UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934 (Amendment
(Amendment No. )
Filed by the Registrantý☒
Filed by a Party other than the Registrant¨ ☐
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¨ Preliminary Proxy Statement
¨Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
ý Definitive Proxy Statement
¨ Definitive Additional Materials
¨ Soliciting Material Pursuant to § 240.14a-11(c) or § 240.14a-12
| ☐ | Preliminary Proxy Statement |
| ☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| ☒ | Definitive Proxy Statement |
| ☐ | Definitive Additional Materials |
| ☐ | Soliciting Material Pursuant to § 240.14a-11(c) or § 240.14a-12 |
PEREGRINE PHARMACEUTICALS,AVID BIOSERVICES, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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2023
Annual Meeting of Stockholders
Notice and Proxy Statement
October 23, 2023
10:00 a.m. (Pacific time)
AVID BIOSERVICES, INC.
2017
Annual Meeting of Stockholders
Notice and Proxy Statement
January 18, 2018
10:00 a.m. (PST)
PEREGRINE PHARMACEUTICALS, INC.
December 7, 2017
Dear Fellow Stockholders,
We are pleased to invite you to attend the 20172023 annual meeting of stockholders of Peregrine Pharmaceuticals,Avid Bioservices, Inc. to be held at 14191 Myford Road, Tustin, California 92780 on January 18, 2018,October 23, 2023, at 10:00 A.M. (PST).a.m., Pacific time, exclusively online via the internet as a virtual web conference at www.virtualshareholdermeeting.com/CDMO2023. The meeting will be held for the following purposes:
| (1) | To elect seven directorsto serve on our Board of Directors until our |
| (2) | To ratify the appointment of Ernst & Young LLP as the independent registered public accounting firm of the Company for the fiscal year ending April 30, |
| (3) | To |
| (4) | To |
| (5) | To conduct any other business properly brought before the |
Our Board of Directors has fixed the close of business on November 27, 2017August 25, 2023 as the record date for the Annual Meeting.2023 annual meeting. Only stockholders of record on November 27, 2017August 25, 2023 are entitled to notice of and to vote at the Annual Meeting.2023 annual meeting. Further information about voting rights and the matters to be voted upon is presented in the accompanying proxy statement.
We have determined that the 2023 annual meeting will be held in a virtual format only via the Internet. You will be able to participate in the 2023 annual meeting online by visiting www.virtualshareholdermeeting.com/CDMO2023. You will also be able to vote your shares electronically at the 2023 annual meeting.
On or about DecemberSeptember 8, 2017,2023, we expect to mail our shareholdersstockholders a Notice of Internet Availability of Proxy Materials (the “Notice”) containing instructions on how to access our proxy statement and our annual report. The Notice provides instructions on how to access our proxy statement and our annual report. The Noticealso provides instructions on how to vote via the Internet or by telephone and includes instructions on how to receive a paper copy of our proxy materials by mail. The accompanying proxy statement and our annual report can be accessed directly at www.proxyvote.com.
YOUR VOTE IS IMPORTANT. Whether or not you plan to attend the Annual Meeting,2023 annual meeting online, we urge you to submit your vote via the Internet, telephone or mail as soon as possible so that your shares can be voted at the Annual Meeting2023 annual meeting in accordance with your instructions.
Very truly yours,
/s/ Joseph Carleone
Joseph Carleone, Ph.D., Chairman of the Board of Directors |
Notice of Annual Meeting of Stockholders
To the Stockholders of Peregrine Pharmaceuticals,Avid Bioservices, Inc.:
You are invited to attend the 20172023 Annual Meeting of Stockholders, which we refer to as the “2017 Annual Meeting”, of PEREGRINE PHARMACEUTICALS, INC.Avid Bioservices, Inc., a Delaware corporation, which we refer to as “we,” “us,” “our,” the “Company” and “PeregrineAvid,” at 14191 Myford Road, Tustin, California 92780 on January 18, 2018,October 23, 2023, at 10:00 A.M. (PST)a.m., Pacific time. The Annual Meeting will be held exclusively online via the Internet as a virtual web conference at www.virtualshareholdermeeting.com/CDMO2023, for the following purposes:
| (1) | To elect seven directorsto serve on our Board of Directors until our |
| (2) | To ratify the appointment of Ernst & Young LLP as the independent registered public accounting firm of the Company for the fiscal year ending April 30, |
| (3) | To |
| (4) | To |
| (5) | To conduct any other business properly brought before the |
The record date for the 2017 Annual Meeting is November 27, 2017.August 25, 2023. Only stockholders of record at the close of business on that date may vote at the 2017 Annual Meeting and at any adjournment or postponement thereof. If your brokerage firm, bank, broker-dealer, trustee or other similar organizationnominee is the holder of record of your shares (i.e., your shares are held in “street name”), you will receive voting instructions from the holder of record. You must follow these instructions in order for your shares to be voted. We recommend that you instruct your brokerage firm, bank, broker-dealer, trustee or other nominee, by following those instructions, to vote FOR all the nominees named in Proposal No. 1, FOR Proposal Nos. 2 and 3 and ONE YEARFOR “ONE YEAR” for Proposal No. 4. A list of our stockholders as of the close of business on November 27, 2017August 25, 2023 will be available for inspection during business hours for ten days prior to the 2017 Annual Meeting at our principal executive offices located at 2642 Michelle Drive,14191 Myford Road, Tustin, California 92780.
The accompanying Proxy Statement provides detailed information about the matters to be considered at the 2017 Annual Meeting. It is important that your voice be heard and your shares be represented at the 2017 Annual Meeting whether or not you are personally able to virtually attend. Even if you plan to attend the 2017 Annual Meeting online, we urge you to submit your vote via the Internet, telephone or mail as soon as possible so that your shares can be voted at the Annual Meeting in accordance with your instructions. If your shares are not registered in your own name and you would like to attend the 2017 Annual Meeting, please ask the brokerage firm, bank, broker-dealer, trustee or other nominee that holds the shares to provide you with evidence of your record date share ownership.
Our Board of Directors UNANIMOUSLY RECOMMENDS VOTING FOR THE ELECTION OF EACH OFTHESEVEN NOMINEES NAMED IN PROPOSAL NO. 1, FOR PROPOSAL NOS. 2 AND 3 AND FOR ONE YEAR ON“ONE YEAR” FOR PROPOSAL NO. 4.
You are cordially invited to attend the 2017 Annual Meeting in person. In accordance with our security procedures, all persons attending the 2017 Annual Meeting will be required to present a form of government-issued picture identification. If you hold your shares in “street name”, you must also provide proof of ownership (such as a recent brokerage statement). If you are a holder of record and attend the 2017 Annual Meeting, you may vote by ballot in person even if you have previously returned your proxy card. If you hold your shares in “street name” and wish to vote in person, you must provide a “legal proxy” in your name from your brokerage firm, bank, broker-dealer, trustee or other nominee.
Please note that, even if you plan to attend the 2017 Annual Meeting online, we recommend that you vote via the Internet, telephone or mail prior to the 2017 Annual Meeting to ensure that your shares will be represented.
Regardless of the number of shares of common stockCommon Stock of the Company that you own, your vote is important. Thank you for your continued support, interest and investment in Peregrine.Avid.
| Very truly yours, | |
| By order of the Board of Directors, | |
| /s/ Mark R. Ziebell | |
| Mark R. Ziebell, | |
| Vice President, General Counsel and Corporate Secretary |
Tustin, California
December 7, 2017
August 28, 2023
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE 2017 ANNUAL MEETING TO BE HELD ONJanuary 18, 2018:OCTOBER 23, 2023: THE PROXY STATEMENT FOR THE 2017 ANNUAL MEETING AND THE ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED APRIL 30, 20172023 ARE AVAILABLE FREE OF CHARGE AT WWW.PROXYVOTE.COM.
On or about DecemberSeptember 8, 2017,2023, the Notice of Annual Meeting of Stockholders and the attached Proxy Statement will be made available to stockholders of record as of November 27, 2017.August 25, 2023.
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PEREGRINE PHARMACEUTICALS,
AVID BIOSERVICES, INC.
Proxy Statement For Annual Meeting Of Stockholders
This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors of PEREGRINE PHARMACEUTICALS, INC.Avid Bioservices, Inc., a Delaware corporation, to be used at the 20172023 Annual Meeting of Stockholders of the Company, which we refer to as the “2017 Annual Meeting”,and which will be held at 14191 Myford Road, Tustin, California 92780 on January 18, 2018,October 23, 2023, at 10:00 A.M. (PST)a.m., Pacific time, and at any adjournment or postponement thereof. The Annual Meeting will be held exclusively online via the Internet as a virtual web conference at www.virtualshareholdermeeting.com/CDMO2023. Only stockholders of record at the close of business on November 27, 2017,August 25, 2023, which we refer to as the “record date”, will be entitled to vote at the 2017 Annual Meeting. The Notice of Internet Availability of Proxy Materials, which we refer to as the “Notice”, containing instructions on how to access this Proxy Statement and the Annual Report on Form 10-K for the fiscal year ended April 30, 2017 are2023, which we refer to as the “Annual Report”, is first being mailed to stockholders of record as of November 27, 2017August 25, 2023 on or about DecemberSeptember 8, 2017.2023.
Holders of our common stock at the close of business on November 27, 2017 will be entitled to vote at the 2017 Annual Meeting. Our 10.50% Series E Convertible Preferred Stock, $0.001 par value per share (“Series E Preferred Stock”), is non-voting, except to the extent required by law and in certain other limited circumstances, none of which are applicable to the proposals being presented to our stockholders for consideration at the 2017 Annual Meeting. Accordingly, the holders of shares of Series E Preferred Stock will not be entitled to vote on any of the proposals to be voted on at the 2017 Annual Meeting, except to the extent such holders are also the owners of our common stock and are entitled to vote such shares. As of the date of November 27, 2017, 45,210,608 shares of our common stock, $0.001 par value per share (“Common Stock”), at the close of business on August 25, 2023 will be entitled to vote at the Annual Meeting. As of the date of August 25, 2023, 63,112,934 shares of our Common Stock were issued and outstanding and entitled to vote. Stockholders are entitled to one vote for each share of common stockCommon Stock held. A majority, or 22,605,305,31,556,468, of these shares, present in person or represented by proxy at the 2017 Annual Meeting, will constitute a quorum for the transaction of business.
