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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☐ | Check box if any part of the fee is offset as provided by Exchange Act Rule0-11(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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490 Lapp Road
Malvern, PA 19355
20192020 ANNUAL MEETING OF SHAREHOLDERS
To be Held on May 9, 20197, 2020
March 21, 201927, 2020
Dear Shareholder:
We are pleased to invite you to attend Recro Pharma, Inc.’s, 2019or 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 Thursday, May 9, 2019,7, 2020, at the offices of Pepper Hamilton LLP, 400 Berwyn Park, 899 Cassatt Road, Berwyn, PA 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 2018,2019, our board of directors, or Board, has worked together with management and in consultation with its outside advisors to provide oversight of corporate strategy, business objectives and potential risks facing Recro Pharma, Inc., or the Company.
Details regarding admission to the meetingAnnual Meeting and the business to be conducted are more fully described in the accompanying Notice of 20192020 Annual Meeting of Shareholders, or Notice, and 20192020 Annual Meeting Proxy Statement, or Proxy Statement. Other than the proposals described in the Proxy Statement, the Board of Directors, or Board 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.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 2019 Annual Meeting of Shareholders and Proxy Statement.
If you have any questions with respect to voting, please call our Chief Financial Officer, Ryan D. Lake, at (484)395-2436.
Sincerely,SINCERELY,
Wayne Weisman | ||||
Chairman of the Board | Gerri Henwood Director, President and Chief Executive Officer |
THIS PROXY STATEMENT AND ENCLOSED PROXY CARD ARE
FIRST BEING MADE AVAILABLE ON OR ABOUT MARCH 21, 2019.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Dear Shareholders:
You are invited to attend Recro Pharma, Inc.’s 2019Recro’s Annual Meeting of Shareholders.Meeting. At the Annual Meeting, shareholders will vote:
to elect the threetwo director nominees that are set forth in the attached Proxy Statement to serve as Class IIIII directors, whose term will expire in 2022;2023;
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
to ratify the selection of KPMG LLP, or KPMG, as our independent registered public accounting firm for the 20192020 fiscal year.
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: | May 7, 2020 | |
Time: | 9:00 a.m. | |
Location: | Pepper Hamilton LLP
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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 21, 2019.27, 2020. This proxy statementProxy Statement and our 2018Annual 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 20182019 Annual Report, including the financial statements, please send your request to Chief Financial Officer, Recro Pharma, Inc., 490 Lapp Road, Malvern, PA 19355.
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SUMMARY INFORMATION (continued)
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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 Statement and our 20182019 Annual Report in full.
Summary of Shareholder Voting Matters
Proposal | For More Information |
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Item 1: Election of Class | 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 our Independent Registered Public Accounting Firm for 2020 | Page 32 | ✓ FOR |
Our Director Nominees
You are being asked to vote on the election of Gerri Henwood, Karen FlynnWilliam Ashton and Bryan M. ReasonsDr. Michael Berelowitz as Class IIIII directors, each to serve for a three-year term expiring at our 20222023 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 has twothree directors and Classes II and III each consist of threetwo directors.
The term of office of our Class IIIII directors expires at the Annual Meeting. We are nominating Gerri Henwood, Karen FlynnWilliam Ashton and Bryan M. ReasonsDr. Michael Berelowitz forre-election at the Annual Meeting to serve until the 20222023 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 Ms. Henwood, Ms. FlynnMr. Ashton and Mr. Reasons.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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Committee Memberships | ||||||||||||||||
Name | Age | Director Since | Occupation | Independent | AC | CC | NCGC | Other Current
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Gerri Henwood | 66 | 2008 | President and Chief Executive Officer of Recro Pharma, Inc.
| No | Tetraphase Pharmaceuticals, Inc. | |||||||||||
Karen Flynn | 56 | 2015 | Senior Vice President and Chief Commercial Officer of West Pharmaceutical Services, Inc.
| Yes | M | C | None | |||||||||
Bryan M. Reasons | 51 | 2017 | Chief Financial Officer of Mallinckrodt plc
| Yes | C | Aclaris Therapeutics, Inc. |
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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| CC = Compensation Committee |
| 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 |
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SUMMARY INFORMATION |
In FebruaryOn November 5, 2019, we entered intoannounced 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 amended and expanded $125 million credit facility with investment funds managed by Athyrium Capital Management, LP,independent publicly traded company as a leading healthcare-focused investment firm. The amended credit facility will provide us with increased financial flexibility and supportresult of a pro rata distribution of its common stock to our plans to commercialize our lead drug candidate, intravenous, or IV, meloxicam, which is currently under review by the U.S. Food and Drug Administration, or FDA.
