UNITED STATES
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
Filed by the Registrant | ☒ | Filed by a Party other than the Registrant | ☐ |
Check the appropriate box:
Otonomy, Inc. (Name of Registrant as Specified In Its Charter) Payment of Filing Fee (Check the appropriate box):
OTONOMY, INC. Dear Stockholder: I am pleased to invite you to attend the The attached Notice of Annual Meeting of Stockholders and proxy statement contain details of the business to be conducted at the Annual Meeting. Whether or not you attend the Annual Meeting, it is important that your shares be represented and voted at the meeting. Therefore, I urge you to promptly vote and submit your proxy via the Internet, by phone, or by signing, dating and returning the enclosed proxy card in the enclosed envelope. If you decide to attend the Annual Meeting, you will be able to change your vote On behalf of Otonomy, I would like to thank you for your continued support.
OTONOMY, INC. 4796 Executive Drive San Diego, California 92121 NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting to Be Held on June
April The date of this proxy statement is April TABLE OF CONTENTS
OTONOMY, INC. PROXY STATEMENT FOR To Be Held at 8:00 a.m. Pacific Time on June This proxy statement and the enclosed form of proxy are furnished in connection with the solicitation of proxies by our board of directors for use at our QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING The information provided in the “question and answer” format below addresses certain frequently asked questions but is not intended to be a summary of all matters contained in this proxy statement. Please read the entire proxy statement carefully before voting your shares. Why am I receiving these materials? The board of directors is providing these proxy materials to you in connection with its solicitation of proxies for use at Otonomy’s Annual Meeting, which will take place on June What proposals will be voted on at the Annual Meeting? There are the election of the approval, on anon-binding advisory basis, of the compensation paid to our named executive officers as disclosed in this proxy statement; and
the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year ending December 31, At the time this proxy statement was mailed, our management and board of directors were not aware of any other matters to be presented at the Annual Meeting other than those set forth in this proxy statement and in the notice accompanying this proxy statement. How does our board of directors recommend that I vote? The board of directors recommends that you vote: FOR the election of each of the FOR the approval, on anon-binding advisory basis, of the compensation paid to our named executive officers as disclosed in this proxy statement; and
FOR the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year ending December 31, Who is entitled to vote at the Annual Meeting? Holders of our common stock at the close of business on April What is the difference between holding shares as a stockholder of record and as a beneficial owner? Stockholder of Record: Shares Registered in Your Name. If, at the close of business on the Record Date, your shares were registered directly in your name with EQ Shareowner Services, our transfer agent, then you are considered the stockholder of record with respect to those shares. As the stockholder of record, you have the right to grant your voting proxy directly to the individuals listed on the proxy card or to vote Beneficial Owners: Shares Registered in the Name of a Broker, Bank or Other Nominee. If, at the close of business on the Record Date, your shares were held, not in your name, but rather in a stock brokerage account or by a bank or other nominee on your behalf, then you are considered the beneficial owner of shares held in “street name.” As the beneficial owner, you have the right to direct your broker, bank or other nominee how to vote your shares by following the voting instructions your broker, bank or other nominee provides. If you do not provide your broker, bank or other nominee with instructions on how to vote your shares, your broker, bank or other nominee may, in its discretion, vote your shares with respect to routine matters but may not vote your shares with respect to anynon-routine matters. Please see “What if I do not specify how my shares are to be voted?” for additional information.
Stockholder of Record: Shares Registered in Your Name. If you were a stockholder of record at the close of business on the Record Date, you do not need to do anything in advance to virtually attend and/or vote your shares Beneficial Owners: Shares Registered in the Name of a Broker, Bank or Other Nominee. If you were a beneficial owner at the close of business on the Record Date, you may not vote your shares You will be able to attend the Annual Meeting virtually, submit your questions during the meeting and vote your shares electronically at the meeting by visiting www.virtualshareholdermeeting.com/OTIC2021. To participate in the Annual Meeting, you will need
How do I vote and what are the voting deadlines? Stockholder of Record: Shares Registered in Your Name. If you are a stockholder of record, you can vote in one of the following ways: You may vote via the Internet. To vote via the Internet, go to http://www.proxyvote.com to complete an electronic proxy card. You will be asked to provide the control number from the proxy card you receive. Your vote must be received by 11:59 p.m. Eastern Time on June You may vote by telephone.To vote by telephone, dial toll-free1-800-690-6903 and follow the recorded instructions. You will be asked to provide the control number from the proxy card. Your vote must be received by 11:59 p.m. Eastern Time on June You may vote by mail. If you would like to vote by mail, you need to complete, date and sign the proxy card that accompanies this proxy statement and promptly mail it to the tabulation agent in the enclosed postage-paid envelope so that it is received no later than June You may vote Beneficial Owners: Shares Registered in the Name of a Broker, Bank or Other Nominee. If you are the beneficial owner of shares held of record by a broker, bank or other nominee, you will receive voting instructions fromyourbroker,bankorothernominee.Youmustfollowthevotinginstructionsprovidedbyyourbroker,bankor other
Can I change my vote or revoke my proxy? Stockholder of Record: Shares Registered in Your Name. If you are a stockholder of record, you may revoke your proxy or change your proxy instructions at any time before your proxy is voted at the Annual Meeting by: entering a new vote by Internet ortelephone; signing and returning a new proxy card with a laterdate; delivering a written revocation to our Secretary at Otonomy, Inc., 4796 Executive Drive, San Diego, California 92121, by 11:59 p.m. Eastern Time on June attending the Annual Meeting and voting Beneficial Owners: Shares Registered in the Name of a Broker, Bank or Other Nominee. If you are the beneficial owner of your shares, you must contact the broker, bank or other nominee holding your shares and follow their instructions to change your vote or revoke your proxy. What is the effect of giving a proxy? Proxies are solicited by and on behalf of our board of directors. The persons named in the proxy have been designated as proxy holders by our board of directors. When a proxy is properly dated, executed and returned, the shares represented by the proxy will be voted at the Annual Meeting in accordance with the instructions of the stockholder. If no specific instructions are given, however, the shares will be voted in accordance with the recommendations of our board of directors. If any matters not described in this proxy statement are properly presented at the Annual Meeting, the proxy holders will use their own judgment to determine how to vote your shares. If the Annual Meeting is postponed or adjourned, the proxy holders can vote your shares on the new meeting date, unless you have properly revoked your proxy, as described above. What if I do not specify how my shares are to be voted? Stockholder of Record: Shares Registered in Your Name. If you are a stockholder of record and you submit a proxy but you do not provide voting instructions, your shares will be voted: “FOR” the election of each of the “FOR” the approval, on anon-binding advisory basis, of the compensation paid to our named executive officers as disclosed in this proxy statement (Proposal No. 2); and
“FOR” the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year ending December 31, In the discretion of the named proxy holders regarding any other matters properly presented for a vote at the Annual Meeting or any adjournments or postponements thereof. Beneficial Owners: Shares Registered in the Name of a Broker, Bank or Other Nominee. If you are a beneficial owner and you do not provide your broker, bank or other nominee that holds your shares with voting instructions, then your broker, bank or other nominee will determine if it has discretion to vote on each matter. Brokers do not have discretion to vote onnon-routine matters. Proposal No. 1
What are the effects of abstentions and brokernon-votes? An abstention represents a stockholder’s affirmative choice to decline to vote on a proposal. If a stockholder indicates on its proxy card that it wishes to abstain from voting its shares, or if a broker, bank or other nominee holding its customers’ shares of record causes abstentions to be recorded for shares, these shares will be considered present and entitled to vote at the Annual Meeting. As a result, abstentions will be counted for purposes of determining the presence or absence of a quorum and will also count as votes against a proposal in cases where approval of the proposal requires the affirmative vote of a majority of the shares present and entitled to vote at the Annual Meeting (e.g., Proposals No. 2 and A brokernon-vote occurs when a broker, bank or other nominee holding shares for a beneficial owner does not vote on a particular proposal because the broker, bank or other nominee does not have discretionary voting power with respect to such proposal and has not received voting instructions from the beneficial owner of the shares. Brokernon-votes will be counted for purposes of calculating whether a quorum is present at the Annual Meeting but will not be counted for purposes of determining the number of votes cast. Therefore, a brokernon-vote will make a quorum more readily attainable but will not otherwise affect the outcome of the vote on any proposal. What is a quorum? A quorum is the minimum number of shares required to be present at the Annual Meeting for the meeting to be properly held under our bylaws and Delaware law. A majority of the shares of common stock outstanding and entitled to vote, in person (including virtually) or by proxy, constitutes a quorum for the transaction of business at the Annual Meeting. As noted above, as of the Record Date, there were a total of How many votes are needed for approval of each proposal?