The Notice of Annual Meeting of Stockholders, this Proxy Statement, the proxy card and the Annual Report on Form 10-K for the Company’s fiscal year ended April 30, 2017 are also available atwww.proxyvote.com.Web links and addresses contained in this Proxy Statement are provided for convenience only, and the content on the referenced websites does not constitute a part of this Proxy Statement.
All references in this Proxy Statement to “PeregrineAvid”, the “Company”, “we”, “us” and “our” refer to Peregrine Pharmaceuticals,Avid Bioservices, Inc. References to the “Board of Directors” or “Board” refer to the Board of Directors of Peregrine.Avid.
QUESTIONS AND ANSWERS ABOUT THE 2017 ANNUAL MEETING
How do I attend the virtual Annual Meeting?
To participate in the virtual Annual Meeting, visit www.virtualshareholdermeeting.com/CDMO2023 on October 23, 2023 and enter your 16-digit control number included on your proxy card, your Notice of Internet Availability, or the instructions included with your proxy materials. The meeting will begin promptly at 10:00 a.m., Pacific time, on October 23, 2023. Online access will begin fifteen (15) minutes prior to the start of the meeting. If you are unable to locate your 16-digit control number, you will be able to login as a guest. However, if you login as a guest, you will not be able to vote your shares or ask questions during the meeting.
The virtual meeting platform is supported across most Internet browsers and devices (desktop computers, laptop computers, tablets, and smart phones) running updated versions of applicable software and plugins. Stockholders should ensure that they have a strong WiFi connection wherever they intend to participate in the meeting. Stockholders should also give themselves plenty of time to log in and ensure that they can hear streaming audio prior to the start of the meeting.
Can I ask a question at the virtual Annual Meeting?
Yes, you will be able to submit questions electronically during the Annual Meeting by using the “Ask a Question” field during the webcast if you have logged in using your control number on your proxy card or Notice of Internet Availability. After entering your 16-digit control number, you may also submit a question prior to the meeting on the voting website at www.proxyvote.com by selecting the “Question for Management” field.
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During the live question and answer session of the meeting, members of our executive leadership team will answer questions as they come in, as time permits. To ensure the meeting is conducted in a manner that is fair to all stockholders, the Chair of the meeting (or such other person designated by our Board), may exercise broad discretion in recognizing stockholders who wish to participate, the order in which questions are asked and the amount of time devoted to any one question. However, we reserve the right to edit or reject questions we deem profane or otherwise inappropriate. During the meeting, details for submitting written questions will be available at www.virtualshareholdermeeting.com/CDMO2023.
What do I do if I have technical difficulties during the virtual Annual Meeting?
If you have any difficulties accessing the virtual meeting during the check-in or meeting time, please call the technical support number that will be posted on the virtual Annual Meeting login page.
Why am I receiving these materials?
At the 2017 Annual Meeting, the Company asks you to vote on four proposals:
Proposal No. 1: to elect seven directorsto serve on our Board of Directors until our 20182024 annual meeting of stockholders, with each director to hold office until his or her successor is duly elected and qualified or until his or her earlier death, resignation or removal;
Proposal No. 2: to ratify the appointment of Ernst & Young LLP as the independent registered public accounting firm of the Company for the fiscal year ending April 30, 2018;2024;
Proposal No. 3: to adopt, onapprove, by an advisory basis,vote, a non-binding resolution approving the compensation of the Company’s named executive officers, as described in thethis Proxy Statement under “Executive Compensation”“Compensation Discussion and Analysis” and “Executive Compensation”; and
Proposal No.4: to vote, onapprove, by an advisory basis, onvote, the frequency of theholding future advisory vote to approvevotes on the compensation of the Company’sour named executive officers.
The Board may also ask you to participate in the transaction of any other business that is properly brought before the 2017 Annual Meeting in accordance with the provisions of our Restated Certificate of Incorporation as amended,(the “Charter”) and Amended and Restated Bylaws (the “Bylaws”).
You are receiving this Proxy Statement as a stockholder of the Company as of November 27, 2017,August 25, 2023, the record date for purposes of determining the stockholders entitled to receive notice of and vote at the 2017 Annual Meeting. As further described below, we request that you promptly vote via the Internet, telephone or mail.
THE BOARD UNANIMOUSLY RECOMMENDS VOTING FOR THE ELECTION OF EACH OF THE BOARD’S NOMINEES ON PROPOSAL NO. 1, FOR PROPOSAL NOS. 2 AND 3 AND FOR ONE YEAR“ONE YEAR” ON PROPOSAL NO. 4.
When will the 2017 Annual Meeting be held?
The 2017 Annual Meeting is scheduled to be held at 10:00 A.M. (PST), on January 18, 2018 at 14191 Myford Road, Tustin, California 92780.
Who is soliciting my vote?
In this Proxy Statement, the Board is soliciting your vote.
Will there be any other items of business on the agenda?
If any other items of business or other matters are properly brought before the 2017 Annual Meeting, your proxy gives discretionary authority to the persons named on the proxy card concerning those items of business or other matters. The persons named on the proxy card intend to vote the proxy in accordance with their best judgment. Our Board of Directors does not intend to bring any other matters to be voted on at the 2017 Annual Meeting, and we are not currently aware of any matters that may be properly presented by others for consideration at the 2017 Annual Meeting.
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How does the Board recommend that I vote?
The Board unanimously recommends that you vote as follows:
| FORthe election of all seven board nominees; |
| · | FORthe ratification of the appointment of Ernst & Young LLP as the independent registered public accounting firm of the Company for the fiscal year ending April 30, |
· | FORthe approval, |
| · | FOR ONE |
What are the Board’s recommendations on Proposal Nos. 1, 2, 3, and 4?
We describe all proposals and the Board’s reasons for supporting a vote FOR all the nominees named in Proposal No. 1, FOR Proposal Nos. 2 and 3 and for ONE YEAR (annual vote) on Proposal No. 4 in detail beginning at page 11 of this Proxy Statement.
Who can vote?
Holders of our common stockCommon Stock at the close of business on November 27, 2017,August 25, 2023, the record date, may vote at the 2017 Annual Meeting. At the close of business on that date, there were 45,210,60863,112,934 shares of our common stockCommon Stock outstanding and entitled to vote.
Is my vote confidential?
Proxies, ballots and voting tabulations are handled on a confidential basis to protect your voting privacy. This information will not be disclosed, except as necessary to meet applicable legal requirements, to allow for the tabulation of votes and certification of the vote, or to facilitate a successful proxy solicitation.
What is the difference between holding shares as a stockholder of record and as a beneficial owner?
Stockholder of Record: Shares Registered in Your Name. If, at the close of business on the Record Date,record date, your shares were registered directly in your name, then you are the stockholder of record for these shares. As the stockholder of record, you may vote either in persononline at the 2017 Annual Meeting or by proxy.
Beneficial Owners: Shares Registered in “Street Name”. If, at the close of business on the Record Date,record date, your shares were held, not in your name, but rather in a stock brokerage account or by a bank or other nominee on your behalf, then you are considered the beneficial owner of shares held in “street name.” As the beneficial owner, you have the right to direct your brokerage firm, bank, broker-dealer, trustee or other nominee how to vote your shares by following the voting instructions your brokerage firm, bank, broker-dealer, trustee or other nominee provides. If you do not provide your brokerage firm, bank, broker-dealer, trustee or other nominee with instructions on how to vote your shares, your brokerage firm, bank, broker-dealer, trustee or other nominee may, in its discretion, vote your shares with respect to routine matters but may not vote your shares with respect to any non-routine matters. Please see “Will my shares be voted if I do nothing?” for additional information.
Why did I receive a Notice of Internet Availability of Proxy Materials (the “Notice”) instead of a full set of proxy materials?
In accordance with the rules of the Securities and Exchange Commission (the “SECSEC””), we have elected to furnish our proxy materials, including this Proxy Statement and our annual report,Annual Report, primarily via the Internet. Stockholders may request to receive proxy materials in printed form by mail or electronically by e-mail by following the instructions contained in the Notice. We encourage stockholders to take advantage of the availability of our proxy materials on the Internet to help reduce the environmental impact of our annual meetings of stockholders.
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How do I vote if I am a record holder?vote?
You can vote by attending the 2017 Annual Meeting and voting in person, or you can vote by proxy. If you are the record holder of your stock, you can vote in the following four ways:
| By Internet or Telephone: To vote via the Internet or by telephone, follow the instructions provided in the Notice of Internet Availability of Proxy Materials. If you vote via the Internet or by telephone, you do not need to return a proxy card by mail. Internet and telephone voting are available 24 hours a day. Votes submitted through the Internet or by telephone must be received by 11:59 p.m. Eastern |
| · | By Mail: If you received proxy materials by mail, you can vote by submitting a proxy by mail by marking, dating, signing and returning the proxy card in the postage-paid envelope. Your proxy must be received no later than |
Shareholders of record and beneficial owners will be able to vote their shares electronically during the Annual Meeting by visiting www.virtualshareholdermeeting.com/CDMO2023. You will need your control number included on your notice or proxy card in order to be able to vote during the Annual Meeting. However, even if you plan to participate in the Annual Meeting online, we recommend that you vote by proxy so that your votes will be counted if you later decide not to participate in the Annual Meeting.
