•reviewing and discussing with management and our independent registered public accounting firm our annual and quarterly financial statements and related disclosures as well as critical accounting policies and practices used by us;
•coordinating the oversight and reviewing the adequacy of our internal control over financial reporting;
•establishing policies and procedures for the receipt and retention ofaccounting-related complaints and concerns;
•recommending based upon the audit committee’s review and discussions with management and our independent registered public accounting firm whether our audited financial statements shall be included in our Annual Report onForm 10-K;
•monitoring the integrity of our financial statements and our compliance with legal and regulatory requirements as they relate to our financial statements and accounting matters;
•preparing the audit committee report required by SEC rules to be included in our annual proxy statement;
•reviewing all related person transactions for potential conflict of interest situations and approving all such transactions; and
•reviewing quarterly earnings releases.
All audit and
non-audit services, other thande minimisnon-audit services to be provided to us by our independent registered public accounting firm must be approved in advance by our audit committee.
BJ Bormann, Dawn Halkuff, John Schmid, and Jeffrey Sherman and Dawn Halkuff serve on the compensation committee, which is chaired by BJ Bormann. Our board of directors has determined that each member of the compensation committee is “independent” as defined in the applicable Nasdaq rules. During the fiscal year ended December 31, 2018,2020, the compensation committee met threeseven times. The compensation committee’s responsibilities include: •annually reviewing and recommending to the board of directors the corporate goals and objectives relevant to the compensation of our Chief Executive Officer;
chief executive officer;
•evaluating the performance of our chief executive officer in light of such corporate goals and objectives and based on such evaluation (i) reviewing and determining the cash compensation of our Chief Executive Officerchief executive officer and (ii) reviewing and approving grants and awards to our Chief Executive Officerchief executive officer under equity-based plans;
•reviewing and approving the cash compensation of our other executive officers;
•reviewing and establishing our overall management compensation, philosophy, and policy;
•overseeing and administering our compensation and similar plans;
•evaluating and assessing potential and current compensation advisors in accordance with the independence standards identified in the applicable Nasdaq rules;
•reviewing and approving our policies and procedures for the grant of equity-based awards;
equity-based• awards;
reviewing and recommending to the board of directors the compensation of our directors;
•preparing our compensation committee report if and when required by SEC rules;
•reviewing and discussing annually with management our “Compensation Discussion and Analysis,” if and when required, to be included in our annual proxy statement; and
•reviewing and approving the retention or termination of any consulting firm or outside advisor to assist in the evaluation of compensation matters.
Nominating and Corporate Governance Committee
Jonathan Rigby,
Dawn Halkuff, Marla Persky and
Dawn HalkuffJeffrey Sherman serve on the nominating and corporate governance committee, which is
chaired by Jonathan Rigby. Following the Annual Meeting, Marla Persky, Jeffrey Sherman and Dawn Halkuff will serve on the nominating and corporate governance committee, which will be chaired by Marla Persky. Our board of directors has determined that each member of the nominating and corporate governance committee is “independent” as defined in the applicable Nasdaq rules. During the fiscal year ended December 31,
2018,2020, the nominating and corporate governance committee met
threefive times. The nominating and corporate governance committee’s responsibilities include:
•developing and recommending to the board of directors criteria for board and committee membership;
•establishing procedures for identifying and evaluating board of director candidates, including nominees recommended by stockholders;
•reviewing the composition of the board of directors to ensure that it is composed of members containing the appropriate skills and expertise to advise us;
•identifying individuals qualified to become members of the board of directors;
•recommending to the board of directors the persons to be nominated for election as directors and to each of the board’s committees;
•developing and recommending to the board of directors a code of business conduct and ethics and a set of corporate governance guidelines; and
•overseeing the evaluation of our board of directors and management.
management; and•evaluating the Company's environmental, social, and governance ("ESG") efforts and initiatives.
The nominating and corporate governance committee considers candidates for board of directors membership suggested by its members and the
Chief Executive Officer.chief executive officer. Additionally, in selecting nominees for directors, the nominating and corporate governance committee will review candidates recommended by stockholders in the same manner and using the same general criteria as candidates recruited by the committee and/or recommended by our board of directors. Any stockholder who wishes to recommend a candidate for consideration by the committee as a nominee for director should follow the procedures described later in this proxy statement under the heading “Stockholder Proposals.” The nominating and corporate governance committee will also consider whether to nominate any person proposed by a stockholder in accordance with the provisions of our bylaws relating to stockholder nominations as described later in this proxy statement under the heading “Stockholder Proposals.”
Identifying and Evaluating Director Nominees. Our board of directors is responsible for filling vacancies on our board of directors and for nominating candidates for election by our stockholders each year in the class of directors whose term expires at the relevant annual meeting. The board of directors delegates the selection and nomination process to the nominating and corporate governance committee, with the expectation that other members of the board of directors, and of management, will be requested to take part in the process as appropriate. Generally, the nominating and corporate governance committee identifies candidates for director nominees in consultation with management, through the use of search firms or other advisors, through the recommendations submitted by stockholders or through such other methods as the nominating and corporate governance committee deems to be helpful to identify candidates. Once candidates have been identified, the nominating and corporate governance committee confirms that the candidates meet all of the minimum qualifications for director nominees established by the nominating and corporate governance committee. The nominating and corporate governance committee may gather information about the candidates through interviews, detailed questionnaires, comprehensive background checks or any other means that the nominating and corporate governance committee
deems to be appropriate in the evaluation process. The nominating and corporate governance committee then meets as a group to discuss and evaluate the qualities and skills of each candidate, both on an individual basis
and taking into account the overall composition and needs of our board of directors. Based on the results of the evaluation process, the nominating and corporate governance committee recommends candidates for the board of directors’ approval to fill a vacancy or as director nominees for election to the board of directors by our stockholders each year in the class of directors whose term expires at the relevant annual meeting.
Diversity of Executive Leadership Team and Board
Building an organization that is diverse, welcoming, and inclusive is not just a people priority for Xeris, it is a business priority. Our board of directors, executive leadership team, and employees are invested in making Xeris a diverse and inclusive company where everyone can bring their best selves to work with a sense of belonging. We have included diversity recruiting and retention as a key business goal, and we have taken steps to measure achievement of this goal by reviewing diversity metrics on a monthly basis. In addition, we have ongoing partnerships with diversity-focused recruiting firms and we have initiated partnerships with organizations that offer diversity-focused growth and development opportunities for our employees at all levels.
We are proud to have both an executive leadership team and a board of directors that represents our customers and employees by bringing diverse ideas and backgrounds to the table. While we do not have a specific policy with regard to the consideration of diversity in identifying director nominees, we believe it is essential to have directors representing diversity in many areas, including but not limited to race, ethnicity, gender, age, abilities, sexual identity, background, and professional experience.
Board and Committee Meetings Attendance
The full board of directors met fiveten times during 2018 and the pricing committee for our initial public offering met once during 2018.2020. During 2018,2020, each member of the board of directors attended in person or participated in 75% 90% or more of the aggregate of (i) the total number of meetings of the board of directors (held during the period for which such person has been a director) and (ii) the total number of meetings held by all committees of the board of directors on which such person served (during the periods that such person served). Director Attendance at Annual Meeting of Stockholders
Directors are responsible for attending the
annual meetingAnnual Meeting of stockholders to the extent practicable.
We did not hold anAll directors attended the annual meeting of stockholders in
2018.2020.
