EXECUTIVE COMPENSATION
Compensation Overview
This
compensation discussion, which should be read together with the compensation tables set forth below,section provides information regarding the total compensation awarded to, earned by, or paid to during the years ended December 31,
20182019 and
20192020 to (1)
each individual who served as our principal executive officer, (2) our two next most highly compensated executive officers who earned more than $100,000 during the fiscal year ended December 31,
20192020 and were serving as executive officers as of such date, and (3) any individual who would otherwise be included in (2) above but for the fact that such individual was not serving as an executive officer of ours as of December 31,
2019.2020. We refer to these individuals in this Proxy Statement as our named executive officers.
Our named executive officers for
20192020 who appear in the Summary Compensation Table are:
Meenu Chhabra, our President and Chief Executive Officer,
Marija Zecevic,Richard Peters, M.D., Ph.D., our Chief CommercialExecutive Officer;
Sheila Wilson, our Chief Operating Officer; and
Po-Shun Lee,N. Anthony Coles, M.D., our former Executive Vice President andChair;
Paulash Mohsen, our Chief Medical Officer.Business Officer;
Our executive compensation program is administered by our Compensation Committee in consultation with our Board of Directors. The key objectives of our executive compensation program are (1) to attract, motivate, reward and retain superior executive officers with
Meenu Chhabra, the
skills necessary to successfully lead and manage our business; (2) to achieve accountability for performance by linking annual cash incentive compensation to the achievement of measurable performance objectives; and (3) to align the interests of our executive officers and our stockholders through short- and long-term incentive compensation programs. For our executive officers, these short- and long-term incentives are designed to accomplish these objectives by providing a significant correlation between our results of operations and their total compensation.Setting Executive Compensation
Our Compensation Committee is responsible for reviewing and determining the compensation of our executive officers, and, with respect to ourformer Chief Executive Officer recommending compensation for determination byof Proteostasis;
Marija Zecevic, the full Boardformer Chief Commercial Officer of Directors. We have not adopted any formal guidelines for allocating total compensation between long-termProteostasis; and short-term compensation, cash compensation andnon-cash compensation, or among different forms
Sheila Wilson, the former Chief Operating Officer of
non-cash compensation.Role of the Compensation Committee
The Compensation Committee, which is comprised entirely of independent directors, reviews and approves, or with respect to our Chief Executive Officer, recommends to the full Board of Directors for approval, Proteostasis.
To date, the compensation
packages for our named executive officers, including an analysis of all elements of compensation separately and in the aggregate.In reviewing and approving, or making recommendations with respect to, these matters, our Compensation Committee considers such matters as it deems appropriate, including our financial and operating performance, the alignment of the interests of our executive officers and our stockholders and our ability to attract and retain qualified and committed individuals, as well as each executive officer’s performance, experience, responsibilities and the compensation of executive officers in similar positions at comparable companies. In determining its recommendations for the appropriate compensation levels for our Chief Executive Officer, the Compensation Committee meets outside the presence of all our executive officers. With respect to the compensation levels of all other executive officers, the Compensation Committee meets outside the presence of all executive officers except our Chief Executive Officer. Our Chief Executive Officer annually reviews the performance of each of the other named executive officers with the Compensation Committee.
Role of Compensation Consultant
In 2019, we engaged Radford (“Radford”), an independent executive compensation consultant, to provide guidance with respect to the development and implementation of our compensation programs.
Our Compensation Committee charter requires that any compensation consultants engaged by the Compensation Committee be independent of company management. During 2019, Radford did not provide services to us other than the services described in this Proxy Statement. Under its charter, our Compensation Committee is responsible for performing an annual assessment of any compensation consultants’ independence to determine whether the consultants are independent. Our Compensation Committee has determined that Radford is independent and that their work has not raised any conflicts of interest.
Elements of Compensation
Base Salary
Our Compensation Committee reviews the base salaries of our executive officers, including our named executive officers, from time to time and makes adjustments as it determines to be reasonable and necessary to reflect the scope of an executive officer’s performance, contributions, responsibilities, experience, prior salary level, position (in the case of a promotion) and market conditions.
The following table sets forth the annual base salaries for each of our named executive officers for 2019 and 2020.
| | | | |
NAME | | 2019 BASE SALARY ($) | | 2020 BASE SALARY ($) |
Meenu Chhabra | | 539,600 | | 566,580 |
Sheila Wilson. | | 358,100 | | 376,005 |
Marija Zecevic, Ph.D.. | | 364,000 | | 382,200 |
Po-Shun Lee, M.D. (1) | | 360,706 | | N/A |
(1) | Dr. Lee’s employment with us was terminated effective July 22, 2019.
|
Non-Equity Incentive Plan Compensation
We believe thathas consisted of a significant portioncombination of our executives’ compensation should be based on the attainment of business goals recommended by the Compensation Committee and approved by the Board of Directors while also rewarding individual performance. Each named executive officer is eligible for an annual incentive bonus pursuant to our Senior Executive Cash Incentive Bonus Plan, which is approved annually.