How do I vote if my common shares are held in “street name”?
If you hold your shares beneficially in street name through a nominee (such as a brokerage firm, bank, broker-dealer or trustee), you may be able to complete your proxy and authorize your vote by proxy by telephone or the Internet as well as by mail. You should follow the instructions you receive from your nominee to vote these shares.
If you do not provide voting instructions to your brokerage firm, bank, broker-dealer, trustee or other nominee holding shares of our common stockCommon Stock for you, your shares will not be voted with respect to Proposal Nos. 1 (election of directors), 3 (advisory vote to approve executive compensation) and 4 (frequency of the advisory(advisory vote to approve the compensationfrequency of our namedholding future advisory votes on executive officers)compensation), as brokerage firms, banks, broker-dealers or other nominees do not have discretion to vote on non-routine matters. We therefore encourage you to provide voting instructions on a proxy card or a provided voting instruction form to the brokerage firm, bank, broker-dealer, trustee or other nominee that holds your shares by carefully following the instructions provided in their notice to you.
Electronic voting will be possible during the meeting for anyone who wants to vote during the meeting. If you hold your shares in street name, you must request a legal proxy from your bank or broker to vote during the meeting.
How many votes do I have?
Stockholders are entitled to one vote per proposal for each share of common stockCommon Stock held. The holders of shares of Series E Preferred Stock will not be entitled to vote at the 2017 Annual Meeting, except to the extent such holders are also the owners of our common stock and are entitled to vote such shares.
How will my shares of common stockCommon Stock be voted?
The shares of common stockCommon Stock represented by any proxy card which is properly executed and received by the Company prior to or at the 2017 Annual Meeting will be voted in accordance with the specifications you make thereon. Where a choice has been specified on the proxy card with respect to the proposals, the shares represented by the proxy will be voted in accordance with the specifications. If you return a validly executed proxy card without indicating how your shares should be voted on a matter and you do not revoke your proxy, your proxy will be voted:FOR the election of each of the seven named director nominees set forth on the proxy card (Proposal No. 1);FOR the ratification of the appointment of Ernst & Young LLP as the independent registered public accounting firm of the Company for the fiscal year ending April 30, 20182024 (Proposal No. 2);FOR the approval, onby an advisory basis,vote, of a non-binding resolution approving the compensation of the Company’s named executive officers, as described in thethis Proxy Statement under “Executive Compensation”“Compensation Discussion and Analysis” and “Executive Compensation” (Proposal No. 3); andFORONE YEAR (annual vote) on the frequency of the advisory vote to approve the compensation of our named executive officers (Proposal No. 4).
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What vote is required with respect to the proposals?
Proposal No. 1, the election of seven directors to our Board, will require approval of a plurality of the shares present in person or represented by proxy at the 2017 Annual Meeting and entitled to vote, meaning that the director nominees receiving the highest numbers of “for” votes of the shares entitled to be voted for them, up to the number of directors to be elected by such shares, will be elected. As a result, the seven director nominees receiving the most “for” votes at the 2017 Annual Meeting will be elected. The proxy card enables a stockholder to vote “FOR” or “WITHHOLD” from voting as to each person nominated by the Board.
Proposal Nos. 2 and 3 will be decided by the affirmative vote of a majority of the stock represented and entitled to vote at the 2017 Annual Meeting. A stockholder may vote “FOR,” “AGAINST” or “ABSTAIN” on Proposal Nos. 2 and 3 and for “One Year” (annual vote), “Two Years” (biennial vote) or, “Three Years” (triennial vote) or ABSTAIN on Proposal No. 4. Each of Proposal Nos. 2 and 3 will pass if the total votes cast “for” a given proposal exceed the total number of votes cast “against” such given proposal. For Proposal No. 4, the option (one year, two years or three years) receiving the greatest number of votes will be considered the frequency recommended by stockholders.
What is the effect of abstentions and broker non-votes on voting?
Abstentions and broker “non-votes” are included in the determination of the number of shares present at the 2017 Annual Meeting for quorum purposes. Abstentions will count as a vote against the proposals, other than for the election of directors (Proposal No. 1) and the frequency of the advisory vote to approve the compensation of our named executive officers (Proposal No. 4). Abstentions will not have an effect on the election of directors or the frequency of the advisory vote to approve the compensation of our named executive officers because directors are elected and the frequency is selected by a plurality of the shares present in person or represented by proxy at the 2017 Annual Meeting and entitled to vote. Broker “non-votes” are not counted in the tabulations of the votes cast or present at the 2017 Annual Meeting and entitled to vote on any of the proposals and therefore will have no effect on the outcome of the proposals. A broker “non-vote” occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that item and has not received instructions from the beneficial owner. At the 2017 Annual Meeting, nominees will not have discretion to vote on Proposal Nos. 1 (election of directors), 3 (advisory vote to approve executive compensation) or 4 (frequency of the advisory vote to approve the compensation of our named executive officers), but will have discretion to vote on Proposal No. 2 (ratification of appointment of independent registered public accounting firm).
We encourage you to provide voting instructions on the proxy card or a provided voting instruction form to the brokerage firm, bank, broker-dealer, trustee, or other nominee that holds your shares by carefully following the instructions provided in their notice to you. Electronic voting will be possible during the meeting for anyone who wants to vote during the meeting. If you hold your shares in “street name”, you must request a legal proxy from your bank or broker to vote during the meeting.
Who is paying for this proxy solicitation?
We will bear the costs of soliciting proxies for the 2017 Annual Meeting. These costs will include, among other items, the expense of preparing, assembling, printing and mailing the proxy materials to stockholders of record and beneficial owners, and reimbursements paid to brokerage firms, banks andfirm, bank, broker-dealer, trustee or other fiduciariesnominee for their reasonable out-of-pocket expenses for forwarding proxy materials to stockholders and obtaining beneficial owner’s voting instructions. In addition to soliciting proxies by mail, our directors, officers and employees may solicit votes, without additional compensation, personally, by telephone, or by other appropriate means.
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If I have already voted by proxy against the proposals, can I still change my mind?
Yes. ToYou may change your vote at any time prior to the taking of the vote at the Annual Meeting. If you are the stockholder of record, you may change your vote by (i) granting a new proxy simply sign,bearing a later date (which automatically revokes the earlier proxy) using any of the methods described above (and until the applicable deadline for each method), (ii) providing a written notice of revocation to our corporate secretary at Avid Bioservices, Inc., 14191 Myford Road, Tustin, California 92780, Attn: Corporate Secretary, prior to your shares being voted, or (iii) attending the Annual Meeting online and returnvoting online as instructed above. Attendance at the virtual meeting will not cause your previously granted proxy cardto be revoked unless you specifically so request. If you hold your shares in “street name”, you must request a legal proxy from your bank or voting instruction form inbroker to vote during the accompanying postage-paid envelope, or vote by proxy by telephone or via the Internet in accordance with the instructions in the proxy card or voting instruction form.meeting. We strongly urge you to vote by proxy FOR each of the seven nominees named in Proposal No. 1 and FOR Proposal Nos. 2 and 3 and for ONE YEAR on Proposal No. 4. Only your latest dated proxy will count at the 2017 Annual Meeting.
Will my shares be voted if I do nothing?
If your shares of our common stockCommon Stock are registered in your name, you must sign and return a proxy card in order for your shares to be voted, unless you vote over the Internet or by telephone or attend the 2017virtual Annual Meeting and vote in person.online.
If your shares of common stockCommon Stock are held in “street name,” that is, held for your account by a brokerage firm, bank, broker-dealer, trustee or other nominee, and you do not instruct your brokerage firm, bank, broker-dealer, trustee or other nominee how to vote your shares, then your brokerage firm, bank, broker-dealer, trustee or other nominee will determine if it has discretion to vote on each matter. Brokerage firms, banks, broker-dealers, trustees or other nominees do not have discretion to vote on non-routine matters. Proposal Nos. 1 (election of directors), 3 (advisory vote to approve executive compensation) and 4 (frequency of the advisory vote to approve the compensation of our named executive officers) are considered to be non-routine matters, while Proposal No. 2 (ratification of appointment of independent registered public accounting firm) is considered a routine matter. As a result, if you do not provide voting instructions to your brokerage firm, bank, broker-dealer, trustee or other nominee, then your brokerage firm, bank, broker-dealer, trustee or other nominee may not vote your shares with respect to Proposal Nos. 1, 3 or 4, which would result in a “broker non-vote,” but may, in its discretion, vote your shares with respect to Proposal No. 2. For additional information regarding broker non-votes, see “What is the effect of abstentions and broker non-votes on voting?” above.
If your shares of our common stockCommon Stock are held in “street name,” your brokerage firm, bank, broker-dealer, trustee or nominee has enclosed a proxy card or voting instruction form with this Proxy Statement. We strongly encourage you to authorize your brokerage firm, bank, broker-dealer, trustee or other nominee to vote your shares by following the instructions provided on the proxy card or voting instruction form. If you hold your shares in “street name”, you must request a legal proxy from your bank or broker to vote during the meeting.
We strongly urge you to vote by proxy FOR each of the seven nominees in Proposal No. 1 and FOR Proposal Nos. 2 and 3 and forFOR ONE YEAR on Proposal No. 4 by marking, dating, signing dating and returning the proxy card today in the envelope provided. You may also vote by proxy over the Internet using the Internet address on the proxy card or by telephone using the toll-free number on the proxy card. If your shares are held in “street name,” you should follow the instructions on your proxy card or voting instruction form provided by your brokerage firm, bank, broker-dealer, trustee or other nominee and provide specific instructions to your brokerage firm, bank, broker-dealer, trustee or other nominee to vote as described above.
What constitutes a quorum?