Policy on Trading, Pledging and Hedging of Company Stock
Certain transactions in our securities (such as purchases and sales of publicly traded put and call options and short sales) create a heightened compliance risk or could create the appearance of misalignment between management and stockholders. In addition, securities held in a margin account or pledged as collateral may be sold without consent if the owner fails to meet a margin call or defaults on the loan, thus creating the risk that a sale may occur at a time when an officer or director is aware of material,non-public nonpublic information or otherwise is not permitted to trade in Company securities. Our insider trading policy expressly prohibits short sales and derivative transactions of our stock by our executive officers, directors, employeesand certain designated consultants and contractors, including short sales of our securities. Our insider trading policy expressly prohibits, without the advance approval of our audit committee, purchases or sales of puts, calls, or other derivative securities of the company or any derivative securities that provide the economic equivalent of ownership. Code of Business Conduct and Ethics
We have adopted a written code of business conduct and ethics that applies to our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer, or controller, orand persons performing similar functions. A current copy of the code is posted on the corporate governance section of our website, which is located athttps://investors.xerispharma.com/corporate-governance/documents-charters.www.xerispharma.com/investors/corporate-governance#corporate-governance_goverance-documents. If we make any substantive amendments to, or grant any waivers from, the code of business conduct and ethics for any officer or director, we will disclose the nature of such amendment or waiver on our website or in a current report onForm 8-K. Board’s Leadership Structure and Role in Risk Oversight
Mr. Edick serves as our chief executive officer and as chairman of the board. The board of directors believes that having our chief executive officer as chairman of the board facilitates the board of directors’ decision-making process because Mr. Edick
has first-hand knowledge of our operations and the major issues facing us. This also enables Mr. Edick to act as the key link between the board of directors and other members of management.
Our board of directors has appointed Mr. Schmid to serve as our lead independent director. As lead independent director, Mr. Schmid presides over meetings of our independent directors, serves as a liaison between our chairman of the board of directors and the independent directors and performs such additional duties as our board of directors may otherwise determine and delegate.
Risk is inherent to every business, and how well a business manages risk can ultimately determine its success. We face a number of risks, including risks relating to our financial condition, development and commercialization activities, operations, strategic direction, and intellectual property. Management is responsible for the
day-to-day management of risks we face, while our board of directors, as a whole and through its committees, has responsibility for the oversight of risk management. In its risk oversight role, our board of directors has the responsibility to satisfy itself that the risk management processes designed and implemented by management are adequate and functioning as designed.
The role of the board of directors in overseeing the management of our risks is conducted primarily through committees of the board of directors, as disclosed in the descriptions of each of the committees above and in the charters of each of the committees. The full board of directors (or the appropriate board committee in the case of risks that are under the purview of a particular committee) discusses with management our major risk exposures, their potential impact on us, and the steps we take to manage them. When a board committee is responsible for evaluating and overseeing the management of a particular risk or risks, the chairman of the relevant committee reports on the discussion to the full board of directors during the committee reports portion of the next board meeting. This enables the board of directors and its committees to coordinate the risk oversight role, particularly with respect to risk interrelationships.
Communication with the Directors of Xeris Pharmaceuticals, Inc.
Any interested party with concerns about our company may report such concerns to the board of directors or the chairman of our board of directors and nominating and corporate governance committee, by submitting a written communication to the attention of such director at the following address:
c/o Xeris Pharmaceuticals, Inc.
,180 N. LaSalle Street, Suite 1600
You may submit your concern anonymously or confidentially by postal mail. You may also indicate whether you are a stockholder, customer, supplier, or other interested party.
A copy of any such written communication may also be forwarded to Xeris’ legal counsel, and a copy of such communication may be retained for a reasonable period of time. The director may discuss the matter with Xeris’ legal counsel, with independent advisors, with
non-management directors, or with Xeris’ management, or may take other action or no action as the director determines in good faith, using reasonable judgment, and applying his or her own discretion.
Communications may be forwarded to other directors if they relate to important substantive matters and include suggestions or comments that may be important for other directors to know. In general, communications relating to corporate governance and
long- term long-term corporate strategy are more likely to be forwarded than communications relating to ordinary business affairs, personal grievances, and matters as to which we tend to receive repetitive or duplicative communications.
The audit committee oversees the procedures for the receipt, retention, and treatment of complaints received by Xeris regarding accounting, internal accounting controls, or audit matters, and the confidential, anonymous submission by employees of concerns regarding questionable accounting, internal accounting controls or auditing matters. Xeris has also established atoll-free telephone number for the reporting of such activity, which is866-275-3202.
Board and Committee Evaluations
The nominating and corporate governance committee oversees the annual board and committee evaluation process. Generally, the board and each committee conduct self-evaluations by means of written questionnaires completed by each director and committee member. The anonymous responses are summarized and provided to the board and each committee at their next meetings in order to facilitate an examination and discussion by the board and each committee of the effectiveness of the board and committees, board and committee structure and dynamics, and areas for possible improvement. The nominating and
corporate governance committee establishes the board and committee evaluation process each year and may determine to use an independent third-party evaluation process from time to time in the future.
Non-Employee Director Compensation Table
– 2018- 2020
The table below shows all compensation paid to our
non-employee directors during
2018. | | | | | | | | | | | | |
Name | | Fees Earned or
Paid in Cash
($) | | | Option
Awards
($) (1) | | | Total
($) | |
BJ Bormann (2) | | | 38,250 | | | | 134,013 | | | | 172,263 | |
Robert C. Faulkner (3) | | | — | | | | — | | | | — | |
Dawn Halkuff (4) | | | 33,750 | | | | 134,013 | | | | 167,763 | |
Cary McNair (3) | | | — | | | | — | | | | — | |
Marla Persky (5) | | | 35,250 | | | | 134,013 | | | | 169,263 | |
Jonathan Rigby (6) | | | 48,250 | | | | 76,575 | | | | 124,825 | |
John Schmid (7) | | | 52,750 | | | | 172,000 | | | | 224,750 | |
Jeffrey Sherman (8) | | | 30,750 | | | | 134,013 | | | | 164,763 | |
| | | | | | | | | | | | | | | | | | | | |
| Name | | Fees Earned or Paid in Cash ($) (1) | | Option Awards ($) (2) | | Total
($) |
BJ Bormann (3) | | 55,000 | | | 33,234 | | | 88,234 | |
Dawn Halkuff (4) | | 45,000 | | | 33,234 | | | 78,234 | |
Marla Persky (5) | | 51,000 | | | 33,234 | | | 84,234 | |
John Schmid (6) | | 77,000 | | | 33,234 | | | 110,234 | |
Jeffrey Sherman (7) | | 45,000 | | | 33,234 | | | 78,234 | |
Mark Thierer (8) | | 32,250 | | | 33,234 | | | 65,484 | |
| | | | | | |
(1) Amounts represent annual fees earned for services on our board of directors rendered by each member of the board of directors. Of such fees, the following amounts were deferred under the deferred compensation plan adopted in April 2020 (discussed below):
(1) | Each equity award was granted pursuant to our 2011 Stock Option/Issuance Plan, or 2011 Plan, and, unless otherwise described in the footnotes, the shares vest in 24 monthly equal installments commencing as of May 15, 2018, in all cases subject to the optionee’s continuous service to us through each vesting date. The shares subject to the options are early exercisable. Upon a change in control of the Company while the optionee is providing services to us and where the option is not assumed, continued, or substituted, 100% of the shares subject to the option shall vest and become exercisable immediately prior to the effective date of the change in control.
| | | | | | | | | | |
(2) | Name | | ($) |
| Dr. Bormann joined our board of directors in April 2018. The amounts reported were granted pursuant to the offer agreement, dated March 30, 2018, by and between Dr. Bormann and us. As of December 31, 2018, Dr. Bormann held unexercised options to purchase 19,650 shares of our common stock. | | 20,625 | |
(3) | Investor-appointed directors did not receive fees or other compensation for their service on our board of directors. Messrs. Faulkner and McNair departed from our board of directors in April 2018.