Under the 2019 Senior Executive Cash Incentive Bonus Plan, each named executive officer was eligible to be considered for an annual performance bonus based on the percentage attainment, as determined by the Board of Directors upon recommendation from the Compensation Committee, of (1) our 2019 corporate goals established by the Board of Directors, upon recommendation of the Compensation Committee in its sole discretion and communicated to each officer and (2) the 2019 individual goals established by the Board of Directors, upon recommendation of the Compensation Committee. Our 2019 corporate goals established by the Board of Directors, upon recommendation of the Compensation Committee included achievement of topline data in differing doses of nesolicaftor(PTI-428), posenacaftor(PTI-801), and doricaftor(PTI-808), and achievement of regulatory milestones for our proprietary combination therapies, initiatives to improve corporate culture and the extension of our cash runway. The Compensation Committee retained the discretion to make adjustments to the calculated bonus based on unexpected or unplanned events, the overall financial condition of the Company, extraordinary performance or underperformance or other factors as determined appropriate by the Compensation Committee. Each named executive officer has a target bonus opportunity and may earn more or less than the annual target amount based on our company’s and his or her individual performance.
The Board of Directors, upon the recommendation of the Compensation Committee, determined that the percentage attainment of our corporate goals for 2019 was 100%. After review of individual performance achievement targets, the Board of Directors determined that each of Ms. Chhabra, Ms. Wilson and Dr. Zecevic shall be granted a 2019 performance bonus equal to 110% of her target bonus percentage of her base salary, as reflected in the column of the Summary Compensation Table abovetitled “Non-Equity Incentive Plan Compensation.”
| | | | | | | | |
NAME | | 2019 BONUS TARGET (%) | | 2019 INCENTIVE BONUS PAID ($) | | | 2020 BONUS TARGET (%) |
Meenu Chhabra | | 50 | | | 296,780 | | | 50 |
Sheila Wilson. | | 30 | | | 157,564 | | | 40 |
Marija Zecevic, Ph.D. | | 35 | | | 160,160 | | | 40 |
Po-Shun Lee, M.D. (2) | | 40 | | | 80,245 | | | N/A |
(2) | Dr. Lee’s employment with us was terminated effective July 22, 2019; however, pursuant to the terms of his separation agreement, he remained eligible for apro-rated bonus under our Senior Executive Cash Incentive Bonus Plan as he served as a consultant to us from July 23, 2019 to December 25, 2019.
|
Equity-Based Awards
Equity-basedbonuses and long-term incentive compensation is an integral part of our overall compensation program. Providing named executive officers with the opportunity to create significant wealth through stock ownership is a powerful tool to attract and retain highly qualified executives, achieve strong long-term stock price performance and align our executives’ interests with those of our stockholders. In addition, equity awards serve as an additional retention measure. Additional grants may occur periodically in order to specifically incentivize executives with respect to achieving certain corporate goals or to reward executives for exceptional performance. We have historically granted equity awards to our employees, including our named executive officers, in the form of stock options to purchase shares of our commonand restricted stock.
Retirement Benefits and Other Compensation
Our named executive officers, did not participate in, or otherwise receive any benefits under, any pension or nonqualified deferred compensation plan sponsored by us during 2019. Our named executive officers werelike all full-time employees, are eligible to participate in our employee benefits, including health insurance and group life insurance benefits, on the same basis as our other employees. We maintain a 401(k) plan intended to qualify as atax-qualified plan under Section 401 of the U.S. Internal Revenue Code of 1986, as amended, which our named executive officers are eligible to participate in on the same basis as our other employees. We generally do not provide perquisites or personal benefits except in limited circumstances, and we did not provide any perquisites or personal benefits to our named executive officers in 2019.