Proposal No. 2: The approval, on a non-binding advisory basis, of the compensation paid to our named executive officers as disclosed in this proxy statement requires an affirmative vote of a majority of the shares of our common stock present in person (including virtually) or by proxy at the Annual Meeting and entitled to vote thereon to be approved. You may vote FOR, AGAINST or ABSTAIN. If you ABSTAIN from voting on Proposal No. 2, the abstention will have the same effect as a vote AGAINST the proposal. Broker non-votes will have no effect on the outcome of Proposal No. 2. Because Proposal No. 2 is an advisory vote, the result will not be binding on our board of directors or our company. Our board of directors and our compensation committee will consider the outcome of the vote when determining named executive officer compensation.
How are proxies solicited for the Annual Meeting and who is paying for such solicitation? Our board of directors is soliciting proxies for use at the Annual Meeting by means of the proxy materials. We will bear the entire cost of proxy solicitation, including the preparation, assembly, printing, mailing and distribution of the proxy materials. Copies of solicitation materials will also be made available upon request to brokers, banks and other nominees to forward to the beneficial owners of the shares held of record by such brokers, banks or other nominees. The original solicitation of proxies may be supplemented by solicitation by telephone, electronic communication, or other means by our directors, officers, employees or agents. No additional compensation will be paid to these individuals for any such services, although we may reimburse such individuals for their reasonableout-of-pocket expenses in connection with such solicitation. We do not plan to retain a proxy solicitor to assist in the solicitation of proxies. If you choose to access the proxy materials and/or vote over the Internet, you are responsible for Internet access charges you may incur. If you choose to vote by telephone, you are responsible for telephone charges you may incur. What does it mean if I received more than one Notice? If you receive more than one Notice, your shares may be registered in more than one name or in different accounts. Please follow the voting instructions on each Notice to ensure that all of your shares are voted. Is my vote confidential? Proxy instructions, ballots and voting tabulations that identify individual stockholders are handled in a manner that protects your voting privacy. Your vote will not be disclosed either within Otonomy or to third parties, except as necessary to meet applicable legal requirements, to allow for the tabulation of votes and certification of the vote, or to facilitate a successful proxy solicitation. I share an address with another stockholder, and we received only one paper copy of the proxy materials. How may I obtain an additional copy of the proxy materials? We have adopted a procedure approved by the Securities and Exchange Commission (the “SEC”) called
householding will continue to be able to access and receive separate proxy cards. Upon written or oral request, we will promptly deliver a separate copy of the proxy materials and annual report to any stockholder at a shared address to which we delivered a single copy of any of these documents. To receive a separate copy, or, if you are receiving multiple copies, to request that we only send a single copy of next year’s proxy materials and annual report, you may contact us as follows: Otonomy, Inc. Attention: Secretary 4796 Executive Drive San Diego, California 92121 (619)323-2200 Stockholders who hold shares in street name may contact their brokerage firm, bank, broker-dealer or other nominee to request information about householding. How can I find out the results of the voting at the Annual Meeting? Preliminary voting results will be announced at the Annual Meeting. In addition, final voting results will be published in a current report on Form8-K that we expect to file within four business days after the Annual Meeting. If final voting results are not available to us at that time, we intend to file a Form8-K to publish preliminary results and, within four business days after the final results are known to us, file an amendment to the Form8-K to publish the final results. What is the deadline to propose actions for consideration at next year’s annual meeting of stockholders or to nominate individuals to serve as directors? Stockholder Proposals Stockholders may present proper proposals for inclusion in our proxy statement and for consideration at the next annual meeting of stockholders by submitting their proposals in writing to our Secretary in a timely manner. For a stockholder proposal to be considered for inclusion in our proxy statement for our Otonomy, Inc. Attention: Secretary 4796 Executive Drive San Diego, California 92121 Our bylaws also establish an advance notice procedure for stockholders who wish to present a proposal before an annual meeting of stockholders but do not intend for the proposal to be included in our proxy statement. Our bylaws provide that the only business that may be conducted at an annual meeting is business that is (i) specified in our proxy materials with respect to such meeting, (ii) otherwise properly brought before the annual meeting by or at the direction of the Board, or (iii) properly brought before the annual meeting by a stockholder of record entitled to vote at the annual meeting who has delivered timely written notice to our Secretary, which notice must contain the information specified in our bylaws. To be timely for our not earlier than February not later than March 22,
In the event that we hold our the 90th day prior to such annual meeting;or the 10th day following the day on which public announcement of the date of such annual meeting is firstmade. If a stockholder who has notified us of his, her or its intention to present a proposal at an annual meeting does not appear to present his, her or its proposal at such annual meeting, we are not required to present the proposal for a vote at such annual meeting. Nomination of Director Candidates You may propose director candidates for consideration by our corporate governance and nominating committee. Any such recommendations should include the nominee’s name and qualifications for membership on our board of directors and should be directed to our Secretary at the address set forth above. For additional information regarding stockholder recommendations for director candidates, see “Board of Directors and Corporate Governance—Stockholder Recommendations for Nominations to the Board of Directors.” In addition, our bylaws permit stockholders to nominate directors for election at an annual meeting of stockholders. To nominate a director, the stockholder must provide the information required by our bylaws. In addition, the stockholder must give timely notice to our Secretary in accordance with our bylaws, which, in general, require that the notice be received by our Secretary within the time period described above under “Stockholder Proposals” for stockholder proposals that are not intended to be included in a proxy statement. Availability of Bylaws A copy of our bylaws may be obtained by accessing our public filings on the SEC’s website at www.sec.gov. You may also contact our Secretary at our principal executive office for a copy of the relevant bylaw provisions regarding the requirements for making stockholder proposals and nominating director candidates.