|
(4) | Ms. Halkuff joined our board of directors in April 2018. The amounts reported were granted pursuant to the offer agreement, dated April 16, 2018, by and between Ms. Halkuff and us. As of December 31, 2018, Ms. Halkuff held unexercised options to purchase 19,650 shares of our common stock. | | 33,750 | |
(5) | Ms. Persky joined our board of directors in April 2018. The amounts reported were granted pursuant to the offer agreement, dated March 30, 2018, by and between Ms. Persky and us. As of December 31, 2018, Ms. Persky held unexercised options to purchase 19,650 shares of our common stock. | | 9,562 | |
(6) | The amounts reported were granted pursuant to the offer agreement, dated September 15, 2017, by and between Mr. Rigby and us. As of December 31, 2018, Mr. Rigby held unexercised options to purchase 39,344 shares of our common stock.
|
(7) | The amounts reported were granted pursuant to the offer agreement, dated August 31, 2017, by and between Mr. Schmid and us. On December 31, 2017,
| | 28,875 | |
| Dr. Sherman | | 16,875 | |
| Mr. Schmid early exercised all 5,659 stock options, 1,887 of which remained unvested as of December 31, 2018. As of December 31, 2018, Mr. Schmid held unexercised options to purchase 25,220 shares of our common stock.Thierer(8) | | 32,250 | |
(8) | Dr. Sherman joined our board of directors in April 2018. The amounts reported were granted pursuant to the offer agreement, dated March 30, 2018, by and between Dr. Sherman and us. As of December 31, 2018, Dr. Sherman held unexercised options to purchase 19,650 shares of our common stock.
|
(2) The amounts reported in the Option Awards column represent the grant date fair value of the stock options granted to our non-employee directors as of the grant date as computed in accordance with Accounting Standards Codification Topic 718 issued by the Financial Accounting Standards Board, not including any estimates of forfeitures. The assumptions used in calculating the grant date fair value of the stock options reported in the Option Awards column are set forth in the notes to our audited financial statements included in our Annual Report on Form 10-K. Note that the amounts reported in this column reflect the accounting cost for these stock options and do not correspond to the actual economic value that may be received by our non-employee directors from the options.
(3) As of December 31, 2020, Dr. Bormann held unexercised options to purchase 50,878 shares of our common stock.
(4) As of December 31, 2020, Ms. Halkuff held unexercised options to purchase 50,878 shares of our common stock.
(5) As of December 31, 2020, Ms. Persky held unexercised options to purchase 50,878 shares of our common stock.
(6) Mr. Schmid serves as our lead independent director. As of December 31, 2020, Mr. Schmid held unexercised options to purchase 56,448 shares of our common stock.
(7) As of December 31, 2020, Dr. Sherman held unexercised options to purchase 50,878 shares of our common stock.
(8) Mr. Thierer resigned from our board of directors in December 2020. As of December 31, 2020, Mr. Thierer held unexercised options to purchase 7,641 shares of our common stock. Subsequent to his resignation, the deferred fees noted in footnote (1) above were paid to Mr. Thierer.
Non-Employee Director Compensation Policy
Under our director compensation program, we pay our
non-employee directors a cash retainer for service on the board of directors and for service on each committee on which the director is a member. The chairman of each committee receives
a higheran additional retainer for such service as set forth below. These fees are payable in arrears in four equal quarterly installments on the last day of each quarter, provided that the amount of such payment is prorated for any portion of such quarter that the director is not serving on our board of
directors.directors or such committee. The fees paid to
non-employee directors for service on the board of directors and for service on each committee of the board of directors on which the director is a member are as follows:
| | | | | | | | |
| | | MEMBER
ANNUAL
FEE
($) | | | CHAIRMAN
ADDITIONAL
ANNUAL FEE
($) | |
Board of Directors | | | 35,000 | | | | 20,000 | |
Audit Committee | | | 8,000 | | | | 8,000 | |
Compensation Committee | | | 6,000 | | | | 6,000 | |
Nominating and Corporate Governance Committee | | | 4,000 | | | | 4,000 | |
| | | | | | | | | | | | | | |
| | MEMBER
ANNUAL
FEE
($) | | CHAIRMAN ADDITIONAL
ANNUAL FEE
($) |
| Board of Directors | | 35,000 | | | 20,000 | |
| Audit Committee | | 8,000 | | | 8,000 | |
| Compensation Committee | | 6,000 | | | 6,000 | |
| Nominating and Corporate Governance Committee | | 4,000 | | | 4,000 | |
We also
provide an annual fee of $20,000 for our lead independent director (to the extent such lead independent director is not the chairman) and reimburse our
non-employee directors for reasonable travel and out-of-pocket expenses incurred in connection with attending our board of director and committee meetings.
In addition, each new non-employee director elected or appointed to our board of directors will be granted an option to purchase 19,650 shares of our common stock on the date of such director’s election or appointment to the board of directors. Such options will vest over three years, subject to continued service as a director through such vesting date(s). On the date of each annual meeting of stockholders of our company, each non-employee director will be granted an additional option to purchase 11,228 shares of our common stock, which will vest in full upon the earlier to occur of the first anniversary of the date of grant or the date of the next annual meeting subject to continued service as a director through such vesting date(s).
This program is intended to provide a total compensation package that enables us to attract and retain qualified and experienced individuals to serve as directors and to align our directors’ interests with those of our stockholders.
In April 2020, we adopted a deferred compensation plan pursuant to which non-employee directors and executive management deferred payment of all or a portion of their annual cash retainers, annual base salaries and annual cash performance-based compensation pursuant to the terms and conditions of the plan and then receive such deferred amounts in a lump sum on the first to occur of the following: (a) a specific payment date, (b) within 90 days after the individual incurs a "separation from service" within the meaning of Section 409A of the Code, (c) within 90 days after the consummation of a "change in control event" within the meaning of Section 409A of the Code, (d) within 90 days after the date of the individual’s death, or (e) within 90 days after the date of the individual’s disability. Amounts deferred are 100% vested and accrue interest at a rate of two percent per annum. As of December 31, 2020, total fees and compensation of $1.7 million were deferred under the plan.
Our named executive officers for the year ended December 31,
20182020 are:
•Paul Edick, our President and Chief Executive Officer;
•John Shannon, our Executive Vice President and Chief Operating Officer; and
Barry Deutsch,•Beth Hecht, our Chief Financial Officer.
Senior Vice President, General Counsel and Corporate Secretary.
Summary Compensation Table
The following table sets forth information regarding compensation awarded to, earned by, or paid to each of our named executive officers for services rendered to us in all capacities during the fiscal year ended December 31,
2018.2020. The following table also presents information regarding the compensation awarded to, and earned by, and paid to each such individual during the fiscal year ended December 31,
2017,2019, to the extent such individual was a named executive officer for such year.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
NAME AND PRINCIPAL
POSITION | | YEAR | | | SALARY
($) | | | BONUS
($) (1) | | | OPTION
AWARDS
($) (2) | | | NON-EQUITY
INCENTIVE
PLAN
COMPENSATION
($) (3) | | | ALL OTHER
COMPENSATION
($) | | | TOTAL
($) | |
Paul Edick, | | | 2018 | | | | 535,000 | | | | 119,900 | | | | 329,626 | | | | 329,725 | | | | — | | | | 1,314,251 | |
President and Chief Executive Officer (4) | | | 2017 | | | | 489,583 | | | | — | | | | 657,134 | | | | 250,000 | | | | — | | | | 1,396,717 | |
John Shannon, | | | 2018 | | | | 368,750 | | | | — | | | | 344,036 | | | | 205,700 | | | | — | | | | 918,486 | |
Executive Vice President and Chief Operating Officer (5) | | | 2017 | | | | 218,750 | | | | — | | | | 168,029 | | | | 100,834 | | | | — | | | | 487,613 | |
Barry Deutsch, Chief Financial Officer (6) | | | 2018 | | | | 276,095 | | | | — | | | | 448,144 | | | | 132,000 | | | | — | | | | 856,239 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| NAME AND PRINCIPAL POSITION | | YEAR | | SALARY ($)(1) | | STOCK AWARDS ($) (2) | | OPTION AWARDS ($) (3) | | NON-EQUITY INCENTIVE PLAN COMPENSATION ($) (4) | | ALL OTHER COMPENSATION ($) (5) | | TOTAL
($) |
| | | | | | | | | | | | | | |
| Paul Edick, | | 2020 | | 626,977 | | 1,178,450 | | | — | | | 453,222 | | | 5,700 | | | 2,264,349 | |
| Chief Executive Officer | | 2019 | | 598,277 | | 1,735,000 | | | 1,598,580 | | | 370,181 | | | 5,600 | | | 4,307,638 | |
| | | | | | | | | | | | | | |
| John Shannon, | | 2020 | | 473,658 | | 414,050 | | | 246,300 | | | 300,000 | | | 2,420 | | | 1,436,428 | |
President and Chief Operating
Officer | | 2019 | | 444,479 | | — | | | 639,432 | | | 178,500 | | | 5,171 | | | 1,267,582 | |
| | | | | | | | | | | | | | |
| Beth Hecht, | | 2020 | | 392,852 | | 286,650 | | | 369,450 | | | 189,808 | | | 5,634 | | | 1,244,394 | |
Senior Vice President, General Counsel and
Corporate Secretary | | 2019 | | 364,417 | | — | | | 259,769 | | | 145,782 | | | 5,600 | | | 775,568 | |
| | | | | | | | | | | | | | |
(1) Represents salary earned during 2020 and 2019. Of the amounts earned in 2020, the following amounts were deferred under the deferred compensation plan adopted in April 2020:
(1) | Amounts reported in the bonus column represent the amount of each bonus paid to our named executive officers that was discretionarily awarded above target under the cash bonus program and took into account individual and company achievements.