A quorum is the minimum number of shares required to be present at the 2017 Annual Meeting for the meeting to be properly held under our Bylaws and Delaware law. A majority of the issued and outstanding shares of common stock and entitled to vote,Common Stock, present in person or represented by proxy, and entitled to vote will constitute a quorum for the transaction of business at the 2017 Annual Meeting. Votes withheld, abstentions and broker non-votes will be counted as present or represented for purposes of determining the presence or absence of a quorum for the 2017 Annual Meeting. In the absence of a quorum, the 2017 Annual Meeting may be adjourned by a majority of the shares entitled to be vote present in person or by proxy.
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What is “Householding” of Annual Meeting materials?
Some “street name” holders may be “householding” our proxy statements and annual reports. This means that only a single copy of our Proxy Statement and Annual Report to stockholders may have been sent to two or more stockholders sharing the same address. We will promptly deliver a separate copy of either document to you if you call or write us at our principal executive offices, 2642 Michelle Drive,14191 Myford Road, Tustin, California, 92780, Attn: Investor Relations, telephone: (800) 987-8256. If you would like to receive separate copies of the Proxy Statement or Annual Report to stockholders in the future, or if you are receiving multiple copies and would like to receive only one copy per household, please notify your brokerage firm, bank, broker,broker-dealer, trustee or other nominee if your shares are held in “street name”, or you may contact us at the above address and telephone number.
How can I find out the results of the voting at the 2017 Annual Meeting?
Preliminary voting results are expected to be announced at the 2017 Annual Meeting. Final voting results will be published in a Current Report on Form 8-K to be filed with the SEC within four business days after the 2017 Annual Meeting. If final voting results are not available to us in time to file a Current Report on Form 8-K within four business days after the 2017 Annual Meeting, we intend to file a Current Report on Form 8-K to publish preliminary results and, within four business days after the final results are known to us, file an additional Current Report on Form 8-K to publish the final results.
Who will count the votes?
The votes will be counted, tabulated and certified by the inspector of elections for the 2017 Annual Meeting, who shall be duly appointed by the Board.
What is the deadline to propose actions for consideration at next year’s annual meeting of stockholders?
Stockholder proposals may be included in our proxy materials for an Annual Meetingannual meeting so long as they are provided to us on a timely basis and satisfy the other conditions set forth in applicable SEC rules. For a stockholder proposal to be included in our proxy materials for the 2018 Annual Meeting2024 annual meeting of Stockholders,stockholders, which we expect to hold on or about October 11, 2018,16, 2024, the proposal must be received at our principal executive offices at 2642 Michelle Drive,14191 Myford Road, Tustin, California 92780, addressed to the Corporate Secretary, no later than May 3, 2018,11, 2024, and must comply with all applicable requirements of Rule 14a-8 promulgated under the Securities Exchange Act.Act of 1934, as amended (the “Exchange Act”). However, if our 2018 Annual Meeting2024 annual meeting of Stockholdersstockholders is not held between September 11, 201823, 2024 and November 10, 2018,22, 2024, then the deadline will be a reasonable time prior to the time we begin to print and send our proxy materials.
Stockholder business that is not intended for inclusion in our proxy materials may be brought before the 2018 Annual Meeting2024 annual meeting so long as we receive notice of the proposal as specified by our Bylaws, addressed to the Corporate Secretary at our principal executive offices at 2642 Michelle Drive,14191 Myford Road, Tustin, California 92780, by not earlier than the close of business on June 13, 201825, 2024 and not later than the close of business on July 13, 2018.25, 2024. However, if the 2018 Annual Meeting2024 annual meeting of Stockholdersstockholders is not held between September 11, 201823, 2024 and November 10, 2018,22, 2024, the notice must be delivered no earlier than the close of business on the 120th day nor later than the close of business on the 90th day prior to the 2018 Annual Meeting2024 annual meeting of Stockholdersstockholders or, if later, the 10th day following the day on which public disclosure of the date of the 2018 Annual Meeting2024 annual meeting of Stockholdersstockholders is made. All such notices must be submitted in accordance with the specific procedural requirements in our Bylaws and must include certain information with regard to the person submitting the proposal. Failure to comply with our Bylaw procedures and deadlines may preclude presentation of the proposal at our 2018 Annual Meeting2024 annual meeting of Stockholders.stockholders.
Whom should I call if I have questions about the 2017 Annual Meeting?
If you have any questions or if you need additional copies of the proxy materials, please call 1-800-690-6903 or log on towww.proxyvote.com. www.proxyvote.com.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE 2017 ANNUAL MEETING TO BE HELD ON JANUARY 18, 2018:OCTOBER 23, 2023: THE PROXY STATEMENT FOR THE 2017 ANNUAL MEETING AND THE ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED APRIL 30, 20172023 ARE AVAILABLE FREE OF CHARGE ATWWW.PROXYVOTE.COM.
WWW.PROXYVOTE.COM.
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ANNUAL MEETING PROCEDURES
Annual Meeting Admission
Only Peregrine Pharmaceuticals, Inc. stockholders as of the close of business on November 27, 2017 or their duly authorized and constituted proxies may attend the 2017 Annual Meeting. Proof of ownership of our common stock must be presented in order to be admitted to the 2017 Annual Meeting. If your shares are held in the name of a brokerage firm, bank, broker-dealer, trustee or other nominee or holder of record and you plan to attend the 2017 Annual Meeting in person, you must bring a brokerage statement, the proxy card mailed to you by your brokerage firm, bank, broker-dealer, trustee or other nominee or other proof of ownership as of the close of business on November 27, 2017, the record date, to be admitted to the 2017 Annual Meeting. Otherwise, proper documentation of a duly authorized and constituted proxy must be presented. This proof can be: a brokerage statement or letter from a brokerage firm, bank, broker-dealer, trustee or other nominee indicating ownership on the record date, a proxy card, or a valid, legal proxy provided by your brokerage firm, bank, broker-dealer, trustee or other nominee.
After the chairman of the meeting opens the 2017 Annual Meeting, further entry will be prohibited. No cameras, recording equipment, electronic devices, large bags, briefcases or packages will be permitted in the 2017 Annual Meeting, and the use of mobile phones during the 2017 Annual Meeting is also prohibited. All persons attending the 2017 Annual Meeting will be required to present a valid government-issued picture identification, such as a driver’s license or passport, to gain admittance to the 2017 Annual Meeting.
Appraisal Rights
Holders of shares of common stock and shares of Series E Preferred Stock do not have appraisal rights under Delaware law in connection with this proxy solicitation.
Stockholder List
A list of our stockholders as of the close of business on November 27, 2017 will be available for inspection during business hours for ten days prior to the 2017 Annual Meeting at our principal executive offices located at 2642 Michelle Drive, Tustin, California 92780.
Communications with the Board
Any stockholder or other interested party who desires to communicate with our Chairman of the Board of Directors or any of the other members of the Board of Directors may do so by writing to: Board of Directors, c/o Joseph Carleone, Ph.D., Chairman of the Board of Directors, Peregrine Pharmaceuticals, Inc., 2642 Michelle Drive, Tustin, California 92780, or by email at boardofdirectors@peregrineinc.com. Communications may be addressed to the Chairman of the Board, an individual director, a Board committee, the non-management directors, or the full Board. Communications will then be distributed to the appropriate directors unless the Chairman determines that the information submitted constitutes “spam,” offensive or inappropriate material, and/or communications offering to buy or sell products or services.
Other Matters
If you have any questions or if you need additional copies of the proxy materials, please call 1-800-690-6903 or log on towww.proxyvote.com.
Seven directors are to be elected to Peregrine’sAvid’s Board of Directors at the 2017 Annual Meeting. Proxies can only be voted for the number of nominees named in this Proxy Statement. All of our current directors are standing for reelection.
All directors are elected annually and serve until our next annual meeting of stockholders, with each director to hold office until his or her successor is duly elected and qualified or until his or her earlier death, resignation or removal. The election of directors requires the affirmative vote of a plurality of the shares of common stock present in person or represented by proxy at the 2017 Annual Meeting and entitled to vote. Thus, the seven nominees receiving the highest number of votes will be elected as directors at the 2017 Annual Meeting.
Our Board of Directors has proposed each of the following nominees for election as directors, each of whom areis a current membersmember of our Board of Directors: Mark R. Bamforth,Directors and has consented to serve as a director for an additional term if elected: Esther M. Alegria, Ph.D, Joseph Carleone, Ph.D., Nicholas S. Green, Richard B. Hancock, RogerCatherine J. Lias,Mackey, Ph.D., Joel McComb, Gregory P. Sargen and Patrick D. Walsh.Jeanne A. Thoma. The Board of Directors recommends that you vote FOR the election of each of our nominees to serve as directorsa director of the Company until the next annual meeting, with each director to hold office until his or her successor is duly elected and qualified or until his or her earlier death, resignation or removal. If any nominee is unable or declines to serve as a director at the time of the 2017 Annual Meeting, the proxies will be voted for any nominee designated by the present Board to fill the vacancy. We do not expect that any nominee will be unable or will decline to serve as a director.
Our
Vote Required
The election of directors requires the affirmative vote of a plurality of the shares of Common Stock present in person or represented by proxy at the Annual Meeting and entitled to vote. Thus, the seven nominees receiving the highest number of votes will be elected as directors at the Annual Meeting.
Considerations in Evaluating Director Nominees
The Corporate Governance Committee has reviewed the qualifications of the seven director nominees and has recommended the election of the seven nominees recommended by the Board of Directors.
Settlement Agreement
On November 27, 2017, we entered into a settlement agreement (the “Settlement Agreement”) with Ronin Trading, LLC, Ronin Capital, LLC, SWIM Partners LP, SW Investment Management LLC, John S. Stafford, III, Stephen White and Roger Farley (collectively, the “Ronin Group”) to settle a potential proxy contest pertaining to the election of directors at the 2017 Annual Meeting. The Ronin Group beneficially owned approximately 9.6% of the outstanding shares of our common stock as of November 27, 2017.