In February 2019, we entered into a new manufacturing and supply agreement with Novartis Pharma AG, or Novartis, pursuant toshareholders, which we will continuerefer to beherein as the exclusive supplier to NovartisSeparation. In the Separation, our shareholders of Ritalin LArecord as of November 15, 2019 received one share of Baudax Bio common stock, par value $0.01 per share, for every two and Focalin XR capsules through 2023.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.
Our contract development manufacturing business, or CDMO, generated record annual revenues of $77.8 million in 2018.
In December 2018,Following the Separation, we announced that we amendedhave concentrated our IV meloxicam license agreement with Alkermes Pharma Ireland Limited, which reduced our 2019 cash requirements by $30 millionefforts on driving growth and extendedbuilding on the milestone payments associated with FDA approval of IV meloxicam over seven years.
In October 2018, we announced that the FDA set a date for decision on our resubmitted New Drug Application, or NDA, for IV meloxicam under the Prescription Drug User Fee Act, of March 24, 2019.
In October 2018, we also announced the expansionstrength and commercial success of our CDMO service capabilities throughbusiness. 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 openingyear ended December 31, 2019, generating revenues of a 24,000 square-foot Good Manufacturing Practice, or GMP, development and high potency product services facility in Gainesville, GA. This new site, which is near our existing 97,000 square-foot,DEA-licensed CDMO facility, houses an expanded development space focused on creating unique oral dosage forms, solving formulation, process and analytical issues, as well as providing additional capacity for clinical trial supply manufacturing and related services. In addition, the new facility has specialized space dedicated to the development and GMP manufacturing of high potency products.$99.2 million.
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PROXY STATEMENT
This 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 Thursday, May 9, 2019,7, 2020, at 9:00 a.m., Eastern Time,time, at the offices of Pepper Hamilton LLP, 400 Berwyn Park, 899 Cassatt Road, Berwyn, PA 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 21, 2019.27, 2020. The Notice of Internet Availability of Proxy Materials being mailed to the shareholders is not part of the proxy statement.Proxy Statement.
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TABLE OF CONTENTS (continued)
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 21, 2019.27, 2020. This proxy statementProxy Statement and our 20182019 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 20182019 Annual Report, including the financial statements, please send your request to Chief Financial Officer, Recro Pharma, Inc., 490 Lapp Road, Malvern, PA 19355.
SHAREHOLDERS ENTITLED TO VOTE
All shareholders of record of our common stock at the close of business on March 15, 2019,16, 2020, or the Record Date, are entitled to receive the Notice and to vote their shares at the Annual Meeting. As of that date, 21,990,73523,455,226 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:
Mailing your signed proxy card or voter instruction | Using the | Calling toll-free from the United States, U.S. territories and | ||
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 exercised. To do so, you must do one of the following:
Vote over the Internetinternet or by telephone as instructed above. Only your latest Internetinternet or telephone vote is counted. You may not revoke or change your vote over the Internetinternet or by telephone after 11:59 p.m., Eastern Time,time, on May 8, 2019.6, 2020;
Sign a new proxy card and submit it by mail, which must be received no later than May 8, 2019.6, 2020. Only your latest dated proxy card will be counted.counted;
Attend the Annual Meeting and vote in person as instructed above. Attendingabove (attending the Annual Meeting will not by itself revoke a previously granted proxy.proxy); or
Give our Corporate Secretary written notice before or at the meeting that you want to revoke your proxy.
