UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
INFORMATION
(Amendment (Amendment No. )
1)
☒
☐
under §240.14a-12
required
materials
0-11
April 28,
Details regarding the annual meeting, the business to be conducted at the annual meeting, and information about Bellerophon Therapeutics, Inc. that you should consider when you vote your shares are described in this proxy statement.
At the annual meeting, three (3) persons will be elected to our Board of Directors. In addition, we will ask stockholders to consider the following proposals:
Under Securities and Exchange Commission rules that allow companies to furnish proxy materials to stockholders over the Internet, we have elected to deliver our proxy materials to the majority of our stockholders over the Internet. This delivery process allows us to provide stockholders with the information they need, while at the same time conserving natural resources and lowering the cost of delivery. On or about April 28, 2023, we will begin sending to our stockholders a Notice of Internet Availability of Proxy MaterialsStockholders (the “Notice”) containing instructions on how to access our proxy statement for our 2023 annual meeting of stockholders and our 2022 annual report to stockholders. The Notice also provides instructions on how to vote online or by telephone and includes instructions on how to receive a paper copy of the proxy materials by mail.
We hope you will be able to attend the annual meeting. Whether you plan to attend the annual meeting or not, it is important that you cast your vote either in person or by proxy. You may vote over the Internet as well as by telephone or by mail. When you have finished reading the proxy statement, you are urged to vote in accordance with the instructions set forth in this proxy statement. We encourage you to vote by proxy so that your shares will be represented and voted at the annual meeting, whether or not you can attend.
Thank you for your continued support of Bellerophon Therapeutics, Inc. We look forward to seeing you at the annual meeting.
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April 28, 2023
NOTICE OF 2023 ANNUAL MEETING OF STOCKHOLDERS
TIME:10:00 a.m. EST
DATE:Wednesday, June 7, 2023
PLACE: 20 Independence Boulevard, Suite 402, Warren, NJ 07059
PURPOSES:
WHO MAY VOTE:
You may vote if you were the record owner of Bellerophon Therapeutics, Inc. common stock at the close of business on April 21, 2023 (the "record date"). A list of stockholders of record will be available at the annual meeting and, during the ten days prior to the annual meeting, at our principal executive offices located at 20 Independence Boulevard, Suite 402, Warren, NJ 07059.
All stockholders are cordially invited to attend the annual meeting. Whether you plan to attend the annual meeting or not, we urge you to vote by following the instructions in the Notice of Internet Availability of Proxy Materials (the "Notice") and submit your proxy by the Internet, telephone or mail in order to ensure the presence of a quorum. On or about April 28, 2023, we will begin sending to our stockholders the Notice containing instructions on how to access our proxy statement for our 2023 annual meeting of stockholders and our 2022 annual report to stockholders. The Notice also provides instructions on how to vote online or by telephone and includes instructions on how to receive a paper copy of the proxy materials by mail. You may change or revoke your proxy at any time before it is voted at the annual meeting.
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IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON JUNE 7, 2023
This proxy statement and our 2022 annual report to stockholders are available for viewing, printing and downloading at www.investorvote.com/BLPH. To view these materials, please have available your 15-digit control number(s) that appears on your Notice or proxy card. On this website, you can also elect to receive future distributions of our proxy statements and annual reports to stockholders by electronic delivery.
Additionally, you can find a copy of our Annual Report on Form 10-K, which includes our financial statements, for the fiscal year ended December 31, 2022 on the website of the Securities and Exchange Commission, or the SEC, at www.sec.gov, or in the “Financial Info” section of the “Investors" section of our website at www.bellerophon.com. You may also obtain from us a printed copy of our Annual Report on Form 10-K, including our financial statements, free of charge, by sending a written request to: Bellerophon Therapeutics, Inc., Attn: Investor Relations, 20 Independence Boulevard, Suite 402, Warren, NJ, 07059. Exhibits will be provided upon written request and payment of an appropriate processing fee.
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IMPORTANT INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
Why is the Company Soliciting My Proxy?
The Board of Directors (the “Board”“Special Meeting”) of Bellerophon Therapeutics, Inc. (the “Company”) to be held at 11:00 a.m., Eastern time, on December 11, 2023 at the offices of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., 919 Third Avenue, New York, NY 10022.
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We have made available to you on the Internet or have sent you this proxy statement, the Notice of Annual Meeting of Stockholders, the proxy card and a copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, because you ownedcast by all stockholders?
Why Did I Receive a Notice in the Mail Regarding the Internet Availability of Proxy Materials Instead of a Full Set of Proxy Materials?
As permitted by the rules of the SEC, we may furnish our proxy materials to our stockholders by providing access to such documents on the Internet, rather than mailing printed copies of these materials to each stockholder. Most stockholders will not receive printed copies of the proxy materials unless they request them. We believe that this process should expedite stockholders’ receipt of proxy materials, lower the costs of the annual meeting and help to conserve natural resources. If you received a Notice by mail or electronically, you will not receive a printed or electronic copy of the proxy materials, unless you request one by following the instructions included in the Notice. Instead, the Notice instructs you as to how you may access and reviewRecord Date, all of the proxy materials and submit your proxy on the Internet. If you request a paper copy of the proxy materials, you may authorize the voting of your shares by following the instructions on the proxy card, in addition to the other methods of voting described in this proxy statement.
Who Can Vote?
Only stockholders who owned our common stock at the close of business on April 21, 2023,which are entitled to vote with respect to all matters to be acted upon at the annual meeting. On thisSpecial Meeting. Each stockholder of record date, there were 10,449,834 sharesis entitled to one vote for each share of our common stock outstanding and entitled to vote.held by such stockholder. Our common stock is our only class of voting stock.
You do not need to attend
How Many Votes Do I Have?
Each share of our common stock that you own entitles you to one vote.
How Do I Vote?
Whether you plan to attend the annual meeting or not, we urge youcard to vote by proxy. All shares of common stock representedInternet or telephone.
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transfer agent, Computershare Trust Company, N.A. (“Computershare”), or if you have stock certificates registered in your name, you may vote:
Telephone and Internet voting facilities for stockholders of record will be available 24 hours a day and will close at 1:00 a.m.until 11:59 p.m. Eastern Time on June 7, 2023.
December 10, 2023 and mailed proxy cards must be received by December 10, 2023 in order to be counted at the Special Meeting. If the Special Meeting is adjourned or postponed, these deadlines may be extended.
How Does the Board Recommend That I Votechange my vote?
The Board recommends thatRecord Date for the Special Meeting, you vote as follows:
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If any other matter is presented athave the annual meeting,power to revoke your proxy provides that your shares will be voted by the proxy holder listed in the proxy in accordance with his best judgment. At the time this proxy statement was first made available, we knew of no matters that needed to be acted on at the annual meeting, other than those discussed in this proxy statement.
May I Change or Revoke My Proxy?
If you give us your proxy, you may change or revoke it at any time before your proxy is voted at the annual meeting.Special Meeting. You may change orcan revoke your proxy in any one of the followingfour ways:
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Your most current vote, whether by telephone, Internet or proxy card is the one that will be counted.
What if I Receive More Than One Notice or Proxy Card?
You may receive more than one Notice or proxy card if you hold shares of our common stock in more than one account, which may be in registered form or held in street name. Please vote in the manner described above under “How Do I Vote?” for each account to ensure that all of your shares are voted.
Will My Shares be Voted if I Do Not Vote?
If your shares are registered in your name or if you have stock certificates, they will not be counted if you do not vote as described above under “How Do I Vote?” If your shares are held in street name and you do not provide voting instructions to thea broker, bank broker or other nominee that holds your shares, as described above,you must contact such broker, bank or nominee in order to find out how to change your vote.
Your bank, broker or other nominee does not have the ability to vote your uninstructed shares in the election of directors or the amendment to our 2015 Plan. Therefore, if you hold your shares in street name it is critical that you cast your vote if you want your vote to be counted for the election of directors or the amendment to our 2015 Plan (Proposals 1 and 3 of this proxy statement).
What Vote is Required to Approve Each Proposal and How are Votes Counted?
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Is Voting Confidential?
We will keep all the proxies, ballots and voting tabulations private. We only let our Inspectors of Election, Computershare and Peter Fernandes, our Chief Executive Officer, examine these documents. Management will not know how you voted on a specific proposal unless it is necessary to meet legal requirements. We will, however, forward to management any written comments you make, on the proxy card or otherwise provide.
Where Can I Find the Voting Results of the Annual Meeting?
The preliminary voting results will be announced at the annual meeting, and we will publish preliminary, or final results if available, in a Current Report on Form 8-K within four business days of the annual meeting. If final results are unavailable at the time we file the Form 8-K, then we will file an amended report on Form 8-K to disclose the final voting results within four business days after the final voting results are known.
What Are the Costs of Soliciting these Proxies?
We will pay all of the costs of soliciting these proxies. Our directors and employees may solicit proxies in person or by telephone, fax or email. We will pay these employees and directors no additional compensation for these services. We will ask banks, brokers and other institutions, nominees and fiduciaries to forward these proxy materials to their principals and to obtain authority to execute proxies. We will then reimburse them for their expenses.
What Constitutes a Quorum for the Annual Meeting?
The presence, in person or by proxy, of the holders of a majority of the outstanding shares of common stock of the Company entitled to vote at the Special Meeting. With respect to the Dissolution Proposal, abstentions and failures to vote will have the same effect as votes against the proposal.
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Attending the Annual Meeting
The annual meeting will be held at 10:00 a.m. EST on Wednesday, June 7, 2023, at our principal executive offices, located at 20 Independence Boulevard, Suite 402, Warren, NJ 07059. When you arrive at 20 Independence Boulevard, Suite 402, Warren, NJ, 07059, signs will direct you to the appropriate meeting rooms. You need not attend the annual meeting in order to vote. See “How Do I Vote?” above for more information.
Householding of Annual Disclosure Documents
SEC rules concerning the delivery of annual disclosure documents allow us or your broker to send a single Notice or, if applicable, a single set of our proxy materials to any household at which two or more of our stockholders reside, if we or your broker believeBoard recommends that the stockholders are membersvote “FOR” the adjournment of the same family. This practice, referredSpecial Meeting, if necessary, to as “householding,” benefits both you and us, by reducingsolicit additional proxies if there are not sufficient votes at the volumetime of duplicate information received at your household and helpingthe Special Meeting to reduce our expenses. The rule applies to our Notices, annual reports, proxy statements and information statements. Once you receive notice from your broker or from us that communications to your address will be “householded,”approve the practice will continue until you are otherwise notified or until you revoke your consent to the practice. Stockholders who participate in householding will continue to have access to and utilize separate proxy voting instructions.
If your household received a single Notice or, if applicable, a single set of proxy materials this year, but you would prefer to receive your own copy, please contact our transfer agent, Computershare, by calling their toll free number, 1-800-736-3001.
If you do not wish to participate in “householding” and would like to receive your own Notice or, if applicable, set of our proxy materials in future years, follow the instructions described below. Conversely, if you share an address with another Bellerophon stockholder and together both of you would like to receive only a single Notice or, if applicable, set of proxy materials, follow these instructions:
Electronic Delivery of Company Stockholder Communications
Most stockholders can elect to view or receive copies of future proxy materials over the Internet instead of receiving paper copies in the mail.
You can choose this option and save the Company the cost of producing and mailing these documents by:
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The percentage ownership calculations for beneficial ownership are based on 10,449,834 shares of common stock outstanding as of April 21, 2023.
Except as otherwise set forth below, the address of each beneficial owner is c/o Bellerophon Therapeutics, Inc., 20 Independence Boulevard,c/o Verdolino & Lowey, P.C., 124 Washington Street, Suite 402, Warren, NJ 07059.
10, Foxborough, Massachusetts 02035.
Name of Beneficial Owner | | | Shares Beneficially Owned | | | of Shares Beneficially Owned | | ||||||
5% Stockholders | | | | | | | | | | | | | |
None. | | | | | | | | | | | | | |
Executive Officers and Directors | | | | | | | | | | | | | |
Peter Fernandes(1) | | | | | 110,677 | | | | | | * | | |
Parag Shah(2) | | | | | 86,175 | | | | | | * | | |
Martin Dekker | | | | | 25,973 | | | | | | * | | |
Naseem Amin(3) | | | | | 315,676 | | | | | | 2.6% | | |
Scott Bruder(4) | | | | | 38,212 | | | | | | * | | |
Mary Ann Cloyd(5) | | | | | 37,757 | | | | | | * | | |
All executive officers and directors as a group (6 persons) | | | | | 655,727 | | | | | | 5.2% | | |
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| | Number of | | Percentage |
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| | Shares | | of Shares |
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| | Beneficially | | Beneficially |
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Name of Beneficial Owner |
| Owned |
| Owned |
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5% Stockholders |
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Puissance Life Science Opportunities Fund VI (1) |
| 1,771,266 |
| 17.0 | % |
Tang Capital Partners, LP (2) | | 1,062,619 | | 9.9 | % |
Perceptive Advisors LLC (3) | | 930,000 | | 8.9 | % |
Executive Officers and Directors |
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Peter Fernandes (4) |
| 64,215 |
| * | |
Parag Shah (5) | | 52,963 | | * | |
Martin Dekker (6) | | 53,739 | | * | |
Bobae Kim (7) | | 13,512 | | * | |
Nicholas Laccona (8) | | 13,501 | | * | |
Naseem Amin (9) |
| 268,098 |
| 2.5 | % |
Scott Bruder (10) |
| 38,212 |
| * | |
Mary Ann Cloyd (11) |
| 37,757 |
| * | |
Ted Wang (12) |
| 1,867,813 |
| 17.9 | % |
Crispin Teufel (13) |
| 33,087 |
| * | |
All executive officers and directors as a group (10 persons) |
| 2,442,897 |
| 23.3 | % |
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MANAGEMENT AND CORPORATE GOVERNANCE
The Board of Directors
Our bylaws provide that our business is to be managed by or under the direction of our Board. Our Board is divided into three classes for purposes of election. One class is elected at each annual meeting of stockholders to serve for a three-year term. Our Board currently consists of five members, classified into three classes as follows: (1) Scott Bruder, Naseem Amin and Ted Wang constitute a class with a term ending at the 2023 annual meeting; (2) no directors currently constitute a class with a term ending at the 2024 annual meeting and (3) Mary Ann Cloyd and Crispin Teufel constitute a class with a term ending at the 2025 annual meeting.
