & Operations | Gerri Henwood has served as our President and Chief Executive Officer and a member of our Board since our inception in 2008. Ms. Henwood also serves as Chief Executive Officer and a director of Baudax. From 2006 to 2013, Ms. Henwood served as the President of Malvern Consulting Group, or MCG, a pharmaceutical incubator and consulting firm. From 1999 to 2006, Ms. Henwood was the President and Chief Executive Officer of Auxilium Pharmaceuticals, Inc., a biopharmaceutical company she founded in late 1999. From 1985 to 1999, Ms. Henwood was the founder and Chief Executive Officer of IBAH, Inc., a contract research organization. Ms. Henwood began her career with Smith Kline & French, now part of GlaxoSmithKline plc. She rose through the ranks to be a Brand Manager, then the head of Regulatory and Medical Affairs for the U.S. business and then to the position of Group Director—Marketing in the International Pharmaceutical Division. Ms. Henwood currently serves on the board of directors of Tetraphase Pharmaceuticals, Inc., a commercial stage biopharmaceutical company, a position she has held since May 2015, and she previously served on the board of directors of Alkermes, Inc. and its successor company, Alkermes, plc, a global biopharmaceutical company, from 2003 until March 2015, and on the board of directors of MAP Pharmaceuticals, Inc., a biopharmaceuticals company, from 2004 until its acquisition by Allergan, Inc. in March 2013. Ms. Henwood also serves on the compensation committee of the board of directors of Tetraphase Pharmaceuticals, Inc. Ms. Henwood holds a B.S. in Biology from Neumann University. | |
| Finance & Accounting | ||
| Life Sciences, Healthcare & Public Health | ||
| Pharmaceutical Marketing & Sales | ||
| International Business | ||
| Government, Regulatory & Public Policy | ||
| Risk Management | ||
| Medicine & Science | ||
Skills & Qualifications: Ms. Henwood’s expertise in developing, financing and providing strong executive leadership to numerous biopharmaceutical companies, her strong background in pharmaceutical marketing and commercialization, clinical and product development and substantial knowledge of the pharmaceutical industry, her corporate governance experience as a board member of multiple publicly-traded and privately-held companies, as well as her extensive knowledge of our business and history as a founder of our company, contributed to our Board’s conclusion that she should serve as a director of our Company. | |||
Cephalon, a biopharmaceutical company. Following the acquisition of Cephalon by Teva Pharmaceutical Industries Ltd., a generic pharmaceuticals company, he served as Vice President, Finance of Teva from November 2011 to January 2012. Prior to joining Cephalon, Mr. Reasons held various finance management positions at E.I. Du Pont De Nemours and Company from 2003 to 2005 and served as senior manager at PricewaterhouseCoopers LLP from 1992 to 2003. Mr. Reasons has a B.S in accounting from Pennsylvania State University and an M.B.A from Widener University and is a certified public accountant.
Skills & Qualifications:Mr. Reasons’s extensive experience in the pharmaceutical industry, including his experience in senior leadership positions at a number of large pharmaceutical companies, as well as his expertise in financial and accounting matters, contributed to our Board’s conclusion that he should serve as a director of our company.
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BOARD OF DIRECTORS (continued)
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BOARD OF DIRECTORS (continued)
CORPORATE GOVERNANCE AND RISK MANAGEMENT
We are committed to good corporate governance and integrity in our business dealings. Our governance practices are documented in our Second Amended and Restated Articles of Incorporation, or Articles, our Bylaws, our Code of Business Conduct and Ethics, or the Code of Conduct, our Corporate Governance Guidelines and the charters of the committees of the Board, or collectively, the Committees. Aspects of our governance documents are summarized below. You can find our charters for each Committee of the board and our Code of Conduct on our website www.recropharma.comwww.recrogainesville.com under “News & Investors—Corporate Governance—Governance Documents.”
Our Board has determined all of our directors, except for Ms. Henwood, are “independent” directors, as defined under the rules of the NASDAQNasdaq Capital Market, or NASDAQ.Nasdaq. In making such determination, the Board considered the relationships that each such non-employee director has with the Company and all other facts and circumstances that the Board deemed relevant in determining their independence, including the beneficial ownership of our common stock by each non-employee director. Our independent directors generally meet in executive session at each regularly scheduled boardBoard meeting. Until their resignations in 2020, Ms. Karen Flynn and Mr. Alfred Altomari were independent directors as defined by Nasdaq while they served on our Board in 2019.
The Board does not have a formal policy with respect to the separation of the offices of Chief Executive Officer, or CEO, and Chairman of the Board. It is the Board’s view that rather than having a rigid policy, the Board, with the advice and assistance of the Governance Committee, and upon consideration of all relevant factors and circumstances, will determine, as and when appropriate, whether the two offices should be separate. Currently, our leadership structure separates the offices of Chief Executive OfficerCEO and Chairman of the Board with Ms. Henwood serving as our Chief Executive OfficerCEO and Mr. Weisman serving as Chairman of the Board. Our Board believes that the separation of the positions of CEO and Chairman of the Board reinforces the independence of the Board from management, creates an environment that encourages objective oversight of management’s performance and enhances the effectiveness of our Board as a whole.
Our Board has established various Committees to assist in discharging its duties: the Audit Committee;Committee, the Compensation Committee;Committee and the Governance Committee. Each member of our Committees is an independent director as that term is defined by the SEC and NASDAQ.Nasdaq. The primary responsibilities of each of the Committees and the Committee memberships are provided below under the section entitled “Board Attendance, Committee Meetings and Committee Membership.”
Each of the Committees has the authority, as its members deem appropriate, to engage legal counsel or other experts or consultants in order to assist the Committee in carrying out its responsibilities.
The Board’s role in risk oversight is consistent with our leadership structure, with management having day-to-day responsibility for assessing and managing our risk exposure and the Board actively overseeing management of our risks—both at the Board and Committee level. The risk oversight process includes receiving regular reports from Committees and our executive officers to enable our Board to understand our risk identification, risk management and risk mitigation strategies with respect to areas of potential material risk, including operations (including cyber-security), finance, legal, regulatory, strategic and reputational risk.
The Board focuses on the overall risks affectingwhich may affect us. Each Committee has been delegated the responsibility for the oversight of specific risks that fall within its areas of responsibility. For example:
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Notice of Annual Meeting of Shareholders and 2020 Proxy Statement 11
• | The Governance Committee manages risks associated with the independence of the Board, potential conflicts of interest and the effectiveness of the Board. |
While each Committee is responsible for evaluating certain risks and overseeing the management of such risks, the entire Board is regularly informed through Committee reports about such risks. Matters of significant strategic risk are considered by our entire Board.
EVALUATING BOARD EFFECTIVENESS
The Board is committed to continuous improvement and annual self-evaluations are an important tool for evaluating effectiveness. The Board and each Committee conduct a rigorous annual self-evaluation of their performance and effectiveness.