Notice of Annual Meeting of Shareholdersand 2019 Proxy Statement | 1
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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 8, 2019.6, 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, 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 brokernon-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 brokernon-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 brokernon-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 | Majority of the votes cast | Abstentions and brokernon-votes will not be taken into account in determining the outcome of the proposal | 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 brokernon-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.
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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 have engaged Okapi Partners LLC to assist with the solicitation of proxies for an estimated fee of $20,000, plus any additional expenses. We may also reimburse brokerage firms, banks and other agents for the cost of forwarding proxy materials to beneficial owners.
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GENERAL INFORMATION ABOUT THE MEETING (continued)
Our Board has nominated Gerri Henwood, Karen FlynnWilliam Ashton and Bryan M. ReasonsDr. Michael Berelowitz forre-election as Class IIIII directors at our Annual Meeting to hold office until our 20222023 Annual Meeting of 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 theday-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. Gerri Henwood, Karen FlynnWilliam Ashton and Bryan M. Reasons,Dr. Michael Berelowitz, current Class IIIII directors, have been nominated by our Board for election at the Annual Meeting for three-year terms that will expire at the 20222023 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 our business strategy and oversight of our 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 eightseven 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. Important general criteria and considerations for Board membership include:
General Criteria |
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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 our current and future business needs, including, among others, the combined mix of experience in the following areas:
Director Skills | ||||||
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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 committeeGovernance Committee determine whether a particular Board member or candidate possesses one or more of the skill sets, as well as whether those skills and/or other attributes qualify him or her for service on a 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 companyCompany 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.
BOARD REFRESHMENTPOTENTIAL DIRECTOR CANDIDATES
On an ongoing basis, the Governance Committee considers potential 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 may contact the Governance Committee in the manner described inunder the heading “Shareholder
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Communications to the Board.”Board” in this Proxy Statement. Shareholder nominations must be made according to the procedures required under our Bylaws and described in this Proxy Statement under the heading “Requirements for Submission of Shareholder Proposals for Next Year’s Annual Meeting.” Shareholder-recommended candidates and shareholder nominees whose nominations comply with these procedures and who meet the criteria referred to above will be evaluated by the Governance Committee in the same manner as the Governance Committee’s nominees.
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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 IIIII DIRECTORS— PRESENT TERMS EXPIRING AT THE ANNUAL MEETING AND PROPOSED TERMS TO EXPIRE IN 20222023
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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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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, Inc. (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 Chester County Economic Development Council. Ms. Flynn holds a B.S. inPre-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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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,
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BOARD OF DIRECTORS (continued)
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Inc., or IBAH, 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 clinical 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.
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.
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Age: 75 Director Since: 2014 | Committee Memberships: Audit, Nominating and Corporate Governance | 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. 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. | ||||
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Bryan M. Reasonshas been a director of the Company since 2017. Mr. Reasons has served as the Chief Financial Officer of Mallinckrodt plc, a global specialty pharmaceutical company, since March 18, 2019. Prior to that, Mr. Reasons served as the Senior Vice President, Finance and Chief Financial Officer of Impax Laboratories, Inc., or Impax, a specialty pharmaceutical company, from December 2012 until its merger with Amneal Pharmaceuticals LLC in May 2018, after which he served as Senior Vice President and, Finance and Chief Financial Officer of the surviving company, Amneal Pharmaceuticals, Inc. until the end of February 2019. 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 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 currently serves as a director and chair of the audit committee of Aclaris Therapeutics, Inc., a position he has held since April 2018. 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’ 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.
All of the nominees are current directors on our Board and, with the exception of Ms. Henwood, 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 Governance Committee’s recommendation on February 27, 2019.
Notice of Annual Meeting of Shareholders and 20192020 Proxy Statement | 75
BOARD OF DIRECTORS |
CLASS I DIRECTORS —TERMS EXPIRING AT THE 2021 ANNUAL MEETING OF SHAREHOLDERS
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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. |
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 13.2% of our outstanding stock as of March 15, 2019. 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
Skills & Qualifications: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 Innovative Solutions and Support, Inc., Amkor Technology, Inc. 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.