Set forth below are the namesLess than 1% of the persons nominated as directors and directors whose terms do not expire this year, their ages, their offices in the Company, if any, their principal occupations or employment for at least the past five years, the length of their tenure as directors and the names of other public companies in which such persons hold or have held directorships during the past five years. Additionally, information about the specific experience, qualifications, attributes or skills that led to our Board’s conclusion at the time of filing of this proxy statement that each person listed below should serve as a director is set forth below:
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Our Board has reviewed the materiality of any relationship that each of our directors has with Bellerophon Therapeutics, Inc., either directly or indirectly. Based upon this review, our Board has determined that the following members of the Board are “independent directors” as defined by The Nasdaq Stock Market: Mr. Teufel, Drs. Amin and Bruder and Ms. Cloyd.
Board Diversity Matrix (As of April 21, 2023) | ||||
Total Number of Directors | ||||
| Female | Male | Non-Binary | Did Not Disclose Gender |
Gender: | ||||
Directors | 1 | 4 | — | — |
Number of Directors Who Identify in Any of the Categories Below: | ||||
African American or Black | — | — | — | — |
Alaskan Native or Native American | — | — | — | — |
Asian (other than South Asian) | — | 1 | — | — |
South Asian | — | 1 | — | — |
Hispanic or Latinx | — | — | — | — |
Native Hawaiian or Pacific Islander | — | — | — | — |
White | 1 | 2 | — | — |
Two or More Races or Ethnicities | — | — | — | — |
LGBTQ+ | — | |||
Persons with Disabilities | — | |||
Did not Disclose Demographic Background | — |
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Naseem Amin has served as the Chairman of our Board since May 2021, and has served as a member of our Board since June 2015. Dr. Amin has served as the Chief Executive Officer at GMP-Orphan since June 2017 and has served as the Chairman of Arix Bioscience plc, a global venture capital company focused on investing in life sciences, since April 2020. Dr. Amin had served as the Chief Scientific Officer of Smith and Nephew Plc until 2014. Previously, Dr. Amin was Senior Vice President, Business Development at Biogen Idec from 2005 to 2009 and was with Genzyme Corporation from 1999 to 2005, most recently as Head, International Business Development and where he has also led the clinical development of five currently marketed therapeutic products. Dr. Amin began his career at Baxter Healthcare Corporation, where he served as Director, Medical Marketing and Portfolio Strategy, Renal Division. Dr. Amin is a Venture Partner at Advent Life Sciences, serves as an Advisory Board member for Imperial College, Department of Biomedical Engineering, and serves as Chairman of OPEN-London, a non-profit organization focused on encouraging and mentoring South Asians from Pakistan who are interested in starting entrepreneurial companies. Dr. Amin received his medical degree from the Royal Free School of Medicine, London, and an MBA from the Kellogg Graduate School of Management, Northwestern University. We believe that Dr. Amin is qualified to serve on our Board because of his broad industry experience in the Biotech and Medical Device industry.
Scott Bruder has served as a member of our Board since May 2015. Dr. Bruder currently leads the Bruder Consulting & Venture Group with a global team that provides scientific, clinical, regulatory and development strategy services to medical device, regenerative medicine and biotechnology companies, investment banks, venture partners and private equity firms. Since 2011, Dr. Bruder has been an adjunct Professor of Biomedical Engineering at Case Western Reserve University, following 13 years as adjunct faculty in the Department of Orthopedic Surgery. Dr. Bruder currently serves on the Board of Directors of Kuros Biosciences AG, a Swiss Exchange listed biotechnology company, where he leads the R&D Committee. Previously, he was the Chairman of the Board of Spinal Elements, a privately held, leading provider of innovative medical devices used during spinal surgical procedures. Dr. Bruder served as the Chief Medical and Scientific Officer of Stryker Corporation from 2012 until 2014, and was the Chief Science and Technology Officer for Becton, Dickinson and Company from 2007 until 2012. Previously, Dr. Bruder held a number of senior executive and scientific roles at Johnson & Johnson, Anika Therapeutics and Osiris Therapeutics. Dr. Bruder is a magna cum laude graduate from Brown University with a Sc.B. in Biology, and a graduate of Case Western Reserve University School of Medicine, where he simultaneously earned an M.D. and a Ph.D. in stem cell biology. We believe that Dr. Bruder is qualified to serve on our Board because of his experience in medical devices, biotechnology, life sciences, and biomedical engineering.
Mary Ann Cloyd has served as a member of our Board since February 2016. Since April 2018 she has served on the board of NCMIC Group, Inc., a mutual insurance and financial services company based in Des Moines, Iowa. Since May 2019 she has served on the board of Fresh Del Monte Produce, Inc., a producer and distributor of prepared fruit and vegetables, juices, beverages and snacks, and since January 2021 as a director of Ekso Bionics, Holdings, Inc., a publicly traded company focused on exoskeleton technology. From 1990 to 2015, Ms. Cloyd was a partner at PricewaterhouseCoopers LLP (“PwC”), where she served multinational corporate clients in a variety of industries, including the biotechnology and pharmaceutical industries. She was the Leader of the PwC Center for Board Governance from 2012 to 2015. Ms. Cloyd has also served on both PwC’s Global and U.S. Boards. On the U.S. Board, she chaired the Risk Management, Ethics & Compliance Committee and the Partner Admissions Committee, and on the Global Board, she served on the Risk and Operations Committee and the Clients Committee. Ms. Cloyd previously served on the Board of Trustees of the PwC Charitable Foundation, Inc., and she previously served as President of the Foundation. Ms. Cloyd is also on the Board of the Geffen Playhouse, where she serves as Vice Chair, the Caltech Associates and the Advisory Board of the UCLA Iris Cantor Women’s Helath Center. Ms. Cloyd earned a bachelor of business administration from Baylor University, summa cum laude. We believe that Ms. Cloyd is qualified to serve on our Board because of her experience in finance, senior management and corporate governance.
Dr. Ted Wang has served as a member of our Board since November 2017. Dr. Wang has served as the Chief Investment Officer of Puissance Capital Management LP, of which he was a founder, since January 2015. Prior to that, Dr. Wang was a Partner of Goldman, Sachs & Co. (“Goldman”), which he joined in 1996 and with which he served in many leadership positions, mostly recently as Co-Head of U.S. Equities Trading and Global Co-Head of One Delta Trading and a member of the Goldman Sachs Risk Committee. Prior to joining Goldman, Dr. Wang co-founded Xeotron Corp., a company specializing in DNA biochips in Texas. Dr. Wang serves on the board of Ekso Bionics Holdings, Inc., Viewray, Inc. and Tracon Pharmaceuticals, Inc. Dr. Wang holds a Ph.D. in Physics from the University of Minnesota, an M.B.A.
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from the University of Texas, Austin, and a B.S. from Fudan University, China. We believe that Dr. Wang is qualified to serve on our Board because of his financial expertise and years of experience.
Crispin Teufel was appointed to our Board effective March 18, 2019. Since 2017, Mr. Teufel has served as the Chief Executive Officer of Lincare Holdings Inc., the leading national provider of respiratory services in the home, and as its Chief Financial Officer since 2013. Mr. Teufel serves on the board of directors of the German-American Chamber of Commerce and was elected as their chairman of the board in November 2020. Mr. Teufel holds an MBA in Economics from Ruhr University Bochum, Germany, is a Certified Public Accountant and is a German Tax Advisor under Germany’s Taxation and Ministry of Finance. We believe that Mr. Teufel is qualified to serve on our Board because of his managerial, financial and business experience.
There are no family relationships among any of our directors or executive officers.
Committees of the Board and Meetings
Meeting Attendance. During the fiscal year ended December 31, 2022, there were six meetings of our Board, and the various committees of the Board met a total of six times. The Board took two actions by unanimous written consent during the fiscal year ended December 31, 2022. The various committees of the Board took six actions by unanimous written consent during the fiscal year ended December 31, 2022. No director attended fewer than 75% of the total number of meetings of the Board and of committees of the Board on which he or she served during fiscal 2022. The Board has adopted a policy under which each member of the Board makes every effort to but is not required to attend each annual meeting of our stockholders. Five directors attended our annual meeting of stockholders held in 2022.
Audit Committee. Our Audit Committee met four times during fiscal 2022 and took four actions by unanimous written consent. This committee currently has three members, Mary Ann Cloyd (Chairperson), Naseem Amin and Crispin Teufel. Our audit committee assists our Board in its oversight of our accounting and financial reporting process and the audits of our financial statements. Our audit committee’s responsibilities include:
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Our Audit Committee’s role and responsibilities are set forth in the Audit Committee’s written charter and include the authority to retain and terminate the services of our independent registered public accounting firm. All audit and non-audit services to be provided to us by our independent registered public accounting firm must be approved in advance by our audit committee. All members of the Audit Committee satisfy the current independence standards promulgated by the SEC and by The Nasdaq Stock Market, as such standards apply specifically to members of audit committees. The Board has determined that Ms. Cloyd and Mr. Teufel are “audit committee financial experts,” as the SEC has defined that term in Item 407 of Regulation S-K. Please also see the report of the Audit Committee set forth elsewhere in this proxy statement.
A copy of the Audit Committee’s written charter is publicly available on our website at www.bellerophon.com.
Compensation Committee. Our Compensation Committee met once and took two actions by unanimous written consent during fiscal 2022. This committee currently has two members, Crispin Teufel (Chairman) and Scott Bruder. Our Compensation Committee’s role and responsibilities are set forth in the Compensation Committee’s written charter and includes reviewing, approving and making recommendations regarding our compensation policies, practices and procedures to ensure that legal and fiduciary responsibilities of the Board are carried out and that such policies, practices and procedures contribute to our success. Our Compensation Committee also administers our 2015 Equity Incentive Plan (as amended, the “2015 Plan”). The Compensation Committee is responsible for the determination of the compensation of our executive officers and shall conduct its decision making process with respect to that issue without the executive officers present. All members of the Compensation Committee qualify as independent under the definition promulgated by The Nasdaq Stock Market.
The Compensation Committee has adopted the following processes and procedures for the consideration and determination of executive and director compensation: review and approval of compensation for executive officers and directors during which the executive officers may not be present during his or her compensation deliberations and grant options and stock awards under equity-based plans with delegation to one or more executive officers of the power to grant options or stock awards to employees who are not directors or executive officers.
A copy of the Compensation Committee’s written charter is publicly available on our website at www.bellerophon.com.
Nominating and Corporate Governance Committee. Our Nominating and Corporate Governance Committee met once during fiscal 2022 and has two members, Mary Ann Cloyd (Chairperson) and Scott Bruder. The Nominating and Corporate Governance Committee’s role and responsibilities are set forth in the Nominating and Corporate Governance Committee’s written charter and include evaluating and making recommendations to the full Board as to the size and composition of the Board and its committees, evaluating and making recommendations as to potential candidates, and evaluating current Board members’ performance. All members of the Nominating and Corporate Governance qualify as independent under the definition promulgated by The Nasdaq Stock Market.
If a stockholder wishes to nominate a candidate for director who is not to be included in our proxy statement, it must follow the procedures described in our Bylaws and in “Stockholder Proposals and Nominations For Director” at the end of this proxy statement.
In addition, under our current corporate governance policies, the Nominating and Corporate Governance Committee may consider candidates recommended by stockholders as well as from other sources such as other directors or officers, third party search firms or other appropriate sources. For all potential candidates, the Nominating and Corporate Governance Committee may consider all factors it deems relevant, such as a candidate’s personal integrity and sound judgment, business and professional skills and experience, independence, knowledge of the industry in which we operate, possible conflicts of interest, diversity, the extent to which the candidate would fill a present need on the Board, and concern for the long-term interests of the stockholders. In general, persons recommended by stockholders will be considered on the same basis as candidates from other sources. If a stockholder wishes to propose a candidate for consideration as a nominee by the Nominating and Corporate Governance Committee under our corporate governance policies, it should utilize the "Contact Us" feature on our website at www.bellerophon.com.
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The Nominating and Corporate Governance Committee seeks to develop a board that reflects diverse backgrounds, experience, expertise, skill sets and viewpoints. We actively seek director candidates who bring diversity of age, gender, nationality, race, ethnicity and sexual orientation.
A copy of the Nominating and Corporate Governance Committee’s written charter is publicly available on the Company’s website at www.bellerophon.com.
Board Leadership Structure and Role in Risk Oversight
Our current Board leadership structure separates the positions of Principal Executive Officer (“PEO”) and Chairman of the Board, although we do not have a corporate policy requiring that structure. The Board believes that this separation is appropriate for the organization at this time because it allows for a division of responsibilities and a sharing of ideas between individuals having different perspectives. Our current PEO is primarily responsible for our operations, while our Board Chairman is primarily focused on matters pertaining to corporate governance and management oversight. While the Board believes that this is the most appropriate structure at this time, the Board retains the authority to change the Board structure if it deems such a change to be appropriate in the future.
The Chairman of the Board of Directors provides leadership to the Board and works with the Board to define its activities and the calendar for fulfillment of its responsibilities. The Chairman of the Board approves the meeting agendas after input from management, facilitates communication among members of the Board and presides at meetings of our Board and stockholders. Dr. Amin has served as our Chairman of the Board since May 2021. The Chairman of the Board, the Chairman of the Audit Committee, and the other members of the Board work in concert to provide oversight of our management and affairs. We believe that the leadership of the Chairman of the Board fosters a culture of open discussion and deliberation, with a thoughtful evaluation of risk, to support our decision-making. Our Board encourages communication among its members and between management and the Board to facilitate productive working relationships. Working with the other members of the Board, the Chairman also works to ensure that there is an appropriate balance and focus among key board responsibilities such as strategic development, review of operations and risk oversight.
The Board is also responsible for oversight of our risk management practices. This oversight is conducted primarily through the Audit Committee of the Board whose responsibilities include overseeing our risk assessment and risk management policies. Due to the effective flow of information between the Board and senior management, identified risks can be effectively communicated and mitigated. Senior management takes an active role in day-to-day risk management.