PROCESS BEGINS | EVALUATION | PRESENTATION OF EVALUATION RESULTS | FOLLOW-UP |
The Governance Committee initiates and oversees the Board evaluation process, which is conducted in the early part of the calendar year. Each Committee begins an initial evaluation of its own effectiveness. | During the evaluation, the Governance Committee assesses several factors, including: Director independence and qualifications to serve on various Committees; and Committee chair assignments and membership rotations. | The results of the Board and Committees’ evaluations are presented, in executive session, at a subsequent Board meeting. | Any results requiring additional consideration are addressed at future Board and Committee meetings, as appropriate. |
The Governance Committee also reviews the effectiveness of the overall evaluation process and considers whether to: incorporate individual director evaluations into the process; or conduct the evaluation through an external third-party provider. In 2019, the Governance Committee determined that no modifications to the existing process were warranted and to maintain the evaluation process in its current form. |
We have a written Code of Conduct that applies to our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. The Code of Conduct covers fundamental ethical and compliance-related principles and practices such as accurate accounting records and financial reporting, avoiding conflicts of interest, the protection and use of our property and information and compliance with legal and regulatory requirements. Any amendments to the Code of Conduct, or any waivers of its requirements, will be disclosed on our website at www.recrogainesville.com.
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CORPORATE GOVERNANCE AND RISK MANAGEMENT (continued)
DIRECTOR ORIENTATION AND CONTINUING EDUCATION
Our director orientation programs familiarize new directors with the Company’s businesses, strategies, and policies, and assist new directors in developing the skills and knowledge required for their service on the Board. All other directors are also invited to attend the orientation programs. From time to time, management advises, or invites outside experts to attend Board meetings to advise, the Board on its responsibilities, management’s responsibilities, developments relevant to corporate governance and best corporate practices. Additionally, Board members may attend, and are encouraged to attend, accredited director education programs at the Company’s expense.
RESTRICTIONS ON THE HEDGING AND PLEDGING OF RECRO SHARES
Pursuant to the Company’s Insider Trading Policy, which applies to all officers, all directors and all employees of the Company and any of the Company’s subsidiaries, or the Covered Individuals, the Covered Individuals are prohibited from purchasing financial instruments or otherwise engaging in transactions that hedge or offset, or are designed to hedge or offset, any decrease in the market value of any equity security of Recro or any such subsidiary. Covered Individuals are also prohibited from selling “short” any securities of those companies. These prohibitions also apply to family members living in the same household as Covered Individuals, as well as entities influenced or controlled by the Covered Individuals.
Pursuant to the Insider Trading Policy, the Covered Individuals are also prohibited from holding any equity securities of Recro or any such subsidiary in a margin account or otherwise pledging such securities as collateral for a loan.
CORPORATE GOVERNANCE GUIDELINES
We have a written set of corporate governance guidelines that are designed to help ensure effective corporate governance of our Company. Our corporate governance guidelines cover topics including, but not limited to, director qualification criteria, director responsibilities, director compensation, director orientation and continuing education, succession planning and the annual evaluations of our Board and its Committees.Committees and succession planning. Succession planning for the Board is critical to our success. Our goal is to achieve a Board that provides effective oversight of the Company through the appropriate balance of diversity of perspectives, experience, expertise and skills. Our corporate governance guidelines are reviewed at least annually by the Governance Committee and amended by our Board when appropriate.
BOARD ATTENDANCE, COMMITTEE MEETINGS AND COMMITTEE MEMBERSHIP
Director (1)
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Independence
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Board
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AC
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CC
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NCGC
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Alfred Altomari
| Yes
| M
| C
| M
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William Ashton
| Yes
| M
| M
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Michael Berelowitz
| Yes
| M
| M
| M
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Winston Churchill
| Yes
| M
| M
| C
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Karen Flynn
| Yes
| M
| M
| C
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Gerri Henwood
| No
| M
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Abraham Ludomirski(2)
| Yes
| M
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Bryan M. Reasons(2)
| Yes
| M
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Wayne Weisman
| Yes
| C
| M
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2016 Meetings
| N/A
| 7
| 5
| 6
| 4
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Notice of Annual Meeting of Shareholdersand 2017 Proxy Statement | 11
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Director | Independence | Board | AC | CC | NCGC |
Arnaud Ajdler | Yes | M | M | M |
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William Ashton | Yes | M |
| C | M |
Michael Berelowitz | Yes | M | M |
| M |
Winston Churchill | Yes | M |
| M | C |
Gerri Henwood | No | M |
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Bryan M. Reasons | Yes | M | C |
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Wayne Weisman | Yes | C |
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| M |
2019 Meetings | N/A | 17 | 5 | 7 | 6 |
AC = Audit Committee | CC = Compensation Committee | C = Chair |
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NCGC = Nominating and Corporate Governance Committee | M = Member |
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During 2016, with the exception of Dr. Ludomirski,2019, each director attended at least 75% of the meetings of the Board and meetings of each Committee of the Board on which he or she served.
Audit Committee
The Audit Committee assists the Board Although we do not have a formal policy regarding attendance by providing oversight of our financial management, independent auditor and financial reporting procedures, as well as such other matters as directed by the Board or the Audit Committee Charter.
Among other things, the Audit Committee’s responsibilities include:
The members of our Audit Committee are Mr. Altomari (chair), Dr. Berelowitz and Ms. Flynn. All membersBoard at our Annual Meeting, we encourage all of our Audit Committee are deemed “independent” and financially literate under the applicable rules and regulationsdirectors to attend. All of the SEC and NASDAQ. Mr. Altomari also qualifies as an “audit committee financial expert” within the meaning of SEC regulations.
Notice ofour directors attended our 2019 Annual Meeting of Shareholdersand 2017 Proxy Statement | 12Shareholders.
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Compensation Committee
The Compensation Committee reviews the performance and development of our management in achieving corporate goals and objectives and assures that our executive officers (including our chief executive officer, or CEO) are compensated effectively in a manner consistent with our strategy, competitive practice and shareholder interests, as well as such other matters as directed by the Board or the Compensation Committee Charter. Among other things, the Compensation Committee’s responsibilities include:
Our Compensation Committee may delegate to one or more of our executive officers the power to grant options or other stock awards pursuant to such equity-based plan to employees who are not our directors or executive officers. Our Compensation Committee may also form and delegate authority to one or more subcommittees as it deems appropriate from time to time under the circumstances.
During 2016, the Compensation Committee retained Radford, or Radford, an Aon Hewitt company, as its executive compensation consultant. Radford reported directly to the Compensation Committee. Radford provided various executive compensation services to the Compensation Committee, including advising the Compensation Committee on the principal aspects of our executive compensation program and evolving industry practices and providing market information and analysis regarding the competitiveness of our program design and our award values in relation to performance. Upon request by the Compensation Committee, a representative of Radford attended meetings of the Compensation Committee.
Radford provides no services to us other than its advice to the Compensation Committee on executive and director compensation matters. The Compensation Committee determined Radford to be independent under the NASDAQ and SEC regulations.
Our Chief Executive Officer annually reviews the performance of each of the other executive officers, including the other named executive officers. She then recommends annual merit salary adjustments and any changes in annual or long-term incentive opportunities for other executives. The Compensation Committee considers our Chief Executive Officer’s recommendations in addition to data and recommendations presented by Radford.
The members of our Compensation Committee are Mr. Altomari, Mr. Ashton, Mr. Churchill and Ms. Flynn (chair). The Board has determined that all Compensation Committee members are independent under the listing
Notice of Annual Meeting of Shareholdersand 2017 Proxy Statement | 13
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standards of NASDAQ, and that they are “nonemployee directors” for purposes of Rule 16b-3 under the Securities Exchange Act of 1934, as amended, or the Exchange Act, and “outside directors” for purposes of Section 162(m) of the Internal Revenue Code, or the Code.