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE Our business affairs are managed under the direction of our board of directors, which is currently comprised of seven (7) members. Our board of directors has affirmatively determined that six (6) of our seven (7) directors, are independent within the meaning of the independent director requirements of The NASDAQ Stock Market LLC (“NASDAQ”). Our board of directors is divided into three classes with staggered three-year terms. At each annual meeting of stockholders, a class of directors will be elected for a three-year term to succeed the same class whose term is then expiring. Upon the recommendation of our corporate governance and nominating committee, we are nominating The following table sets forth the names, ages as of March 31,
James B. Breitmeyer, M.D., Ph.D. has served on our board of directors since June 2018. Since September 2015, Dr. Breitmeyer has served as President, Chief Executive Officer and director of Oncternal Therapeutics, Inc. a clinical-stage oncology biotechnology company. He has been a director of Zogenix, Inc., a pharmaceutical company, since March 2014, and was their acting Chief Medical Officer from August 2012 to February 2013. Previously, Dr. Breitmeyer served as President of Bavarian Nordic, Inc. and Executive Vice President of Bavarian A/S, a multinational corporation headquartered in Denmark, from February 2013 to July 2015. He previously served as the Executive Vice President of Development and Chief Medical Officer of Cadence Pharmaceuticals Inc., a pharmaceutical company, from August 2006 to August 2012, and the Chief Medical Officer of Applied Molecular Evolution Inc., a wholly-owned subsidiary of Eli Lilly and Co., a global pharmaceutical company, from December 2001 to August 2006. Dr. Breitmeyer has also served as President and Chief Executive Officer of the Harvard Clinical Research Institute, and as Chief Medical Officer and Head of Research & Development for North America at Serono Laboratories Inc., an international biopharmaceutical company. Dr. Breitmeyer served as a founding collaborator and scientific advisor to Immunogen Inc., a biotechnology company, and held clinical and teaching positions at the Dana Farber Cancer Institute and Harvard Medical School. Dr. Breitmeyer earned his B.A. in Chemistry from the University of California and his M.D. and Ph.D. from Washington University School of Medicine and is Board Certified in Internal Medicine and Oncology. We believe Dr. Breitmeyer is qualified to serve on our board of directors because of his extensive experience in the biopharmaceutical industry, including providing strong executive leadership to numerous biopharmaceutical companies, and significant expertise in the medical field. David A. Weber, Ph.D. has served as our President and Chief Executive Officer and on our board of directors since November 2010. Prior to joining us, Dr. Weber served from February 2004 to April 2010 as the Chief Executive Officer of MacuSight, Inc., a developer of a sustained delivery formulation of sirolimus for the treatment of severe ophthalmic diseases. Prior to MacuSight, he served as acting Chief Executive Officer and Executive Vice President of Oculex Pharmaceuticals, Inc., a specialty pharmaceutical company focused on the development and commercialization of intraocular pharmaceuticals and drug delivery systems, until its acquisition by Allergan in 2003. Dr. Weber has also held management positions in healthcare product development with Oral-B Laboratories and The Procter & Gamble, Co., a consumer products company. From September 2018 to April 2021, he served on the board of directors of Oculis, a clinical stage ophthalmic biotechnology company. Dr. Weber received his Ph.D. in medical microbiology from Creighton University and his Master’s and Bachelor’s degrees in biological sciences from Wichita State University. We believe Dr. Weber is qualified to serve on our board of directors because of his broad range of experience in business and healthcare product development, including over a decade as the chief executive officer of companies developing locally delivered therapeutics. Vickie Cappshas served on our board of directors since March 2014. From July 2002 to December 2013, Ms. Capps was the Chief Financial Officer of DJO Global, Inc., a medical device company. Prior to joining DJO Global, Inc., Ms. Capps served as the Chief Financial Officer of several other public and private companies. Ms. Capps has served as a member of the board of directors of
and is a member of its audit committee and its finance and investment committee. Ms. Capps previously served as a member of the board of directors of Synthorx, Inc., a biotechnology company, from April 2018 until the sale of the company in January 2020. Earlier in her career, Ms. Capps was a Senior Audit and Accounting Professional at Ernst & Young, LLP. Ms. Capps is a California Certified Public Accountant and was recognized as a CFO of the Year Honoree by the San Diego Business Journal in 2009 and 2010. Ms. Capps holds a Bachelor’s degree in Business Administration/Accounting from San Diego State University. We believe Ms. Capps is qualified to serve on our board of directors because of her exceptionally strong skill set consisting of corporate finance, accounting, operations, investor relations, capital markets and strategic business development. Ciara Kennedy, Ph.D.has served on our board of directors since March 2020. Since December 2016, Dr. Kennedy has served as President, Chief Executive Officer and director of Amplyx Pharmaceuticals, and previously served as the company’s Chief Operating Officer beginning in October 2015. Amplyx is a clinical-stage company developing innovative drug therapies for debilitating and life-threatening diseases in patients with compromised immune systems. Prior to Amplyx, she served as Chief Operating Officer at Lumena Pharmaceuticals, until the company’s acquisition by Shire Pharmaceuticals, and then continued as Vice President, Head of Cholestatic Liver Disease at Shire post acquisition. Previously, Dr. Kennedy held several positions at Cypress Bioscience where she played a key role in the company’s FDA approval and launch of Savella® for fibromyalgia, and also held several positions in program and alliance management at Biogen Idec where she managed multiple development projects spanning the drug discovery and development continuum. She is a founder of Reneo Pharmaceuticals and Mirum Pharmaceuticals, and also serves as a director of privately held Aristea Therapeutics. Dr. Kennedy received her doctorate at the Queen’s University of Belfast, Northern Ireland, her Master of Business Administration from the Rady School of Management at University of California, San Diego , and her Bachelor of Science from University We believe Dr. Kennedy is qualified to serve on our board of directors because of her experience as an investor in biopharmaceutical and life sciences companies, her educational background, and her leadership in the medical and life science industries.
Jay Lichter, Ph.D.has served on our board of directors since May 2008 and Chairman of our board of directors since August 2015. Dr. Lichter served as our Chief Executive Officer from inception until November 2010. Dr. Lichter is currently chief executive officer of Avelas BioSciences and Fortis, both private biotechnology companies. He is an experienced biotechnology and pharmaceutical business executive with over 25 years of experience in management, scientific research and business development. Since 2007, Dr. Lichter has been a managing director at Avalon Ventures, an early-stage venture capital fund focused on information technology and life sciences. In that role, he led Avalon’s investments in public companies officer for several privately-held biotechnology companies. He previously served on the board of directors of We believe Dr. Lichter is qualified to serve on our board of directors because of his experience as a venture capital investor and his experience as a biotechnology and pharmaceutical business executive with over 25 years of experience in management, scientific research and development. Iain McGill has served on our board of directors since August 2016. Mr. McGill currently serves as Senior Vice President of Jazz Pharmaceuticals Europe and Rest of World for Jazz Pharmaceuticals Public Limited Company, an international biopharmaceutical company, since March 2015. From March 2014 to March 2015, Mr. McGill served as Head of EUSA Pharma and Senior Vice President, Jazz Pharmaceuticals, and as Chief Commercial Officer, EUSA Pharma, a specialty pharmaceutical company, from June 2012 to March 2014, when he joined Jazz Pharmaceuticals in connection with its acquisition of EUSA Pharma. From October 2011 to June 2012, Mr. McGill served as Chief Commercial Officer at EUSA Pharma (Europe) Ltd. From August 2010 to September 2011, he served as President Europe, International & Global Marketing of EUSA Pharma (Europe) Ltd, and from January 2010 to July 2010, as President of Europe. From 2006 to 2009, Mr. McGill served as Vice President and Global Business Manager at Wyeth, a pharmaceutical company acquired by Pfizer Inc. Mr. McGill holds a Bachelor of Science degree in Biochemistry from the University ofLondon.