Stockholder Communications to the Board
Generally, stockholders who have questions or concerns should contact our Investor Relations department at 908-574-4770. However, any stockholders who wish to address questions regarding our business directly with the Board, or any individual director, should direct his or her questions using the “Contact Us” page of our website at www.bellerophon.com. Communications will be distributed to the Board, or to any individual director or directors as appropriate, depending on the facts and circumstances outlined in the communications. Items that are unrelated to the duties and responsibilities of the Board may be excluded, such as:
In addition, any material that is unduly hostile, threatening, or illegal in nature may be excluded, provided that any communication that is filtered out will be made available to any outside director upon request.
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Executive Officers
The following table sets forth the name, age and position of each of our executive officers, who are also not directors, and key employees as of April 21, 2023.
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* On April 19, 2023, Mr. Laccona notified us of his intent to resign as Principal Financial and Accounting Officer and from all other positions held. We and Mr. Laccona are currently negotiating the effective date of his resignation.
Peter Fernandes has served as our Chief Executive Officer since December 2022 having previously served as our Principal Executive Officer since November 2021 and as our Chief Regulatory, Safety & Quality Officer since May 2015. Prior to joining us, Mr. Fernandes was Vice President of Global Regulatory Affairs at Ikaria Inc., from October 2012 to May 2015, and in this capacity also led our regulatory group since its inception in February 2014. Previously, he led Regulatory Affairs and Quality Assurance for OptiNose, Inc. from October 2010 to September 2012, was Vice President US Drug Regulatory Affairs Respiratory and US DRA Respiratory Franchise Head for Novartis Pharmaceuticals from November 2007 to October 2010. He has also served as the Head of US Development Site and Vice President of Regulatory Affairs and Quality Assurance at Altana Pharma, a subsidiary of Nycomed Inc., and led the US Respiratory and GI Drug Regulatory Affairs group at Boehringer Ingelheim. Mr. Fernandes has over 30 years of experience leading cross functional global development teams covering respiratory and cardiovascular diseases with successful US and global submissions and approvals obtained for a number of well-known drugs e.g., Flomax, Spiriva, Omnaris. Mr. Fernandes also serves as Co-Chair of the Pulmonary Vascular Research Institute (PVRI) Innovative Drug Development Initiative that is instrumental in developing novel regulatory endpoints and clinical trial design for Pulmonary Hypertension (PH) in collaboration with academia, industry and regulators. Mr. Fernandes has an M. Pharm. from the Grant Medical College and a B. Pharm. from the K.M. K College of Pharmacy, both at the University of Bombay in India.
Nicholas Laccona has served as our Principal Financial and Accounting Officer and Secretary since October 2021. Mr. Laccona previously served as the Controller of the Company since August of 2020. Prior to joining the Company, Mr. Laccona served as Senior Manager, Audit at KPMG LLP from December 2014 through August 2020. Prior to that, Mr. Laccona served as an auditor with Sobel & Co., LLC. Mr. Laccona holds a Bachelor’s degree from the University of Maryland, College Park, is a Certified Public Accountant and an active member of the America Institute of Certified Public Accountants.
Martin Dekker has served as our Vice President of Engineering and Manufacturing since January 2015. Prior to joining us, Mr. Dekker held several positions at Spacelabs Healthcare, a company that develops and manufactures medical devices, from November 1998 to January 2015, most recently as Director of Global Operations Engineering. During his time at Spacelabs Healthcare, Mr. Dekker led and co-designed new products, developed and launched transformative manufacturing technologies and championed cross-functional quality/engineering projects. He is a member of the Institute of Electrical and Electronic Engineers. Mr. Dekker received a B.S. in electronics from Noordelijke Hogeschool Leeuwarden, the Netherlands.
Parag Shah, Ph.D. has served as our Vice President of Business Operations since April 2016 with responsibilities for Project Management, Supply Distribution, Pre-Clinical and Business Development activities. Prior to joining us, Dr. Shah was Principal Scientist at Pfizer from 2004 through 2010 where he was responsible for leading multiple parenteral and liquid formulation development teams. In addition, Dr. Shah was a member of multiple Limited Duration Teams including serving as Pfizer’s Team Lead for the Nanoparticle Network responsible for internal and external evaluation of nanoparticle technologies. Dr. Shah joined Ikaria as Parenteral Development Lead in 2010 and assumed additional responsibilities in 2012 as Director, Pharmaceutical Science, covering both Pharmaceutical Development and Clinical
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Supply Management. Dr. Shah received his Bachelor’s degree from Carnegie Mellon and his Ph.D. in Chemical Engineering from The University of Texas at Austin.
Bobae Kim, has served as our Vice President, Regulatory Affairs and Quality Assurance since September 2022. Ms. Kim joined as Senior Director of Regulatory Affairs and Quality Assurance in September 2016. Prior to joining us, Ms. Kim served as Chief Technology Officer for Iluminage Beauty Inc, a joint venture of Syneron Candela and Unilever Ventures that develops and manufactures medical devices. Ms. Kim was responsible for identifying new technology, leading the design and developing new products as well as responsible for the company’s overall regulatory strategy including filing and obtaining regulatory approvals, maintaining their Quality Management System and the execution of their clinical development program to support safety, efficacy and usability. Ms. Kim holds a Regulatory Affairs Certificate (RAC) with Regulatory Affairs Professional Society since December 2017and is a Certified Clinical Research Associate (CCRA) with the Association of Clinical Research Professionals (ACRP) since April 2013. Ms. Kim received an Honors B.Sc. in Biochemistry from McMaster University, in Canada.
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EXECUTIVE OFFICER AND DIRECTOR COMPENSATION
This section describes the material elements of compensation awarded to, earned by or paid to each of our named executive officers. Our compensation committee will review and approve the compensation of our executive officers and oversee our executive compensation programs and initiatives.
Summary Compensation Table
The following table sets forth information regarding compensation paid or accrued during the last two fiscal years ended December 31, 2022 and 2021 to Peter Fernandes, our Chief Executive Officer, and our two next most highly compensated executive officers during the fiscal year ended December 31, 2022, who were serving as executive officers as of such date.
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| | | | | | | | Stock | | Option | | All Other | | |
Name and | | | | | | | | Awards | | Awards | | Compensation | | |
Principal Position | | Year | | Salary ($) | | Bonus ($) | | ($)(1) | | ($)(1) | | ($)(2) | | Total ($) |
Peter Fernandes | | 2022 | | 373,727 | | 158,430 | | 153,400 | | — | | 18,300 | | 703,857 |
Chief Executive Officer and Chief Regulatory, Safety & Quality Officer | | 2021 | | 329,600 | | 131,840 | | — | | — | | 17,400 | | 478,840 |
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Parag Shah | | 2022 | | 270,375 | | 108,150 | | 120,360 | | — | | 18,300 | | 517,185 |
Vice President of Business Operations | | 2021 | | 257,500 | | 103,000 | | — | | — | | 17,400 | | 377,900 |
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Martin Dekker | | 2022 | | 270,375 | | 108,150 | | 120,360 | | — | | 18,300 | | 517,185 |
Vice President of Engineering and Manufacturing | | 2021 | | 257,500 | | 103,000 | | — | | — | | 17,400 | | 377,900 |
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Narrative to Summary Compensation Table
Base Salary. In 2022, we paid salaries of $373,727 to Mr. Fernandes, $270,375 to Mr. Shah and $270,375 to Mr. Dekker. In 2021, we paid salaries of $329,600 to Mr. Fernandes, $257,500 to Mr. Shah and $257,500 to Mr. Dekker. Base salaries are used to recognize the experience, skills, knowledge and responsibilities required of all of our employees, including our executive officers. Our compensation committee will review the salaries of our executives annually at the beginning of each calendar year and recommend to our Board changes in salaries based primarily on changes in job responsibilities, experience, individual performance and comparative market data.
Bonus Compensation. Our named executive officers are expected to be eligible to receive an annual bonus award in accordance with the management incentive program then in effect with respect to such executive officer and based on an annualized target of base salary, as specified in their respective employment agreements, if applicable. Our named executive officers are also expected to be eligible for performance-based annual bonus awards based on metrics to be determined by our Board, in consultation with the executive officer, and our Board will determine the extent to which the metrics have been satisfied and the amount of the annual bonus, if any. The performance-based bonuses are designed to motivate our employees to achieve annual goals based on our strategic, financial and operating performance objectives.
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With respect to 2022 performance, the compensation committee approved total bonus compensation, with a value of $158,430 to Mr. Fernandes, $108,150 to Mr. Shah, and $108,150 to Mr. Dekker.
With respect to 2021 performance, the compensation committee approved total bonus compensation, with a value of $131,840 to Mr. Fernandes, $103,000 to Mr. Shah, and $103,000 to Mr. Dekker.
Long-Term Equity Based Incentive Awards. We believe that equity grants provide our executives with a strong link to our long-term performance, create an ownership culture and help to align the interests of our executives and our stockholders. In addition, we believe that equity grants with a time-based vesting feature promote executive retention because this feature incentivizes our named executive officers to remain in our employment during the vesting period. Accordingly, our compensation committee and Board periodically review the equity incentive compensation of our named executive officers and from time to time may grant additional equity incentive awards to them in the form of stock options or restricted share awards.
Grants of Plan Based Awards
The following table shows information regarding grants of equity awards that we made during the fiscal year ended December 31, 2022 to each of our executive officers named in the Summary Compensation Table.
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Name and Principal Position | | Grant Date | | Restricted Stock Awards (number of shares) | | Grant Date Fair Value of Stock Awards ($)(1) |
Peter Fernandes, Chief Executive Officer and Chief Regulatory, Safety and Quality Officer | | 01/26/2022 | | 65,000 | | 153,400 |
Parag Shah, Vice President of Business Operations | | 01/26/2022 | | 51,000 | | 120,360 |
Martin Dekker, Vice President of Engineering and Manufacturing | | 01/26/2022 | | 51,000 | | 120,360 |
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Outstanding Equity Awards at 2022 Fiscal Year-End
The following table sets forth information regarding outstanding equity awards held by our named executive officers as of December 31, 2022:
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| | Option Awards | | Stock Awards | ||||||||
| | Number of Securities | | Number of Securities | | | | | | | | |
| | Underlying | | Underlying | | | | | | Number of Shares | | Market Value of |
| | Unexercised | | Unexercised | | Option | | Option | | or Units of | | Shares or Units of |
Name and | | Options | | Options | | Exercise | | Expiration | | Stock That Have | | Stock That Have |
Principal Position |
| Exercisable (#) |
| Unexercisable (#) | | Price ($) |
| Date |
| Not Vested (#) |
| Not Vested ($) |
Peter Fernandes |
| 318 | | — | | 124.05 |
| 02/25/2023 |
| — |
| — |
Chief Executive Officer |
| 666 | | — | | 123.00 |
| 05/17/2025 |
| — |
| — |
Chief Regulatory, Safety and Quality Officer |
| 2,000 | | — | | 7.35 |
| 12/06/2026 |
| — |
| — |
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| 6,666 | | — | | 30.45 |
| 01/12/2028 |
| — |
| — |
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| 9,165 | | — | | 13.65 |
| 11/20/2028 |
| — |
| — |
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| 780 | | 52 | (1) | 13.20 |
| 01/02/2029 |
| — |
| — |
| | 9,506 | | 2,193 | (2) | 7.50 |
| 09/26/2029 |
| — |
| — |
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| 32,500 | (3) | 29,250 |
Parag Shah |
| 266 |
| — | | 199.20 |
| 06/20/2024 |
| — |
| — |
Vice President of Business Operations |
| 133 |
| — | | 180.00 |
| 02/13/2025 |
| — |
| — |
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| 291 |
| — | | 153.30 |
| 03/12/2025 |
| — |
| — |
| | 2,000 | | — | | 7.35 |
| 12/06/2026 |
| — |
| — |
| | 5,333 | | — | | 30.45 |
| 01/12/2028 |
| — |
| — |
| | 9,165 | | — | | 13.65 |
| 11/20/2028 |
| — |
| — |
| | 780 | | 52 | (1) | 13.20 |
| 01/02/2029 |
| — |
| — |
| | 9,507 |
| 2,193 | (2) | 7.50 |
| 09/26/2029 |
| — |
| — |
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| 25,500 | (3) | 22,950 |
Martin Dekker |
| 532 |
| — | | 180.00 |
| 02/13/2025 |
| — |
| — |
Vice President of Engineering and Manufacturing |
| 1,666 |
| — | | 7.35 |
| 12/07/2026 |
| — |
| — |
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| 5,333 |
| — | | 30.45 |
| 01/12/2028 |
| — |
| — |
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| 9,166 |
| — | | 13.65 |
| 11/20/2028 |
| — |
| — |
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| 780 |
| 52 | (1) | 13.20 |
| 01/02/2029 |
| — |
| — |
| | 9,506 |
| 2,193 | (2) | 7.50 |
| 09/26/2029 |
| — |
| — |
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| 25,500 | (3) | 22,950 |
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Pay Versus Performance
The following table shows the relationship between executive compensation actually paid (“CAP”) to our Chief Executive Officer and our named executive officers and certain financial performance of the Company during the last two fiscal years ended December 31, 2022 and 2021.
Year | Summary Compensation Table Total for PEO (1) | Compensation Actually Paid to PEO (2) | Average Summary Compensation Table Total for Non-PEO NEOs (3) | Average Compensation Actually Paid to Non-PEO NEOs (4) | Value of Initial Fixed $100 Investment Based On Total Shareholder Return (5) | Net Income (Loss) (in millions) (6) |
2022 | $703,857 | $609,935 | $517,185 | $443,493 | $13.49 | $(19,831) |
2021 | $984,680 | $984,680 | $333,777 | $333,777 | $46.48 | $(17,756) |
In accordance with SEC rules, the following adjustments were made to total compensation for each year to determine CAP:
Year | Reported Summary Compensation Table Total for PEO | Reported Value of Equity Awards (i) | Equity Award Adjustments (ii) | Compensation Actually Paid to PEO |
2022 | $703,857 | $(153,400) | $59,478 | $609,935 |
2021 | $984,680 | $ - | $ - | $984,680 |
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Year | Year End Fair Value of Equity Awards | Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards | Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year | Year over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation | Total Equity Award Adjustments |
2022 | $29,250 | $ - | $30,228 | $ - | $ - | $ - | $59,478 |
2021 | $ - | $ - | $ - | $ - | $ - | $ - | $ - |
In accordance with the SEC rules, the following adjustments were made to average total compensation for the NEOs as a group (excluding Mr. Fernandes and Mr. Tenenbaum) for each year to determine the CAP, using the same methodology described above in Footnote 2:
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Year | Average Reported Summary Compensation Table Total for Non-PEO NEOs | Average Reported Value of Equity Awards | Average Equity Award Adjustments (i) | Average Reported Change in the Actuarial Present Value of Pension Benefits | Average Pension Benefit Adjustments (ii) | Average Compensation Actually Paid to Non-PEO NEOs |
2022 | $517,185 | $(120,360) | $46,668 | $ - | $ - | $443,493 |
2021 | $333,777 | $ - | $ - | $ - | $ - | $333,777 |
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Year | Average Year End Fair Value of Equity Awards | Year over Year Average Change in Fair Value of Outstanding and Unvested Equity Awards | Average Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year | Year over Year Average Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | Average Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | Average Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation | Total Average Equity Award Adjustments |
2022 | $22,950 | $ - | $23,718 | $ - | $ - | $ - | $46,668 |
2021 | $ - | $ - | $ - | $ - | $ - | $ - | $ - |
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Analysis of Information Presented in the Pay Versus Performance Table
The following disclosure addresses the relationship between CAP as disclosed in the Pay Versus Performance table and applicable financial performance.