| | | | | | | | | | |
| Name | | ($) |
| Mr. Edick | | 397,106 | |
| Mr. Shannon | | 179,932 | |
| Ms. Hecht | | 59,315 | |
(2) Amounts reflect the grant date fair value of restricted stock unit awards granted in 2019 or 2020, in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification Topic 718, or ASC 718. Such grant date fair value does not take into account any estimated forfeitures related to service-vesting conditions. Assumptions used in the calculation of these amounts are set forth in the notes to our audited financial statements included in our Annual Report on Form 10-K. These amounts do not correspond to the actual value that may be recognized by the named executive officers upon vesting of applicable awards.
(3) Amounts reflect the grant date fair value of option awards granted or modified in 2019 or 2020, as applicable, in accordance with ASC 718. Such grant date fair value does not take into account any estimated forfeitures related to service-vesting conditions. Assumptions used in the calculation of these amounts are set forth in the notes to our audited financial statements included in our Annual Report on Form 10-K. These amounts do not correspond to the actual value that may be recognized by the named executive officers upon vesting of applicable awards.
(4) The amounts reported reflect a cash bonus approved by our board of directors based on achievement of individual and company performance goals in 2019 or 2020, as applicable. Of the amounts earned for 2020 performance, the following amounts were deferred under the compensation plan adopted in April 2020:
(2) | Amounts reflect the grant date fair value of option awards granted or modified in 2017 or 2018, as applicable, in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification Topic 718, or ASC 718. Such grant date fair value does not take into account any estimated forfeitures related to service-vesting conditions. Assumptions used in the calculation of these amounts are included in Note 2 to the notes to our audited financial statements included in our Annual Report on Form 10-K. These amounts do not correspond to the actual value that may be recognized by the named executive officers upon vesting of applicable awards.
| | | | | | | | | | |
| Name | | ($) |
| Mr. Edick | | 339,916 | |
| Mr. Shannon | | 112,500 | |
| Ms. Hecht | | 28,471 | |
(3) | The amounts reported reflect a cash bonus approved by our board of directors based on achievement of individual and company performance goals in 2017 or 2018, as applicable.
|
(4) | Mr. Edick commenced his employment with us in January 2017.
|
(5) | Mr. Shannon commenced his employment with us in February 2017.
|
(6) | Mr. Deutsch was appointed as our Chief Financial Officer in April 2018.
|
(5) The amounts reported reflect the Company's matching contributions under its 401(k) plan.
We use base salaries to recognize the experience, skills, knowledge and responsibilities required of all our employees, including our named executive officers. Base salaries are reviewed annually, typically in connection with our annual performance review process, and adjusted from time to time to realign salaries with market levels after taking into account individual responsibilities, performance and experience.
We do not have a formal performance-based bonus plan. Our employment agreements with our named executive officers provide that the executive may be eligible to earn an annual performance bonus of up to a target percentage of the executive’s base salary, as described further below under the section entitled “– Employment“Employment Arrangements and Severance Agreements with our Named Executive Officers.” From time to time, ourOur board of directors or compensation committee may approve annual bonuses for our named executive officers based on individual performance, company performance or as otherwise determined to be appropriate, including up to amounts in excess of 100% of an individual’s target bonus.
Although we do not have a formal policy with respect to the grant of equity incentive awards to our executive officers, or any formal equity ownership guidelines applicable to them, we believe that equity grants provide our executive officers with a strong link to our long-term performance, create an ownership culture and help to align the interests of our executive officers and our stockholders. In addition, we believe that equity grants with a time-based vesting feature promote executive retention because this feature incentivizes our executive officers to remain in our employment during the vesting period. Accordingly, our board of directors periodically reviews the equity incentive compensation of our named executive officers and from time to time may grant equity incentive awards to them in the form of stock options and restricted stock units.
We typically grant equity incentive awards at the start of employment to each executive officer and our other employees as well as on an annual basis for retention purposes. We set the option exercise price
and grant date fair value based on the closing price of our common stock as reported on The Nasdaq Global Select Market on the date of grant.
Employment Arrangements and Severance Agreements with our Named Executive Officers
We have entered into employment agreements with each of our named executive officers. These agreements set forth the initial terms and conditions of each executive’s employment with us, including base salary, target annual bonus opportunity and standard employee benefit plan participation.
These employment agreements provide for “at will” employment. The material terms of these employment agreements with our named executive officers are described below. The terms “cause,” “material change” and
“change"change in
control”control" used in each existing employment agreement are defined in each employment agreement.
We entered into an employment agreement with Mr.
Paul Edick,
our President and Chief Executive Officer, on January 9, 2017, pursuant to which
Mr. Edick is entitled to receive an annual base salary of $500,000, an annual target bonus equal to 50% of his annual base salary based upon our board of directors’ assessment of Mr. Edick’s performance and our attainment of targeted goals approved by the board of directors, an equity grant and eligibility to participate in our benefit plans generally. This employment agreement also contains provisions related to confidentiality, inventions assignment and non-competition, pursuant to which Mr. Edick agrees to refrain from disclosing our confidential information, re-affirms the obligations contained in his Proprietary Information and Inventions Agreement and agrees not to compete with us during his employment.Mr. Edick’s employment agreement provides that, in the event that his employment is terminated by us without “cause” or by him upon a “material change,” subject to the execution and effectiveness of a separation agreement and release, he will be entitled to receive (in addition to accrued compensation and benefits through the date of termination) (i) salary continuation based on his then-current base salary for 11 months and (ii) reimbursement of COBRA premiums for health benefit coverage for him and his immediate family in an amount equal to the monthly employer contribution that we would have made to provide health insurance to Mr. Edick had he remained employed with us for up to 11 months following termination.
Upon a “change in control,” subject to the execution and effectiveness of a release, Mr. Edick shall be eligible to receive a lump sum amount equal to 18 months of his then-current base salary (but in no event less than $500,000), his annual target bonus reflective for a period of 18 months and 100% accelerated vesting of his outstanding stock options. Furthermore, the employment agreement provides that our board of directors may, in its sole discretion, consider providing Mr. Edick with a transaction bonus at the time of a “change in control.” If he is terminated upon the effectiveness of the “change in control,” he shall also receive reimbursement of
COBRA premiums for health benefit coverage for him and his immediate family in an amount equal to the monthly employer contribution that we would have made to provide health insurance to Mr. Edick had he remained employed with us for up to 18 months following termination.