Notice of Annual Meeting of Shareholders and 2020 Proxy Statement 6
BOARD OF DIRECTORS (continued)
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 |
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Skills & Qualifications: As a long time director of our company, Mr. Weisman's extensive knowledge of our business and history, experience as a board member of multiple publicly-traded and privately-held companies and expertise in developing, financing and providing strong executive leadership to numerous growing life science companies contributed to our Board’s conclusion that he should serve as a director of our Company.
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Wayne B. Weismanhas 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 13.2% of our outstanding stock as of March 15, 2019. 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
Notice of Annual Meeting of Shareholders and 20192020 Proxy Statement | 87
BOARD OF DIRECTORS (continued)
Arnaud Ajdler | |||
Age: 44 Director Since | Committee Memberships | 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. | ||
Skills & Qualifications: Mr. Ajdler’s significant investment experience and extensive corporate governance experience gained from his participation on multiple public company boards, contributed to our Board’s conclusion that he should serve as a director of our Company. |
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
Notice of Annual Meeting of Shareholders 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. 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,. He is also an advisory board member of the Philadelphia-Israel Chamber of Commerce and2020 Proxy Statement Mid-Atlantic8 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.
BOARD OF DIRECTORS (continued)
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 hisin-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 IIIII DIRECTORS —TERMS EXPIRING AT THE 20202022 ANNUAL MEETING OF SHAREHOLDERS
Director Since: 2008 | Committee Memberships: None | 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.
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Finance & Accounting | |||||
| Life Sciences, Healthcare & Public Health | ||||
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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, Inc., or Agile, a specialty pharmaceutical company focused on 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 a B.S. from Drexel University.
Pharmaceutical Marketing & Sales
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.
| 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.
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Notice of Annual Meeting of Shareholders and 20192020 Proxy Statement | 9
BOARD OF DIRECTORS (continued)
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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 board of directors of Spectrum Pharmaceuticals, Inc. since February 2018, and 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 Academy of Notre Dame and Loyola University. 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.
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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Age: 52 Director Since: 2017 | Committee Memberships: Audit (Chair) | Other Public Directorships: Aclaris Therapeutics, Inc. | |||
Business Leadership & Operations Finance & Accounting Life Sciences, Healthcare & Public Health Pharmaceutical Marketing & Sales Risk Management
| Bryan M. Reasons has been a member of our Board since 2017. Mr. Reasons has served as the Chief Financial Officer of Mallinckrodt plc, a global specialty pharmaceutical company, since March 2019. Prior to that, Mr. Reasons served as the Senior Vice President, Finance and Chief Financial Officer of Impax Laboratories, Inc., or Impax, a specialty pharmaceutical company, from December 2012 until February 2019. 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 Cephalon, a biopharmaceutical company. Following the acquisition of Cephalon by Teva Pharmaceutical Industries Ltd., or Teva, 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 currently serves as a director and chair of the audit committee of Aclaris Therapeutics, Inc., a position he has held since April 2018. Mr. Reasons has a B.S. in accounting from Pennsylvania State University and an M.B.A. from Widener University d is a certified public accountant. | ||||
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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 Ltd. and Cellect Biotherapeutics Ltd., and he previously served on the board of directors of Oramed Pharmaceuticals Inc. from June 2010 to August 2016. 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 andco-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 and scientific expertise, contributed to our Board’saccounting matters, contributed to our Board’s conclusion that he should serve as a director of our Company.
Notice of Annual Meeting of Shareholders and 20192020 Proxy Statement | 10
BOARD OF DIRECTORS (continued)
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 suchnon-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 eachnon-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 CEO and Chairman of the Board with Ms. Henwood serving as our CEO 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, the Compensation 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 havingday-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.
Notice of Annual Meeting of Shareholders and 2019 Proxy Statement | 11
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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:
The Audit Committee oversees management of financial reporting, compliance and litigation risks, including risks related to our insurance, information technology, cybersecurity, human resources and regulatory matters, as well as the steps management has taken to monitor and control such exposures.
The Compensation Committee is responsible for overseeing the management of risks relating to our executive compensation policies, plans and arrangements and the extent to which those policies or practices increase or decrease risk for the Company.