CAP Versus Total Stockholder Return
CAP to our PEO decreased from fiscal year 2021 to fiscal year 2022, whereas there was an increase in CAP to our Non-PEO NEOs for the same comparative periods. The decrease in PEO CAP is partially due to the combination of compensation for Mr. Fernandes and Mr. Tenenbaum in 2021 versus only Mr. Fernandes in 2022. Additionally, there was no equity compensation granted to during 2021 which is the primary driver of the increase between periods for our Non-PEO NEOs. Over the same two-fiscal-year period, our cumulative Total Stockholder Return also decreased. As a research and development organization, our primary focus is to successfully complete our late stage phase 3 REBUILD trial. At this stage of the organization’s operations, we believe that our equity compensation program, which aims to align executive compensation with the interests of our stockholders (i.e., stock price) through regular equity grants, reflects appropriate alignment of interests to successfully incentive our executive to drive completion the REBUILD.
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CAP Versus Net Income
CAP to our PEO decreased from fiscal year 2021 to fiscal year 2022, whereas there was an increase in CAP to our Non-PEO NEOs for the same comparative periods. The decrease in PEO CAP is partially due to the combination of compensation for Mr. Fernandes and Mr. Tenenbaum in 2021 versus only Mr. Fernandes in 2022. Additionally, there was no equity compensation granted to during 2021 which is the primary driver of the increase between periods for our Non-PEO NEOs. Over the same two-fiscal-year period, our cumulative Net Loss for fiscal year 2022 increased from fiscal year 2021. As a research and development organization, our primary focus is to successfully complete our late stage phase 3 REBUILD trial. At this stage of the organization’s operations, we believe that our equity compensation program, which aims to align executive compensation with the interests of our stockholders (i.e., stock price) through regular equity grants, reflects appropriate alignment of interests to successfully incentive our executive to drive completion the REBUILD. The increase in the Net Loss between periods is directly attributable to the incremental efforts to deliver a completed study in a timely manner.
Employment Agreements with Our Named Executive Officers
Agreement with Mr. Fernandes
In April 2015, we entered into an offer letter with Mr. Fernandes in connection with the commencement of his employment with us. The letter provides that Mr. Fernandes is employed at will, and either we or Mr. Fernandes may terminate the employment relationship for any reason, at any time. The letter provides that Mr. Fernandes is entitled to a $320,000 base salary, subject to annual review by the Company. Following the end of each calendar year, Mr. Fernandes is eligible to receive an annual bonus for such calendar year in accordance with the terms of our management incentive program, calculated as a percentage of his annual base salary. As of the date of this proxy statement, Mr. Fernandes’ target bonus percentage is 40%. With respect to 2022 performance, the compensation committee approved total bonus compensation, with a value of $158,430 to Mr. Fernandes.
Potential Payments upon Termination or Change-In-Control
None of our employment arrangements with our NEOs provide for severance or change in control-related payments or benefits. All of our employment arrangements with our NEOs are terminable at will by us.
Stock Option and Other Compensation Plans
The four equity incentive plans described in this section are (i) the assumed 2007 Ikaria stock option plan, which we refer to as the 2007 Ikaria plan, (ii) the assumed Ikaria 2010 long term incentive plan, which we refer to as the 2010 Ikaria plan, (iii) our 2014 equity incentive plan and (iv) our 2015 equity incentive plan. Following the effectiveness of the registration statement for our Initial Public Offering (“IPO”), we have been granting awards to eligible participants only under the 2015 equity incentive plan.
Assumed 2007 Ikaria Plan
The 2007 Ikaria plan was adopted by Ikaria in March 2007, and we assumed the terms of the 2007 Ikaria plan in connection with our spin-out from Ikaria, Inc., or Ikaria (the “Spin-Out”). Stock options granted under the 2007 Ikaria plan have a contractual life of ten years. Pursuant to the terms of the 2007 Ikaria plan, in the event of a liquidation or dissolution of our company, each outstanding option under the 2007 Ikaria plan will terminate immediately prior to the consummation of the action, unless the administrator determines otherwise. In the event of a merger or other reorganization event, each outstanding option will be assumed or an equivalent option or right will be substituted by the successor entity, unless such successor entity does not agree to assume the award or to substitute an equivalent option or right in which case such option will terminate upon the consummation of the merger or reorganization event.
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Assumed 2010 Ikaria Plan
The 2010 Ikaria plan was adopted by Ikaria in February 2010 and amended and restated in May 2010, and we assumed the terms of the 2010 Ikaria plan in connection with the Spin-Out. Pursuant to the terms of the 2010 Ikaria plan, upon our liquidation, dissolution, merger or consolidation, except as otherwise provided in an applicable option or award agreement, each option or award will be (i) treated as provided in the agreement related to the transaction, or (ii) if not so provided in such agreement, each holder of an option or award will be entitled to receive, in respect of each share subject to outstanding options or awards, the same number of stock, securities, cash, property or other consideration that he or she would have received had he or she exercised such options or awards prior to the transaction. The stock, securities, cash, property or other consideration shall remain subject to all of the conditions, restrictions and performance criteria which were applicable to the options and awards prior to any such transaction. If the consideration paid or distributed is not entirely shares of common stock of the acquiring or resulting corporation, the treatment of outstanding options and stock appreciation rights may include the cancellation of outstanding options and stock appreciation rights upon consummation of the transaction as long as the holders of affected options and stock appreciation rights, at the election of the compensation committee, either:
2014 Equity Incentive Plan
In June 2014, our Board adopted, and our stockholders approved, the 2014 equity incentive plan. The 2014 equity incentive plan is administered by our Board or by a committee appointed by our Board. The 2014 equity incentive plan provided for the grant of options. Following the effectiveness of our registration statement filed in connection with our IPO, no options may be granted under the 2014 equity incentive plan.
Our employees, officers, directors, consultants and advisors were eligible to receive awards under the 2014 equity incentive plan.
Awards under the 2014 equity incentive plan are subject to adjustment in the event of a split, reverse split, dividend, recapitalization, combination or reclassification of our common stock, spin-off or other similar change in our capitalization or event or any dividend or distribution to holders of our common stock other than an ordinary cash dividend.
Upon a merger or other reorganization event (as defined in the 2014 equity incentive plan), our Board may, in its sole discretion, take any one or more of the following actions pursuant to the 2014 equity incentive plan, as to some or all outstanding options:
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At any time, our Board may, in its sole discretion, provide that any award under the 2014 equity incentive plan will become immediately exercisable in full or in part, free of some or all restrictions or conditions, or otherwise realizable in full or in part.
Our Board may amend, suspend or terminate the 2014 equity incentive plan at any time, except that stockholder approval will be required to comply with applicable law or stock market requirements.
2015 Equity Incentive Plan
In January 2015, our Board adopted, and in February 2015, our stockholders approved, the 2015 equity incentive plan (as subsequently amended and restated, the “2015 Plan”), which became effective immediately prior to the effectiveness of the registration statement for our IPO. The 2015 Plan provides for the grant of incentive stock options, nonstatutory stock options, share appreciation rights, restricted share awards, restricted share unit awards and other share-based awards. Upon the effectiveness of the 2015 Plan, the number of shares of our common stock that were reserved for issuance under the 2015 Plan was equal to the sum of stock.
Our employees, officers, directors, consultants and advisors are eligible to receive awards under the 2015 Plan. However, incentive stock options may only be granted to our employees.
Pursuant to the terms of the 2015 Plan, our Board (or a committee delegated by our Board) administers the plan and, subject to any limitations in the plan, selects the recipients of awards and determines:
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If our Board delegates authority to an officer to grant awards under the 2015 Plan, the officer will have the power to make awards to all of our officers, except executive officers. Our Board will fix the terms of the awards to be granted by such officer,stockholders, including the exercise price2024 annual meeting, if the Plan of such awards (which may include a formula by whichDissolution is approved with the exercise will be determined), and the maximum numberSecretary of shares subject to awards that such officer may make.
Upon a merger or other reorganization event, our Board may, except to the extent specifically provided otherwise in an award or other agreement between us and the plan participant, take any one or moreState of the following actions pursuant to the 2015 Plan as to some or all outstanding awards other than restricted shares:
Inproxy to vote the case of certain restricted share units, no assumption or substitution is permitted, and the restricted share units will instead be settledproxy in accordance with the terms of the applicable restricted share unit agreement.
Upon the occurrence of a reorganization event other than a liquidation or dissolution, the repurchasetheir best judgment on those matters.
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unless the Board may otherwise determine, apply to the cash, securities or other property into which shares of our common stock are converted or exchanged pursuant to the reorganization event, provided that our Board may provide for the termination or deemed satisfaction of such repurchase or other rights under the applicable award agreement or any other agreement between the participant and us. Upon the occurrence of a reorganization event involving a liquidation or dissolution, all restrictions and conditions on each outstanding restricted share awardSEC will automatically be deemed terminated or satisfied, unless otherwise provided inupdate and supersede the agreement evidencing the restricted share award or in any other agreement between the participant and us.
At any time, our Board may, in its sole discretion, provide that any award under the 2015 Plan will become immediately exercisable in full or in part, free of some or all restrictions or conditions, or otherwise realizable in full or in part.
No award may be granted under the 2015 Plan on or after February 12, 2025. Our Board may amend, suspend or terminate the 2015 Plan at any time, except that stockholder approval may be required to comply with applicable law or stock market requirements.
On March 10, 2017, the Board approved our Amended and Restated 2015 Equity Incentive Plan, which became effective upon approvalinformation already incorporated by our stockholders at the 2017 annual meeting, to increase the number of shares authorized for issuance of awards under the 2015 Plan to 333,333 shares of common stock and increase the maximum number of shares available under the annual increase from 53,223 shares to 200,000 shares. On May 14, 2019, the Company’s stockholders approved an additional amendment to the 2015 Plan to increase the aggregate number of shares reserved for issuance under the 2015 plan from 333,333 to 833,333.
401(k) Retirement Plan
We maintain a 401(k) retirement plan that is intendedreference. Such documents are considered to be a tax-qualified defined contribution plan under Section 401(k)part of this proxy statement, effective as of the Internal Revenue Code.date such documents are filed. In general, allthe event of our employeesconflicting information in these documents, the information in the latest filed document should be considered correct. We are eligible to participate, beginning onincorporating by reference the first daydocuments listed below, which we have already filed with the SEC, and any future filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the month following commencement of their employment. The 401(k) plan includes a salary deferral arrangement pursuant to which participants may elect to reduce their current compensation by up toExchange Act, including all filings made after the statutorily prescribed limit, equal to $20,500 in 2022 plus an additional $6,500 for employees 50 years of age or older as of December 31, 2022 and eligible for catch-up contributions, and have the amountdate of the reduction contributedfiling of this proxy statement, except as to the 401(k) plan.
Limitations on Liability and Indemnification
Our certificate of incorporation limits the personal liability of directors for breach of fiduciary duty to the maximum extent permitted by the Delaware General Corporation Law and provides that no director will have personal liability to us or to our stockholders for monetary damages for breach of fiduciary duty or other duty as a director. However, these provisions do not eliminate or limit the liabilityany portion of any of our directors:
Any amendment tofuture report or repeal of these provisions willdocument that is not eliminate or reduce the effect of these provisions in respect of any act, omission or claim that occurred or arose prior todeemed filed under such amendment or repeal. If the Delaware General Corporation Law is amended to provide for further limitations on the personal liability of directors of corporations, then the personal liability of our directors will be further limited to the greatest extent permitted by the Delaware General Corporation Law.
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In addition, our certificate of incorporation provides that we must indemnify our directors and officers and we must advance expenses, including attorneys’ fees, to our directors and officers in connection with legal proceedings, subject to very limited exceptions.
In addition, we have entered into indemnification agreements with each of our directors and officers. These indemnification agreements may require us, among other things, to indemnify each such director or officer for some expenses, including attorneys’ fees, judgments, fines and settlement amounts incurred by him or her in any action or proceeding arising out of his or her service as one of our directors or officers.
We maintain a general liability insurance policy that covers certain liabilities of our directors and officers arising out of claims based on acts or omissions in their capacities as directors or officers.
Certain of our non-employee directors may, through their relationships with their employers, be insured and/or indemnified against certain liabilities incurred in their capacity as members of our Board.
Rule 10b5-1 Sales Plans
Our directors and executive officers may adopt written plans, known as Rule 10b5-1 plans, in which they will contract with a broker to buy or sell shares of our common stock on a periodic basis. Under a Rule 10b5-1 plan, a broker executes trades pursuant to parameters established by the director or officer when entering into the plan, without further direction from the director or officer. The director or officer may adopt, amend or terminate a plan when not in possession of material, non-public information. In addition, our directors and executive officers may also buy or sell additional shares outside of a Rule 10b5-1 plan when they are not in possession of material, nonpublic information. None of our directors or executive officers have adopted or entered into Rule 10b5-1 plans.
Director Compensation
Since December 7, 2016, our director compensation policy consisted of the following:
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On December 7, 2016, the Board approved a change in director compensation under which payment of fees for each non-employee director will be provided in the form of cash or restricted shares of common stock.