Pursuant to the Settlement Agreement, on November 27, 2017, our Board of Directors accepted the resignations of Steven W. King, Carlton M. Johnson, Jr., Eric S. Swartz and David H. Pohl from our Board of Directors, and the applicable committees thereof, and the Board of Directors is directed under its charter to identify qualified individuals to become directors, and to recommend individuals it identifies to the Board of Avid Bioservices, Inc.Directors for nomination. The Company’s Corporate Governance Guidelines establish criteria for membership on the Board. Under these criteria, the Corporate Governance Committee seeks to identify a diverse group of candidates for the Board. These candidates should possess strength of character, mature judgment, familiarity with the Company’s business and appointed eachindustry, independence of Richard B. Hancock, Gregory P. Sargen, Joel McComb (collectively,thought and an ability to work collegially and be committed to representing the “Ronin Appointees”)long-term interests of the stockholders. The Corporate Governance Committee considers all factors it deems appropriate, which may include tenure, existing commitments to other businesses, potential conflicts of interest with other pursuits, legal considerations such as antitrust issues, corporate governance background, various and Joseph Carleone, Ph.D.relevant career experience, relevant technical skills, relevant business or government acumen, financial and accounting background, executive compensation background, other relevant factors deemed relevant to creating a diverse Board. The Corporate Governance Committee does not assign specific weight to particular criteria and not all criteria apply to every candidate.
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Board Diversity Matrix
The table below provides an enhanced disclosure regarding the diversity of the members and nominees of our Board of DirectorsDirectors. Each of the categories listed in the below table has the meaning as it is used in Nasdaq Rule 5605(f).
| Board Diversity Matrix (As of August 15, 2023) | ||||
| Board Size: | ||||
| Total Number of Directors | 7 | |||
| Male | Female | Non-Binary | Gender Undisclosed | |
| Part I: Gender Identity | ||||
| Number of directors base on gender identity | 4 | 3 | ||
| Part II: Demographic Background | ||||
| African American or Black | ||||
| Asian | ||||
| Hispanic or Latinx | 1 | |||
| Native Hawaiian or Pacific Islander | ||||
| White | 4 | 2 | ||
| Two or More Race or Ethnicities | ||||
| LGBTQ+ | 1 | |||
| Did not Disclose Demographic Background | ||||
Director Skills and Experience
We continually evaluate our director skillsets and expertise for alignment with Avid’s strategic goals. Our directors bring extensive experience in areas that are critical to fill the resultant vacancies,Company’s strategy and long-term success, such as CDMO business and operational experience, strategic planning and finance. Below we highlight the key skills and experiences of our director nominees that are critical to Avid’s success and which the Corporate Governance Committee considered when evaluating each director’s experience and qualifications to serve untilas a director. Each mark indicates a strength that was self-selected by each director. Additional information about each director’s background and business experience is provided below in the Company’s next annual meeting of stockholders or until his earlier death, resignation, disqualification or removal.biographical information.
Under the Settlement Agreement, so long as the Ronin Group has not breached the Settlement Agreement, we agreed to nominate the Ronin Appointees, together with Joseph Carleone, Ph.D. and incumbent directors Roger J. Lias, Ph.D., Mark R. Bamforth and Patrick D. Walsh, for election to the Board at the 2017 Annual Meeting. Additionally, so long as the Ronin Group has not breached the Settlement Agreement, we have agreed to nominate such number of Ronin Appointees to the Board at our 2018 annual meeting of stockholders (the “2018 Annual Meeting”) as is equal to the then-current number of authorized directors, minus one, divided by two.
Key Skills & Experience | ||||||||
Director Nominee | CDMO Business and Operations Leadership | Public Company Board/CEO | Finance & Capital Markets | Strategic Planning and M&A | Risk Oversight | Human Resources and Executive Compensation | Commercial Sales & Marketing | Corporate Governance |
| Esther M. Alegria, Ph.D. | ü | ü | ü | ü | ü | ü | ||
| Joseph Carleone, Ph.D. | ü | ü | ü | ü | ü | ü | ü | ü |
| Nicholas S. Green | ü | ü | ü | ü | ü | |||
| Richard B. Hancock | ü | ü | ü | ü | ü | ü | ||
| Catherine J. Mackey, Ph.D. | ü | ü | ü | ü | ü | |||
| Gregory P. Sargen | ü | ü | ü | ü | ü | ü | ||
| Jeanne A. Thoma | ü | ü | ü | ü | ü | ü | ü | |
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Pursuant
Following its evaluation of the seven nominees, the Corporate Governance Committee voted to recommend the nominees to the Settlement Agreement,Board of Directors as candidates for election to a new term in office. The Board believes that as a group the Ronin Group has agreed notBoard consists of a sufficiently diverse group in terms of experience, knowledge and abilities to takeallow the following actions, among others, priorBoard to fulfill its responsibilities to the datestockholders and the Company. As such, and based in part on the Corporate Governance Committee’s evaluation and recommendation, the Board of Directors has concluded that it is thirty (30) calendar days afterin our best interest and the datebest interest of our stockholders for each of the 2018 Annual Meeting (the “Standstill Period”): (1) propose certain extraordinary transactions, (2) solicit proxies, (3) join any “group” or voting arrangement, (4) call or seek to call a meeting of stockholders; (5) submit nominations for a contested election, (5) seek to control, change or influence the management, the Board or policies of the Company, (6) seek waivers or amendments to the Company’s governing documents, (7) initiate or institute certain litigation or other proceedings against the Company or any of its current or former directors or officers, or (8) encourage or support any other stockholder to take any of the foregoing actions.
If any of the Ronin Appointees is unableproposed nominees to serve as a director, resigns as a director or is removed as a director during the Standstill Period, Ronin may recommend another individual for appointment to themember of our Board who meets certain criteria, including qualifying as “independent” under the rules of The NASDAQ Stock Market LLC, among others.
Under the Settlement Agreement, the Ronin Group has agreed to be present for quorum purposes at the 2017 Annual Meeting and all subsequent stockholder meetings during the Standstill Period and to vote all of the Common Stock beneficially owned by it in accordance with the Board’s recommendations with respect to nominees to the Board or any other matter at each such subsequent stockholder meeting, subject to certain exceptions.
During the Standstill Period, we and the Ronin Group have mutually agreed, subject to certain exceptions, not to make or cause to be made any statement or announcement that disparages, calls into disrepute, or otherwise defames or slanders the other party or any of its subsidiaries, affiliates, successors, assigns, officers, directors, board members, products or services.
In addition, we agreed to reimburse the Ronin Group for its actual, reasonable and documented out-of-pocket expenses up to $75,000 incurred in connection with the Settlement Agreement and all related matters.
Accordingly, each of Messrs. Hancock, McComb, Sargen and Dr. Carleone were appointed as directors pursuant to the Settlement Agreement.
For additional details regarding the terms of the Settlement Agreement, including a copy of the Settlement Agreement, please see the Current Report on Form 8-K that we filed with the SEC on November 28, 2017.Directors.
Nominees
Information with respect to the number of shares of common stockCommon Stock beneficially owned by each director as of November 27, 2017August 15, 2023 appears under the heading “Security“Security Ownership of Certain Beneficial Owners, Directors and Management.Management.” The name, age, years of service on our Board of Directors, and principal occupation and business experience of each director nominee is set forth below.
NOMINEE BIOGRAPHIES
Name and Age | Principal Occupation and Business Experience | Director Since |
(age 65) |
| |
Joseph Carleone, (age | Dr. Carleone was appointed to the Board of Directors | 2017 |
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| Name and Age | Director Since | |
Nicholas S. Green (age 59) | Mr. Green was appointed to the Board of Directors and as our President and Chief Executive Officer in July 2020. Mr. Green has more than 30 years of experience in the global pharmaceutical and healthcare services industry with significant expertise in the contract manufacturing of novel pharmaceutical products, having most recently served since April 2011 as the president and chief executive officer of Therapure Biopharma, a Canada-based biopharmaceutical company which includes Therapure Biomanufacturing. In this role, he oversaw the growth of Therapure’s CDMO business, while also leading the creation of Therapure’s proprietary plasma protein business, named Evolve. Prior to Therapure, Mr. Green held a number of senior management roles, most notably managing director of Nipa Laboratories Ltd., head of the life science division of Clariant International Ltd. in the USA, president and CEO of Rhodia Pharma Solutions Ltd. and president of Codexis, Inc.’s pharma division. Mr. Green holds a bachelor’s degree in chemistry from Queen Mary College in London and an MBA from the University of Huddersfield. The Board of Directors concluded that Mr. Green should serve as a director in light of his extensive operational and executive management experience in the CDMO industry. | 2020 |
Richard B. Hancock (age |
| 2017 |
Catherine J. Mackey, Ph.D. (age 67) | 2019 |
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Name and Age | Principal Occupation and Business Experience | |
|
Since | |
|
| |
Gregory P. Sargen (age |
| 2017 |
| Jeanne A. Thoma (age 63) | Ms. Thoma was appointed to the Board of Directors in December 2020. Ms. Thoma is a seasoned pharmaceutical industry executive with more than 30 years of experience spanning product development and commercialization, as well as operations and supply chain management. She most recently served as president and chief executive officer of SPI Pharma Inc., a global pharmaceuticals ingredients company and an innovative solutions provider of ingredients and drug delivery systems. Prior to SPI, Ms. Thoma held positions of increasing responsibility at Lonza AG, a Switzerland-based CDMO and Life Science company, most recently as president and chief operating officer of the microbial control business sector. Before joining Lonza, she spent 14 years within the pharma solutions business at BASF Corporation, during which she held various leadership positions in the areas of sales, marketing and operations. Ms. Thoma is currently a member of the board of directors of ANI Pharmaceuticals (NASDAQ:ANIP), and is a member of its Audit and Finance Committee and Compensation Committee, Nanoform Finland Plc (HEL:NANOFH) and is a member of its Audit and Compensation Committee and Pharmathen S.A., a private company where she is the chair of the Nomination and Compensation committee. Ms. Thoma was formerly a member of the board of directors of Vectura Group plc. (LSE:VEC). Ms. Thoma holds a B.S. from Montclair State University and an M.B.A. from Fairleigh Dickinson University. The Board of Directors concluded that |
|
| |
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Recommendation
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ELECTION TO THE BOARD OF EACH OF THE SEVEN NOMINEES NAMED ABOVE IN THIS PROPOSAL NO. 1.