Nominating and Corporate Governance Committee
The Governance Committee identifies qualified individuals for membership on the Board; recommends to the Board the director nominees to fill vacancies on the Board and to stand for election at the next annual meeting of shareholders; develops and recommends to the Board a set of corporate governance guidelines for the Board; and provides oversight of the corporate governance affairs of the Board; as well as such other matters as directed by the Board or the Nominating and Corporate Governance Charter. Among other things, our Governance Committee’s responsibilities include:
The Governance Committee is responsible for identifying individuals that the Committee believes are qualified to become Board members, as described above in the section entitled “Board Structure and Composition.”
The members of our Governance Committee are Dr. Berelowitz, Mr. Churchill (chair) and Mr. Weisman. The Board has determined that all Governance Committee members are independent under the listing standards of NASDAQ.
Ms. Myers, our Senior Vice President, Regulatory and Quality, is the sister of Ms. Henwood, our President, Chief Executive Officer and member of the Board. See Ms. Myers’ biography under “Executive Officers” for a summary of her extensive regulatory experience. Other than the family relationship between Ms. Myers and Ms. Henwood described above, there are no family relationships among any of our directors or executive officers.
Notice of Annual Meeting of Shareholdersand 2017 Proxy Statement | 14
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of our Compensation Committee has served as one of our officers or employees at any time. None of our executive officers serve as a member of the Compensation Committee of any other company that has an executive officer serving as a member of the Board. None of our executive officers serve as a member of the board of directors of any other company that has an executive officer serving as a member of our Compensation Committee.
Mr. Churchill, a member of our Compensation Committee, is a director of the corporate general partner of the common general partner of SCP Vitalife, and managing member of companies providing certain management services to them. SCP Vitalife provided substantially all of our funding prior to our initial public offering, or IPO, and currently holds more than 5% of our common stock. See “Certain Relationships and Related Party Transactions—Investor Rights Agreement” for a description of our Investor Rights Agreement with SCP Vitalife.
POLICIES AND PROCEDURES FOR RELATED PERSON TRANSACTIONS
Our Board has adopted a written related person transaction policy setting forth the policies and procedures for the review and approval or ratification of related-person transactions. This policy covers any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which we were or are to be a participant, where the amount involved exceeds $120,000 and a related person had or will have a direct or indirect material interest, including, without limitation, purchases of goods or services by or from the related person or entities in which the related person has a material interest, indebtedness, guarantees of indebtedness and employment by us of a related person. In reviewing and approving any such transactions, our Audit Committee is tasked to consider all relevant facts and circumstances, including, but not limited to, whether the transaction is on terms comparable to those that could be obtained in an arm’s length transaction and the extent of the related person’s interest in the transaction. All of the transactions described under “Certain Relationships and Related Party Transactions” in this Proxy Statement either were approved in compliance with this policy or occurred prior to the adoption of this policy.
Notice of Annual Meeting of Shareholdersand 2017 Proxy Statement | 15
We have designed and implemented our compensation program for our non-employee directors to attract, motivate and retain individuals who are committed to our values and goals and who have the expertise and experience that we need to achieve those goals.
In December 2016, we reviewed the compensation program for our non-employee directors with our independent compensation consultant, Radford. In consultation with Radford and a review of director compensation trends of our peer group, we modified the compensation program for our non-employee directors. The changes included an increase to certain of our cash retainers and a shift from a share-based approach to a value-based approach, as well as a switch from stock options to restricted stock units, in the granting of annual equity awards to our non-employee directors.
The table below depicts our 2016 compensation program for our non-employee directors and the changes commencing on January 1, 2017, which will be reflected in next year’s proxy statement:
Compensation Elements – Non-Employee Director Compensation Program
| ||||
Cash | 2016 | 2017 | ||
Annual Cash Retainer | $40,000 | $40,000 | ||
Annual Committee Chair Retainer | ||||
Audit | $20,000 | $20,000 | ||
Compensation | $15,000 | $15,000 | ||
Nominating and Corporate Governance | $7,500 | $9,000 | ||
Committee Member Retainer | ||||
Audit | $10,000 | $10,000 | ||
Compensation | $7,500 | $7,500 | ||
Nominating and Corporate Governance | $5,000 | $5,000 | ||
Annual Non-Executive Chairman of the Board Cash Retainer | $25,000 | $30,000 | ||
Equity | 2016 | 2017 | ||
Initial Equity Grant | 20,000 options vesting in three equal annual installments | 20,000 options vesting in three equal annual installments | ||
Annual Equity Retainer (1) | 10,000 options vesting on first anniversary of the grant date and granted in December of the prior year | $70,000 in restricted stock units vesting on the first anniversary of the date of grant and granted following the annual meeting of shareholders
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Notice of Annual Meeting of Shareholdersand 2017 Proxy Statement | 16
Our non-employee directors are also reimbursed for their business-related expenses incurred in connection with attendance at Board and Committee meetings and related activities. Our only employee director, Ms. Henwood, receives no separate compensation for her service in such capacity.
The following table provides summary information regarding 2016 compensation to our non-employee directors.
Name
| Fees Earned or Paid in
| Option Awards ($)
| Total ($)
| |||
Alfred Altomari(1)
| 67,500
| —
| 67,500
| |||
William L. Ashton(2)
| 56,250
| —
| 56,250
| |||
Michael Berelowitz(1)
| 56,250
| —
| 56,250
| |||
Winston Churchill(1)
| 51,250(5)
| —
| 51,250
| |||
Karen Flynn(3)
| 57,500
| —
| 57,500
| |||
Abraham Ludomirski(1)(4)
| 42,500(5)
| —
| 42,500
| |||
Wayne B. Weisman(1)
| 70,000(5)
| —
| 70,000
|
Notice of Annual Meeting of Shareholdersand 2017 Proxy Statement | 17
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INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES
The Audit Committee works with our management in order to negotiate appropriate fees with KPMG LLP and is ultimately responsible for approving those fees. The following is a summary and description of fees for services provided by KPMG LLP in 2016 and 2015.
Service
| 2016
| 2015
| ||||
Audit Fees
| $
| 521,000
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| $619,500
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Audit-Related Fees
| $
| 245,000
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| $260,730
| ||
Tax Fees
| $
| 227,008
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| $216,205
| ||
All Other Fees
|
| —
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| —
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Total
| $
| 993,008
|
| $1,096,435
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“Audit fees” represented the aggregate fees for professional services rendered for the audit of the Company’s financial statements and the review of the Company’s quarterly financial statements on Form 10-Q that are customary under the standards of the Public Company Accounting Oversight Board (United States), and in connection with statutory audits.
“Audit-related fees” primarily consisted of fees for our Registration Statements on Form S-1, Form S-3 and Form S-8.
“Tax fees” consisted of fees related to tax compliance, tax planning and tax advice.
AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES
The Audit Committee is responsible for appointing, setting compensation for, and overseeing the work of the independent registered public accounting firm. The Audit Committee’s charter establishes a policy that all audit and permissible non-audit services provided by the independent registered public accounting firm will be pre-approved by the Audit Committee. In its performance of these responsibilities, prior approval of certain non-audit services is not required if: (i) all such services involve no more than 5% of the revenues paid by the Company to the registered public accounting firm during the fiscal year; (ii) such services were not identified by the Company to be non-audit services at the time of the engagement, and (iii) such services are promptly brought to the attention of the Audit Committee and approved by the Audit Committee prior to completion of the audit for such fiscal year.