In October 2022, the Board created a Transaction Committee to review and negotiate certain transactions and approved a cash retainer of $7,500 per year ($15,000 for the chair).
The following table shows the total compensation paid or accrued during the fiscal year ended December 31, 2022 to each of our non-employee directors. Directors who are employed by us are not compensated for their service on our Board:
| | | | | | | | |
|
| Fees Earned or |
| Stock Awards |
| Option Awards |
| Total |
Name |
| Paid in Cash |
| ($)(1) |
| ($)(1) |
| ($) |
Naseem Amin |
| 7,500 |
| 75,600 | (2) | — |
| 83,100 |
Scott P. Bruder |
| 45,000 |
| — |
| 39,902 | (3) | 84,902 |
Mary Ann Cloyd |
| 57,500 |
| — |
| 39,902 | (3) | 97,402 |
Ted Wang |
| 35,000 |
| — |
| 39,902 | (3) | 74,902 |
Crispin Teufel |
| 52,500 |
| — |
| 39,902 | (3) | 92,402 |
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EQUITY COMPENSATION PLAN INFORMATION
Securities Authorized for Issuance under Equity Compensation Plans
The following table contains information about our equity compensation plans as of December 31, 2022.
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| | |
| |
|
| | | | | | | | |
| | | | | | | Number of securities | |
| | | | Weighted-average | | remaining available for | | |
| | Number of securities | | exercise price of | | future issuance under | | |
| | to be issued upon exercise | | outstanding | | equity compensation plans | | |
| | of outstanding options, | | options, warrants | | (excluding securities | | |
Plan category |
| warrants and rights |
| and rights |
| reflected in column(a)) | | |
|
| (a) |
| | (b) |
| (c) |
|
Equity compensation plans approved by security holders |
| 488,402 | (1) | $ | 12.88 | (2) | 645,657 | (3) |
Equity compensation plans not approved by security holders |
| — |
|
| — |
| — |
|
|
|
|
|
|
|
|
|
|
Total |
| 488,402 |
| $ | 12.88 |
| 645,657 |
|
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The Audit Committee of the Board, which consists entirely of directors who meet the independence and experience requirements of The Nasdaq Stock Market, has furnished the following report:
The Audit Committee assists the Board in overseeing and monitoring the integrity of our financial reporting process, compliance with legal and regulatory requirements and the quality of internal and external audit processes. This committee’s role and responsibilities are set forth in our charter adopted by the Board, which is available on our website at www.bellerophon.com. This committee reviews and reassesses our charter annually and recommends any changes to the Board for approval. The Audit Committee is responsible for overseeing our overall financial reporting process, and for the appointment, compensation, retention, and oversight of the work of KPMG LLP. In fulfilling its responsibilities for the financial statements for fiscal year 2022, the Audit Committee took the following actions:
Based on the Audit Committee’s review of the audited financial statements and discussions with management and KPMG LLP, the Audit Committee recommended to the Board that the audited financial statements be included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, for filingfiled with the SEC.
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CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
In addition tothis proxy statement is delivered, a copy of the directordocuments incorporated by reference into this proxy statement but not delivered with the proxy statement. You may request a copy of these filings, and executive officer compensation arrangements discussed above in “Executive Officer and Director Compensation,” since January 1, 2021,any exhibits we have engagedspecifically incorporated by reference as an exhibit in this proxy statement, at no cost by writing us at the following transactionsaddress: Bellerophon Therapeutics, Inc., c/o 124 Washington Street, Suite 101, Foxborough, Massachusetts 02035, (508) 543-1720.
Baylor BioSciences License Agreement
On January 4, 2023, we entered into a license agreement (the “License Agreement”) with Baylor BioSciences, Inc. (“Baylor”), pursuant to which Baylor will receive exclusive rights to develop and commercialize INOpulse within mainland China, Taiwan, Hong Kong and Macau (collectively, “Greater China”) for diseases associated with pulmonary hypertension, including the lead indication of fibrotic interstitial lung disease (fILD), as well as PH-Sarcoidosis and PH-COPD. Under the termsGeneral Corporation Law of the License Agreement, Baylor agreed to pay Bellerophon a license paymentState of $6 million, payable by Baylor within 90 days, subject to certain closing conditions. AsDelaware (the “DGCL”).
Indemnification Agreements
Our certificate of incorporation provides that we will indemnify our directors and officersPlan to the fullest extent permittedCompany’s stockholders to take action on the Plan. If the Plan is adopted by Delaware law. In addition, we have entered into indemnification agreements with each of our directors and officers. See “Executive Officer and Director Compensation-Limitations on Liability and Indemnification” for additional information regarding these agreements.
Policy and Procedures for Related Party Transactions
Our audit committee charter requires all future transactions between us and any director, executive officer, holder of 5% or more of any class of our capital stock or any memberthe requisite vote of the immediate family of, or entities affiliated with, any of them, or any other related persons, as defined in Item 404 of Regulation S-K, or their affiliates, in whichCompany’s stockholders, the amount involved is equal to or greater than $120,000, be approved in advance by our audit committee. Any request for such a transaction must first be presented to our audit committee for review, consideration and approval. In approving or rejecting any such proposal, our audit committee is to consider all available information deemed relevant byPlan shall constitute the audit committee, including, but not limited to, the extentadopted Plan of the related person’s interest in the transaction, and whether the transaction is on terms no less favorable to us than terms we could have generally obtained from an unaffiliated third party under the same or similar circumstances.
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(PROPOSAL NO. 1)
On April 25, 2023, our Board nominated Scott Bruder, Naseem Amin and Ted Wang for election at the annual meeting. Our Board currently consists of five members, classified into three classes as follows: (1) Scott Bruder, Naseem Amin and Ted Wang constitute a class with a term ending at the 2023 annual meeting; (2) no directors currently constitute a class with a term ending at the 2024 annual meeting and (3) Mary Ann Cloyd and Crispin Teufel constitute a class with a term ending at the 2025 annual meeting. At each annual meeting of stockholders, directors are elected for a full term of three years to succeed those directors whose terms are expiring.
On April 25, 2023, our Board accepted the recommendation of the Nominating and Corporate Governance Committee and voted to nominate Scott Bruder, Naseem Amin and Ted Wang for election at the annual meeting for a term of three years to serve until the 2026 annual meeting of stockholders, and until his or her respective successor has been elected and qualified, or until his or her earlier resignation or removalCompany..
Unless authority to vote for either of these nominees is withheld, the shares represented by the enclosed proxy will be voted FOR the election as director of Scott Bruder, Naseem Amin and Ted Wang. In the event that any nominee becomes unable or unwilling to serve, the shares represented by the enclosed proxy will be voted for the election of such other person as the Board may recommend in that nominee’s place. We have no reason to believe that any nominee will be unable or unwilling to serve as a director.
A plurality of the shares voted for the nominee at the annual meeting is required to elect the nominees as a director.
THE BOARD RECOMMENDS THE ELECTION OF SCOTT BRUDER, NASEEM AMIN AND TED WANG AS DIRECTORS, AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR THEREOF UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY.
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INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
(PROPOSAL NO. 2)
The Audit Committee has appointed KPMG LLP, as our independent registered public accounting firm, to audit our financial statements for the fiscal year ending December 31, 2023. The Board proposes that the stockholders ratify this appointment. KPMG LLP audited our financial statements for the fiscal year ended December 31, 2022. We expect that representatives of KPMG LLP will be present at the annual meeting, will be able to make a statement if they so desire, and will be available to respond to appropriate questions.
In deciding to appoint KPMG LLP, the Audit Committee reviewed auditor independence issues and existing commercial relationships with KPMG LLP, and concluded that KPMG LLP has no relationship with the Company that would impair its independence for the fiscal year ending December 31, 2023.
The following table summarizes the fees of KPMG LLP, our independent registered public accounting firm, for professional services rendered for the audit of our fiscal 2022 and 2021 consolidated financial statements and the fees billed to us for other services for each of the last two fiscal years.
| | | | | | |
Fee Category |
| 2022 |
| 2021 | ||
Audit Fees (1) | | $ | 505,000 | | $ | 457,500 |
Audit-Related Fees | |
| — | |
| — |
All Other Fees | |
| — | |
| — |
Total Fees | | $ | 505,000 | | $ | 457,500 |
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-audit Services of Independent Public Accountant
Consistent with SEC policies regarding auditor independence, the Audit Committee has responsibility for appointing, setting compensation and overseeing the work of our independent registered public accounting firm. In recognition of this responsibility, the Audit Committee has established a policy to pre-approve all audit and permissible non-audit services provided by our independent registered public accounting firm.
Prior to engagement of an independent registered public accounting firm for the next year’s audit, management will submit an aggregate of services expected to be rendered during that year for each of four categories of services to the Audit Committee for approval.
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Prior to engagement, the Audit Committee pre-approves these services by category of service. The fees are budgeted and the Audit Committee requires our independent registered public accounting firm and management to report actual fees versus the budget periodically throughout the year by category of service. During the year, circumstances may arise when it may become necessary to engage our independent registered public accounting firm for additional services not contemplated in the original pre-approval. In those instances, the Audit Committee requires specific pre-approval before engaging our independent registered public accounting firm.
The Audit Committee may delegate pre-approval authority to one or more of its members. The member to whom such authority is delegated must report, for informational purposes only, any pre-approval decisions to the Audit Committee at its next scheduled meeting.
In the event the stockholders do not ratify the appointment of KPMG LLP as our independent registered public accounting firm, the Audit Committee will reconsider its appointment.
The affirmative vote of a majority of the shares cast affirmatively or negatively at the annual meeting is required to ratify the appointment of the independent registered public accounting firm.
THE BOARD RECOMMENDS A VOTE TO RATIFY THE APPOINTMENT OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM, AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR OF SUCH RATIFICATION UNLESS A STOCKHOLDER INDICATES OTHERWISE ON THE PROXY.
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INCREASE THE NUMBER OF SHARES TO BE GRANTED UNDER THE COMPANY'S
2015 EQUITY PLAN
(PROPOSAL NO. 3)
General
On April 25, 2023, our Board approved our amended and restated 2015 Plan, to be effective upon approval by our stockholders at the annual meeting, to increase the number of shares authorized for issuance of awards under section 4(a)(1)(A) of the 2015 Plan from 833,333 shares to 1,443,318 shares of common stock. The 2015 Plan will continue to allow additional shares to be issued under the Plan if options outstanding under our 2014 Equity Incentive Plan (the “Existing Plan”) are canceled or expire in the future. Our 2015 Plan was approved by our Board and stockholders in 2015. As of April 21, 2023, options to purchase 922,038 shares of common stock are outstanding under the 2015 Plan, 8,892 shares of common stock have been issued upon the exercise of options granted under the 2015 Plan, 163,000 of restricted stock units to receive shares of common stock are outstanding and 340,065 shares of common have be issued upon the vesting of restricted stock awards. 45,657 shares remain available for issuance under the 2015 Plan. By its terms, the 2015 Plan may be restated or amended by the Board, provided that any restatement or amendment which the Board determines requires stockholder approval is subject to receiving such stockholder approval. On April 25, 2023, our Board voted to approve an amendment and restatement of the 2015 Plan to increase the aggregate number of shares of common stock available for the grant of awards under section 4(a)(1)(A) of the 2015 Plan from 833,333 shares to 1,443,318 shares of common stock.
Reasons for Amendment to the 2015 Plan
This amended and restated 2015 Plan is being submitted to you for approval at the annual meeting in order to ensure favorable federal income tax treatment for grants of incentive stock options under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”). Approval by our stockholders of the amendment and restatement of our 2015 Plan is also required byCompany approve the listing rules of The Nasdaq Stock Market.
Our Board, the Compensation Committee and management all believe that the effective use of stock-based long-term incentive compensation is vital to our ability to achieve strong performance in the future. The 2015 Plan, as amended, will maintain and enhance the key policies and practices adopted by our management and Board to align employee and stockholder interests. In addition, our future success depends, in large part, upon our ability to maintain a competitive position in attracting, retaining and motivating key personnel. We believe that the increase in the number of shares available for issuance under our 2015 Plan is essential to permit our management to continue to provide long-term, equity-based incentives to present and future key employees, consultants and directors. Our Board of Directors believes that the number of shares currently remaining available for issuance pursuant to future awards under the 2015 Plan (as of April 21, 2023) is not sufficient for future granting needs. Our Board of Directors currently believes that if the amendment to the 2015 Plan is approved by stockholders, the 655,642 shares available for issuance under the 2015 Plan will result in an adequate number of shares of common stock being available for future awards under the 2015 Plan for one additional year following the current year. Accordingly, our Board believes approvaldissolution of the amendment to increaseCompany, the aggregate numberCompany shall file with the Secretary of shares available for issuance under the 2015 Plan is in our best interests and those of its stockholders and recommends a vote “FOR” the approvalState of the amendment to the 2015 Plan.
The following isState of Delaware a brief summarycertificate of the 2015 Plan, as amended, which assumes this Proposal No. 3 is approved by our stockholders. This summary is qualified in its entirety by reference to the textdissolution (the “Certificate of the 2015 Plan (as amended and restated), a copy of which is attached as Appendix A to this proxy statement.
Material Features of our 2015 Plan.
In January 2015, our Board adopted, and in February 2015, our stockholders approved, the 2015 Plan, which became effective immediately prior to the effectiveness of the registration statement for our IPO. The 2015 Plan provides for the grant of incentive stock options, nonstatutory stock options, share appreciation rights, restricted share
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awards, restricted share unit awards and other share-based awards. Upon the effectiveness of the 2015 Plan, the number of shares of our common stock that were reserved for issuance under the 2015 Plan was equal to the sum of (1) 449,591 plus (2) the number of shares (up to 558,851 shares) equal to the sum of the number of shares of our common stock available for issuance under the 2014 equity incentive plan immediately prior to the effectiveness of the registration statement for our IPO and the number of shares of our common stock subject to outstanding awards under the 2014 equity incentive plan that expire, terminate or are otherwise surrendered, canceled, forfeited or repurchased by us at their original issuance price pursuant to a contractual repurchase right plus (3) an annual increase, to be added on the first day of each fiscal year, beginning with the fiscal year ending December 31, 2016 and continuing until, and including, the fiscal year ending December 31, 2025, equal to the least of (i) 798,358 shares of our common stock, (ii) a number equal to the difference between 5% of the number of shares of our common stock outstanding on the first day of the fiscal year (treating all shares of our common stock issuable upon the exercise of outstanding options and upon the conversion of outstanding shares of preferred stock, warrants or other securities convertible into shares of our common stock as outstanding for this purpose) and the number of shares of our common stock available for grant under the 2015 Plan on the first day of the fiscal year and (iii) an amount determined by our Board.