welfare benefit plans.20192020 Summary Compensation Table
The following table presents information regarding the
total compensation awarded to,
or earned by,
and paid to each individual who served as one of our named executive officers
for services rendered to us in all capacities during the fiscal
years indicated. | | | | | | | | | | | | | | | | | | | | | | | | |
Name and Principal Position | | Year | | | Salary ($) | | | Option Awards (1) ($) | | | Non-Equity Incentive Plan Compensation (2) ($) | | | All Other Compensation (3) ($) | | | Total ($) | |
Meenu Chhabra | | | 2019 | | | | 539,600 | | | | 1,135,941 | | | | 296,780 | | | | 8,400 | | | | 1,980,721 | |
President, and Chief Executive Officer | | | 2018 | | | | 515,000 | | | | 516,770 | | | | 257,500 | | | | — | | | | 1,783,730 | |
Sheila Wilson(4) | | | 2019 | | | | 358,100 | | | | 424,887 | | | | 157,564 | | | | 6,300 | | | | 946,851 | |
Chief Operating Officer | | | | | | | | | | | | | | | | | | | | | | | | |
Marija Zecevic, Ph.D.(5) | | | 2019 | | | | 364,000 | | | | 424,847 | | | | 160,160 | | | | 6,300 | | | | 955,307 | |
Chief Commercial Officer | | | | | | | | | | | | | | | | | | | | | | | | |
Po-Shun Lee, M.D.(6) | | | 2019 | | | | 225,705 | | | | 441,478 | | | | 80,245 | (7) | | | 239,903 | (8) | | | 987,331 | |
Former Executive Vice President and Chief Medical Officer | | | 2018 | | | | 360,706 | | | | 160,815 | | | | 126,247 | | | | — | | | | 783,070 | |
year ended December 31, 2020.N. Anthony Coles
Executive Chair of the Board of Directors
| | | 2020 | | | 390,000 | | | — | | | 42,046(5) | | | 312,000 | | | — | | | 744,046 |
| 2019 | | | 469,211 | | | — | | | 291,375 | | | 170,703 | | | — | | | 931,289 |
Richard Peters, M.D., Ph.D.(6)
Chief Executive Officer
| | | 2020 | | | 600,000 | | | — | | | 238,739(5) | | | 480,000 | | | 1,956(7) | | | 1,320,695 |
| 2019 | | | 195,769 | | | — | | | 3,536,984 | | | 83,312 | | | 1,965 | | | 3,818,022 |
Paulash Mohsen
Chief Business Officer
| | | 2020 | | | 374,764 | | | — | | | 151,724(5) | | | 205,000 | | | 1,733(7) | | | 733,221 |
| 2019 | | | 357,108 | | | — | | | — | | | 94,277 | | | 4,915 | | | 456,300 |
Meenu Chhabra
Former Chief Executive Officer
| | | 2020 | | | 560,043 | | | 267,288 | | | 1,583,177(8) | | | — | | | 857,902(9) | | | 3,268,410 |
| 2019 | | | 539,600 | | | — | | | 1,135,941 | | | 296,780 | | | 8,400 | | | 1,980,721 |
Marija Zecevic
Former Chief Commercial Officer
| | | 2020 | | | 377,790 | | | 145,898 | | | 505,811(8) | | | — | | | 390,565(10) | | | 1,420,065 |
| 2019 | | | 364,000 | | | — | | | 424,847 | | | 160,160 | | | 6,300 | | | 955,307 |
Sheila Wilson
Former Chief Operating Officer
| | | 2020 | | | 237,172 | | | — | | | 158,747(8) | | | — | | | 388,224(11) | | | 784,144 |
| 2019 | | | 358,100 | | | — | | | 424,887 | | | 157,564 | | | 6,300 | | | 946,851 |
(1)
| AmountsUpon the completion of the merger of Proteostasis and Yumanity, Inc. in December 2020, Ms. Chhabra, Dr. Zecevic and Ms. Wilson resigned from their respective positions at Proteostasis.
|
(2)
| The amounts reported represent the aggregate grant-dategrant date fair value of option awardsrestricted stock units granted to ourthe named executive officers in theduring fiscal year indicated, computed2020, calculated in accordance with Financial Accounting Standards Board, (“FASB”)or FASB Accounting Standards Codification, (“ASC”)or ASC Topic 718 excluding718. Such grant date fair value does not take into account any estimatesestimated forfeitures. The assumptions used in calculating the grant date fair value of forfeitures related to service-based vesting conditions. For information regarding assumptions underlying the valuation of equity awards seereported in this column are set forth in Note 912 to our financial statements included in our Annual Report on Form10-K for the year ended December 31, 20192020 filed with the SEC on March 10, 2020. TheseThe amounts doreported in this column reflect the accounting cost for the restricted stock units and does not correspond to the actual economic value that may be recognizedreceived upon settlement of the restricted stock units or any sale of any of the underlying shares of common stock. |
(3)
| The amounts reported represent the aggregate grant date fair value of the stock options awarded to the named executive officers during fiscal year 2020 and 2019, calculated in accordance with Financial Accounting Standards Board, or FASB Accounting Standards Codification, or |
TABLE OF CONTENTS
(5) | Mr. Rabinowitz resigned as a director effective January 31, 2019.