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Our Board of Directors strongly believes in good corporate governance policies and practices. We expect to continue to seek and implement those corporate governance practices that we believe will promote a high level of performance from our Board of Directors, officers and employees. This section describes key corporate governance guidelines and practices that our Board of Directors has adopted. Copies of the following corporate governance documents are posted on our website at http://ir.peregrineinc.com/governance.cfm:ir.avidbio.com/corporate-governance: (1) Code of Business Conduct and Ethics,Ethics; (2) Amended and Restated Charter of the Compensation Committee of the Board of Directors,Directors; (3) Charter of the Audit Committee of the Board of Directors, andDirectors; (4) Charter of the Corporate Governance Committee of the Board of Directors.Directors; and (5) Corporate Governance Guidelines. If you would like a printed copy of any of these corporate governance documents, please send your request to Peregrine Pharmaceuticals,Avid Bioservices, Inc., Attention: Corporate Secretary, 2642 Michelle Drive,14191 Myford Road, Tustin, California 92780.
Board of Directors
Our business is managed under the direction of our Board of Directors pursuant to the General Corporation Law of the State of Delaware and our Bylaws. Our Board of Directors has responsibility for establishing broad corporate policies and reviewing our overall performance. Among the primary responsibilities of our Board of Directors is the oversight of the management of our Company. Our directors remain informed of our business and management activities by reviewing documents provided to them before each meeting of the Board of Directors and by attending presentations made by our chief executive officerChief Executive Officer and other members of management. The Board of Directors held six (6) formalfour meetings during the fiscal year ended April 30, 2017.2023. Each incumbent director attended at least seventy-five percent (75%) of the meetings of the Board and of the committees on which he or she served during the fiscal year ended April 30, 2017.2023. In addition, members of the Board of Directors have access to our books, records and reports and independent auditors and advisors. Members of our management frequently interact with and are at all times available to our directors.Board of Directors.
Director Independence
Under NASDAQ Listing Rule 5605(a)(2), a director will not be considered an “independent director” if such director at any time during the past three years was an employee of the Company, or if a director (or a director’s family member) accepted compensation from the Company (other than compensation for board or committee service) in excess of $120,000 during any twelve consecutive month period within the three years preceding the determination of independence. In addition, a director will not qualify as an “independent director” if, in the opinion of our Board of Directors, that person has a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Our Board of Directors has affirmatively determined, that eachafter considering all of the currentrelevant facts and circumstances, that all of the directors, as well as those standing for re-election,other than Nicholas S. Green our President and Chief Executive Officer, are independent directors as defined byfrom our management under the NASDAQ Listing Rules governingstandards set forth in the Company’s Corporate Governance Guidelines, which incorporates the independence standards required by Listing Rule 5605(a)(2) of The Nasdaq Stock Market. This means that none of the independent directors except for Roger J. Lias, Ph.D., Presidenthave any direct or indirect material relationship with the Company, either directly or as a partner, stockholder or officer of our wholly-owned subsidiary Avid Bioservices, Inc.an organization that has a relationship with the Company.
Our Audit, Compensation and Corporate Governance Committees are composed entirely of independent directors as required by applicable SEC and NASDAQ rules, including Rule 10A-3 under the Exchange Act. In addition, there are no family relationships among any of the directors or executive officers of the Company. Further, each member of our Audit, Compensation and Corporate Governance CommitteesCommittee is a “non-employee director” under Section 16 of the Exchange Act and an “outside director” for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended.Act.
Meetings of Independent Directors
The independent members of our Board of Directors have a practice of meeting in executive sessions without the presence of any members of Peregrine’sAvid’s management. TheIn accordance with the Corporate Governance Guidelines, the independent members of the Board of Directors are generally scheduled to meet in executive session each time the Board of Directors holds its regularly scheduled meetings and otherwise as needed.
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Committees of Our Board of Directors
The Board of Directors has three standing committees: the Compensation Committee, the Audit Committee, and the Corporate Governance Committee. Each of the three committees maintains a written charter approved by the Board of Directors. Current copies of all of our committees’ charters are available on our website at http://ir.peregrineinc.com/governance.cfm.ir.avidbio.com/corporate-governance. The following is a summary of our three standing committees:
Compensation Committee. The primary purposes of the Compensation Committee of the Board of Directors are to: (i) establish the compensation policy of the Company; (ii) ensure that the compensation of the Board of Directors, Chief Executive Officer and other corporate officers of the Company enables it to attract and retain high-quality leadership and is consistent with such policy; (iii) review the performance and development of the Company’s Chief Executive Officer and other corporate officers in achieving Company goals and objectives and to ensure that senior executives of the Company are compensated effectively in a manner consistent with the strategy of the Company; and (iv) produce an annual report on executive compensation for inclusion in the Company’s proxy statements, in accordance with applicable rules and regulations. The Compensation Committee carries out its responsibilities in accordance with the terms of its charter. The Compensation Committee met five (5) times during the fiscal year ended April 30, 2017.2023. The Compensation Committee has the authority to determinerecommend director compensation to the Board and to determine executive compensation and may not delegate this authority. The Compensation Committee’s members are currently Dr. Joseph Carleone (chairmanCatherine J. Mackey (chair of the committee), Mr. Richard B. Hancock and Mr. Gregory P. Sargen, and Ms. Jeanne A. Thoma, each of whom is an independent director. During the fiscal year ended April 30, 2017, the members of the Compensation Committee were Mr. Eric S. Swartz (chairman), Mr. Carlton M. Johnson Jr. and Mr. David H. Pohl.
Audit Committee. The primary purposes of the Audit Committee of the Board of Directors are to assist the Board of Directors in fulfilling its oversight responsibilities by reviewingreviewing: (i) the Company’s financial statements provided to stockholders, the public and others,others; (ii) the Company’s system of internal controls regarding finance, accounting, legal compliance and ethical behaviorbehavior; and (iii) the Company’s auditing, accounting and financial reporting process. The Audit Committee carries out its responsibilities in accordance with the terms of its charter. The Audit Committee met four (4) times during the fiscal year ended April 30, 2017.2023. The Audit Committee of our Board of Directors has determined that Mr. McCombGregory P. Sargen is an “audit committee financial expert” within the meaning of Item 407 of Regulation S-K of the Securities Act and meets the financial sophistication required under the NASDAQ listing standards. The Audit Committee meets the NASDAQ composition requirements, including the requirement that all Audit Committee members have the ability to read and understand financial statements. The current Audit Committee members are currently Messrs.Mr. Gregory P. Sargen (chairman(chair of the committee), Joel McCombDr. Catherine J. Mackey, Mr. Richard B. Hancock, and Dr. Joseph Carleone,Esther M. Alegria, each of whom is an independent director. During the fiscal year ended April 30, 2017, the members of the Audit Committee were Mr. Carlton M. Johnson Jr. (chairman), Mr. David H. Pohl and Mr. Eric S. Swartz.
Corporate Governance Committee. The primary purposes of the Corporate Governance Committee (formerly known as the Nominating Committee) of the Board of Directors are to: (i) make recommendations to the Board of Directors regarding the size of the Board of DirectorsDirectors; (ii) make recommendations to the Board of Directors regarding the criteria for the selection of director nominees,nominees; (iii) identify and recommend to the Board of Directors for selection as director nominees individuals qualified to become members of the Board of Directors, including stockholder recommendations,recommendations; (iv) recommend committee assignments to the Board of Directors,Directors; (v) develop and recommend to the Board of Directorsregularly review our corporate governance guidelines,documents, including our corporate Charter and Bylaws and the Corporate Governance Guidelines; (vi) oversee the evaluation of the Board of Directors. The qualitiesDirectors and skills sought in prospective members of the Board of Directors will be determined by the independent directors. Generally, director candidates must be qualified individuals who, if added to the Board of Directors, would provide the mix of director characteristics, experience, perspectivecommittees thereof, and skills appropriate for the Company. Criteria for selection of candidates will include, but not be limited to: (i) business(vii) review and financial acumen, as determined by the Corporate Governance Committee in its discretion, (ii) qualities reflecting a proven record of accomplishmentmonitor our environmental, social and ability to work with others, (iii) knowledge of the Company’s industry, (iv) relevant experiencegovernance strategy, policies and knowledge of corporate governance practices, and (v) expertise in an area relevant to the Company. The Corporate Governance Committee carries out its responsibilities in accordance with the terms of its charter. The Governance Committee does not have a written policy with respect to Board of Directors diversity; however, the committee’s goal is to assemble a Board of Directors that brings to the Company a diversity of knowledge, skills and expertise derived from high quality business and professional experience. We believe a Board of Directors with these attributes leads to improved Company performance by encouraging new ideas and perspectives and expanding the knowledge base available to management.practices. The Corporate Governance Committee met two (2)three times during the fiscal year ended April 30, 2017.2023. The Corporate Governance Committee’s members are currently Messrs. Mark R. Bamforth (chairmanMs. Jeanne A. Thoma (chair of the committee), Joel McCombDr. Joseph Carleone, Dr. Esther M. Alegria and Patrick D. Walsh,Mr. Richard B. Hancock, each of whom is an independent director. During the fiscal year ended April 30, 2017, the members of the Nominating Committee were Mr. David H. Pohl (chairman), Mr. Carlton M. Johnson Jr. and Mr. Eric S. Swartz.