Our employees, officers, directors, consultants and advisors are eligible to receive awards under the 2015 Plan. However, incentive stock options may only be granted to our employees. As of April 21, 2023, there were approximately 16 individuals eligible to participate.
Pursuant to the terms of the 2015 Plan, our Board (or a committee delegated by our Board) administers the plan and, subject to any limitations in the plan, selects the recipients of awards and determines:
If our Board delegates authority to an officer to grant awards under the 2015 Plan, the officer will have the power to make awards to all of our officers, except executive officers. Our Board will fix the terms of the awards to be granted by such officer, including the exercise price of such awards (which may include a formula by which the exercise will be determined), and the maximum number of shares subject to awards that such officer may make.
Upon a merger or other reorganization event, our Board may, except to the extent specifically provided otherwise in an award or other agreement between us and the plan participant, take any one or more of the following actions pursuant to the 2015 Plan as to some or all outstanding awards other than restricted shares:
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Our Board does not need to take the same action with respect to all awards, all awards held by a participant or all awards of the same type.
In the case of certain restricted share units, no assumption or substitution is permitted, and the restricted share units will instead be settledDissolution”) in accordance with the terms of the applicable restricted share unit agreement.
Upon the occurrence of a reorganization event other than a liquidation or dissolution, the repurchase and other rights with respect to outstanding restricted share awards will continue for the benefit of the successor company and will, unless the Board may otherwise determine, apply to the cash, securities or other property into which shares of our common stock are converted or exchanged pursuant to the reorganization event, provided that our Board may provide for the termination or deemed satisfaction of such repurchase or other rights under the applicable award agreement or any other agreement between the participant and us. Upon the occurrence of a reorganization event involving a liquidation or dissolution, all restrictions and conditions on each outstanding restricted share award will automatically be deemed terminated or satisfied, unless otherwise provided in the agreement evidencing the restricted share award or in any other agreement between the participant and us.
At any time, our Board may, in its sole discretion, provide that any award under the 2015 Plan will become immediately exercisable in full or in part, free of some or all restrictions or conditions, or otherwise realizable in full or in part.
No award may be granted under the 2015 Plan on or after February 12, 2025. Our Board may amend, suspend or terminate the 2015 Plan at any time, except that stockholder approval may be required to comply with applicable law or stock market requirements.
On March 10, 2017, the Board approved our Amended and Restated 2015 Equity Incentive Plan, which became effective upon approval by our stockholders at the 2017 annual meeting, to increase the number of shares authorized for issuance of awards under the 2015 Plan to 333,333 shares of common stock and increase the maximum number of shares available under the annual increase from 53,223 shares to 200,000 shares. On May 14, 2019, the Company’s stockholders approved an additional amendment to the 2015 Plan to increase the aggregate number of shares reserved for issuance under the 2015 plan from 333,333 to 833,333. On April 25, 2023, our Board voted to approve an amendment
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and restatement of the 2015 Plan to increase the aggregate number of shares of common stock available for the grant of awards under section 4(a)(1)(A) of the 2015 Plan from 833,333 shares to 1,443,318 shares of common stock.
Federal Income Tax Considerations
The following summary is intended only as a general guide to certain U.S. federal income tax consequences under current law of participation in the 2015 Plan, as amended, and does not attempt to describe all possible federal or other tax consequences of such participation or tax consequences based on any participant’s particular circumstances. The summary does not purport to be complete, and it does not address the tax consequences of the participant’s death, any tax laws of any municipality, state or foreign country in which a participant might reside, or any other laws other than U.S. federal income tax laws. Furthermore, the tax consequences are complex and subject to change, and a participant’s particular situation may be such that some variation of the described rules is applicable. Recipients of awards under the 2015 Plan, as amended, should consult their own tax advisors to determine the tax consequences to them as a result of their particular circumstances.
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New Plan Benefits
The following table sets forth RSUs and stock options that were approved by the Compensation Committee to the persons and groups named below under our 2015 Plan in February 2023 and that would be satisfied by the issuance of shares under our 2015 Plan, as amended, contingent upon stockholder approval of the amendment to the 2015 Plan. Should stockholder approval not be obtained, these awards will be automatically forfeited. The contingent RSUs set forth below shall vest in full on December 31, 2023. The contingent options set forth below shall have an exercise price equal to the closing sale price of our common stock on the date of stockholder approval of the amendment to the 2015 Plan. The contingent options granted to the directors set forth below vest in full on the one-year anniversary of stockholder approval of the amendment to the 2015 Plan. The contingent options granted to the Named Executive Officers and employees set forth below vest in quarterly installments over a four-year period from the date of stockholder approval of the amendment to the 2015 Plan.
Any other awards under our 2015 Plan, as amended, would be granted by our Compensation Committee or other delegated persons. We cannot determine at this time either the persons who will receive such awards under the Plan or the amount or types of any such awards.
| | | | |
Name and Position | | Number of RSUs | | Number of Stock Options |
Peter Fernandes, Chief Executive Officer and Chief Regulatory, Safety and Quality Officer | | – | | 100,000 |
Parag Shah, Vice President of Business Operations | | – | | 50,000 |
Martin Dekker, Vice President of Engineering and Manufacturing | | – | | 50,000 |
All executive officers as a group | | – | | 300,000 |
All non-executive directors as a group | | 47,578 | | 58,428 |
All non-executive officer employees as a group | | – | | 100,000 |
THE BOARD RECOMMENDS A VOTE TO APPROVE THE AMENDMENT TO OUR 2015 PLAN TO INCREASE THE AGGREGATE NUMBER OF AUTHORIZED SHARES RESERVED FOR ISSUANCE UNDER THE 2015 PLAN TO 1,443,318 SHARES OF COMMON STOCK, AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR OF THE AMENDMENT UNLESS A STOCKHOLDER INDICATES OTHERWISE ON THE PROXY.
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ADVISORY VOTE ON APPROVAL OF EXECUTIVE COMPENSATION AS DISCLOSED IN THIS PROXY STATEMENT
(PROPOSAL NO. 4)
We are seeking your advisory vote as required by Section 14A of the Securities Exchange Act of 1934, as amended, on the approval of the compensation of our named executive officers, the compensation tables and related material contained in this proxy statement. Because your vote is advisory, it will not be binding on our Compensation committee or our Board of Directors. However, the Compensation Committee and our Board will review the voting results and take them into consideration when making future decisions regarding executive compensation. We have determined to hold an advisory vote to approve the compensation of our named executive officers annually, and the next such advisory vote will occur at the 2024 Annual Meeting of Stockholders.
Our compensation philosophy is designed to align each executive’s compensation with our short-term and long-term performance and to provide the compensation and incentives needed to attract, motivate and retain key executives who are crucial to our long-term success. Consistent with this philosophy, a significant portion of the total compensation opportunity for each of our executives is directly related to performance factors that measure our progress against the goals of our strategic and operating plans, as well as our performance against that of our peer companies.
Stockholders are urged to read the “Executive Compensation” section of this proxy statement for additional details about our executive compensation, including information about the fiscal year 2022 compensation of our named executive officers.
In accordance with the rules of the SEC, the following resolution, commonly known as a “say-on-pay” vote, is being submitted for a stockholder vote at the 2023 annual meeting:
“RESOLVED, that the compensation paid to the named executive officers of Bellerophon Therapeutics, Inc., as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the compensation tables and the related material disclosed in this proxy statement, is hereby APPROVED.”
The affirmative vote of a majority of the shares cast affirmatively or negatively for this proposal is required to approve, on an advisory basis, this resolution.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS, AND PROXIES SOLICITED BY OUR BOARD OF DIRECTORS WILL BE VOTED IN FAVOR OF SUCH APPROVAL UNLESS A STOCKHOLDER INDICATES OTHERWISE ON THE PROXY.
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We have adopted a code of business conduct and ethics that applies to all of our employees, including our chief executive officer and chief financial and accounting officers. The text of the code of business conduct and ethics is posted on our website at www.bellerophon.com. Disclosure regarding any amendments to, or waivers from, provisions of the code of business conduct and ethics that apply to our directors, principal executive and financial officers will be included in a Current Report on Form 8-K within four business days following the date of the amendment or waiver, unless website posting or the issuance of a press release of such amendments or waivers is then permitted by the rules of The Nasdaq Stock Market.
The Board knows of no other business which will be presented to the annual meeting. If any other business is properly brought before the annual meeting, proxies will be voted in accordance with the judgment of the persons named therein.
STOCKHOLDER PROPOSALS AND NOMINATIONS FOR DIRECTOR
To be considered for inclusion in the proxy statement relating to our 2024 annual meeting of stockholders, we must receive stockholder proposals (other than for director nominations) not less than 90 days nor more than 120 days prior to the first anniversary of the 2023 annual meeting. To be considered for presentation at the 2024 annual meeting, although not included in the proxy, proposals (including director nominations that are not requested to be included in our proxy statement) must be received not less than 90 days nor more than 120 days prior to the first anniversary of this year’s annual meeting; provided, however, that in the event that the date of the annual meeting in any other year is advanced by more than 20 days, or delayed by more than 60 days, from the first anniversary of this year’s annual meeting, a stockholder’s notice must be received not earlier than the 120th day prior to such annual meeting and not later than the close of business on the later of (A) the 90th day prior to such annual meeting and (B) the tenth day following the day on which notice of the date of such annual meeting was mailed or public disclosure of the date of such annual meeting was made, whichever first occurs. In addition to satisfying the foregoing advance notice requirements, to comply with the universal proxy rules under the Exchange Act, stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must follow the requirements set forth in Rule 14a-19 as promulgated under the Exchange Act.
Proposals that are not received in a timely manner will not be voted on at the 2024 annual meeting of stockholders. If a proposal is received on time, the proxies that management solicits for the annual meeting may still exercise discretionary voting authority on the proposal under circumstances consistent with the proxy rules of the SEC. All stockholder proposals should be marked for the attention of Secretary, Bellerophon Therapeutics, Inc., 20 Independence Boulevard, Suite 402, Warren, NJ, 07059.
Warren, NJ
April 28, 2023
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BELLEROPHON THERAPEUTICS LLC
AMENDED AND RESTATED
2015 EQUITY INCENTIVE PLAN
(amended and restated as of [ ], 2023)
1. Purpose
The purpose of this 2015 Equity Incentive Plan (the “Plan”) of Bellerophon Therapeutics LLC, a Delaware limited liability company (the “Company”), is to advance the interests of the Company’s shareholders by enhancing the Company’s ability to attract, retain and motivate persons who are expected to make important contributions to the Company and by providing such persons with equity ownership opportunities and performance-based incentives that are intended to better align the interests of such persons with those of the Company’s shareholders. Except where the context otherwise requires, the term “Company” shall include any of the Company’s present or future parent or subsidiary corporations as defined in Sections 424(e) or (f) of the Internal Revenue Code of 1986, as amended, and any regulations thereunder (the “Code”) and any other business venture (including, without limitation, joint venture or limited liability company) in which the Company has a controlling interest, as determined by the board of directors of the Company (the “Board”). Upon the conversion of the Company from a limited liability company to a C corporation (as such term is defined in Section 1361 of the Code) (the “Conversion”), references to the Company shall refer to Bellerophon Therapeutics, Inc.
2. Eligibility
All of the Company’s employees, officers and directors, as well as consultants and advisors to the Company (as such terms are defined and interpreted for purposes of Form S-8 under the Securities Act of 1933, as amended (the “Securities Act”), or any successor form) are eligible to be granted Awards under the Plan. Each person who is granted an Award under the Plan is deemed a “Participant.” “Award” means Options (as defined in Section 5), SARs (as defined in Section 6), Restricted Shares (as defined in Section 7), Restricted Share Units (as defined in Section 7) and Other Share-Based Awards (as defined in Section 8).
3. Administration and Delegation
(a) Administration by Board of Directors. The Plan will be administered by the Board. The Board shall have authority to grant Awards and to adopt, amend and repeal such administrative rules, guidelines and practices relating to the Plan as it shall deem advisable. The Board may construe and interpret the terms of the Plan and any Award agreements entered into under the Plan. The Board may correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award in the manner and to the extent it shall deem expedient and it shall be the sole and final judge of such expediency. All decisions by the Board shall be made in the Board’s sole discretion and shall be final and binding on all persons having or claiming any interest in the Plan or in any Award.
(b) Appointment of Committees. To the extent permitted by applicable law, the Board may delegate any or all of its powers under the Plan to one or more committees or subcommittees of the Board (a “Committee”). All references in the Plan to the “Board” shall mean the Board or a Committee of the Board or the officers referred to in Section 3(c) to the extent that the Board’s powers or authority under the Plan have been delegated to such Committee or officers.
(c) Delegation to Officers. To the extent permitted by applicable law, the Board may delegate to one or more officers of the Company the power to grant Options and other Awards that constitute rights under Delaware law (subject to any limitations under the Plan) to officers of the Company and to exercise such other powers under the Plan as the Board may determine, provided that the Board shall fix the terms of such Awards to be granted by such officers (including the exercise price of such Awards, which may include a formula by which the exercise price will be
determined) and the maximum number of Shares subject to such Awards that the officers may grant; provided further, however, that no officer shall be authorized to grant such Awards to any “executive officer” of the Company (as defined by Rule 3b-7 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) or to any “officer” of the Company (as defined by Rule 16a-1 under the Exchange Act). The Board may not delegate authority under this Section 3(c) to grant Restricted Shares, unless Delaware law then permits such delegation.
4 .Shares Available for Awards
(a) Number of Shares; Share Counting.