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Non-Employee Director Compensation Policy
In December 2015,
Following the consummation of the merger of Proteostasis and Yumanity, Inc., we amended and restated our non-employee director compensation policy. Under our director compensation policy, 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. This cash compensation is the same as was applicable to the prior policy that had been in effect for Proteostasis. 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. The fees paid to non-employee directors for service on the Board of Directors adopted anon-employee director compensation policy, which became effectiveand for service on February 10, 2016 and which was most recently amended byeach committee of the Board of Directors on February 4,which the director is a member are as follows:
Board of Directors | | | $35,000 |
Audit Committee Chair | | | 15,000 |
Audit Committee Member | | | 7,500 |
Compensation Committee Chair | | | 10,000 |
Compensation Committee Member | | | 5,000 |
Nominating and Corporate Governance Committee Chair | | | 7,500 |
Nominating and Corporate Governance Committee Member | | | 3,500 |
We also reimburse our non-employee directors for reasonable travel and out-of-pocket expenses incurred by our non-employee directors in connection with attending our meetings of the Board of Directors and committees thereof.
In addition to cash compensation, each new non-employee director who is initially appointed or elected to the Board of Directors is eligible to receive a one-time equity award of an option to purchase 14,800 shares of our common stock (the “Initial Grant”), which will vest quarterly over three years following the date of grant, subject to the director’s continued service. In addition, on the date of each annual meeting of stockholders of our company, each non-employee director will be granted an additional option to purchase 7,400 shares of our common stock (the “Annual Grant”), which will vest quarterly over one year following the date of grant. Each Initial Grant and Annual Grant shall accelerate in full upon a Sale Event (as defined in the applicable equity plan).
Each non-employee director who was serving as of the date of the merger of Proteostasis and Yumanity, Inc. in December 2020 that is designedalso entitled to an Initial Grant, but such Initial Grant shall be made on the day of the Company’s annual meeting of stockholders in 2021 in lieu of an Annual Grant.
This program is intended to provide a total compensation package that enables us to attract and retain on a long-term basis, high-calibernon-employee directors.Non-employeequalified and experienced individuals to serve as directors receive a combinationand to align our directors’ interests with those of cash and equity compensation.
Cash Compensation
Under our policy, eachnon-employee director will be paid cash compensation as set forth below, prorated based on days of service during a calendar year:
| | | | |
| | Annual
Retainer ($) | |
Board of Directors:
| | | | |
Allnon-employee members
| | | 35,000 | |
Additional retainer forNon-Executive Chairperson
| | | 25,000 | |
| |
Audit Committee:
| | | | |
Chairperson
| | | 15,000 | |
Non-Chairperson members
| | | 7,500 | |
| |
Compensation Committee:
| | | | |
Chairperson
| | | 10,000 | |
Non-Chairperson members
| | | 5,000 | |
| |
Nominating and Corporate Governance Committee:
| | | | |
Chairperson
| | | 7,500 | |
Non-Chairperson members
| | | 3,500 | |
Equity Compensation
In addition to cash compensation, eachnon-employee director is eligible to receive nonqualified stock options and/or restricted stock unit awards under our 2016 Plan. Any stock options granted under this policy are nonstatutory stock options,stockholders.
EQUITY COMPENSATION PLAN INFORMATION The following table provides certain information with
a term of ten years from the date of grant, subject to earlier termination in connection with a termination of service.Vesting schedules for equity awards are subject to thenon-employee director’s continuous service on each applicable vesting date. Notwithstanding any vesting schedule, for eachnon-employee director who remains in continuous service with the Company until immediately prior to the closing of a change in control, the shares subject to his or her then-outstanding equity awards that were granted pursuant to this policy will become fully vested prior to a “Sale Event” (as defined in the 2016 Plan).
Initial Award
Each newnon-employee director who is initially appointed or electedrespect to our Boardequity compensation plans in effect as of Directors is eligible to receive aone-time equity award of an option to purchase 34,800 shares of our common stock or a stock option with a grant date fair value of $72,036, whichever has a lower value, which option vests in equal quarterly installments over a period of three years following the grant date, subject to the director’s continued service on our Board of Directors.December 31, 2020:
Plan Category
| | | | | | | | | |
Equity compensation plans approved by security holders(1) | | | 194,550 | | | $68.48 | | | 76,225(3) |
Equity compensation plans not approved by security holders(2) | | | 750,411 | | | $8.31 | | | 776,799 |
Total | | | | | | | | | |
(1)
| Includes the Proteostasis Therapeutics, Inc. 2008 Equity Incentive Plan, the Proteostasis Therapeutics, Inc. 2016 Stock Option and Incentive Plan (the “2016 Plan”) and the Proteostasis Therapeutics, Inc. 2016 Employee Stock Purchase Plan (the “ESPP”). |