Stockholder Recommendations for Nominations to the Board of Directors
In accordance with our Bylaws, stockholders may nominate a candidate for election as director by complying with certain notice and other requirements set forth therein. For a stockholder to make any nomination for election to the Board of Directors at the 2018 Annual Meeting2024 annual meeting of Stockholders,stockholders, the stockholder must provide notice to the Company, which notice must be delivered to, or mailed and received at, the Company’s principal executive offices not earlier than the close of business on June 13, 201825, 2024 and not later than the close of business on July 13, 2018.25, 2024. However, if the 2018 Annual Meeting2024 annual meeting of Stockholdersstockholders is not held between September 11, 201823, 2024 and November 10, 2018,22, 2024, the notice must be delivered no earlier than the close of business on the 120th day nor later than the close of business on the 90th day prior to the 2018 Annual Meeting2024 annual meeting of Stockholdersstockholders or, if later, the 10th day following the day on which public disclosure of the date of the 2018 Annual Meeting2024 annual meeting of Stockholdersstockholders is made. All such notices must be submitted in accordance with the specific procedural requirements in our Bylaws and must include certain information with regard to the person submitting the proposal. Further updates and supplements to such notice may be required at the times, and in the forms, required under our Bylaws. As set forth in our Bylaws, submissions must includeinclude: (i) the name, age, business address and residence address of such nominee,nominee; (ii) the principal occupation or employment of such nominee,nominee; (iii) the class and number of shares of each class of capital stock of the Company which are owned of record and beneficially by such nominee,nominee; (iv) the date or dates on which such shares were acquired and the investment intent of such acquisition,acquisition; (v) with respect to each nominee for election or re-election to the Board of Directors, a completed and signed questionnaire, representation and agreement required by our Bylaws,Bylaws; and (vi) such other information concerning such nominee as would be required to be disclosed in a proxy statement soliciting proxies for the election of such nominee as a director in an election contest (even if an election contest is not involved), or that is otherwise required to be disclosed pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder (including such person’s written consent to being named as a nominee and to serving as a director if elected). Our Bylaws also specify further requirements as to the form and content of a stockholder’s notice. We recommend that any stockholder wishing to make a nomination for director review a copy of our Bylaws, which is available, without charge, from our Corporate Secretary, at Peregrine Pharmaceuticals,Avid Bioservices, Inc., 2642 Michelle Drive,14191 Myford Road, Tustin, California 92780.
If the Corporate Governance Committee or the Board of Directors determines that any nomination made by a stockholder was not made in accordance with the proper procedures under our Bylaws, the rules and regulations promulgated under the SEC or other applicable laws or regulations, such nomination will be void. The Corporate Governance Committee will evaluate candidates recommended by stockholders in the same manner as those recommended by others.
Pursuant to the Settlement Agreement, so long as the Ronin Group has not breached the Settlement Agreement, the Company agreed to nominate such number of Ronin Appointees to the Board at the 2018 Annual Meeting as is equal to the then-current number of authorized directors, minus one, divided by two.
Board of Directors Leadership Structure
Our Board of Directors does not have a policy on whether the same person should serve as both the Chief Executive Officer and Chairman of the Board of Directors or, if the roles are separate, whether the Chairman should be selected from the non-employee directors or should be an employee. The Board of Directors believes that it should have the flexibility to make these determinations in the way that it believes best provides appropriate leadership for the Company at a given time. Separation of the Company’s Chief Executive Officer and Chairman of the Board is appropriate for the Company at this time. Both positions are actively engaged on significant matters affecting the Company. The Chief Executive Officer has overall responsibility for all aspects of the Company's operations, while the Chairman has a greater focus on governance of the Company, including oversight of the Board of Directors. We believe this balance of shared leadership between the two positions is a strength for the Company. In accordance with the Corporate Governance Guidelines, in the event that in the future the positions of Chairman of the Board and Chief Executive Officer are held by the same person, the non-employee directors shall designate a lead independent director.
Risk Oversight
The Board of Directors oversees an enterprise-wide approach to risk management that is designed to support the achievement of organizational objectives to improve long-term performance and enhance stockholder value. A fundamental part of risk management is not only understanding the risks a company faces and what steps management is taking to manage those risks, but also understanding what level of risk is appropriate for the Company. In setting the Company’s business strategy, the Board of Directors assesses the various risks being mitigated by management and determines what constitutes an appropriate level of risk for the Company.
While the Board of Directors has the ultimate oversight responsibility for the risk management process, various committees of the Board of Directors also have responsibility for risk management. In particular, the Audit Committee focuses on financial risk, including internal controls, and receives financial risk assessment reports from management. Risks relatedOur Compensation Committee is responsible for overseeing the management of risks relating to our executive and other compensation plans. The Corporate Governance Committee oversees the compensation programs are reviewed byannual Board self-evaluation and director nomination processes in order to ensure a diverse and well-balanced Board, and oversees the Compensation Committee. Theevaluation of the Chief Executive Officer, including succession planning. These committees meet regularly and report their findings to the Board of Directors is advised by these committeesthroughout the year. The Company also maintains insurance policies that would reimburse the Company for a wide range of significant risks and management’s response via periodic updates.potential losses that the Company could incur in due course.
Communicating with the Board of Directors
Under our Code of Business Conduct and Ethics, we have established an Open Door Policy and Hotline For Reporting Employee Complaints or Accounting or Auditing Matters for the confidential, anonymous submission by our directors, officers and employees of concerns regarding violations or suspected violations of our Code of Business Conduct and Ethics, including mattersthose relating to accounting and auditing matters. In addition, the Audit Committee has established procedures for the receipt, retention and treatment of communications received by us, our Board of Directors and the Audit Committee regarding accounting, internal controls or auditing matters. Written communications from our stockholders and employees may be sent to: Peregrine Pharmaceuticals,Avid Bioservices, Inc., Attention: Audit Committee Chair, 2642 Michelle Drive,14191 Myford Road, Tustin, California 92780.
In addition, the Company’s annual meeting of stockholders provides an opportunity each year for stockholders to ask questions of or otherwise communicate directly with members of the Board of Directors on appropriate matters. StockholdersAny stockholder or interested person may also communicate in writing with any particular director, or the Company’s non-management directors as a group by sending such writtena communication to: Board of Directors, Attention: Corporate Secretary, Peregrine Pharmaceuticals, Inc., 2642 Michelle Drive, Tustin, California 92780. Copies of written communications received at such address will be provided to the Board of Directors c/o Avid Bioservices, Inc., Attn: Corporate Secretary, Avid Bioservices, Inc., 14191 Myford Road, Tustin, California 92780. All communications will be reviewed by the Company’s Corporate Secretary. The Corporate Secretary will not forward to the non-management directors any spam, junk mail, mass mailing, product complaint, product inquiry, new product suggestion, job inquiry, survey, or business solicitation or advertisement. Material that is unduly hostile, threatening, illegal, or similarly unsuitable will also be excluded. The non-management directors who receive such communication will have discretion to determine the relevant director unlesshandling of such communicationscommunication, and if appropriate, the response to the person sending the communication and disclosure, which shall be consistent with the Company’s policies and procedures and applicable law regarding the disclosure of information.
Corporate Responsibility and Sustainability
We are considered,a dedicated biologics contract development and manufacturing organization working to improve patient lives by providing high quality development and manufacturing services to biotechnology and pharmaceutical companies. In fiscal year 2022 we engaged a third-party consultant to assist us with our establishment of a more formal environmental, social, governance (“ESG”) and sustainability program. Working with the consultant, and under the oversight of our Corporate Governance Committee, we embarked on a comprehensive initiative to assess, benchmark and prioritize our ESG and sustainability practices. In addition, our executive leadership team assembled a working team to formally launch the first phase of this initiative focusing on sustainable procurement and other environmental initiatives, including the engagement of EcoVadis, a leading global corporate social responsibility and sustainability company, to help us establish and enhance processes supporting strong ESG practices throughout our supply chain. This arrangement provides an independent supplier assessment against 21 criteria in categories of environment, labor and human rights, ethics, and sustainable procurement. During fiscal year 2023 we focused on building our supplier procurement program with EcoVadis, ultimately onboarding more than 90% of our procurement spend with rated suppliers in the reasonable judgmentEcoVadis program. As we continue to build our sustainable procurement program, we have also approved a supplier code of the Corporate Secretary,conduct, which formalizes our commitment to be inappropriatebuild a network of suppliers consisting of ethical and reliable partners. In addition to our sustainable procurement program, we have formalized an executive steering team to drive overall ESG initiatives and their associated workstreams for submission to the intended recipient(s). Examples of stockholder communications that would be considered inappropriate for submission to the Board of Directors include, without limitation, customer complaints, solicitations, communications that do not relate directly or indirectly to the Company’s business or communications that relate to improper or irrelevant topics.our people, community and environment.
Director Attendance at Annual Meetings of Stockholders
We have no policy requiring directors to attend annual meetings of stockholders, but directors are encouraged to attend our annual meetings at which they stand for re-election. All fourseven of our then current directors attended the 20162022 Annual Meeting of Stockholders.
Director Compensation
Prior Director Compensation Policy
Pursuant to our then effective compensation program for non-employee directors as formally adopted by the Compensation Committee, during the fiscal year ended April 30, 2017, each member of our Board of Directors who was not an employee or officer of the Company received an annual cash retainer, paid in monthly installments, of $180,000 per year. In addition, each non-employee director received a separate annual cash retainer related to their board membership and oversight of our wholly-owned subsidiary, Avid Bioservices, Inc. (“Avid”), paid in monthly installments, of $60,000 per year. Moreover, for their services as chairperson of their respective committees, the chairman of the Audit Committee, the chairman of the Compensation Committee and the chairman of the Corporate Governance Committee (formerly known as the Nominating Committee) received an additional annual cash retainer, paid in monthly installments, of $90,000, $60,000, and $30,000 per year, respectively. Furthermore, each non-employee director received a cash fee of $2,000 per day for each Board of Directors meeting attended, whether in-person or telephonically, and was entitled to receive a cash fee of $2,000 for each additional Company meeting attended in excess of four hours in length. Any member of the Board of Directors who was also our employee was not entitled to receive any additional compensation for serving as a director.