(1) Authorized Number of Shares. Subject to adjustment under Section 9, Awards may be made under the Plan (any or all of which Awards may be in the form of Incentive Stock Options, as defined in Section 5(b)) for up to such number of Shares (as defined below) as is equal to the sum of:
(A) 1,443,318 Shares; plus
(B) such additional number of Shares (up to 37,256 Shares) as is equal to the sum of (x) the number of Shares reserved for issuance under the Company’s 2014 Equity Incentive Plan, as amended (the “Existing Plan”) that remain available for grant under the Existing Plan immediately prior to the effectiveness of the Company’s initial public offering and (y) the number of Shares subject to awards granted under the Existing Plan which awards expire, terminate or are otherwise surrendered, canceled, forfeited or repurchased by the Company at their original issuance price pursuant to a contractual repurchase right (subject, however, in the case of Incentive Stock Options to any limitations of the Code); plus
(C) an annual increase to be added on the first day of each fiscal year, beginning with the fiscal year ending December 31, 2016 and continuing for each fiscal year until, and including, the fiscal year ending December 31, 2025, equal to the least of (i) 200,000 Shares, (ii) a number equal to the difference between (X) 5% of the number of the Company’s outstanding Shares on such date (treating for this purpose as outstanding all Shares issuable upon the exercise of outstanding options and upon the conversion of outstanding shares of preferred stock, warrants or other securities convertible into Shares) and (Y) the number of Shares available for grant under the Plan on such date and (iii) an amount determined by the Board.
“Shares” shall refer to (i) until immediately prior to the Conversion, the Company’s Non-Voting Units (as defined in the Amended and Restated Limited Liability Company Agreement of the Company, dated as of February 9, 2014 (as amended or otherwise modified from time to time)), (ii) from and after the Conversion until the closing of the Company’s initial public offering, shares of the Company’s non-voting common stock, par value $0.01 per Share (“Non-Voting Common Stock”), and (iii) upon the closing of the Company’s initial public offering, the Company’s voting common stock, par value $0.01 per Share (“Voting Common Stock”). Awards granted between the effectiveness of the Plan and the Conversion shall automatically and without any action on the part of a Participant become Awards covering shares of Non-Voting Common Stock upon the Conversion. Awards granted prior to the closing of the Company’s initial public offering shall automatically and without any action on the part of a Participant become Awards covering shares of Voting Common Stock upon the closing of the Company’s initial public offering. Shares issued under the Plan may consist in whole or in part of authorized but unissued Shares or treasury Shares.
(2) Share Counting. For purposes of counting the number of Shares available for the grant of Awards under the Plan:
(A) all Shares covered by SARs shall be counted against the number of Shares available for the grant of Awards under the Plan; provided, however, if the Company grants an SAR in tandem with an Option for the same number of Shares and provides that only one such Award may be exercised (a “Tandem SAR”), only the Shares covered by the Option, and not the Shares covered by the Tandem SAR, shall be so counted, and the expiration of one in connection with the other’s exercise will not restore Shares to the Plan;
(B) if any Award (i) expires or is terminated, surrendered or canceled without having been fully exercised or is forfeited in whole or in part (including as the result of Shares subject to such Award being repurchased by the Company at the original issuance price pursuant to a contractual repurchase right) or (ii) results in any Shares not being issued (including as a result of an SAR that was settleable either in cash or in Shares actually being settled in cash), the unused Shares covered by such Award shall again be available for the grant of Awards; provided, however, that (1) in the case of Incentive Stock Options, the foregoing shall be subject to any limitations under the Code, (2) in the case of the exercise of an SAR, the number of Shares counted against the Shares available under the Plan shall be the full number of Shares subject to the SAR multiplied by the percentage of the SAR actually exercised, regardless of the number of Shares actually used to settle such SAR upon exercise and (3) the Shares covered by a Tandem SAR shall not again become available for grant upon the expiration or termination of such Tandem SAR; and
(C) Shares delivered (either by actual delivery, attestation, or net exercise) to the Company by a Participant to (i) purchase Shares upon the exercise of an Award or (ii) satisfy minimum statutory tax withholding obligations (including Shares retained from the Award creating the tax obligation) shall be added back to the number of Shares available for the future grant of Awards; provided that in no event shall the maximum number of shares issued in respect of Incentive Stock Options granted under the Plan exceed the number determined under Section 4(a)(1) hereof.
(b) Substitute Awards. In connection with a merger or consolidation of an entity with the Company or the acquisition by the Company of property or stock of an entity, the Board may grant Awards in substitution for any options or other stock or stock-based awards granted by such entity or an affiliate thereof. Substitute Awards may be granted on such terms as the Board deems appropriate in the circumstances, notwithstanding any limitations on Awards contained in the Plan. Substitute Awards shall not count against the overall Share limit set forth in Section 4(a)(1), except as may be required by reason of Section 422 and related provisions of the Code.
5. Options
(a) General. The Board may grant options to purchase Shares (each, an “Option”) and determine the number of Shares to be covered by each Option, the exercise price of each Option and the conditions and limitations applicable to the exercise of each Option, including conditions relating to applicable federal or state securities laws, as it considers necessary or advisable.
(b) Incentive Stock Options. An Option that the Board intends to be an “incentive stock option” as defined in Section 422 of the Code (an “Incentive Stock Option”) shall only be granted, following the Conversion, to employees of Bellerophon Therapeutics, Inc., any of Bellerophon Therapeutics, Inc.’s present or future parent or subsidiary corporations as defined in Sections 424(e) or (f) of the Code, and any other entities the employees of which are eligible to receive Incentive Stock Options under the Code, and shall be subject to and shall be construed consistently with the requirements of Section 422 of the Code. An Option that is not intended to be an Incentive Stock Option shall be designated a “Nonstatutory Stock Option.” The Company shall have no liability to a Participant, or any other party, if an Option (or any part thereof) that is intended to be an Incentive Stock Option is not an Incentive Stock Option or if the Company converts an Incentive Stock Option to a Nonstatutory Stock Option.
(c) Exercise Price. The Board shall establish the exercise price of each Option and specify the exercise price in the applicable Option agreement. The exercise price shall be not less than 100% of the fair market value per Share as determined by (or in a manner approved by) the Board (“Fair Market Value”) on the date the Option is granted; provided that if the Board approves the grant of an Option with an exercise price to be determined on a future date, the exercise price shall be not less than 100% of the Fair Market Value on such future date.
(d) Duration of Options. Each Option shall be exercisableDGCL at such times and subject to such terms and conditionstime as the Board may specify in the applicable Option agreement; provided, however, that no Option will be granted with a term in excess of 10 years.
(e) Exercise of Options. Options may be exercised by delivery to the Company of a notice of exercise in a form (which may be electronic) approved by the Company, together with payment in full (in the manner specified in
Section 5(f)) of the exercise price for the number of Shares for which the Option is exercised. Shares subject to the Option will be delivered by the Company as soon as practicable following exercise.
(f) Payment Upon Exercise. Shares purchased upon the exercise of an Option granted under the Plan shall be paid for as follows:
(1) in cash or by check, payable to the order of the Company;
(2) except as may otherwise be provided in the applicable Option agreement or approveddetermined by the Board in its sole discretion by (the time of such filing, or such later time as stated therein, the “Effective Time”).
(3)such provision for payment made shall be made in full if there are sufficient assets. If there are insufficient assets, such claims and obligations shall be paid or provided for according to their priority and, among claims of equal priority, ratably to the extent providedof assets legally available therefor.
(4)jurisdiction authorized by applicable law to receive the proceeds of such distribution. The proceeds of such distribution shall thereafter be held solely for the benefit of and for ultimate distribution to such stockholders as the sole equitable owner thereof and shall be treated as abandoned property and escheat to the extent provided forapplicable state or other jurisdiction in accordance with applicable law. In no event shall the applicable Nonstatutory Stock Option agreementproceeds of any such distribution revert to or approvedbecome the property of the Company.
(5)the Company shall constitute the approval of the Company’s stockholders of the payment of any such compensation.
(6) by any combination of the above permitted forms of payment.
(g) Limitation on Repricing. Unless such action is approved by the Company’s shareholders, the Company may not (except as provided for under Section 9): (1) amend any outstanding Option granted under the Plan to provide an exercise price per Share that is lower than the then-current exercise price per Share of such outstanding Option, (2) cancel any outstanding option (whether or not granted under the Plan) and grant in substitution therefor new Awards under the Plan (other than Awards granted pursuant to Section 4(b)) covering the same or a different number of Shares and having an exercise price per Share lower than the then-current exercise price per Share of the canceled option, (3) cancel in exchange for a cash payment any outstanding Option with an exercise price per Share above the then-current Fair Market Value, or (4) take any other action under the Plan that constitutes a “repricing” within the meaning of the rules of The Nasdaq Stock Market (“Nasdaq”).
6. Share Appreciation Rights
(a) General. The Board may grant Awards consisting of share appreciation rights (“SARs”) entitling the holder, upon exercise, to receive a number of Shares or an amount of cash or a combination thereof (such form to be determined by the Board) determined by reference to appreciation, from and after the date of grant, in the Fair Market Value of a Share over the measurement price established pursuant to Section 6(b). The date as of which such appreciation is determined shall be the exercise date.
(b) Measurement Price. The Board shall establish the measurement price of each SAR and specify it in the applicable SAR agreement. The measurement price shall not be less than 100% of the Fair Market Value on the date the
SAR is granted; provided that if the Board approves the grant of an SAR effective as of a future date, the measurement price shall be not less than 100% of the Fair Market Value on such future date.
(c) Duration of SARs. Each SAR shall be exercisable at such times and subject to such terms and conditions as the Board may specify in the applicable SAR agreement; provided, however, that no SAR will be granted with a term in excess of 10 years.
(d) Exercise of SARs. SARs may be exercised by delivery to the Company of a notice of exercise in a form (which may be electronic) approved by the Company, together with any other documents required by the Board.
(e) Limitation on Repricing. Unless such action is approved by the Company’s shareholders, the Company may not (except as provided for under Section 9): (1) amend any outstanding SAR granted under the Plan to provide a measurement price per Share that is lower than the then-current measurement price per Share of such outstanding SAR, (2) cancel any outstanding SAR (whether or not granted under the Plan) and grant in substitution therefor new Awards under the Plan (other than Awards granted pursuant to Section 4(b)) covering the same or a different number of Shares and having an exercise or measurement price per Share lower than the then-current measurement price per Share of the canceled SAR, (3) cancel in exchange for a cash payment any outstanding SAR with a measurement price per Share above the then-current Fair Market Value, or (4) take any other action under the Plan that constitutes a “repricing” within the meaning of the rules of Nasdaq.
7. Restricted Shares; Restricted Share Units
(a) General. The Board may grant Awards entitling recipients to acquire Shares (“Restricted Shares”), subject to the rightstockholders of the Company, to repurchasedo and perform or cause the officers of the Company to do and perform, any and all acts, and to make, execute, deliver or partadopt any and all agreements, resolutions, conveyances, certificates and other documents of such Shares at their issue priceevery kind that are deemed necessary, appropriate or other stateddesirable, to implement this Plan and the transactions contemplated hereby, including, without limiting the foregoing, all filings or formula price (oracts required by any state or federal law or regulation to require forfeiturewind up the affairs of such Shares if issued at no cost) from the recipientCompany.
(b) Terms and Conditions for All Restricted Share Awards. The Board shall determine the terms and conditions of a Restricted Share Award, including the conditions for vesting and repurchase (or forfeiture) and the issue price, if any.
(c) Additional Provisions Relating to Restricted Shares.
(1) Dividends. Unless otherwise provided in the applicable Award agreement, any dividends (whether paid in cash, Shares or property) declared and paid by the Company with respect to Restricted Shares (“Accrued Dividends”) shall be paid to the Participant only if and when such Shares become free from the restrictions on transferability and forfeitability that apply to such Shares. Each payment of Accrued Dividends will be made no later than the end of the calendar year in which the dividends are paid to shareholders of that class of shares or, if later, the 15th day of the third month following the lapsing of the restrictions on transferability and the forfeitability provisions applicable to the Restricted Shares.
(2) Share Certificates. The Company may require that any share certificates issued in respect of Restricted Shares, as well as dividends or distributions paid on such Restricted Shares, shall be deposited in escrow by the Participant, together with a stock power endorsed in blank, with the Company (or its designee). At the expiration of the applicable restriction periods, the Company (or such designee) shall deliver the certificates no longer subject to such restrictions to the Participant or if the Participant has died, to his or her Designated Beneficiary. “Designated Beneficiary” means (i) the beneficiary designated, in a manner determined by the Board, by a Participant to receive amounts due or exercise rights of the Participant in the event of the Participant’s death or (ii) in the absence of an effective designation by a Participant, the Participant’s estate.
(d) Additional Provisions Relating to Restricted Share Units.
(1) Settlement. Upon the vesting of and/or lapsing of any other restrictions (i.e., settlement) with respectgiven to each Restricted Share Unit, the Participant shall bestockholder entitled to receive from the Company such number of Shares or (if so provided in the applicable Award agreement) an amount of cash equal to the Fair Market Value of such number of Shares as are set forth in the applicable Restricted Share Unit agreement. The Board may, in its discretion, provide that settlement of Restricted Share Units shall be deferred, on a mandatory basis or at the election of the Participant in a manner that complies with Section 409A of the Code.
(2) Voting Rights. A Participant shall have no voting rights with respect to any Restricted Share Units.
(3) Dividend Equivalents. The Award agreement for Restricted Share Units may provide Participants with the right to receive an amount equal to any dividends or other distributions declared and paid on an equal number of outstanding Shares (“Dividend Equivalents”). Dividend Equivalents may be settled in cash and/or Shares and shall be subject to the same restrictions on transfer and forfeitability as the Restricted Share Units with respect to which the Dividend Equivalents were paid, in each case to the extent provided in the Award agreement.
8. Other Share-Based Awards
(a) General. Other Awards of Shares, and other Awards that are valued in whole or in part by reference to, or are otherwise based on, Shares or other property, may be granted hereunder to Participants (“Other Share-Based Awards”). Such Other Share-Based Awards shall also be available as a form of payment in the settlement of other Awards granted under the Plan or as payment in lieu of compensation to which a Participant is otherwise entitled. Other Share-Based Awards may be paid in Shares or cash, as the Board shall determine.
(b) Terms and Conditions. Subject to the provisions of the Plan, the Board shall determine the terms and conditions of each Other Share-Based Award, including any purchase price applicable thereto.