We have entered into anwas amended and restated employment agreement with Mr. Edickin 2018, pursuant to which Mr. Edick is entitled to receive an annual base salary and an annual target bonus equal to a percentage of his annual base salary based upon our board of directors’ assessment of Mr. Edick’s performance and our attainment of targeted goals as set by the board of directors in its sole discretion. For the fiscal year ending December 31, 2019,2020, Mr. Edick’s annual base salary, is $599,500effective as of February 1, 2020, was $629,475 and his annual target bonus iswas 60% of his annual base salary. This employment agreement also contains provisions related to confidentiality, inventions assignment and non-competition, pursuant to which Mr. Edick re-affirmedreaffirmed the obligations contained in his Proprietary Information and Inventions Agreement. Mr. Edick’s amended and restated employment agreement provides that, in the event that his employment is terminated by us without “cause” or by himhe resigns for “good reason,” subject to the execution and effectiveness of a separation agreement and release, he will be entitled to receive (i) an amount equal to (x) 18 months of base salary payable on our normal payroll cycle if such termination is not in connection withwithin 12 months of a “change in control” or (y) 18 months1.5 times the sum of his base salary plus histhe average targetof his incentive compensation received for the three preceding fiscal years if such termination is in connection withwithin 12 months of a “change in control,” and (ii) reimbursement of COBRA premiums for health benefit coverage for him in an amount equal to the monthly employer contribution that we would have made to provide health insurance to Mr. Edick had he remained employed with us for up to 18 months. In addition, if within 12 months following a “change in control,” Mr. Edick is terminated by us without “cause” or he resigns for “good reason,” all time-based stock options and other time-based stock-based awards held by Mr. Edick issued after the date of the amended and restated employment agreement will accelerate and vest immediately.
We entered into an employment agreement with Mr. John Shannon, our Executive Vice President and Chief Operating Officer, on February 16, 2017 pursuant to which Mr. Shannon is entitled to receive an annual base salary of $250,000, an annual target bonus equal to 40% of his annual base salary based upon our board of directors’ assessment of Mr. Shannon’s performance and our attainment of targeted goals as approved by the board of directors, an equity grant and eligibility to participate in our benefit plans generally. This employment agreement also contains provisions related to confidentiality, inventions assignment and non-competition, pursuant to which Mr. Shannon agrees to refrain from disclosing our confidential information, re-affirms the obligations contained in his Proprietary Information and Inventions Agreement and agrees not to compete with us during his employment. Mr. Shannon’s employment agreement provides that, in the event that his employment is terminated by us without “cause” or by him upon a “material change,” subject to the execution and effectiveness of a separation agreement and release, he will be entitled to receive (in addition to accrued compensation and benefits through the date of termination) (i) salary continuation based on his then-current base salary for 10 months and (ii) reimbursement of COBRA premiums for health benefit coverage for him and his immediate family in an amount equal to the monthly employer contribution that we would have made to provide health insurance to Mr. Shannon had he remained employed with us for up to 10 months following termination.Upon a “change in control,” subject to the execution and effectiveness of a release, Mr. Shannon shall be eligible to receive a lump sum amount equal to 12 months of his then-current base salary (but in no event less than $250,000), his annual target bonus and 100% accelerated vesting of his outstanding stock options. Furthermore, the employment agreement provides that our board of directors may, in its sole discretion, consider providing Mr. Shannon with a transaction bonus at the time of a “change in control.” If he is terminated upon the effectiveness of the “change in control,” he shall also receive reimbursement of COBRA premiums for health benefit coverage for him and his immediate family in an amount equal to the monthly employer contribution that we would have made to provide health insurance to Mr. Shannon had he remained employed with us for up to 12 months following termination.
We have entered into anwas amended and restated employment agreement with Mr. Shannonin 2018, and subsequently amended on August 18, 2020, pursuant to which Mr. Shannon is entitled to receive an annual base salary and an annual target bonus equal to a percentage of his annual base salary based upon our board of directors’ assessment of Mr. Shannon’s performance and our attainment of targeted goals as set by the board of directors in its sole discretion. For the fiscal year ending December 31, 2019,2020, Mr. Shannon’s annual base salary, is $446,250effective as of February 1, 2020, was $459,637 and his annual target bonus iswas 40% of his annual base salary. ThisEffective August 20, 2020, Mr. Shannon was promoted to President and Chief Operating Officer at which time his annual base salary was increased to $500,000 and his annual target bonus was increased to 50% of his annual base salary. Mr. Shannon's employment agreement also contains provisions related to confidentiality, inventions assignment and non-competition, pursuant to which Mr. Shannon re-affirmedreaffirmed the obligations contained in his Proprietary Information and Inventions Agreement. Mr. Shannon’s amended and restated employment agreement provides that, in the event that his employment is terminated by us without “cause” or by himhe resigns for “good reason,” subject to the execution and effectiveness of a separation agreement and release, he will be entitled to receive (i) an amount equal to (x) 15 months of base salary payable on our normal payroll cycle if such termination is not in connection withwithin 12 months of a “change in control” or (y) 15 months1.25
times the sum of
his base salary plus
histhe average
targetof his incentive compensation received for the three preceding fiscal years if such termination is
in connection withwithin 12 months of a “change in control,” and (ii) reimbursement of COBRA premiums for health benefit coverage for him in an amount equal to the monthly employer contribution that we would have made to provide health insurance to Mr. Shannon had he remained employed with us for up to 15 months. In addition, if within 12 months following a “change in control,” Mr. Shannon is terminated by us without “cause” or he resigns for “good reason,” all time-based stock options and other time-based stock-based awards held by Mr. Shannon issued after the date of the amended and restated employment agreement will accelerate and vest immediately.
Barry Deutsch
Beth Hecht
We entered into an employment agreement with Mr. Barry Deutsch,Ms. Hecht, our Chief Financial Officer,Senior Vice President, General Counsel and Secretary, on June 6,10, 2018, as amended on January 1, 2019, pursuant to which Mr. DeutschMs. Hecht is entitled to receive an annual base salary and an annual target bonus equal to a percentage of hisher annual base salary based upon our board of directors’ assessment of Mr. Deutsch’sMs. Hecht’s performance. For the fiscal year ending December 31, 2019, Mr. Deutsch’sMs. Hecht’s annual base salary, is $349,500effective as of February 1, 2020, was $395,434 and hisher annual target bonus is 40% of hisher annual base salary. This employment agreement also contains provisions related to confidentiality, inventions assignment and non-competition, pursuant to which Mr. Deutsch re-affirmedMs. Hecht reaffirmed the obligations contained in his Employee Confidentiality, Noncompetitionher Proprietary Information and AssignmentInventions Agreement. Mr. Deutsch’sMs. Hecht’s employment agreement provides that, in the event that hisher employment is terminated by us without “cause” or by himshe resigns for “good reason,” subject to the execution and effectiveness of a separation agreement and release, heshe will be entitled to receive (i) an amount equal to (x) 15 months of base salary payable on our normal payroll cycle if such termination is not in connection withwithin 12 months of a “change in control” or (y) 15 months1.25 times the sum of her base salary plus histhe average targetof her incentive compensation received for the three preceding fiscal years if such termination is in connection withwithin 12 months of a “change in control,” and (ii) reimbursement of COBRA premiums for health benefit coverage for himher in an amount equal to the monthly employer contribution that we would have made to provide health insurance to Mr. DeutschMs. Hecht had heshe remained employed with us for up to 15 months. In addition, if within 12 months following a “change in control,” Mr. DeutschMs. Hecht is terminated by us without “cause” or heshe resigns for “good reason,” all time-based stock options and other time-based stock-based awards held by Mr. DeutschMs. Hecht issued after the date of the employment agreement will accelerate and vest immediately.