Theodore R. Schroederhas served on our board of directors since August 2015. Since July 2018, Mr. Schroeder has served as Chief Executive Officer and as a member of the board of directors of Nabriva Therapeutics plc, a biopharmaceutical company. Previously, Mr. Schroeder served as President, Chief Executive Officer and as a member of the board of directors of Zavante Therapeutics, Inc., a private biopharmaceutical company, from June 2015 to July 2018. Mr. Schroederco-founded Cadence Pharmaceuticals, Inc., a formerly- public pharmaceutical company, and served as its President and Chief Executive Officer, and as a member of the board of directors, from May 2004 until its acquisition in March 2014 by Mallinckrodt Pharmaceuticals, Inc. Prior to this, Mr. Schroeder held a number of hospital-related sales and marketing positions with Elan, Dura Pharmaceuticals and Bristol-Myers Squibb Company, a global pharmaceutical company. Mr. Schroeder We believe Mr. Schroeder is qualified to serve on our board of directors because of his leadership and broad range of experience in pharmaceutical and life sciences companies. Our common stock is listed on The NASDAQ Global Select Market. Under the rules of NASDAQ, independent directors must comprise a majority of a listed company’s board of directors. In addition, the rules of NASDAQ require that, subject to specified exceptions, each member of a listed company’s audit, compensation and nominating and governance committees be independent. Audit committee members and compensation committee members must also satisfy the independence criteria set forth in Rule10A-3 and Rule10C-1, respectively, under the Exchange Act. Under the rules of NASDAQ, a director will only qualify as an “independent director” if, in the opinion of that company’s board of directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. To be considered independent for purposes of Rule10A-3 and under the rules of NASDAQ, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of our audit committee, our board of directors, or any other board committee: (i) accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries; or (ii) be an affiliated person of the listed company or any of its subsidiaries. To be considered independent for purposes of Rule10C-1 and under the rules of NASDAQ, the board of directors must affirmatively determine that the member of the compensation committee is independent, including a consideration of all factors specifically relevant to determining whether the director has a relationship to the company which is material to that director’s ability to be independent from management in connection with the duties of a compensation committee member, including, but not limited to: (i) the source of compensation of such director, including any consulting, advisory or other compensatory fee paid by the company to such director; and (ii) whether such director is affiliated with the company, a subsidiary of the company or an affiliate of a subsidiary of the company. Our board of directors has undertaken a review of its composition, the composition of its committees and the independence of our directors and considered whether any director has a material relationship with us that could compromise his or her ability to exercise independent judgment in carrying out his or her responsibilities. Based upon information requested from and provided by each director concerning his background, employment and affiliations, including family relationships, our board of directors has determined that none of
defined under the rules of NASDAQ. Our board of directors also determined that Ms. Capps (chairperson), Dr. Breitmeyer and Mr. McGill, who currently comprise our audit committee, and Mr. Schroeder (chairperson) and Drs. Breitmeyer and Lichter, who currently comprise our compensation committee, satisfy the independence standards for committee members established by applicable SEC rules and the listing standards of NASDAQ. In making these determinations, our board of directors considered the current and prior relationships that eachnon-employee director has with our company and all other facts and circumstances our board of directors deemed relevant in determining their independence, including the beneficial ownership of our capital stock by eachnon-employee director, and the transactions involving them described in the section titled “Related Party Transactions.” There are no family relationships among any of our directors or executive officers. Our board of directors is currently chaired by Dr. Lichter. As a general policy, our board of directors believes that separation of the positions of Chairman and Chief Executive Officer reinforces the independence of the board of directors from management, creates an environment that encourages objective oversight of management’s performance and enhances the effectiveness of the board of directors as a whole. As such, Dr. Weber serves as our President and Chief Executive Officer while Dr. Lichter serves as our Chairman of the board of directors but is not an officer. We expect and intend the positions of Chairman of the board of directors and Chief Executive Officer to continue to be held by two individuals in the future. During It is the policy of our board of directors to regularly have separate meeting times for independent directors without management. Although we do not have a formal policy regarding attendance by members of our board of directors at annual meetings of stockholders, we encourage, but do not require, our directors to attend. We have established an audit committee, a compensation committee and a corporate governance and nominating committee. We believe that the composition of these committees will meet the criteria for independence under, and the functioning of these committees comply with the requirements of, the Sarbanes-Oxley Act of 2002, the rules of the NASDAQ Global Select Market and SEC rules and regulations. We intend to comply with the requirements of the NASDAQ Global Select Market with respect to committee composition of independent directors. Each committee has the composition and responsibilities described below. The members of our audit committee are Ms. Capps, Dr. Breitmeyer and Mr. McGill, each of whom is anon-employee member of our board of directors. Ms. Capps serves as the chairperson of our audit committee. All members of our audit committee meet the requirements for independence and financial literacy of audit committee members under current NASDAQ listing standards and SEC rules and regulations. Our audit committee chairperson, Ms. Capps, is our audit committee financial expert, as that term is defined under the SEC rules implementing Section 407 of the Sarbanes-Oxley Act of 2002, and possesses financial sophistication, as
defined under NASDAQ listing standards. The responsibilities of our audit committee include, among other things: selecting and hiring the independent registered public accounting firm to audit our financialstatements; helping to ensure the independence and performance of the independent registered public accounting firm; approving audit andnon-audit services andfees;
reviewing financial statements and discussing with management and the independent registered public accounting firm our annual audited and quarterly financial statements, the results of the independent audit and the quarterly reviews, and the reports and certifications regarding internal controls over financial reporting and disclosurecontrols; preparing the audit committee report that the SEC requires to be included in our annual proxy statement; reviewing reports and communications from the independent registered public accountingfirm; reviewing the adequacy and effectiveness of our internal controls and disclosure controls and procedures; reviewing our policies on risk assessment and riskmanagement; reviewing related party transactions;and establishing and overseeing procedures for the receipt, retention and treatment of accounting related complaints and the confidential submission by our employees of concerns regarding questionable accounting or auditingmatters. Our audit committee operates under a written charter that satisfies the applicable rules and regulations of the SEC and the listing requirements of NASDAQ. A copy of the charter of our audit committee is available on our website at http://investors.otonomy.com in the Corporate Governance section of our Investor Relations webpage. During The members of our compensation committee are Mr. Schroeder and Drs. Breitmeyer and Lichter. Mr. Schroeder serves as the chairperson of our compensation committee. All members of our compensation committee meet the requirements for independence under current NASDAQ listing standards and SEC rules and regulations. Each member of our compensation committee is also anon-employee director, as defined pursuant to Rule16b-3 promulgated under the Exchange Act. The purpose of our compensation committee is to oversee our compensation policies, plans and benefit programs and to discharge the responsibilities of our board of directors relating to compensation of our executive officers. The responsibilities of our compensation committee include, among other things: overseeing our overall compensation philosophy and compensation policies, plans and benefit programs; reviewing and approving or recommending to the board for approval compensation for our executive officers anddirectors; preparing the compensation committee report that the SEC will require to be included in our annual proxy statement;and administering our equity compensationplans. Our compensation committee operates under a written charter that satisfies the listing standards of NASDAQ. A copy of the charter of our compensation committee is available on our website at