All such audit and permissible non-audit services were pre-approved in accordance with this policy during the fiscal year ended December 31, 2016. These services may include audit services, audit-related services, tax services and other services. The Audit Committee considers whether the provision of each non-audit service is compatible with maintaining the independence of our independent registered public accounting firm. The responsibility to pre-approve audit and non-audit services may be delegated by the Audit Committee to one or more members of the Audit Committee; provided that any decisions made by such member or members must be presented to the full Audit Committee at its next scheduled meeting.
Notice of Annual Meeting of Shareholdersand 2017 Proxy Statement | 18
The primary purpose of the Audit Committee is to assist the Board in its general oversight of the Company’s financial reporting process.
Management is primarily responsible for the preparation, presentation, and integrity of the Company’s consolidated financial statements, accounting and financial reporting principles, internal controls and procedures designed to ensure compliance with accounting standards, applicable laws and regulations. The Company’s independent registered public accounting firm for the fiscal year 2016, KPMG LLP, is responsible for performing an independent audit of the consolidated financial statements and expressing an opinion on the conformity of those consolidated financial statements with generally accepted accounting principles.
The Audit Committee and the chairman of the Audit Committee have met with management during fiscal year 2016 to consider the adequacy of the Company’s internal controls, and discussed these matters and the overall scope and plans for the audit of the Company with KPMG LLP. The Audit Committee also discussed with management and KPMG LLP the Company’s disclosure controls and procedures.
The Audit Committee has reviewed and discussed management’s assessment of the effectiveness of the Company’s internal controls and the audited consolidated financial statements for the year ended December 31, 2016 with the management. The Audit Committee has discussed with KPMG LLP the matters required to be discussed by Public Company Accounting Oversight Board Auditing Standard No. 16, as amended, “Communication with Audit Committees.” In addition, KPMG LLP has provided the Audit Committee with the written disclosures and the letter required by Public Company Accounting Oversight Board Auditing Standard No. 16, as amended, “Communication with Audit Committees,” and the Audit Committee has discussed with KPMG LLP their independence.
The Audit Committee also considered whether the independent registered public accounting firm’s provision of non-audit services to the Company is compatible with the auditor’s independence. The Audit Committee has concluded that the independent registered public accounting firm is independent from the Company and its management. Based on the considerations and discussions referred to above, the Audit Committee recommended to the Board that the audited consolidated financial statements for the year ended December 31, 2016 be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.
Audit Committee
Alfred Altomari (Chairman)The Audit Committee assists the Board by providing oversight of our financial management, independent auditor and financial reporting procedures, as well as such other matters as directed by the Board or the Audit Committee Charter.
Michael Berelowitz, M.D.Among other things, the Audit Committee’s responsibilities include:
Karen Flynnappointing, retaining, compensating, overseeing, evaluating, and, when appropriate, terminating our independent registered public accounting firm;
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periodically reviewing policies and procedures with respect to data privacy and security we employ in conducting our business;
reviewing with management its assessment of our internal control over financial reporting, disclosure controls and procedures;
reviewing our Code of Conduct and recommending any changes to the Board;
overseeing our risk assessment and risk management processes;
reviewing and ratifying all related party transactions, based on the standards set forth in our Related Party Transactions Policy; and
preparing and approving the Audit Committee report required to be included in our annual proxy statement.
The members of our Audit Committee are Mr. Ajdler, Dr. Berelowitz and Mr. Reasons (chair). All members of our Audit Committee are deemed “independent” and financially literate under the applicable rules and regulations of the SEC and Nasdaq. Mr. Reasons also qualifies as an “audit committee financial expert” within the meaning of SEC regulations.
Compensation Committee
The following table sets forthCompensation Committee reviews the name, ageperformance and positiondevelopment of our management in achieving corporate goals and objectives and assures that our executive officers (including our CEO) are compensated effectively in a manner consistent with our strategy, competitive practice and shareholder interests, as well as such other matters as directed by the Board or the Compensation Committee Charter. Among other things, the Compensation Committee’s responsibilities include:
annually reviewing and recommending to the Board for approval the corporate goals and objectives applicable to the compensation of our CEO and other executive officers and evaluating at least annually our CEO’s and other executive officers’ performance in light of those goals and objectives;
annually reviewing and approving our peer group for compensation benchmarking;
determining and approving our CEO’s and other executive officers’ compensation level (including salary, cash and equity-based incentive awards and any personal benefits);
administering, or where appropriate, overseeing the administration of, executive and equity compensation plans and such other compensation and benefit plans that are adopted by us from time to time;
determining stock ownership guidelines for our CEO and other executive officers and monitoring compliance with such guidelines, if deemed advisable by our Board or the Compensation Committee; and
overseeing risks and exposures associated with executive compensation plans and arrangements.
Our Compensation Committee has delegated authority to our CEO to grant options or other stock awards, in accordance with guidelines established by our compensation consultant, to our non-executive officers. Our Compensation Committee also has the authority to form and delegate authority to one or more subcommittees as it deems appropriate from time to time under the circumstances.
Our CEO annually reviews the performance of each of the other executive officers, including the other named executive officers. She then recommends annual merit salary adjustments and any changes in annual or long-term incentive opportunities for other executives. The Compensation Committee considers our CEO’s recommendations in addition to data and recommendations presented by our executive compensation consultant.
Notice of Annual Meeting of Shareholders and 2020 Proxy Statement 14
CORPORATE GOVERNANCE AND RISK MANAGEMENT (continued)
Pay Governance, LLC, or Pay Governance, is our executive compensation consultant. Pay Governance reports directly to the Compensation Committee and provides various executive compensation services to the Compensation Committee, including advising the Compensation Committee on the principal aspects of our executive compensation program and evolving industry practices and providing market information and analysis regarding the competitiveness of our program design and our award values in relation to performance. Upon request by the Compensation Committee, a representative of Pay Governance attended Compensation Committee meetings. Pay Governance does not provide services to us other than its advice to the Compensation Committee on executive and director compensation matters. The Compensation Committee determined Pay Governance to be independent under the Nasdaq and SEC regulations.
The members of our Compensation Committee are Mr. Ajdler, Mr. Ashton (chair) and Mr. Churchill. The Board has determined that all Compensation Committee members are independent under the listing standards of Nasdaq, and that they are “non-employee directors” for purposes of Rule 16b-3 under the Securities Exchange Act of 1934, as amended, or the Exchange Act, and “outside directors” for purposes of Section 162(m) of the Internal Revenue Code, or the Code.