Deferred Compensation Plan
In April 2020, we adopted a deferred compensation plan pursuant to which non-employee directors and executive management deferred payment of all or a portion of their annual cash retainers, annual base salaries and annual cash performance-based compensation pursuant to the terms and conditions of the plan and then receive such deferred amounts in a lump sum on the first to occur of the following: (a) a specific payment date, (b) within 90 days after the individual incurs a "separation from service" within the meaning of Section 409A of the Code, (c) within 90 days after the consummation of a "change in control event" within the meaning of Section 409A of the Code, (d) within 90 days after the date of the individual’s death, or (e) within 90 days after the date of the individual’s disability. Amounts deferred are 100% vested and accrue interest at a rate of two percent per annum. As of December 31, 2020, total fees and compensation of $1.7 million were deferred under the plan.
Outstanding Equity Awards at
20182020 Fiscal Year-End
The following table sets forth information concerning outstanding equity awards held by our named executive officers as of December 31,
2018. | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | OPTION AWARDS (1) | | | STOCK AWARDS | |
NAME | | VESTING
COMMENCEMENT
DATE | | | NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS (#)
EXERCISABLE | | | NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS (#)
UNEXERCISABLE | | | OPTION
EXERCISE
PRICE ($) | | | OPTION
EXPIRATION
DATE | | | NUMBER OF
SHARES OR
UNITS OF
STOCK THAT
HAVE NOT
VESTED (#) | | | MARKET
VALUE OF
SHARES OR
UNITS OF
STOCK THAT
HAVE NOT
VESTED
($) | |
Paul Edick | | | 2/1/2018 | (2) | | | 98,252 | | | | — | | | | 5.93 | | | | 1/31/2028 | | | | — | | | | — | |
| | | 6/12/2017 | (2) | | | 69,822 | | | | — | | | | 1.55 | | | | 6/11/2027 | | | | — | | | | — | |
| | | 1/9/2017 | (2) | | | 668,065 | | | | — | | | | 1.55 | | | | 1/27/2027 | | | | — | | | | — | |
John Shannon | | | 5/15/2018 | (2) | | | 34,977 | | | | — | | | | 12.50 | | | | 5/15/2028 | | | | — | | | | — | |
| | | 1/31/2018 | (2) | | | 28,072 | | | | — | | | | 5.93 | | | | 1/31/2028 | | | | — | | | | — | |
| | | 6/12/2017 | (3) | | | — | | | | 25,136 | | | | 1.55 | | | | 6/11/2027 | | | | — | | | | — | |
| | | 2/16/2017 | (3) | | | 129,067 | | | | 31,268 | | | | 1.55 | | | | 2/3/2027 | | | | — | | | | — | |
Barry Deutsch | | | 5/15/2018 | (2) | | | 56,144 | | | | — | | | | 12.50 | | | | 5/15/2028 | | | | — | | | | — | |
| | | 2/1/2018 | (2) | | | 14,036 | | | | — | | | | 5.93 | | | | 1/31/2028 | | | | — | | | | — | |
| | | 7/17/2017 | (2) | | | 21,054 | | | | — | | | | 2.33 | | | | 10/20/2027 | | | | — | | | | — | |
(1) | Each equity award was granted pursuant to our 2011 Plan. The shares subject to each option vest with respect to 25% of the option on the one year anniversary of the applicable vesting commencement date and the remaining shares subject to each option vest in 36 equal installments on the corresponding day of each calendar month thereafter (or, if such calendar month does not have a corresponding day, on the last day of such month), in all cases subject to the optionee’s continuous service to us through each vesting date. In addition, each option becomes exercisable as described in the footnotes below, where any unvested portion is subject to a right of repurchase upon the optionee’s termination of continuous service. Upon a change in control of the Company while the optionee is providing services to us, 100% of the shares subject to the option shall vest and become exercisable immediately prior to the effective date of the change in control.
|
(2) | The shares subject to these options are early exercisable.
|
(3) | All of the shares subject to this option became exercisable on January 1, 2019.
|
2020.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | OPTION AWARDS | | STOCK AWARDS |
| NAME | | VESTING COMMENCEMENT DATE | | NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS (#) EXERCISABLE | | NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS (#) UNEXERCISABLE | | OPTION EXERCISE PRICE ($) | | OPTION EXPIRATION DATE | | NUMBER OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED (#) | | MARKET VALUE OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED ($) (1) |
| | | | | | | | | | | | | | |
| Paul Edick | | 1/31/2020 (2) | | — | | | — | | | — | | | — | | | 185,000 | | | $ | 910,200 | |
| | 1/31/2019 (3) | | — | | | — | | | — | | | — | | | 93,750 | | | $ | 461,250 | |
1/31/2019 (3) | | 95,833 | | | 104,167 | | | 13.88 | | | 1/31/2029 | | — | | | — | |
1/31/2018 (4)(5) | | 98,252 | | | — | | | 5.93 | | | 1/31/2028 | | — | | | — | |
6/12/2017 (4)(5) | | 69,822 | | | — | | | 1.55 | | | 6/11/2027 | | — | | | — | |
1/09/2017 (4)(5) | | 668,065 | | | — | | | 1.55 | | | 1/27/2027 | | — | | | — | |
| | | | | | | | | | | | | | |
| John Shannon | | 8/18/2020 (2) | | — | | | 100,000 | | | 3.94 | | | 8/18/2030 | | — | | | — | |
1/31/2020 (2) | | — | | | — | | | — | | | — | | | 65,000 | | | 319,800 | |
1/31/2019 (3) | | 38,333 | | | 41,667 | | | 13.88 | | | 1/31/2029 | | — | | | — | |
5/15/2018 (4)(5) | | 34,977 | | | — | | | 12.50 | | | 5/15/2028 | | — | | | — | |
1/31/2018 (4)(5) | | 28,072 | | | — | | | 5.93 | | | 1/31/2028 | | — | | | — | |
6/12/2017 (4)(5) | | 25,136 | | | — | | | 1.55 | | | 6/12/2027 | | — | | | — | |
2/16/2017 (4)(5) | | 160,335 | | | — | | | 1.55 | | | 2/4/2027 | | — | | | — | |
| | | | | | | | | | | | | | |
| Beth Hecht | | 8/14/2020 (2) | | — | | | 150,000 | | | 3.94 | | | 8/14/2030 | | — | | | — | |
| | 1/31/2020 (2) | | — | | | — | | | — | | | — | | | 45,000 | | | 221,400 | |
| | 1/31/2019 (3) | | 15,572 | | | 16,928 | | | 13.88 | | | 1/31/2029 | | — | | | — | |
| | 10/5/2018 (3) | | 2,073 | | | 1,753 | | | 19.00 | | | 10/5/2028 | | — | | | — | |
| | 5/15/2018 (4)(5) | | 65,295 | | | — | | | 12.50 | | | 5/15/2028 | | — | | | — | |
| | 1/31/2018 (4)(5) | | 30,879 | | | — | | | 5.93 | | | 1/31/2028 | | — | | | — | |
(1) The amount represents the number of shares underlying the unvested RSUs multiplied by the value of a share of our common stock on December 31, 2020, which was $4.92 per share.
(2) The equity award was granted pursuant to our 2018 Stock Option and Incentive Plan, or 2018 Plan. The shares subject to each option award vest with respect to 25% of the shares subject to the option on the one-year anniversary of the applicable vesting commencement date and thereafter the remaining shares subject to each option vest in 36 equal monthly installments, in all cases subject to the grantee’s continuous service to us through each vesting date. The shares subject to each restricted stock unit vest in four substantially equal annual installments beginning on January 31, 2021, in all cases subject to the grantee's continuous service to us through each vesting date.
(3) The equity award was granted pursuant to our 2018 Plan. The shares subject to each option award vest with respect to 25% of the shares subject to the option on the one-year anniversary of the applicable vesting commencement date and thereafter the remaining shares subject to each option vest in 36 equal monthly installments, in all cases subject to the grantee’s continuous service to us through each vesting date. The shares subject to each restricted stock unit vest in four substantially equal annual installments beginning on January 31, 2020, in all cases subject to the grantee's continuous service to us through each vesting date.