http://investors.otonomy.com in the Corporate Governance section of our Investor Relations webpage. During Corporate Governance and Nominating Committee The members of our corporate governance and nominating committee are Mr. McGill, Ms. Capps and Dr. identifying, evaluating and making recommendations to our board of directors regarding nominees for election to our board of directors and itscommittees; considering and making recommendations to our board of directors regarding the composition of our board of directors and itscommittees; reviewing developments in corporate governancepractices; evaluating the adequacy of our corporate governance practices and reporting;and evaluating the performance of our board of directors and of individualdirectors. Our corporate governance and nominating committee operates under a written charter that satisfies the listing standards of NASDAQ. A copy of the charter of our corporate governance and nominating committee is available on our website at http://investors.otonomy.com in the Corporate Governance section of our Investor Relations webpage. During Compensation Committee During the past fiscal year, Mr. Schroeder and Drs. Breitmeyer and Lichter served on our compensation committee. None of the members of our compensation committee Considerations in Evaluating Director Nominees It is the policy of the corporate governance and nominating committee of our board of directors to consider recommendations for candidates to our board of directors from stockholders holding not less than one percent (1%) of the outstanding shares of the Company’s common stock continuously for at least twelve (12) months prior to the date of the submission of the recommendation or nomination. The corporate governance and nominating committee will use the following procedures to identify and evaluate any individual recommended or offered for nomination to our board of directors: The corporate governance and nominating committee will consider candidates recommended by stockholders in the same manner as candidates recommended to the corporate governance and nominating committee from othersources. In its evaluation of director candidates, including the members of our board of directors eligible forre-election, the corporate governance and nominating committee will consider thefollowing: The current size and composition of our board of directors and the needs of our board of directors and the respective committees of our board ofdirectors.
Such factors as character, integrity, judgment, diversity of experience, independence, area of expertise, corporate experience, length of service, potential conflicts of interest, other commitments (including but not limited to other board, committee and employment commitments, as applicable), and the like. The corporate governance and nominating committee evaluates these factors, among others, and does not assign any particular weighting or priority to any of these factors. Other factors that the corporate governance and nominating committee deemsappropriate.
The corporate governance and nominating committee requires the following minimum qualifications to be satisfied by any nominee for a position on our board ofdirectors: The highest personal and professional ethics andintegrity. Proven achievement and competence in the nominee’s field and the ability to exercise sound businessjudgment. Skills that are complementary to those of the existing board ofdirectors. The ability to assist and support management and make significant contributions to the Company’s success. An understanding of the fiduciary responsibilities that is required of a member of our board of directors and the commitment of time and energy necessary to diligently carry out those responsibilities. If the corporate governance and nominating committee determines that an additional or replacement director is required, the corporate governance and nominating committee may take such measures that it considers appropriate in connection with its evaluation of a director candidate, including candidate interviews, inquiry of the person or persons making the recommendation or nomination, engagement of an outside search firm to gather additional information, or reliance on the knowledge of the members of the corporate governance and nominating committee, our board directors ormanagement. The corporate governance and nominating committee may propose to our board of directors a candidate recommended or offered for nomination by a stockholder as a nominee for election to our board of directors. Additionally, the corporate governance and nominating committee has in the past, and may again in the future, pay fees to third parties to assist in identifying or evaluating director candidates. Annually the board of directors conducts a review and assessment regarding the peformance and effectiveness of the board of directors and each of the committees and evaluates opportunities to improve performace and effectiveness. Stockholder Recommendations for A stockholder that wants to recommend a candidate for election to our board of directors should direct the recommendation in writing by letter to the Company, attention of the Secretary, at 4796 Executive Drive, San Diego, California 92121. The recommendation must include the candidate’s name, home and business contact information, detailed biographical data, relevant qualifications, a signed letter from the candidate confirming willingness to serve, information regarding any relationships between the candidate and the Company and evidence of the recommending stockholder’s ownership of Company stock. Such recommendations must also include a statement from the recommending stockholder in support of the candidate, particularly within the context of the criteria for board membership, including issues of character, integrity, judgment, diversity of experience, independence, area of expertise, corporate experience, length of service, potential conflicts of interest, other commitments and the like and personal references.
A stockholder that instead desires to nominate a person directly for election to our board of directors at an annual meeting of the stockholders must meet the deadlines and other requirements set forth in Section 2.4 of the Company’s bylaws and the rules and regulations of the SEC. Section 2.4 of the Company’s bylaws requires that a stockholder who seeks to nominate a candidate for director must provide a written notice to the Secretary of the Company not later than the 45th day nor earlier than the 75th day before theone-year anniversary of the date on which the corporation first mailed its proxy materials or a notice of availability of proxy materials (whichever is earlier) for the preceding year’s annual meeting;provided,however, that in the event that no annual meeting was held in the previous year or if the date of the annual meeting is advanced by more than 30 days prior to or delayed by more than 60 days after theone-year anniversary of the date of the previous year’s annual meeting, then notice by the stockholder to be timely must be so received by the Secretary of the Company not earlier than the close of business on the 120th day prior to such annual meeting and not later than the close of business on the later of (i) the 90th day prior to such annual meeting and (ii) the 10th day following the day on which Public Announcement (as defined below) of the date of such annual meeting is first made. That notice must state the information required by Section 2.4 of the Company’s bylaws, and otherwise must comply with applicable federal and state law. The Secretary of the Company will provide a copy of the bylaws upon request in writing from a stockholder. “Public Announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or a comparable national news service or in a document publicly filed by the corporation with the SEC pursuant to Section 13, 14 or 15(d) of the Exchange Act, or any successor thereto. Communications with the Board of Directors Our board of directors believes that management speaks for Otonomy, Inc. Individual board members may, from time to time, communicate with various constituencies that are involved with the Company, but it is expected that board members would do this with knowledge of management and, in most instances, only at the request of management. In cases where stockholders and other interested parties wish to communicate directly with ournon-management directors, messages can be sent to our Secretary, at Otonomy, Inc., 4796 Executive Drive, San Diego, California 92121, Attn: Secretary. Our Secretary monitors these communications and will provide a summary of all received messages to the board of directors at each regularly scheduled meeting of the board of directors. Our board of directors generally meets on a quarterly basis. Where the nature of a communication warrants, our Secretary may determine, in his or her judgment, to obtain the more immediate attention of the appropriate committee of the board ornon-management director, of independent advisors or of Company management, as our Secretary considers appropriate. Our Secretary may decide in the exercise of his or her judgment whether a response to any stockholder or interested party communication is necessary. This procedure for stockholder and other interested party communications with thenon-management directors is administered by our corporate governance and nominating committee. This procedure does not apply to (a) communications tonon-management directors from officers or directors of the Company who are stockholders, (b) stockholder proposals submitted pursuant to Rule14a-8 under the Exchange Act, or (c) communications to the audit committee pursuant to the Complaint Procedures for Accounting and Auditing Matters. Corporate Governance Guidelines and Code of Business Conduct and Ethics Our board of directors has adopted Corporate Governance Guidelines. These guidelines address items such as the qualifications and responsibilities of our directors and director candidates and corporate governance policies and standards applicable to us in general. In addition, our board of directors has adopted a Code of Ethics and Conduct that applies to all of our employees, officers and directors, including our Chief Executive Officer, Chief Financial and Business Officer, and other executive and senior financial officers. The full text of our