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.
• | 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.
Notice of Annual Meeting of Shareholders and 2019 Proxy Statement | 12
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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 committeeCommittee conduct a rigorous annual self-evaluation of their performance and effectiveness.
PROCESS BEGINS | EVALUATION |
EVALUATION RESULTS |
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FOLLOW-UP | ||
The Governance Committee initiates and oversees the Board evaluation process, which is conducted in the early part of the calendar year. Each | During the evaluation, the Governance Committee assesses several factors, including:
| 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:
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. |
Notice of Annual Meeting of Shareholders and 2019 Proxy Statement | 13
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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.website at www.recrogainesville.com.
Notice of Annual Meeting of Shareholders and 2020 Proxy Statement | 12
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, the annual evaluations of our Board and its 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
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| M
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| M
| M
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William Ashton
| Yes
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| M
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| M
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Michael Berelowitz
| Yes
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| M
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| M
| M
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Winston Churchill
| Yes
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| M
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| M
| C
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Karen Flynn
| Yes
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| M
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| M
| C
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Gerri Henwood
| No
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| M
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| ||||||||
Bryan M. Reasons
| Yes
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| M
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| C
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Wayne Weisman
| Yes
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| C
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| M
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2018 Meetings
| N/A
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| 10
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| 5
| 7
| 4
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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 |
|
| 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 2018,2019, 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.
Notice of Annual Meeting of Shareholders and 2019 Proxy Statement | 14
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Among other things, the Audit Committee’s responsibilities include:
appointing, retaining, compensating, overseeing, evaluating, and, when appropriate, terminating our independent registered public accounting firm;
discussing with management and the independent registered public accounting firm our annual and quarterly financial statements and related disclosures;
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 business conduct and ethics 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. Altomari, Dr. Berelowitz, Ms. Flynn 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. Each of Mr. Altomari and Mr. Reasons also qualifies as an “audit committee financial expert” within the meaning of SEC regulations.
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 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;
Notice of Annual Meeting of Shareholders and 2019 Proxy Statement | 15
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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 ournon-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.
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.
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.
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 standards of NASDAQ, and that they are“non-employee directors” for purposes of Rule16b-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:
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;
Notice of Annual Meeting of Shareholders and 2019 Proxy Statement | 16
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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 andat 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 Dr. Berelowitz, Mr. Churchill (chair) and Mr. Weisman. The Board has determined thatAnnual Meeting, we encourage 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.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 2018 and as of the date of this Proxy Statement, none of the members of the Compensation Committee was or is oneto attend. All of our officers or employees, and none ofdirectors attended 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.
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. Our management is responsible for determining whether a transaction
Notice of2019 Annual Meeting of Shareholders and 2019 Proxy Statement | 17Shareholders.
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is a related party transaction subject to our policy, and upon subject determination, is responsible for disclosing the material facts concerning the transaction and the related party’s interest in our transaction to our Audit Committee. In reviewing and approving any such transactions, our Audit Committee is tasked to consider all relevant facts and circumstances with respect to the transaction and shall evaluate all available options, including ratification, revision or termination of the transaction. All of the transactions described under “Certain Relationships and Related Party Transactions” in this Proxy Statement either were approved or ratified in compliance with this policy.
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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Notice of Annual Meeting of Shareholdersand 2019 Proxy Statement | 18
We have designed and implemented our compensation program for ournon-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 ournon-employee directors:
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Ournon-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.
Notice of Annual Meeting of Shareholdersand 2019 Proxy Statement | 19
The following table provides summary information regarding 2018 compensation to ournon-employee directors.