(4) The equity award was granted pursuant to our 2011 Stock Option/Issuance Plan, or 2011 Plan. The shares subject to each option award vest with respect to 25% of the shares subject to the option on the one-year anniversary of the applicable vesting commencement date and thereafter the remaining shares subject to each option vest in 36 equal installments, in
all cases subject to the optionee’s continuous service to us through each vesting date. In addition, each option becomes exercisable as described in footnote (5) below, where any unvested portion is subject to a right of repurchase upon the optionee’s termination of continuous service. Upon a change in control of the Company while the optionee is providing services to us, 100% of the shares subject to the option shall vest and become exercisable immediately prior to the effective date of the change in control.
(5) The shares subject to these options are early exercisable.
On January 31, 2019,29, 2021, our compensation committee granted equity awards to our named executive officers pursuant to our 2018 Plan. Mr. Edick received a restricted stock unit award for 125,000 shares of our common stock and an option award exercisable for 200,000225,000 shares of our common stock. Mr. Shannon received an optiona restricted stock unit award exercisable for 80,000150,000 shares of our common stock. Mr. DeutschMs. Hecht received an optiona restricted stock unit award exercisable for 25,000150,000 shares of our common stock. The shares subject to each award vest with respect to 25% of the awardin three substantially equal annual installments beginning on January 31, 2020 and the remaining shares subject to each award vest in 36 equal installments on the corresponding day of each calendar month thereafter (or, if such calendar month does not have a corresponding day, on the last day of such month),29, 2022, in all cases subject to the optionee’snamed executive officer’s continuous service to us through each vesting date. Additionally, Mr. Edick received a stock option award for 400,000 shares of our common stock at an exercise price of $5.08 per share. The shares subject to this option award vest with respect to 25% of the shares subject to the option on January 29, 2022, with the remainder vesting ratably over the following 36 months.
Securities Authorized for Issuance under Equity Compensation Plans
The following table provides information as of December 31,
20182020 with respect to the shares of our common stock that may be issued under our existing equity compensation plans, consisting of the 2011 Plan, the
Xeris Pharmaceuticals, Inc. 2018 Stock Option and Incentive Plan, or 2018 Plan, the Xeris Pharmaceuticals, Inc. 2018 Employee Stock Purchase Plan, or 2018 Employee Stock Purchase Plan, and the Xeris Pharmaceuticals Inc. Equity Inducement Plan, or the
“InducementInducement Plan.
” | | | | | | | | | | | | |
Plan Category | | Number of
Securities to be
Issued Upon
Exercise of
Outstanding
Options, Warrants
and Rights | | | Weighted
Average
Exercise
Price of
Outstanding
Options,
Warrants and
Rights | | | Number of
Securities
Remaining
Available for
Future Issuance
Under Equity
Compensation
Plans (Excluding
Securities
Reflected in the
First Column) | |
Equity compensation plans approved by stockholders(1) | | | 3,233,347 | | | $ | 8.13 | | | | 1,313,937 | (2) |
Equity compensation plans not approved by stockholders(3) | | | — | | | | — | | | | — | |
Total | | | 3,233,347 | | | $ | 8.13 | | | | 1,313,937 | (4) |
(1) | Includes the following plans: our 2011 Plan, 2018 Plan and 2018 Employee Stock Purchase Plan and Inducement Plan.
|
(2) | Excludes (i) 835,728 additional shares of common stock that may be issued pursuant to our 2018 Plan pursuant to an automatic annual increase effective on January 1, 2019 and (ii) 208,932 additional shares of common stock that may be issued pursuant to our 2018 Employee Stock Purchase Plan pursuant to an annual increase effective on January 1, 2019.
|
(3) | In February 2019, our board of directors adopted our Inducement Plan. The Inducement Plan was adopted without stockholder approval pursuant to Rule 5635(c)(4) of the Nasdaq Listing Rules. We have initially reserved 750,000 shares of common stock for the issuance of awards under the Inducement Plan.
|
(4) | Excludes (i) 835,728 additional shares of common stock that may be issued pursuant to our 2018 Plan pursuant to an automatic annual increase effective on January 1, 2019, (ii) 208,932 additional shares of common stock that may be issued pursuant to our 2018 Employee Stock Purchase Plan pursuant to an annual increase effective on January 1, 2019, and (iii) 750,000 shares reserved for issuance under our Inducement Plan adopted by our board of directors in February 2019.
|
| | | | | | | | | | | | | | | | | | | | |
| Plan Category | | Number of
Securities to be
Issued Upon
Exercise of
Outstanding
Options, Warrants
and Rights | | Weighted
Average
Exercise Price
of Outstanding
Options,
Warrants and
Rights | | Number of
Securities
Remaining
Available for
Future Issuance
Under Equity
Compensation
Plans (Excluding
Securities
Reflected in the
First Column) |
| | | | | | |
Equity compensation plans approved by stockholders (1)(2) | | 4,712,000 | | | $ | 5.78 | | | 917,423 | |
Equity compensation plans not approved by stockholders (3) | | 241,906 | | | $ | 6.81 | | | 263,794 | |
| Total | | 4,953,906 | | | $ | 5.84 | | | 1,181,217 | |
(1)Includes the following plans: our 2011 Plan, 2018 Plan, and 2018 Employee Stock Purchase Plan.
(2)Excludes (i) 2,384,448 additional shares of common stock that may be issued pursuant to our 2018 Plan pursuant to an automatic annual increase effective on January 1, 2021 and (ii) 386,000 additional shares of common stock that may be issued pursuant to our 2018 Employee Stock Purchase Plan pursuant to an annual increase effective on January 1, 2021.
(3)In February 2019, our board of directors adopted our Inducement Plan. The Inducement Plan was adopted without stockholder approval pursuant to Rule 5635(c)(4) of the Nasdaq Listing Rules. We initially reserved 750,000 shares of common stock for the issuance of awards under the Inducement Plan. For more information about the Inducement Plan, please see the notes to our audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on March 12, 2021.
As of December 31, 2018,2020, a total of 1,120,937of 609,757 shares of our common stock have been reserved for future issuance pursuant to the 2018 Plan, which number excludes the 835,7282,384,448 shares that were added to the plan as a result of the automatic annual increase on January 1, 2019.2021. The 2018 Plan provides that the number of shares reserved and available for issuance under the plan will automatically increase each January 1, beginning on January 1, 2019,2020, by 4% of the outstanding number of shares of our common stock on the immediately preceding December 31 or such lesser number of shares as determined by the compensation committee. This number will be subject to adjustment in the event of a stock split, stock dividend or other change in our
capitalization. The shares of common stock underlying any awards that are forfeited, cancelled, held back upon exercise or settlement of an award to satisfy the exercise price or tax withholding, reacquired by us prior to vesting, satisfied without the issuance of stock, expire or are otherwise terminated, other than by exercise, under the 2018 Stock Option and Incentive Plan and the 2011 Plan will be added back to the shares of common stock available for issuance under the 2018 Plan. The Company no longer makes grants under the 2011 Plan. As of December 31, 2018,2020, a total of 193,000of 307,666 shares of our common stock have been reserved for issuance pursuant to the 2018 Employee Stock Purchase Plan, which number excludes the 208,932386,000 shares that were added to the plan as a result of the automatic annual increase on January 1, 2019.2021. The 2018 Employee Stock Purchase Plan provides that the number of shares
reserved and available for issuance under the plan will automatically increase each January 1, beginning on January 1, 2019,2020, by the lesser of 386,000 shares of our common stock, 1% of the outstanding number of shares of our common stock on the immediately preceding December 31 or such lesser number of shares as determined by the compensation committee. This number will be subject to adjustment in the event of a stock split, stock dividend or other change in our capitalization.
As of December 31, 2020, a total of 263,764 shares of our common stock have been reserved for future issuance of awards under the Inducement Plan.