Corporate Governance Guidelines and our Code of Ethics and Conduct is posted on our website at http://investors.otonomy.com in the Corporate Governance section of our Investor Relations webpage. We intend to post any amendments to our Code of Ethics and Conduct, and any waivers of our Code of Ethics and Conduct for directors and executive officers, on the same website. Role of the Board in Risk Oversight One of the key functions of our board of directors is informed oversight of our risk management process. Our board of directors Eachnon-employee director is eligible to receive compensation for his or her service consisting of annual cash retainers and equity awards as described below. We also reimburse our directors for expenses associated with attending meetings of our board of directors and committees of our board of directors. Our compensation committee has the primary responsibility for reviewing and approving the compensation paid tonon-employee directors. Our compensation committee reviews at least annually the type and form of compensation paid to ournon-employee directors, which includes a market assessment and analysis by our independent compensation consulting firm, Radford, regarding practices at comparable companies. As part of this analysis, Radford reviewsnon-employee director compensation trends and data from companies comprising the same peer group used by our compensation committee in connection with its review of executive compensation. Based on this review, our compensation committee Cash Compensation Allnon-employee directors are entitled to receive the following cash compensation for their services: $40,000 (or before the adjustment in April 2020, $35,000) per year for service as a boardmember; $30,000 (or before the adjustment in April 2020, $20,000) per year for service as $15,000 per year for service as chairperson of the auditcommittee; $7,500 per year for service as an audit committeemember; $11,000 (or before the adjustment in April 2020, $10,000) per year for service as chairperson of the compensationcommittee; $5,500 (or before the adjustment in April 2020, $5,000) per year for service as a compensation committeemember; $7,500 per year for service as chairperson of the corporate governance and nominating committee;and
$4,000 (or before the adjustment in April 2020, $3,750) per year for service as a corporate governance and nominating committeemember. All cash payments tonon-employee directors will be paid quarterly in arrears on a prorated basis. Equity Compensation Allnon-employee directors are entitled to receive the following equity compensation for their services: Eachnon-employee director is automatically granted an initial award of a nonstatutory stock option to purchase 35,000 shares of our common stock effective on the date on which such person first Our 2014 Equity Incentive Plan (the “2014 Plan”) provides that in the event of a merger or change in control, as defined in the 2014 Plan, each outstanding equity award granted under the 2014 Plan that is held by anon-employee director will fully vest and all of the shares subject to such award will become fully exercisable, if applicable. The following table sets forth information regarding compensation earned by or paid to ournon-employee directors during
See “Executive Compensation” for information about the compensation of directors who are also our employees. ELECTION OF DIRECTORS Our board of directors is currently composed of seven (7) members. In accordance with our certificate of incorporation, our board of directors is divided into three classes with staggered three-year terms. At the Annual Meeting, two Class I directors will be elected for a three-year term to succeed the same class whose term is then expiring. Each director’s term continues until the election and qualification of such director’s successor, or such director’s earlier death, resignation, or removal. Any increase or decrease in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of our directors. This classification of our board of directors may have the effect of delaying or preventing changes in control of our company. Our corporate governance and nominating committee has recommended, and our board of directors has approved James B. Breitmeyer, M.D., Ph.D. and David A. Weber, Ph.D. as nominees for election as Class I directors at the Annual Meeting. If elected, each of Drs. Breitmeyer and Weber will serve as Class I directors until the 2024 annual meeting of stockholders or until their successors are duly elected and qualified. Drs. Breitmeyer and Weber, are currently directors of our company, and each has agreed to being named in this proxy statement as nominees. For information concerning the nominees, please see “Board of Directors and Corporate Governance.” If you are a stockholder of record and you sign your proxy card or vote over the Internet or by telephone but do not give instructions with respect to the voting of directors, your shares will be voted FOR the election of James B. Breitmeyer, M.D., Ph.D. and David A. Weber, Ph.D. We expect that Drs. Breitmeyer and Weber will accept such nomination; however, in the event that a director nominee is unable or declines to serve as a director at the time of the Annual Meeting, the proxies will be voted for any nominee who shall be designated by our board of directors to fill such vacancy. If you are a beneficial owner of shares of our common stock and you do not give voting instructions to your broker, bank or other nominee, then your broker, bank or other nominee will leave your shares unvoted on this matter. The election of Class I directors requires a plurality vote of the shares of our common stock present in person (including virtually) or by proxy at the Annual Meeting and entitled to vote thereon to be approved. Broker non-votes will have no effect on this proposal. THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH OF THE TWO DIRECTORS NOMINATED BY OUR BOARD OF DIRECTORS AND NAMED IN THIS PROXY STATEMENT AS CLASS I DIRECTORS TO SERVE FOR A THREE-YEAR TERM. ADVISORY VOTE ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) and SEC rules, we are providing our stockholders with the opportunity to vote to approve, on an advisory or non-binding basis, the compensation paid to our named executive officers as disclosed in this proxy statement pursuant to Section 14A of the Exchange Act. This proposal, commonly known as a “Say-on-Pay” proposal, gives our stockholders the opportunity to express their views on our named executive officers’ compensation as a whole. This vote is not intended to address any specific item of compensation or any specific named executive officer, but rather the overall compensation of all of our named executive officers and the philosophy, policies and practices described in this proxy statement. The Say-on-Pay vote is advisory, and therefore is not binding on us, our compensation committee, or our board of directors. The Say-on-Pay vote will, however, provide information to us regarding investor sentiment about our executive compensation philosophy, policies and practices, which our compensation committee will be able to consider when determining executive compensation for the remainder of the current fiscal year and beyond. Our board of directors and our compensation committee value the opinions of our stockholders. Accordingly, our board of directors and our compensation committee will consider the outcome of this vote when making future compensation decisions for our named executive officers. We believe that the information provided in the section titled “Executive Compensation” demonstrates that our executive compensation program was designed appropriately and is working to ensure management’s interests are aligned with our stockholders’ interests to support long-term value creation. Accordingly, we ask our stockholders to vote “FOR” the following resolution at the Annual Meeting: “RESOLVED, that the stockholders approve, on a non-binding advisory basis, the compensation paid to our named executive officers, as disclosed in the proxy statement for the Annual Meeting pursuant to the compensation disclosure rules of the SEC, including the compensation tables and narrative discussion and other related disclosure.” The approval of, on a non-binding advisory basis, the compensation paid to our named executive officers, requires the affirmative vote of a majority of the voting power of the shares of our common stock present in person (including virtually) or by proxy at the Annual Meeting and entitled to vote thereon to be approved. Abstentions will have the effect of a vote against this proposal, and broker non-votes will have no effect. As an advisory vote, the result of this proposal is non-binding. Although the vote is non-binding, our board of directors and our compensation committee value the opinions of our stockholders and will consider the outcome of the vote when making future compensation decisions for our named executive officers. THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE APPROVAL OF, ON A NON-BINDING ADVISORY BASIS, THE COMPENSATION PAID TO OUR NAMED EXECUTIVE OFFICERS, AS DISCLOSED IN THIS PROXY STATEMENT. RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Our audit committee has appointed Ernst & Young LLP, as our independent registered public accounting firm to audit our financial statements for our fiscal year ending December 31, 2021. Ernst & Young LLP has served as our independent registered public accounting firm since 2010. At the Annual Meeting, stockholders are being asked to ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2021. Stockholder ratification of the appointment of Ernst & Young LLP is not required by our bylaws or other applicable legal requirements. However, our board of directors is submitting the appointment of Ernst & Young LLP to our stockholders for ratification as a matter of good corporate governance. In the event that this appointment is not ratified by the affirmative vote of a majority of the shares present in person (including virtually) or by proxy at the Annual Meeting and entitled to vote, such appointment will be reconsidered by our audit committee. Even if the appointment is ratified, our audit committee, in its sole discretion, may appoint another independent registered public accounting firm at any time during our fiscal year ending December 31, 2021 if our audit committee believes that such a change would be in the best interests of Otonomy and its stockholders. If the appointment is not ratified by our stockholders, the Audit Committee may reconsider whether it should appoint another independent registered public accounting firm. A representative of Ernst & Young LLP is expected to be present at the Annual Meeting, will have an opportunity to make a statement if he or she wishes to do so, and is expected to be available to respond to appropriate questions from stockholders. Fees Paid to the Independent Registered Public Accounting Firm The following table presents fees for professional audit services and other services rendered to us by Ernst & Young LLP for our fiscal years ended December 31, 2020 and 2019.