Nominating and Corporate Governance Committee
The Governance Committee identifies qualified individuals for membership on the Board, recommends to the Board the director nominees to fill vacancies on the Board and to stand for election at the next annual meeting of shareholders, develops and recommends to the Board a set of corporate governance guidelines for the Board and provides oversight of the corporate governance affairs of the Board, as well as such other matters as directed by the Board or the Governance Committee Charter. Among other things, our Governance Committee’s responsibilities include:
developing and submitting to the Board for its adoption a list of selection criteria for new directors to serve on the Board;
identifying, reviewing and evaluating candidates, including candidates submitted by shareholders, for election to the Board and recommending to the Board (i) nominees to fill vacancies or new positions on the Board and (ii) the slate of nominees to stand for election by the Company’s shareholders at each annual meeting of shareholders;
developing, recommending, and overseeing the implementation of and monitor compliance with, our corporate governance guidelines, and periodically reviewing and recommending any necessary or appropriate changes to our corporate governance guidelines;
annually recommending to the Board (i) the assignment of directors to serve on each Committee; (ii) the chairperson of each Committee and (iii) the chairperson of the Board or lead independent director, as appropriate;
periodically assessing the appropriate size and composition of the Board as a whole, the needs of the Board and the respective committees of the Board, and the qualification of director candidates in light of these needs;
reviewing the adequacy of the Articles and Bylaws and recommending to the Board, as conditions dictate, amendments for consideration by the shareholders;
reviewing any proposals submitted by shareholders for action at the annual meeting of shareholders and make recommendations to the Board regarding action to be taken in response to each proposal; and
implementing policies with respect to governance risk oversight, assessment and management of risk associated with the independence of our Board and director nominees, potential conflicts of interest of members of our Board and our executive officers and the effectiveness of the Board and the committees thereof.
The Governance Committee is responsible for identifying individuals that the Committee believes are qualified to become Board members, as described above in the section entitled “Board Structure and Composition.”
The members of our Governance Committee are Mr. Ashton, Dr. Berelowitz, Mr. Churchill (chair) and Mr. Weisman. The Board has determined that all Governance Committee members are independent under the listing standards of Nasdaq.
There are no family relationships among any of our directors or executive officers.
Notice of Annual Meeting of Shareholders and 2020 Proxy Statement 15
CORPORATE GOVERNANCE AND RISK MANAGEMENT (continued)
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 2019 and as of the date of this Proxy Statement:Statement, none of the members of the Compensation Committee was or is one of our officers or employees, and none of our executive officers has served or serves on the compensation committee or board of any company that employed or employs any member of our Compensation Committee or Board.
Connect
Engaging with investors is fundamental to our commitment to good governance and essential to maintaining strong corporate governance practices. Throughout the year, we seek opportunities to connect with our investors to gain and share valuable insights into current and emerging global governance trends.
Collaborate
We strive for a collaborative approach to shareholder engagement and value the variety of investors’ perspectives received, which helps deepen our understanding of their interests and motivations.
Communicate
Our goal is to communicate with our shareholders through various platforms, including via our website, in print and in person at investor presentations or shareholder meetings. We view communication between our shareholders and the Board as a dialogue.
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Gerri Henwood – For biographical information for Gerri Henwood, see “Board of Directors – Continuing Directors.”
Michael Celanohas served as our Chief Financial Officer since July 2016. From September 2015 until June 2016, he served as the Chief Financial Officer (part-time) of Makindus, Inc., a clinical-stage biotechnology company. Prior to that, from May 2015 until September 2015, he was self-employed providing consulting services to life science companies. From January 2013 to May 2015, Mr. Celano served as the Chief Financial Officer of DrugScan, Inc., a clinical laboratory services company. He also served as the Chief Financial Officer of Kensey Nash Corporation, a biomaterials company from March 2009 until June 2012, and as a consultant to Royal DSM, the acquiror of Kensey Nash Corporation, from July 2012 through December 2012. Previously, Mr. Celano served as a partner with KPMG LLP, in charge of its Mid-Atlantic Life Sciences Practice, and was co-leader of its National Life Science Practice. Mr. Celano also was co-leader of the Life Science Practice for Arthur Andersen before he joined KPMG. Mr. Celano currently serves on the board of directors of Orasure Technologies, Inc., a diagnostic and medical device company, a position he has held since October 2006. Mr. Celano holds a B.S. degree in Accounting from St. Joseph’s University.
Stewart McCallum, M.D.has served as our Chief Medical Officer since December 2015. From May 2006 to November 2015, Dr. McCallum worked at GSK (formerly GlaxoSmithKline plc), a research-based pharmaceutical and healthcare company, where he served in clinical director positions and ultimately as Clinical Director Academic and Sirtuin, Discovery Performance Units. During his time at GSK, Dr. McCallum successfully led high profile drug development programs across a wide variety of therapeutic areas including urology, oncology, gastrointestinal, dermatology, stem cell therapies, in vitro fertilization and women’s health. He was responsible for the planning, design and execution of comprehensive development plans incorporating medical, regulatory and commercial considerations. From 1998 to 2006, Dr. McCallum served as Assistant Professor Urology at Stanford University Medical Center. Dr. McCallum received his M.D. from the University of Toronto and his B.S. in Biochemistry from the University of Western Ontario. He completed a Clinical Fellowship in Microsurgery and Male Fertility at the Joan & Sanford I. Weill Medical College of Cornell University.
Fred Graffhas served as our Chief Commercial Officer since February 2016. From August 2015 to February 2016, Mr. Graff served as Vice President, North American Sales for Fluidigm Corporation, a life science technology company. In April 2013, Mr. Graff Founded Graff & Associates, a life science consulting firm, where he worked until August 2015. Prior to founding Graff & Associates, Mr. Graff served as Vice President, Commercial Operations for MAP Pharmaceuticals, Inc. (subsequently acquired by Allergan, Inc.), or MAP, abiopharmaceutical company focused on treatments in neurology, from September 2011 to March 2013, where he
Notice of Annual Meeting of Shareholdersand 20172020 Proxy Statement | 2016
CORPORATE GOVERNANCE AND RISK MANAGEMENT (continued)
We have designed and implemented our compensation program for our non-employee directors to attract, motivate and retain individuals who are committed to our values and goals and who have the expertise and experience that we need to achieve those goals.
The table below depicts our compensation program for our non-employee directors:
Compensation Elements — Non-Employee Director Compensation Program | |
| |
Cash | |
Annual Cash Retainer | $40,000 |
Annual Committee Chair Retainer | |
Audit | $20,000 |
Compensation | $15,000 |
Nominating and Corporate | |
Governance | $9,000 |
Committee Member Retainer | |
Audit | $10,000 |
Compensation | $7,500 |
Nominating and Corporate | |
Governance | $5,000 |
Annual Non-Executive Chairman of the Board Cash | $30,000 |
Retainer | |
Equity | |
Initial Equity Grant | A stock option to purchase 20,000 shares of our common stock vesting in three equal annual installments |
Annual Equity Retainer | $70,000 in restricted stock units and $65,000 in stock options, granted annually following our annual meeting of shareholders, and in each case vesting on the first anniversary of the date of grant |
Cash fees are paid quarterly, and are typically pro-rated for non-employee directors who cease to provide services mid-year. Our non-employee directors are also reimbursed for their business-related expenses incurred in connection with attendance at Board and Committee meetings and related activities. Our only employee director, Ms. Henwood, receives no separate compensation for her service in such capacity.
On December 5, 2019, we granted each of our non-employee directors “make-whole grants” of restricted stock units under our equity plan. The make-whole grants were awarded in lieu of any adjustments to outstanding restricted stock unit and option awards held by these non-employee directors upon the Separation.
was instrumental in developing a joint commercial launch plan between MAP and Allergan that included product pricing, contract strategy, trade strategy, product positioning and messaging and sample policy. PriorDIRECTOR COMPENSATION 2019
The following table provides summary information regarding 2019 compensation to joining MAP, Mr. Graff served as Vice President, Sales for Vanda Pharmaceuticals, Inc., a biopharmaceutical companyfocused on central nervous system disorders, from 2008 to 2010. Previously, Mr. Graff served as the Senior Vice President of Sales of Sepracor, Inc. (subsequently Sunovion Pharmaceuticals, Inc.), a biopharmaceutical company focused on the treatment of central nervous system and respiratory disorders, from 1997 to 2007. He holds a B.A. in Political Science from the University of Arizona.