Compensation Risk Assessment
We believe that although a portion of the compensation provided to our executive officers and other employees is
performance-based,based on goals and objectives, our executive compensation program does not encourage excessive or unnecessary risk taking.
This is primarily due to the fact that our compensation programs are designed to encourage our executive officers and other employees to remain focused on both short-term and long-term strategic goals. As a result, we do not believe that our compensation programs are reasonably likely to have a material adverse effect on us.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Certain Relationships and Transactions
Other than the compensation agreements and other arrangements described under
the “Executive
compensation”Compensation” and
“Director compensation”the “Non-Employee Director Compensation” sections in this proxy statement and the transactions described below, since January 1,
2017,2018, there has not been and there is not currently proposed any transaction or series of similar transactions to which we were, or will be, a party in which the amount involved exceeded, or will exceed, $120,000 (or, if less, 1% of the average of our total assets amounts at December 31,
20172018, 2019 and
2018)2020) and in which any director, executive officer, holder of five percent or more of any class of our capital stock or any member of the immediate family of, or entities affiliated with, any of the foregoing persons, had, or will have, a direct or indirect material interest.
Participation in our
Initial2019 Public Offering
Our
directors,executive officers
and 5% stockholders and their affiliates purchased an aggregate of
1,566,667 shares of our common stock in our 2018 initial public offering at the initial public offering price. The following table sets forth the number of shares of our common stock purchased by directors, executive officers and 5% stockholders and their affiliates and the aggregate purchase price paid for such shares. | | | | | | | | |
Name | | Shares of
Common Stock
Purchased | | | Aggregate Cash
Purchase Price | |
Entities affiliated with Palmetto Partners, Ltd. | | | 150,000 | | | $ | 2,250,000.00 | |
Entities affiliated with Deerfield Management Company | | | 750,000 | | | $ | 11,250,000.00 | |
Entities affiliated with Redmile Group, LLC | | | 666,667 | | | $ | 10,000,005.00 | |
Participation in our Public Offering
Our directors, officers and 5% stockholders and their affiliates purchased an aggregate of 596,5008,500 shares of our common stock in our 2019 public equity offering at the public offering price. The following table sets forth the number of shares of our common stock purchased by directors, executive officers and 5% stockholders and their affiliates and the aggregate purchase price paid for such shares.
| | | | | | | | |
Name | | Shares of
Common Stock
Purchased | | | Aggregate Cash
Purchase Price | |
Entities affiliated with Redmile Group, LLC | | | 588,000 | | | $ | 5,880,000.00 | |
Barry Deutsch | | | 5,000 | | | $ | 50,000.00 | |
Beth Hecht | | | 2,500 | | | $ | 25,000.00 | |
Kenneth Johnson | | | 1,000 | | | $ | 10,000.00 | |
Private Placements of Securities
Series C Preferred Stock Financing
In December 2015, with subsequent closings
| | | | | | | | | | | | | | |
| Name | | Shares of Common Stock Purchased | | Aggregate Cash Purchase Price |
| | | | |
| Barry Deutsch | | 5,000 | | | $ | 50,000.00 | |
| Beth Hecht | | 2,500 | | | $ | 25,000.00 | |
| Kenneth Johnson | | 1,000 | | | $ | 10,000.00 | |
Participation in December 2016, May 2017, December 2017our 2020 Public Offerings
Our directors, executive officers and
February 2018, we sold5% stockholders and their affiliates purchased an aggregate of
13,542,5921,998,097 shares of our
Series C preferredcommon stock
in our February 2020 public equity offering at
a purchase price of $6.2705 per share for an aggregate principal amount of $84.9 million.the public offering price. The following table
summarizes purchasessets forth the number of shares of our
Series C preferredcommon stock
purchased by
related persons: | | | | | | | | |
STOCKHOLDER | | SHARES OF
SERIES C
PREFERRED
STOCK | | | TOTAL
PURCHASE
PRICE | |
Entities affiliated with Palmetto Partners, Ltd. | | | 1,833,983 | | | $ | 11,499,996.38 | |
Entities affiliated with Deerfield Management Company | | | 3,114,584 | | | $ | 19,529,998.98 | |
Entities affiliated with Redmile Group, LLC (1) | | | 3,109,796 | | | $ | 19,499,995.65 | |
Paul Edick (2) | | | 23,922 | | | $ | 150,002.91 | |
Nora Brennan (3) | | | 16,000 | | | $ | 100,328.00 | |
John Shannon | | | 16,000 | | | $ | 100,328.00 | |
Ken Johnson | | | 4,000 | | | $ | 25,082.00 | |
Barry Deutsch | | | 3,987 | | | $ | 25,000.49 | |
(1) | Robert Faulkner was a member of our board of directors from December 2015 to April 2018 and is a partner at Redmile Group, LLC.
|
(2) | Represents 23,922 shares of Series C preferred stock held by the Paul R. Edick 2008 Revocable Trust.
|
(3) | Ms. Brennan departed from her position as our Chief Financial Officer on April 24, 2018.
|
directors, executive officers and 5% stockholders and their affiliates and the aggregate purchase price paid for such shares.
| | | | | | | | | | | | | | |
| Name | | Shares of Common Stock Purchased | | Aggregate Cash Purchase Price |
| | | | |
| Entities affiliated with Sessa Capital (Master), L.P. | | 1,100,000 | | | $ | 4,565,000.00 | |
| Entities affiliated with Deerfield Management Company, L.P. | | 850,000 | | | $ | 3,527,500.00 | |
| Paul R. Edick | | 20,000 | | | $ | 83,000.00 | |
| John Shannon | | 12,048 | | | $ | 49,999.20 | |
| Barry Deutsch | | 9,639 | | | $ | 40,001.85 | |
| Beth Hecht | | 4,000 | | | $ | 16,600.00 | |
| Kenneth Johnson | | 2,410 | | | $ | 10,001.50 | |
Our 5% stockholders and their affiliates purchased 18,000 of the Company's 5.00% Convertible Senior Notes due 2025 and 740,000 shares of our common stock in our June 2020 concurrent public offerings at the public offering price. The following table sets forth the number of convertible notes and shares of our common stock purchased by 5% stockholders and their affiliates and the aggregate purchase price paid for such notes and shares.
| | | | | | | | | | | | | | | | | | | | |
| Name | | Convertible Notes Purchased | | Shares of Common Stock Purchased | | Aggregate Cash Purchase Price |
| | | | | | |
| Entities affiliated with Deerfield Management Company, L.P. | | 18,000 | | | — | | | $ | 18,000,000 | |
| Entities affiliated with Sessa Capital (Master), L.P. | | — | | | 740,000 | | | $ | 2,012,800 | |
Agreements with Stockholders
In connection with our Series C preferred stock financing, we entered into investors’ rights, voting and right of first refusal and co-sale agreements containing registration rights, information rights, voting rights and rights of first refusal, among other things, with certain holders of our preferred stock and certain holders of our common stock. These stockholder agreements were terminated in connection with our
IPO,initial public offering, except for the registration rights granted under our investors’ rights agreement.
Indemnification Agreements
In connection with our IPO, we entered into agreements to indemnify our directors and executive officers. These agreements, among other things, require us to indemnify these individuals for certain expenses (including attorneys’ fees), judgments, fines and settlement amounts reasonably incurred by such person in any action or proceeding, including any action by or in our right, on account of any services undertaken by such person on behalf of the Company or that person’s status as an executive officer or a member of our board of directors to the maximum extent allowed under Delaware law.
Limitation of Liability and Indemnification of Officers and Directors
Our certificate of incorporation and bylaws contain provisions that limit or eliminate the personal liability of our directors to the fullest extent permitted by the DGCL, as it now exists or may in the future be amended. Consequently, a director will not be personally liable to us or our stockholders for monetary damages or breach of fiduciary duty as a director, except for liability for:
•any breach of the director’s duty of loyalty to us or our stockholders;