9. Adjustments for Changes in Shares and Certain Other Events
(a) Changes in Capitalization. In the event of any stock split, reverse stock split, stock dividend, recapitalization, combination of Shares, reclassification of Shares, spin-off or other similar change in capitalization or event, or any dividend or distribution to holders of Shares other than an ordinary cash dividend, (i) the number and class of securities available under the Plan, (ii) the Share counting rules set forth in Section 4(a), (iii) the number and class of securities and exercise price per Share of each outstanding Option, (iv) the Share and per-Share provisions and the measurement price of each outstanding SAR, (v) the number of Shares subject to and the repurchase price per Share subject to each outstanding Restricted Share Award and (vi) the Share and per-Share-related provisions and the purchase price, if any, of each outstanding Other Share-Based Award, shall be equitably adjusted by the Company (or substituted Awards may be made, if applicable) in the manner determined by the Board. Without limiting the generality of the foregoing, in the event the Company effects a split of Shares by means of a stock dividend and the exercise price of and the number of Shares subject to an outstanding Option are adjusted as of the date of the distribution of the dividend (rather thanvote thereon as of the record date for determining the stockholders entitled to notice of the meeting.
(b) Reorganization Events.
(1) Definition. A “Reorganization Event” shall mean: (a) any merger or consolidationmembers of the Companygoverning body if all the members of the corporation entitled to vote thereon shall consent in writing and a certificate of dissolution shall be filed with the Secretary of State pursuant to § 275(d) of this title. If there is no member entitled to vote thereon, the dissolution of the corporation shall be authorized at a meeting of the governing body, upon the adoption of a resolution to dissolve by the vote of a majority of members of its governing body then in office. In all other respects, the method and proceedings for the dissolution of a nonstock corporation shall conform as nearly as may be to the proceedings prescribed by § 275 of this title for the dissolution of corporations having capital stock.
(2) Consequencescorporation; the corporation shall, solely for the purpose of such action, suit or proceeding, be continued as a Reorganization Eventbody corporate beyond the 3-year period and until any judgments, orders or decrees therein shall be fully executed, without the necessity for any special direction to that effect by the Court of Chancery.
(A) In connection with a Reorganization Event,any creditor, stockholder or director of the Boardcorporation, or any other person who shows good cause therefor, at any time, may take any oneeither appoint 1 or more of the following actionsdirectors of the corporation to be trustees, or appoint 1 or more persons to be receivers, of and for the corporation, to take charge of the corporation’s property, and to collect the debts and property due and belonging to the corporation, with power to prosecute and defend, in the name of the corporation, or otherwise, all such suits as may be necessary or proper for the purposes aforesaid, and to appoint an agent or agents under them, and to do all other acts which might be done by the corporation, if in being, that may be necessary for the final settlement of the unfinished business of the corporation. The powers of the trustees or receivers may be continued as long as the Court of Chancery shall think necessary for the purposes aforesaid.
(B) Notwithstanding the terms of Section 9(b)(2)(A), in the case of outstanding Restricted Share Unitsa claim filed pursuant to § 295 of this title against a corporation or successor entity for which a receiver or trustee has been appointed by the Court of Chancery the time period shall be as provided in § 296 of this title, and the 30-day appeal period provided for in § 296 of this title shall be applicable. A notice sent by a corporation or successor entity pursuant to this subsection shall state that are subjectany claim rejected therein will be barred if an action, suit or proceeding with respect to Section 409Athe claim is not commenced within 120 days of the Code: (i) if the applicable Restricted Share Unit agreement provides that the Restricted Share Unitsdate thereof, and shall be settled uponaccompanied by a “changecopy of §§ 278 – 283 of this title and, in control event” within the meaningcase of Treasury Regulation Section 1.409A-3(i)(5)(i),a notice sent by a court- appointed receiver or trustee and the Reorganization Event constitutes suchas to which a “change in control event,” then no assumption or substitution shall be permittedclaim has been filed pursuant to Section 9(b)(2)(A)(i)§ 295 of this title, copies of §§ 295 and 296 of this title.
(C) For purposes of Section 9(b)(2)(A)(i), an Award (other than Restricted Shares)dissolved corporation. Such notice shall be considered assumed if, following consummation ofin substantially the Reorganization Event, such Award confers the right to purchase or receive pursuant to the terms of such Award, for each Share subject to the Award immediately prior to the consummation of the Reorganization Event, the consideration (whether cash, securities or other property) received as a result of the Reorganization Event by holders of Shares for each Share held immediately prior to the consummation of the Reorganization Event (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if the consideration received as a result of the Reorganization Event is not solely common stock of the acquiring or succeeding corporation (or an affiliate thereof), the Company may, with the consent of the acquiring or succeeding corporation, provide for the consideration to be received upon the exercise or settlement of the Award to consist solely of such number of shares of common stock of the acquiring or succeeding corporation (or an affiliate thereof) that the Board determined to be equivalent in value (as of the date of such determination or another date specified by the Board) to the per Share consideration received by holders of outstanding Shares as a result of the Reorganization Event.
(3) Consequences of a Reorganization Event on Restricted Shares. Upon the occurrence of a Reorganization Event other than a liquidation or dissolution of the Company, the repurchaseform, and other rights of the Company with respect to outstanding Restricted Shares shall inure to the benefit of the Company’s successorsent and shall, unless the Board determines otherwise, apply to the cash, securities or other property which the Shares were converted
into or exchanged for pursuant to such Reorganization Eventpublished in the same manner, andas described in paragraph (a)(1) of this section.
10. General Provisions Applicableoffer pursuant to Awards
(a) Transferability of Awards. Awardsthis section shall not be sold, assigned, transferred, pledgedrevive any claim then barred or otherwise encumberedconstitute acknowledgment by the corporation or successor entity that any person to whom they are granted, either voluntarilysuch notice is sent is a proper claimant and shall not operate as a waiver of any defense or counterclaim in respect of any claim asserted by operation of law, exceptany person to whom such notice is sent.
(b) Documentation. Each Award shall be evidenced in such form (written, electronic or otherwise) as the Board shall determine. Each Award may contain terms and conditions in addition to those set forth in the Plan.
(c) Board Discretion. Except as otherwise provided by the Plan, each Award may be made alone or in addition or in relation to any other Award. The terms of each Award need not be identical, and the Board need not treat Participants uniformly.
(d) Termination of Status. The Board shall determine the effect on an Award of the disability, death, termination or other cessation of employment, authorized leave of absence or other change in the employment or other status of a Participant and the extent to which, and the period during which, the Participant, or the Participant’s legal representative, conservator, guardian or Designated Beneficiary, may exercise rights under the Award.
(e) Withholding. Notwithstanding any other provision herein to the contrary, the Participant must satisfy all applicable federal, state, and local or other income and employment tax withholding obligations before the Company will deliver stock certificates or otherwise recognize ownership of Shares under an Award. The Company may decide to satisfy the withholding obligations through additional withholding on salary or wages. If the Company elects not to or cannot withhold from other compensation, the Participant must pay the Company the full amount, if any, required for withholding or have a broker tender to the Company cash equal to the withholding obligations. Payment of withholding obligations is due before the Company will issue any Shares on exercise, vesting or release from forfeiture of an Award, and, unless the Company determines otherwise. shall be paid before or at the same time as payment of the exercise or purchase price. If provided for in an Award or approved by the Board in its sole discretion, a Participant may satisfy such tax obligations in whole or in part by delivery (either by actual delivery or attestation) of Shares, including Shares retained from the Award creating the tax obligation, valued at their Fair Market Value; provided, however, except as otherwise provided by the Board, that the total tax withholding where Shares are being used to satisfy such tax obligations cannot exceed the Company’s minimum statutory withholding obligations (based on minimum statutory withholding rates for federal and state tax purposes, including payroll taxes, that are applicable to such supplemental taxable income). Shares used to satisfy minimum statutory tax withholding requirements cannot be subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements.
(f) Amendment of Award. Except as otherwise provided in Sections 5(g) and 6(e) with respect to repricings and Section 11(d) with respect to actions requiring shareholder approval, the Board may amend, modify or terminate any outstanding Award, including but not limited to, substituting therefor another Award of the same or a different type, changing the date of exercise or realization, and converting an Incentive Stock Option to a Nonstatutory Stock Option. The Participant’s consent to such action shall be required unless (i) the Board determines that the action, taking into account any related action, does not materially and adversely affect the Participant’s rights under the Plan or (ii) the change is permitted under Section 9.
(g) Conditions on Delivery of Shares. The Company will not be obligated to deliver any Shares pursuant to the Plan or to remove restrictions from Shares previously issued or delivered under the Plan until (i) all conditions of the Award have been met or removed to the satisfaction of the Company, (ii) in the opinion of the Company’s counsel, all other legal matters in connection with the issuance and delivery of such Shares have been satisfied, including any applicable securities laws and regulations and any applicable stock exchange or stock market rules and regulations, and (iii) the Participant has executed and delivered to the Company such representations or agreements as the Company may consider appropriate to satisfy the requirements of any applicable laws, rules or regulations.
(h) Acceleration. The Board may at any time provide that any Award shall become immediately exercisable in whole or in part, free of some or all restrictions or conditions, or otherwise realizable in whole or in part, as the case may be.
11. Miscellaneous
(a) No Right To Employment or Other Status. No person shall have any claim or right to be granted an Award by virtue of the adoption of the Plan, and the grant of an Award shall not be construed as giving a Participant the right to continued employment or any other relationship with the Company. The Company expressly reserves the right at any time to dismiss or otherwise terminate its relationship with a Participant free from any liability or claim under the Plan, except as expressly provided in the applicable Award.
(b) No Rights As Shareholder. Subject to the provisions of the applicable Award, no Participant or Designated Beneficiary shall have any rights as a shareholder with respect to any Shares to be distributed with respect to an Award until becoming the record holder of such Shares.
(c) Effective Date and Term of Plan. The Plan shall become effective immediately prior to the effectiveness of the Company’s initial public offering (the date on which the Company’s initial public offering becomes effective, the Plan’s “Effective Date”). No Awards shall be granted under the Plan after the expiration of 10 years from the Effective Date, but Awards previously granted may extend beyond that date.
(d) Amendment of Plan. The Board may amend, suspend or terminate the Plan or any portion thereof at any time provided that no amendment that would require shareholder approval under the rules of Nasdaq may be made effective unless and until the Company’s shareholders approve such amendment. In addition, if at any time the approval of the Company’s shareholders is required as to any other modification or amendment under Section 422 of the Code or any successor provision with respect to Incentive Stock Options, the Board may not effect such modification or amendment without such approval. Unless otherwise specified in the amendment, any amendment to the Plan adopted in accordance with this Section 11(d) shall apply to, and be binding on the holders of, all Awards outstanding under the Plan at the time the amendment is adopted, provided the Board determines that such amendment, taking into account any related action, does not materially and adversely affect the rights of Participants under the Plan. No Award shall be made that is conditioned upon shareholder approval of any amendment to the Plan unless the Award provides that (1) it will terminate or be forfeited if shareholder approval of such amendment is not obtained within no more than 12 months150 days from the date of grant and (2) it maythe last notice of rejections given pursuant to § 280(a)(3) of this title. In the absence of actual fraud, the judgment of the directors of the dissolved corporation or the governing persons of such successor entity as to the provision made for the payment of all obligations under paragraph (a)(4) of this section shall be conclusive.
(e) Authorizationthe expiration of Sub-Plans (including for Grantsthe period described in § 278 of this title, adopt a plan of distribution pursuant to non-U.S. Employees). The Board may from timewhich the dissolved corporation or successor entity (i) shall pay or make reasonable provision to time establish onepay all claims and obligations, including all contingent, conditional or more sub-plans under the Plan for purposes of satisfying applicable securities, tax or other laws of various jurisdictions. The Board shall establish such sub-plans by adopting supplementsunmatured contractual claims known to the Plan containing (i)corporation or such
limitations on the Board’s discretion under the Plan successor entity, (ii) shall make such provision as the Board deems necessary or desirable or (ii) such additional terms and conditions not otherwise inconsistent with the Plan as the Board shall deem necessary or desirable. All supplements adopted by the Board shallwill be deemedreasonably likely to be part of the Plan, but each supplement shall apply only to Participants within the affected jurisdiction and the Company shall not be requiredsufficient to provide copies ofcompensation for any supplement to Participants in any jurisdictionclaim against the corporation which is not the subject of a pending action, suit or proceeding to which the corporation is a party and (iii) shall make such supplement.
(f) Compliance with Section 409A of the Code. Exceptprovision as provided in individual Award agreements initially or by amendment, if andwill be reasonably likely to be sufficient to provide compensation for claims that have not been made known to the extent (i) any portion of any payment, compensationcorporation or other benefit provided to a Participant pursuantthat have not arisen but that, based on facts known to the Plan in connection with hiscorporation or her employment termination constitutes “nonqualified deferred compensation”successor entity, are likely to arise or to become known to the corporation or successor entity within the meaning of Section 409A of the Code and (ii) the Participant is a specified employee as defined in Section 409A(a)(2)(B)(i) of the Code, in each case as determined by the Company in accordance with its procedures, by which determinations the Participant (through accepting the Award) agrees that he or she is bound, such portion of the payment, compensation or other benefit shall not be paid before the day that is six months plus one day10 years after the date of “separation from service” (as determined under Section 409Adissolution. The plan of the Code) (the “New Payment Date”), except as Section 409A of the Code may then permit. The aggregate of any paymentsdistribution shall provide that otherwise would have been paid to the Participant during the period between the date of separation from service and the New Payment Datesuch claims shall be paid in full and any such provision for payment made shall be made in full if there are sufficient assets. If there are insufficient assets, such plan shall provide that such claims and obligations shall be paid or provided for according to their priority and, among claims of equal priority, ratably to the Participant in a lump sum on such New Payment Date, and anyextent of assets legally available therefor. Any remaining payments willassets shall be paid on their original schedule.
The Company makes no representations or warranty and shall have no liabilitydistributed to the Participantstockholders of the dissolved corporation.
(g) Limitations on Liability. Notwithstanding any other provisions of the Plan, no individual acting as a director, officer, employee or agent of the Company will be liable to any Participant, former Participant, spouse, beneficiary, or any other person for any claim loss,against the corporation in an amount in excess of such stockholder’s pro rata share of the claim or the amount so distributed to such stockholder, whichever is less.
(h) Governing Law. The provisions of the Plan and all Awards made hereunder shall be governed by and interpreted in accordance with the laws of the State of Delaware, excluding choice-of-law principles of the law of such state that would require the application of the laws of a jurisdiction other than the State of Delaware.