Randall Mackhas served as our Senior Vice President, Development and Secretary since 2008. From 2008 to 2014, Mr. Mack also served as Executive Vice President, Development for MCG, a pharmaceutical incubator and consulting firm. From 2005 to 2008, Mr. Mack served as Vice President, Project Management and Operations at Adolor Corporation where he oversaw the development programs in the areas of opioid-induced bowel dysfunction and pain management. For more than 15 years, he also held positions of increasing responsibilities at Auxilium, Abbott Laboratories and Harris Laboratories. In these positions he was responsible for the conduct of over 400 clinical trials and the filing of 20 investigational new drugs and 4 new drug applications. During his career he has authored more than 75 scientific articles, book chapters, abstracts and poster presentations in the areas of gastroenterology, urology, neuroscience and psychiatric disorders. Mr. Mack holds a B.S. in Biology and Chemistry from the University of Nebraska-Lincoln.non-employee directors.
Name | Fees Earned or Paid in Cash ($) | Option Awards ($)(1) | Stock Awards ($)(1) | Total ($) |
Arnaud Ajdler | 43,125 | 155,201 | 190,872 | 389,198 |
Alfred Altomari (2) | 63,125 | 65,001 | 318,337 | 446,463 |
William L. Ashton | 51,250 | 65,001 | 355,679 | 471,930 |
Michael Berelowitz | 55,000 | 65,001 | 295,002 | 415,003 |
Winston Churchill | 56,500 | 65,001 | 318,337 | 439,838 |
Karen Flynn (3) | 59,375 | 65,001 | 249,875 | 374,252 |
Bryan M. Reasons | 60,000 | 65,001 | 218,757 | 343,758 |
Wayne B. Weisman | 75,000 | 65,001 | 318,337 | 458,338 |
Diane Myers has served as our Senior Vice President, Regulatory and Quality since 2008. From 2008 to 2014, Ms. Myers served as Senior Vice President of Regulatory Affairs and Quality Assurance for MCG, a pharmaceutical incubator and consulting firm. From 2000 to 2008, Ms. Myers served as Vice President of Regulatory Affairs and Quality at Auxilium. In addition, for more than 15 years she held positions of increasing responsibility at GlaxoSmithKline plc in the Quality Control and Quality Assurance groups within the Biopharmaceutical Research and Development Division. Ms. Myers holds a B.S. in Biology from Neumann University.
Donna M. Nicholshas served as our Chief Accounting Officer and Corporate Controller since 2009. From March 2009 to March 2015, Ms. Nichols was an employee of MCG, a pharmaceutical incubator and consulting firm. From 2004 to 2009, she served as Director of Accounting at Auxilium, and from 1996 to 2003, as Director of Financial Reporting at Adolor Corporation. In such prior roles, Ms. Nichols was responsible for the companies’ SEC financial reporting. Ms. Nichols holds a B.S. from Rider University and is a Certified Public Accountant.
Notice of Annual Meeting of Shareholdersand 20172020 Proxy Statement | 2117
(1) |
This section discusses the material components of the executive compensation program for our executive officers named in the “Summary Compensation Table” below. In 2016, our named executive officers were Gerri Henwood, our President and Chief Executive Officer; Michael Celano, our Chief Financial Officer; and Fred Graff, our Chief Commercial Officer.
The following table sets forth information concerning the compensation of our named executive officers during the fiscal years ended December 31, 2016 and December 31, 2015:
Name and
| Year | Salary ($) | Bonus ($) | Stock Awards ($)(1)(2) | Option Awards ($)(1) | Non-Equity Incentive Plan Compensation ($) | Non- Qualified | All Other Compensation ($) | Total ($) | |||||||||||
| GerriHenwood | 2016 | 515,000(3) | 386,250 | — | — | — | — | 32,129 | 933,379 | |||||||||||
President and Chief Executive Officer
| 2015 | 447,301(3) | 286,980 | — | 1,140,399 | — | — | 48,342 | 1,923,022 | |||||||||||
| Michael Celano | 2016 | 164,538 | 172,500 | — | 823,200(5) | — | — | 6,538 | 1,166,766 | |||||||||||
Chief Financial Officer(4)
| 2015 | — | — | — | — | — | — | — | — | |||||||||||
Fred Graff | 2016 | 324,519 | 144,375 | — | 366,730(7) | — | — | 88,173 | 923,797 | |||||||||||
Chief Commercial Officer(6)
| 2015 | — | — | — | — | — | — | — | — | |||||||||||
| Reflects the grant date fair value determined in accordance with the Financial Accounting Standards Board Accounting Standards, Codification Topic 718, Compensation — Stock Compensation, or ASC 718. The assumptions made in these valuations are included in Note |
(2) | Mr. Altomari is no longer a member of our |
(3) | Ms. Flynn is |
Notice of Annual Meeting of Shareholders and 2020 Proxy Statement | 18
DIRECTOR COMPENSATION (continued)
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES
The Audit Committee works with our management in order to negotiate appropriate fees with KPMG and is ultimately responsible for approving those fees. The following is a summary and description of fees for services provided by KPMG in 2019 and 2018.
Service | 2019 | 2018 |
Audit Fees | $785,000 | $574,000 |
Audit-Related Fees | $315,000 | — |
Tax Fees | $157,933 | $184,826 |
All Other Fees | — | — |
Total | $1,257,933 | $759,326 |
“Audit fees” represented the aggregate fees for professional services rendered for the audit of our annual consolidated financial statements and the review of our quarterly consolidated financial statements on Forms 10-K and 10-Q, respectively, that are customary under the standards of the Public Company Accounting Oversight Board (United States), and in connection with regulatory filings. Our audit fees in 2019 included an auditor’s attestation relating to our internal control over financial reporting in our 2019 Annual Report, which was filed with the SEC on March 4, 2020 in connection with our exit from emerging growth status.
“Audit-related fees” consisted of fees related to the audits and reviews of the carve out financial statements of our acute care segment related to the Separation.
“Tax fees” consisted of fees related to tax compliance, tax planning and tax advice.
AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES
The Audit Committee is responsible for appointing, setting compensation for, and overseeing the work of the independent registered public accounting firm. The Audit Committee’s charter establishes a policy that all audit and permissible non-audit services provided by the independent registered public accounting firm will be pre-approved by the Audit Committee.
All such audit and permissible non-audit services were pre-approved in accordance with this policy during the fiscal year ended December 31, 2019. These services may include audit services, audit-related services, tax services and other services. The Audit Committee considers whether the provision of each non-audit service is compatible with maintaining the independence of our independent registered public accounting firm. The responsibility to pre-approve audit and non-audit services may be delegated by the Audit Committee to one or more members of the Audit Committee; provided that any decisions made by such member or members must be presented to the full Audit Committee at its next scheduled meeting.
Notice of Annual Meeting of Shareholders and 2020 Proxy Statement 19
The primary purpose of the Audit Committee is to assist the Board in its general oversight of the Company’s financial reporting process.