Name
| Fees Earned or Paid in
| Option Awards ($)(1)
| Stock Awards ($)(1)
| Total ($) | ||||
Alfred Altomari
| 57,500
| 64,996
| 69,992
| 192,488
| ||||
William L. Ashton
| 47,500
| 64,996
| 69,992
| 182,488
| ||||
Michael Berelowitz
| 55,000
| 64,996
| 69,992
| 189,988
| ||||
Winston Churchill
| 56,500
| 64,996
| 69,992
| 191,488
| ||||
Karen Flynn
| 65,000
| 64,996
| 69,992
| 199,988
| ||||
Bryan M. Reasons
| 60,000
| 64,996
| 69,992
| 194,988
| ||||
Wayne B. Weisman
| 75,000
| 64,996
| 69,992
| 209,988
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As of December 31, 2018, (i) each of Messrs. Altomari, Churchill, and Weisman had stock options to purchase 60,965 shares of common stock, (ii) Mr. Ashton had stock options to purchase 72,965 shares of our common stock, (iii) Dr. Berelowitz had stock options to purchase 53,465 shares of our common stock, (iv) Ms. Flynn had stock options to purchase 38,965 shares of our common stock, and (v) Mr. Reasons had stock options to purchase 28,965 shares of our common stock. In addition, as of December 31, 2018, each of our directors had a restricted stock unit award to acquire 6,183 shares of our common stock.
Notice of Annual Meeting of Shareholdersand 2019 Proxy Statement | 20
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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 2018 and 2017.
Service
| 2018
| 2017
| ||||
Audit Fees
| $
| 524,500
|
| $546,000
| ||
Audit-Related Fees
| $
| 50,000
|
| $35,000
| ||
Tax Fees
| $
| 184,826
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| $429,369
| ||
All Other Fees
|
| —
|
| —
| ||
Total
| $
| 759,326
|
| $1,010,369
|
“Audit fees” represented the aggregate fees for professional services rendered for the audit of our financial statements and the review of our quarterly financial statements on Form10-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 related to our Registration Statements on FormS-3 andForm S-8.
“Tax fees” consisted of fees related to tax compliance, tax planning and tax advice.
AUDIT COMMITTEEPRE-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 permissiblenon-audit services provided by the independent registered public accounting firm will bepre-approved by the Audit Committee.
All such audit and permissiblenon-audit services werepre-approved in accordance with this policy during the fiscal year ended December 31, 2018. These services may include audit services, audit-related services, tax services and other services. The Audit Committee considers whether the provision of eachnon-audit service is compatible with maintaining the independence of our independent registered public accounting firm. The responsibility topre-approve audit andnon-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 2019 Proxy Statement | 21
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 2018, 2017 and 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 2018 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 contained in the Company’s Annual Report on Form10-K for the year ended December 31, 2018 with management. The Audit Committee has discussed with KPMG LLP the matters required to be discussed by Public Company Accounting Oversight Board Auditing Standard No. 1301, “Communication with Audit Committees.” In addition, KPMG LLP 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 LLP’s communications with the audit committee concerning independence, and the Audit Committee has discussed with KPMG LLP its independence.
The Audit Committee also considered whether the independent registered public accounting firm’s provision ofnon-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 Annual Report on Form10-K for the year ended December 31, 2018.
Audit Committee
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.
Among other things, the Audit Committee’s responsibilities include:
appointing, retaining, compensating, overseeing, evaluating, and, when appropriate, terminating our independent registered public accounting firm;
Notice of Annual Meeting of Shareholders and 2020 Proxy Statement 13
CORPORATE GOVERNANCE AND RISK MANAGEMENT (continued)
• | discussing with management and the independent registered public accounting firm our annual and quarterly financial statements and related disclosures; |
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 Compensation Committee reviews the performance and development 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, 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.
How to Communicate with our Directors | By mail: The Corporate Secretary, Recro Pharma, Inc. 490 Lapp Road Malvern, PA 19355 |
Notice of Annual Meeting of Shareholders and 2020 Proxy Statement 16
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 $65,000 in stock options, granted annually following our annual meeting of shareholders, and in each case vesting on the first anniversary of the date of grant |
Cash fees are paid quarterly, and are typically pro-rated for non-employee directors who cease to provide services mid-year. Our non-employee directors are also reimbursed for their business-related expenses incurred in connection with attendance at Board and Committee meetings and related activities. Our only employee director, Ms. Henwood, receives no separate compensation for her service in such capacity.