In 2020, there were no other professional services provided by Ernst & Young LLP that would have required our audit committee to consider their compatibility with maintaining the independence of Ernst & Young LLP. Audit Committee Policy on Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm Our audit committee has established a policy governing our use of the services of our independent registered public accounting firm. Under the policy, our audit committee is required to pre-approve all audit and permissible non-audit services performed by our independent registered public accounting firm in order to ensure that the provision of such services does not impair such accounting firm’s independence. All fees paid to Ernst & Young LLP for our fiscal years ended December 31, 2019 and 2020 were pre-approved by our audit committee. The ratification of the appointment of Ernst & Young LLP requires the affirmative vote of a majority of the shares of our common stock present in person (including virtually) or by proxy at the Annual Meeting and entitled to vote thereon. Abstentions will have the effect of a vote AGAINST the proposal. THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR OUR FISCAL YEAR ENDING DECEMBER 31, 2021. The information contained in the following Audit Committee Report shall not be deemed to be soliciting material or to be filed with the Securities and Exchange Commission, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that Otonomy, Inc., or the Company, specifically incorporates it by reference in such filing. The audit committee serves as the representative of our board of directors with respect to its oversight of: our accounting and financial reporting processes and the audit of our financialstatements; the integrity of our financialstatements; our compliance with legal and regulatoryrequirements; inquiring about significant risks, reviewing our policies for risk assessment and risk management, and assessing the steps management has taken to control these risks;and the independent registered public accounting firm’s appointment, qualifications andindependence. The audit committee also reviews the performance of our independent registered public accounting firm, Ernst & Young LLP, in the annual audit of our financial statements and in assignments unrelated to the audit, and reviews the independent registered public accounting firm’s fees. The audit committee is composed of three non-employee directors. Our board of directors has determined that each member of the audit committee is independent, and that Ms. Capps qualifies as an “audit committee financial expert” under the SEC rules. The audit committee provides our board of directors such information and materials as it may deem necessary to make our board of directors aware of financial matters requiring the attention of our board of directors. The audit committee reviews our financial disclosures and meets privately, outside the presence of our management, with our independent registered public accounting firm. In fulfilling its oversight responsibilities, the audit committee reviewed and discussed the audited financial statements in our 2020 Annual Report on Form 10-K with management, including a discussion of the quality and substance of the accounting principles, the reasonableness of significant judgments made in connection with the audited financial statements, and the clarity of disclosures in the financial statements. The audit committee reports on these meetings to our board of directors. The audit committee has reviewed and discussed the Company’s audited financial statements with management and Ernst & Young LLP, the Company’s independent registered public accounting firm. The audit committee has discussed with Ernst & Young LLP the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (the “PCAOB”) and the Securities and Exchange Commission. The audit committee has received and reviewed the written disclosures and the letter from Ernst & Young LLP required by the applicable requirements of the PCAOB regarding Ernst & Young LLP’s communications with the audit committee concerning independence and has discussed with Ernst & Young LLP its independence. In addition, the audit committee has discussed with Ernst & Young LLP its independence from management and the Company, including matters in the letter from Ernst & Young LLP required by PCAOB Rule 3526, Communication with Audit Committees Concerning Independence, and considered the compatibility of non-audit services with Ernst & Young LLP’s independence. Based on the review and discussions referred to above, the audit committee recommended to our board of directors that the Company’s audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 for filing with the Securities and Exchange Commission. The audit committee also has selected Ernst & Young LLP as the independent registered public accounting firm for fiscal year 2021. Our board of directors recommends that stockholders ratify this selection at the Annual Meeting. Respectfully submitted by the members of the audit committee of the board of directors: Vickie Capps (Chair) James B. Breitmeyer, M.D., Ph.D. Iain McGill The following table sets forth certain information about our executive officers and their respective ages as of March 31, 2021. Officers are elected by the board of directors to hold office until their successors are elected and qualified.
David A. Weber, Ph.D. | 61 | President, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Paul E. Cayer | 59 | Chief Financial and Business | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Alan C. Foster, Ph.D. |
| 65 | Chief Scientific Officer | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Robert | 53 | Chief Technical
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For the biography of Dr. Weber, please see “Board of Directors and Corporate Governance—Continuing Directors.”
Paul E. Cayer has served as our Chief Business Officer since October 2008, Chief Financial Officer since October 2010, and served as our Secretary from February 2011 until July 2015 and again beginning in February 2021. Mr. Cayer brings more than 30 years of experience in the pharmaceutical, medical device and healthcare technology field. Prior to joining our company, Mr. Cayer served from 2005 to 2008 as Senior Vice President, Corporate Development for Verus Pharmaceuticals, Inc., a specialty pharmaceutical company focused on the treatment of allergic and respiratory disorders in children. Mr. Cayer has also held various management positions with Targeted Molecules Corporation, a biopharmaceutical company, Gensia Pharmaceuticals, Inc., a biopharmaceutical company, Acuson, a provider of medical ultrasound systems, Castle & Cooke, a consumer products company, and served as consultant with Booz-Allen & Hamilton, a management and technology consulting firm. Mr. Cayer received his Bachelor’s degree in biomechanical engineering from HarvardUniversity and MBA from the Harvard Business School.