Management is primarily responsible for the preparation, presentation, and integrity of the Company’s consolidated financial statements, accounting and financial reporting principles, internal controls and procedures designed to ensure compliance with accounting standards, applicable laws and regulations. The Company’s independent registered public accounting firm for the fiscal years 2019, 2018 and 2017, KPMG, is responsible for performing an independent audit of the consolidated financial statements and expressing an opinion on the conformity of those consolidated financial statements with generally accepted accounting principles.
The Audit Committee and the chairman of the Audit Committee have met with management during fiscal year 2019 to consider the adequacy of the Company’s internal controls, and discussed these matters and the overall scope and plans for the audit of the Company with KPMG. The Audit Committee also discussed with management and KPMG the Company’s disclosure controls and procedures.
The Audit Committee has reviewed and discussed management’s assessment of the effectiveness of the Company’s internal controls and the audited consolidated financial statements contained in the Company’s 2019 Annual Report with management. The Audit Committee has discussed with KPMG the matters required to be discussed by Public Company Accounting Oversight Board Auditing Standard No. 1301, “Communication with Audit Committees.” In addition, KPMG has provided the Audit Committee with the written disclosures and the letter required by the applicable requirements of the Public Company Accounting Oversight Board regarding KPMG’s communications with the Audit Committee concerning independence, and the Audit Committee has discussed with KPMG its independence.
The Audit Committee also considered whether the independent registered public accounting firm’s provision of non-audit services to the Company is compatible with the auditor’s independence. The Audit Committee has concluded that the independent registered public accounting firm is independent from the Company and its management. Based on the considerations and discussions referred to above, the Audit Committee recommended to the Board that the audited consolidated financial statements be included in the Company’s 2019 Annual Report.
Audit Committee
Bryan Reasons (Chairman)
Arnaud Ajdler
Michael Berelowitz, M.D.
Notice of Annual Meeting of Shareholders and 2020 Proxy Statement| 2220
| Position | Age |
Gerri Henwood | President, Chief Executive Officer | 67 |
Ryan D. Lake | Chief Financial Officer | 42 |
Gerri Henwood — For biographical information for Gerri Henwood, see “Board of Directors — Continuing Directors.”
Ryan D. Lake has served as our Chief Financial Officer since January 2018. He had previously served as our Senior Vice President of Finance and Chief Accounting Officer since June 2017. Mr. Lake has also served as the Chief Financial Officer of Baudax Bio since the Separation in November 2019. Mr. Lake has over 20 years of senior financial and life sciences leadership experience. Prior to joining us, Mr. Lake served as Chief Financial Officer and Vice President of Finance of Aspire Bariatrics, Inc., a privately-held, commercial-stage, medical device company from July 2015 to May 2017. From 2012 to 2015, Mr. Lake held executive management and senior finance positions, including Director of the Natural Materials Division, Controller and Senior Director of Finance, at DSM Biomedical (successor to Kensey Nash Corporation after its acquisition in 2012), a division of Royal DSM (listed on Euronext Amsterdam), a global science-based company active in health, nutrition and materials. From 2002 to 2012, Mr. Lake held various senior financial positions of increasing responsibility, most notably Senior Director of Finance and Interim Chief Financial Officer, with Kensey Nash Corporation, a medical device company. Earlier in his career, Mr. Lake worked at Deloitte & Touche, LLP. Mr. Lake has a B.S. degree in Accounting from West Chester University of Pennsylvania and is a certified public accountant and Chartered Global Management Accountant.
Notice of Annual Meeting of Shareholders and 2020 Proxy Statement 21
In 2019, our named executive officers were Gerri Henwood, our President and CEO; Ryan Lake, our Chief Financial Officer; and Michael Celano, our Chief Operating Officer, until the termination of his employment in May 2019. In connection with the Separation, we entered into a Transition Services Agreement with Baudax Bio, whereby we agreed that Ms. Henwood and Mr. Lake would continue to provide services to us for a twelve month period following the Separation. Under this agreement, in 2019, we reimbursed Baudax Bio 50% in respect of Ms. Henwood’s services and 50% in respect of Mr. Lake’s services.
Ms. Henwood and Mr. Lake were also named executive officers of Baudax Bio in 2019. For more information about the compensation paid by Baudax Bio to Ms. Henwood and Mr. Lake in respect to the services they rendered to Baudax Bio after the Separation, see Baudax Bio’s proxy statement for its 2020 annual meeting of shareholders, filed with the SEC on or around March 23, 2020, or the Baudax Bio Proxy Statement.
This section discusses the material components of the executive compensation program for our named executive officers.
The following table sets forth information concerning the compensation of our named executive officers during the fiscal years ended December 31, 2019 and December 31, 2018:
Name and Principal Position |
Year | Salary ($) | Bonus ($)(1)(2) | Stock Awards ($)(3)(4) | Option Awards ($)(3) | Non-Equity Incentive Plan Compensation ($)(2) | All Other Compensation ($)(5) | Total ($) |
Gerri Henwood | 2019 | 553,846 | — | 2,608,537 | 1,062,199 | 360,000 | 38,402 | 4,622,984 |
President and Chief Executive Officer | 2018 | 598,662 | — | 1,008,000 | 600,000 | 183,600 | 37,172 | 2,427,434 |
Michael Celano(6) | 2019 | 167,721 | — | 416,753 | 635,331 | — | 478,804 | 1,698,609 |
Chief Operating Officer | 2018 | 415,261 | — | 403,200 | 240,000 | 84,925 | 45,488 | 1,188,874 |
Ryan Lake | 2019 | 319,777 | 69,440 | 623,276 | 334,200 | 138,880 | 44,038 | 1,529,611 |
Chief Financial Officer | 2018 | 309,231 | — | 231,840 | 138,000 | 63,240 | 41,823 | 784,134 |
(1) | Reflects discretionary bonus amounts paid for performance in excess of corporate and individual objectives under our annual performance cash bonus plan. |
(2) | The amounts represent annual performance cash bonuses earned in 2019 and 2018 and paid in the following year. |
(3) | Reflects the grant date fair value determined in accordance with the Financial Accounting Standards Board Accounting Standards, Codification Topic 718, Compensation — Stock Compensation, or ASC 718. The assumptions made in these valuations are included in Note 15 of the Notes to the Annual Financial Statements included in our Annual Report. For Mr. Celano, the amounts in this column include the incremental accounting charge to us for our acceleration of vesting and extension of the exercisability period for Mr. Celano’s options and restricted stock units in connection with his termination of employment. |
(4) | The 2019 amounts reflect both time-based and performance-based restricted stock unit awards, of which certain performance-based awards were forfeited and canceled as the performance criteria was based on acute care segment goals. Refer to the Outstanding Equity Awards at Fiscal Year-End for 2019 table for more information. The value of the performance-based restricted stock unit awards at the grant date reported in the table assuming the maximum achievement of the performance conditions was $761,847 for Ms. Henwood, $269,663 for Mr. Celano and $239,700 for Mr. Lake. This amount also includes make-whole equity grants of $1,520,188 and $280,849 for Ms. Henwood and Mr. Lake, respectively, which were awarded in lieu of any adjustments to outstanding restricted stock unit and option awards held by Ms. Henwood and Mr. Lake upon the Separation. |
(5) | These amounts consist of 401(k) matching contributions, the cost of medical benefits and life and disability insurance premiums. For Mr. Celano, this amount represents severance payments, pro-rata bonus and health benefits pre- and post-termination. |
(6) | Mr. Celano’s employment with us terminated on May 9, 2019. |
Base Salaries
In January 2019, the Compensation Committee approved the following base salaries for our named executive officers: $600,000 for Ms. Henwood, $347,200 for Mr. Lake, and $437,115 for Mr. Celano. Following the Separation, we ceased to pay an annual salary to our named executive officers directly. However, in 2019, we reimbursed Baudax Bio 50% in respect of Ms. Henwood’s services and 50% in respect of Mr. Lake’s services for the period after the Separation. The amounts that we reimbursed to Baudax Bio are reflected in the “Salary” column to the Summary Compensation Table above.