On December 5, 2019, we granted each of our non-employee directors “make-whole grants” of restricted stock units under our equity plan. The make-whole grants were awarded in lieu of any adjustments to outstanding restricted stock unit and option awards held by these non-employee directors upon the Separation.
The following table provides summary information regarding 2019 compensation to our non-employee directors.
Name | Fees Earned or Paid in Cash ($) | 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 |
Notice of Annual Meeting of Shareholders and 2020 Proxy Statement 17
(2) | Mr. Altomari is no longer a member of our Board as of March 6, 2020. |
(3) | Ms. Flynn is no longer a member of our Board as of January 8, 2020. |
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)
Alfred AltomariArnaud Ajdler
Michael Berelowitz, M.D.
Karen Flynn
Notice of Annual Meeting of Shareholdersand 20192020 Proxy Statement| 2220
The following table sets forth the name, age and position of each of our executive officers as of the date of this Proxy Statement:
Name | Position |
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Gerri Henwood | President, Chief Executive Officer | |||||
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Ryan D. Lake | Chief Financial Officer | 42 |
Gerri Henwood –— For biographical information for Gerri Henwood, see “Board of Directors –— Continuing Directors.”
Michael Celano has served as our Chief Operating Officer for manufacturing since January 2018, and as our Secretary since March 2018. He previously served as our Chief Financial Officer from July 2016 to December 2017. Prior to that, from May 2015 until June 2016, he was self-employed providing consulting services to healthcare 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 medical device company from 2009 until 2012 when it was successfully sold to Royal DSM. Previously, Mr. Celano served as Chief Financial Officer for BioRexis Pharmaceutical Corporation, a biopharmaceutical company, which was successfully sold to Pfizer. Prior to entering the biopharmaceutical industry, Mr. Celano served as a partner with KPMG LLP, and wasco-leader of its National Life Science Practice. Mr. Celano also wasco-leader of the Life Science Practice for Arthur Andersen before he joined KPMG. Mr. Celano currently serves as chairman of the board of directors of Orasure Technologies, Inc., a diagnostic and medical device company, a position he has held since April 2018, and has served as a director of Orasure since October 2006. Mr. Celano also served on the Board of Directors of Performance Heath, a consumer health care product manufacturing company from 2015 to 2016 when it was successfully sold to Patterson Medical (a Madison Dearborn company). Mr. Celano holds a B.S. degree in Accounting from St. Joseph’s University.
Ryan D. Lakehas 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.Chartered Global Management Accountant.
Notice of Annual Meeting of Shareholdersand 20192020 Proxy Statement | 2321
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 executive officers named in the “Summary Compensation Table” below. In 2018, our named executive officers were Gerri Henwood, our President and CEO; Michael Celano, our Chief Operating Officer; and Ryan Lake, our Chief Financial Officer.officers.
The following table sets forth information concerning the compensation of our named executive officers during the fiscal years ended December 31, 20182019 and December 31, 2017:2018:
Name and Principal Position
| Year | Salary ($) | Bonus ($)(1)(2) | Non-Equity Incentive Plan Compensation ($)(2) | Stock Awards ($)(3)(7) | Option Awards ($)(3) | All Other Compensation ($)(4) | Total ($) | ||||||||||
Gerri Henwood | 2018 | 598,662 | — | 183,600 | 1,008,000 | 600,000 | 37,172 | 2,427,434 | ||||||||||
President and Chief Executive Officer
| 2017 | 530,153 | 63,508 | 318,092 | 374,563 | 762,569 | 36,220 | 2,085,105 | ||||||||||
Michael Celano | 2018 | 415,261 | — | 84,925 | 403,200 | 240,000 | 45,488 | 1,188,874 | ||||||||||
Chief Operating Officer(5)
| 2017 | 362,124 | 28,910 | 144,850 | 231,628 | 188,666 | 22,719 | 978,897 | ||||||||||
Ryan Lake | 2018 | 309,231 | — | 63,240 | 231,840 | 138,000 | 41,823 | 784,134 | ||||||||||
Chief Financial Officer (6)
| — | — | — | — | — | — | — | — |
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 |