Alan C. Foster, Ph.D. was promoted to Chief Scientific Officer in April 2021, prior to which he served as our Vice President, Research since December 2014. Dr. Foster is a neuroscientist and pharmacologist with over 35 years of drug discovery and development experience. During his career, he has led research programs that identified multiple drug candidates for a wide range of biological targets in the neuroscience, ophthalmology and neurotology therapeutic areas. Prior to Otonomy, he served as Vice President of Pharmacology at Allergan, Inc., and Vice President of Neuroscience at Neurocrine Biosciences, Inc. Previously, he held research leadership positions at Gensia, Inc. and Merck. Dr. Foster was a post-doctoral fellow at both the University of California, Irvine, Department of Psychobiology, and the Maryland Psychiatric Research Center, University of Maryland School of Medicine. He obtained his Ph.D. in Neuropharmacology and a Bachelor’s degree in Physiology and Biochemistry from the University of Southampton, United Kingdom.
Robert M. Savel, II has served as our Chief Technical Officer since January 2014. From September 2011 to December 2013, Mr. Savel served as General Manager and Senior Vice President of Operations for Optimer Pharmaceuticals, Inc., a biopharmaceutical company. From September 2010 to June 2011, Mr. Savel served as Senior Vice President and Chief Technical Officer for Inspire Pharmaceuticals, Inc., an ophthalmic pharmaceutical company. From April 2008 to September 2010, Mr. Savel served as President of Savel Enterprises LLC, a management consulting firm providing technical and operational support to biopharmaceutical clients. From April 2007 to April 2008, Mr. Savel served as the Senior Vice President of Technical Operations for PDL BioPharma. Earlier in his career, he held leadership operating positions with Johnson & Johnson, which included the position of Vice President, Quality and Compliance. Mr. Savel received his Bachelor’s degree in mechanical engineering from Virginia Polytechnic Institute and State University in Blacksburg,Virginia.
The Company is a “smaller reporting company” under Item 10 of Regulation S-K promulgated under the Exchange Act, and the following compensation disclosure is intended to comply with the requirements applicable to smaller reporting companies. Although the rules allow us to provide less detail about our executive compensation program, our compensation committee is committed to providing the information necessary to help stockholders understand our executive compensation-related decisions. Accordingly, this section includes supplemental narratives that describe the 2020 executive compensation program for our named executive officers.
The following discussion of our processes and procedures for making compensation decisions for our named executive officers should be read together with the compensation tables and related disclosures set forth below. Our named executive officers for 2020, which consist of our principal executive officer and the next two most highly compensated executive officers, are:
David A. Weber, Ph.D., President and Chief ExecutiveOfficer;
Paul E. Cayer, Chief Financial and Business Officer;and
Robert M. Savel, II, Chief TechnicalOfficer.
Compensation Philosophy
Our compensation programs are designed to:
Support corporate objectives intended to drive stockholder value and promote the long-term growth of the Company.
Attract, incentivize and retain superior talent at the executive level through competitive compensation programs/arrangements.
Align rewards to the achievement of corporate goals intended to drive stockholder value.
Base executive rewards on achievement of measurable corporate goals that align to our strategic priorities and tactics to build stockholder value, as well as using equity awards to further align the interest of executives and stockholders.
Role of Compensation Committee
Our compensation committee is responsible for the executive compensation programs for our executive officers and reports to our board of directors on its discussions, decisions and other actions. The compensation committee approves the compensation of our named executive officers, and provides recommendations to our board of directors for our CEO’s compensation. As part of the decision-making process, the compensation committee considers our overall performance compared to our corporate objectives, reviews competitive market information with our CEO for each executive officer, as well as their performance against objectives, together with their respective scope of responsibilities and experience level.
Role of Compensation Committee Consultant
Our compensation committee is authorized to retain the services of one or more executive compensation advisors, as it sees fit, in connection with the establishment of our compensation programs and related policies. Our compensation committee retained Radford, part of the Rewards Solutions practice at Aon plc. (“Radford”), a national compensation consultant, to provide it with information, recommendations and other advice relating to executive compensation on an ongoing basis. Accordingly, Radford now serves at the discretion of our compensation committee. Radford has implemented policies and procedures to ensure the objectivity of its executive compensation consultants and the advice it provides to the compensation committee. The compensation committee conducts an annual assessment of Radford’s independence pursuant to the SEC rules and NASDAQ listing standards and concluded that Radford’s work did not give rise to any conflict of interest.
The compensation committee engaged Radford to conduct a competitive analysis of our executive compensation program. In connection with this analysis, Radford analyzed both publicly available data from the companies in our compensation peer group and compensation survey data, while also reviewing and considering historical data insights into our compensation practice and programs, with a goal of ensuring that the compensation we offer to our executive officers is competitive and fair.
Role of Management
Management provides data, analysis, input and recommendations to the compensation committee through our CEO regarding short- and long-term compensation for all executive officers (other than himself) based on our results, an individual executive officer’s contribution toward these results and performance toward goal achievement. Our compensation committee then reviews the Radford and management recommendations and other data and makes decisions as to total compensation for each executive officer other than the CEO, as well as each individual compensation component. While the compensation committee gives reasonable weight to our CEO’s evaluation of each executive officer’s performance and recommendation of appropriate compensation, the Compensation Committee’s decisions are made by the compensation committee in its sole discretion, and outside of the presence of any affected executive officers. As noted above, our compensation committee approves and makes recommendations to our Board of Directors for approval the compensation for the CEO. The independent members of our board of directors make the final decisions regarding executive compensation for the CEO.
Use of Peer Group Data
Annually our compensation committee evaluates the peer group for suitability and modifies the peer group as needed. Our compensation committee engaged Radford to assist in developing an appropriate group of peer companies, with consideration of sector, business stage/revenue, and market capitalization, among other factors to complete a competitive analysis of the components of our executive compensation program and to help us determine the appropriate level of overall compensation for our executive officers. The compensation committee uses the peer group data as one factor in determining the appropriate levels of overall total compensation and each individual compensation element for our executive officers. In addition to peer group data, as noted above, the compensation committee also considers market information and other data and analytics provided by Radford and management.
The following table provides information regarding the compensation of our named executive officers during the years ended December 31, 2020 and 2019.
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| All Other |
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Name and Principal Position |
| Year |
| Salary ($) |
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| Bonus ($)(1) |
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| Awards ($)(2) |
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| Compensation ($)(3) |
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| Total ($) |
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David A. Weber, Ph.D. |
| 2020 |
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| 567,736 |
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| 357,674 |
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| 1,925,910 |
|
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| 1,680 |
|
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| 2,853,000 |
|
President and Chief Executive Officer |
| 2019 |
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| 545,900 |
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| 327,540 |
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| 1,278,000 |
|
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| 1,680 |
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| 2,153,120 |
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Paul E. Cayer |
| 2020 |
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| 410,000 |
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| 172,200 |
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| 1,348,137 |
|
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| 1,260 |
|
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| 1,931,597 |
|
Chief Financial and Business Officer |
| 2019 |
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| 395,185 |
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| 158,074 |
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| 359,438 |
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| 1,260 |
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| 913,957 |
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Robert M. Savel, II |
| 2020 |
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| 366,000 |
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| 153,720 |
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| 687,825 |
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| 1,610 |
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| 1,209,155 |
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Chief Technical Officer |
| 2019 |
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| 355,000 |
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| 142,000 |
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| 319,500 |
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| 1,260 |
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| 817,760 |
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(1) | This column reflects bonus payments earned in 2020 and2019 and paid in the subsequent year. |