Annual Bonuses
In 2019, each of our named executive officers was eligible to receive an annual performance cash bonus based on the achievement of pre-established corporate and individual objectives as determined by our Board and our Compensation Committee, in consultation
Notice of Annual Meeting of Shareholders and 2020 Proxy Statement | 22
with Pay Governance and upon review of the recommendations of our CEO for our other named executive officers. Each officer was assigned a target bonus opportunity expressed as a percentage of his or her base salary. Actual bonus payments could be higher or lower than the target bonus amount, based on the achievement of corporate and individual objectives. The target bonus opportunities in 2019 for Ms. Henwood, Mr. Lake and Mr. Celano were 60%, 40% and 40%, of their base salaries, respectively.
In determining the amount of performance bonus awards actually paid, our Compensation Committee determined the level of achievement of the corporate goals and individual goals for the year. In determining the level of achievement for our other named executive officers, our Compensation Committee reviewed and considered the recommendations of our CEO. These achievement levels were used to determine each named executive officer’s bonus.
Actual bonus amounts paid are reflected in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table above. To the extent that our Compensation Committee determined that our named executive officers exceeded their respective corporate and individual performance goals, certain discretionary amounts were awarded in excess of the non-equity incentive plan compensation. These discretionary amounts are reflected in the “Bonus” column of the Summary Compensation Table above.
Equity Compensation
In 2019, we awarded equity compensation under our 2018 amended and restated equity plan to our named executive officers based on their performance in the form of time- vesting stock options and time- and performance-vested restricted stock units. We determine equity award amounts based on the judgment of our Compensation Committee, taking into account information and recommendations provided by our compensation consultant. With respect to our named executive officers other than our CEO, the Compensation Committee also considers recommendations provided by our CEO. In determining the amount of awards, the Compensation Committee generally does not consider an employee’s current equity ownership in our common stock or the prior awards that are fully vested, but may consider competitive market factors in our industry.
Our stock option awards typically vest over a four-year period, in 48 equal monthly installments, subject to the continued service of the employee with us. Our time-based restricted stock unit awards typically vest in equal annual installments over a four-year period subject to the continued service of the employee with us. Our performance-based restricted stock unit awards include vesting criteria relating to the achievement of certain development, commercialization and financial goals. We believe these vesting arrangements encourage our named executive officers to continue service with us for a longer period of time and remain focused on our multi-year long-term drug development and commercialization programs.
Impact of the Separation on Equity Awards
On December 5, 2019, we granted Ms. Henwood and Mr. Lake “make-whole grants” under our equity plan. The make-whole grants were awarded in lieu of any adjustments to outstanding restricted stock unit and option awards held by these named executive officers upon the Separation. Ms. Henwood received 93,550 make-whole restricted stock units and Mr. Lake received 17,283 make-whole restricted stock units, which will vest on December 5, 2020 (or if earlier, a change in control of the Company), subject to continued employment.
QUALIFIED AND NON-QUALIFIED PLANS
The Company maintains a tax-qualified savings plan under Section 401(k) of the Internal Revenue Code. Employees who participate in the plan may make elective deferrals to the plan, subject to the limitations imposed by the Internal Revenue Code. In addition, the Company currently matches 100% of employee deferrals under the plan, up to a limit of 5% of the employee’s eligible compensation.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END FOR 20162019
The following table summarizes the number of shares of common stock underlying outstanding equity incentive plan awards for each named executive officer as of December 31, 2016:2019:
Notice of Annual Meeting of Shareholders and 2020 Proxy Statement | 23
Option Awards
| ||||||||
Name
| Number of Securities
| Number of Securities
| Option Exercise
| Option Expiration
| ||||
Gerri Henwood
| 41,250 | 18,750(1) | $8.00 | 3/12/2024 | ||||
| 26,667 | 13,333(1) | $7.00 | 4/8/2024 | |||||
| 61,750 | 61,750(2) | $2.47 | 12/17/2024 | |||||
| 77,874 | 45,626(3) | $2.47 | 12/17/2024 | |||||
| 26,325 | 78,975(1) | $8.41 | 12/16/2025 | |||||
| 105,300
| —
| $7.86
| 12/16/2025
| |||||
Michael Celano
| 14,584
| 125,416(4)
| $8.22
| 07/05/2026
| ||||
Fred Graff
| 18,957
| 72,043(4)
| $6.10
| 02/16/2026
| ||||
EXECUTIVE COMPENSATION (continued)
| OPTION AWARDS | STOCK AWARDS | ||||||
| Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of time-based vesting shares or units of stock that have not vested | Market value of time-based vesting shares or units of stock that have not vested ($)(1) | Number of performance-based vesting shares or units of stock that have not vested (#) | Market value of performance-based vesting shares or units of stock that have not vested ($)(1) |
Gerri Henwood | 60,000 | — | 8.00 | 03/11/2024 |
|
|
|
|
| 40,000 | — | 7.00 | 04/07/2024 |
|
|
|
|
| 123,500 | — | 2.47 | 12/16/2024 |
|
|
|
|
| 105,300 |
| 8.41 | 12/15/2025 |
|
|
|
|
| 105,300 | — | 7.86 | 12/01/2026 |
|
|
|
|
| 105,510 | 39,190 (2) | 7.33 | 01/17/2027 |
|
|
|
|
| 47,917 | 52,083 (3) | 9.04 | 01/01/2028 |
|
|
|
|
| 43,702 | 146,998 (4) | 7.99 | 01/17/2029 |
|
|
|
|
|
|
|
|
| 10,000(5) | $183,300 |
|
|
|
|
|
|
| 37,500(6) | $687,375 |
|
|
|
|
|
|
| 40,864(7) | $749,037 |
|
|
|
|
|
|
| 93,550(8) | $1,714,772 |
|
|
|
|
|
|
|
|
| 95,350 (9) | $1,747,766 |
Ryan D. Lake | 40,625 | 24,375 (10) | 7.58 | 06/04/2027 |
|
|
|
|
| 11,021 | 11,979 (3) | 9.04 | 01/01/2028 |
|
|
|
|
| 13,750 | 46,250 (4) | 7.99 | 01/17/2029 |
|
|
|
|
|
|
|
|
| 5,000(11) | $91,650 |
|
|
|
|
|
|
| 8,625(6) | $158,096 |
|
|
|
|
|
|
| 12,857(7) | $235,669 |
|
|
|
|
|
|
| 17,283(8) | $316,797 |
|
|
|
|
|
|
|
|
| 30,000 (9) | $549,900 |
| (1) | The market value is based on the closing stock price of $18.33 on December 31, 2019 (the last trading date in the 2019 fiscal year). |
(2) | The stock option vests in equal monthly installments over 48 months, beginning on |