Pursuant to our then effective
Our non-employee director compensation program foris designed to attract, retain and reward qualified non-employee directors as formally adopted byand align the Compensation Committee,financial interests of the non-employee directors with those of our stockholders. The following table sets forth information regarding the compensation earned during the fiscal year ended April 30, 2017,2023 by each individual who served as a non-employee director participated in our routine annual broad-based stock option grant program. The grant to each non-employee director: (i) consisted of a non-qualified stock option to purchase a number of shares of common stockat any time during the fiscal year. Mr. Green’s compensation for his services as determined byan employee is discussed under “Compensation Discussion and Analysis” and the Compensation Committee; (ii) had an exercise price equal to the fair market value of our common stock on the date of grant; and (iii) typically vested in quarterly increments over a two-year period.executive compensation tables that follow it.
In addition, the Company reimburses its non-employee directors for their out-of-pocket expenses incurred in connection with attending Board of Directors and committee meetings.
| Name | Fees Earned or Paid in Cash | Stock Awards(1) | Option Awards(2) | Total |
| Esther M. Alegria, Ph.D. | $85,000 | $137,452 | — | $222,452 |
| Joseph Carleone, Ph.D. | $120,000 | $137,452 | — | $257,452 |
| Richard B. Hancock | $55,000 | $137,452 | — | $192,452 |
| Catherine J. Mackey, Ph.D. | $90,000 | $137,452 | — | $227,452 |
| Gregory P. Sargen | $90,000 | $137,452 | — | $227,452 |
| Jeanne A. Thoma | $90,000 | $137,452 | — | $227,452 |
Director Compensation Table
The following table outlines the compensation paid to our non-employee directors, including annual base retainer fees, meeting attendance fees, and option awards for the fiscal year ended April 30, 2017:
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Revised Director Compensation Policy
On June 23, 2017, the then currentOur Compensation Committee retained the services of an independent compensation consultant, The VisionLink Advisory Group,reviews and recommends to review theour Board for approval our non-employee director compensation program in comparison with market data for other pharmaceutical organizations. Prior to initiating the analysis, a board compensation philosophy was established to guide the determinationwhich consists of compensation targets as well as the appropriate mix of cash vs. equity pay elements.
The adopted compensation philosophy acknowledges the unique nature of the business and its industry, the level of experience and oversight needed to steer the Company, and the desire to attract a unique set of board of directors to help ensure the achievement of long-term Peregrine strategic objectives. To achieve these aims, the board pay philosophy targeted cash elements (annual retainer, committee, or meeting fees) at the top quartile of the market/75th percentile with equity elements (restricted stock, SARs or stock options) targeted at the median of the market/50th percentile.
After reviewing over 44 similar organizations in the pharmaceutical industry, a peer group of 20 organizations was selected with priority going to organizations with geographic proximity (California – 9 organizations) and with a similar market cap ($56m - $1.8B). The final peer organizations were as follows: Spectrum Pharmaceuticals, CTI BioPharma, Dynavax Technologies, Endocyte, Infinity Pharmaceuticals, Merrimack, Rigel Pharmaceuticals, Arena Pharmaceuticals, Cytokinetics Incorporated, Geron Corporation, Halozyme Therapuetics, Sunesis Pharmceuticals, Theravance, Inc, Achillion Pharmaceuticals, Inc., Array BioPharma Inc., Insmed Incorporated, Novavax, Inc., Sangamo Therapeutics, PTC Therapeutics, Inc. and Sorrento Therapeutics. Peer data was reviewed for both cash and equity elements for all peer organizations. Percentiles were established withincompensation. In fiscal year 2022, the peer group data to be used as a comparison basis for establishing compensation for our non-employee directors moving forward.
Based on analysis by The VisionLink Advisory Group, effective in connection with the October 2017 appointments to our Board of non-employee directors Mark R. Bamforth and Patrick D. Walsh, the then current Compensation Committee formally adopted a newengaged its independent compensation consultant, Radford, part of the Rewards Solutions practice of Aon plc (“Radford”) to review the Company’s non-employee director compensation program comprised of (i) an annual cash retainer, payableand benchmark the compensation against the same peer group used for executive compensation purposes in 12 installments, of $55,000,fiscal year 2022. Taking into account Radford’s assessment, the Compensation Committee recommended, and (ii) an annual cash retainer, payable in 12 installments, of $15,000 per committee membership. Furthermore, each non-employee director will receive a cash fee of $2,000 per day for eachthe Board of Directors meeting attended, whether in-person or telephonically, and a cash fee of $2,000 for each additional Company meeting attended in excess of four hours in length.
Pursuant toapproved, the newly adoptedfollowing non-employee director compensation program, uponwhich was unchanged for fiscal year 2023, comprised of: (A) cash compensation consisting of: (i) an annual retainer of $55,000, (ii) an annual retainer of $50,000 for the Chairman of the Board, and (iii) an annual retainer of $20,000 and $15,000 per committee chairmanship and membership, respectively, each payable in advance in equal quarterly installments, and (B) equity compensation consisting of an annual RSU award, in December of each year, under our 2018 Omnibus Incentive Plan for a number of shares of the Company’s Common Stock with a grant date intrinsic value of $140,000. These RSUs fully vest on the first anniversary of the date of grant. With respect to a non-employee director’s firstinitial appointment or election to our Board of Directors, such non-employee director willwould receive an initial RSU award with a non-qualified stock option grant to purchase 75,000 sharesdate intrinsic value of our common stock, at an exercise price$210,000. The initial RSU award vests in equal annual installments over a three-year period following the grant date. With respect to the fair market valueannual and initial RSU awards, the number of our common stockshares awarded to each non-employee director is based on the average closing price of the Company’s Common Stock as reported on the Nasdaq Stock Market for the thirty (30) days ended on the date of grant, and vesting in equal monthly installments over a three-year period. the award.
Our current Compensation Committee has not yet established a policy with respectnon-employee directors are subject to our routine annual broad-basedshare ownership policy and our policy on securities trading, described in further detail under the “Compensation Discussion and Analysis” in this Proxy Statement.
In July 2023, the Board adopted the Avid Bioservices, Inc. Deferred Compensation Plan, effective July 7, 2023. The plan provides non-employee directors and certain highly compensated employees with an opportunity to defer up to 80% of their base compensation, 100% of their cash bonuses (if applicable), and up to 100% of certain restricted stock option grant program for fiscal year 2018.unit and performance stock unit awards.
The Audit Committee, in consultation with management, has approved the appointment of Ernst & Young LLP as our independent registered public accounting firm for fiscal year ending April 30, 2018.2024. Ernst & Young LLP has served in this capacity for each of the seventeen years ended April 30, 2017. During the seventeen23 fiscal years ended April 30, 2017,2023. During the 23 fiscal years ended April 30, 2023, there were no disagreements between the Company and Ernst & Young LLP on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure.
Representatives of Ernst & Young LLP are expected to be present atattend virtually the 2017 Annual Meeting with the opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions.
Stockholder ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm is not required by theour Bylaws or otherwise. However, the Board of Directors is submitting the appointment of Ernst & Young LLP to the stockholders for ratification as a matter of good corporate governance. If the stockholders fail to ratify the selection, the Audit Committee will reconsider whether or not to retain Ernst & Young LLP. Even if the selection is ratified, the Audit Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if the Audit Committee determines that such a change would be in the best interests of the Company and its stockholders.
Vote Required
The affirmative vote of holders of a majority of the shares of our Common Stock represented in person (virtually) or by proxy at the Annual Meeting and entitled to vote on the matter is required to ratify the appointment of Ernst & Young LLP to serve as our independent registered public accounting firm for the fiscal year ending April 30, 2024.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDSTHAT StockholdersVOTE “FORFOR” PROPOSAL No. 2 TO RATIFY THE APPOINTMENT OF Ernst & Young LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR the FISCAL YEAR ENDING APRIL 30, 2018.2024.
Independent Registered Public Accounting Firm Fees
The following summarizes aggregate fees billed to the Company for the fiscal years ended April 30, 20172023 and 20162022 by Ernst & Young LLP, our independent registered public accounting firm:
| 2017 | 2016 | |||||||
| Audit fees (1) | $ | 590,000 | $ | 496,000 | ||||
| Audit-related fees (2) | – | – | ||||||
| Tax fees (3) | – | – | ||||||
| All other fees (4) | 2,000 | 2,000 | ||||||
| Total fees | $ | 592,000 | $ | 498,000 | ||||
| 2023 | 2022 | |||||||
| Audit fees(1) | $ | 822,000 | $ | 675,000 | ||||
| Audit-related fees(2) | 9,000 | 13,000 | ||||||
| Tax fees(3) | – | 13,000 | ||||||
| Total fees | $ | 831,000 | $ | 701,000 | ||||
| (1) | Audit fees pertain to the audit of our annual consolidated financial statements for the fiscal years ended April 30, |
| (2) | This category consists of fees for assurance and related services reasonably related to the performance of the audit or review of financial statements and that are not reported under the Audit Fees category. |
| (3) | This category consists of fees for professional services rendered for tax compliance and tax advice. |
Pre-Approval Policy for Services Provided by our Independent Registered Public Accounting Firm
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 consistent with applicable SEC rules. From and after the effective date of the SEC rule requiring Audit Committee pre-approval of all audit and permissible non-audit services provided by an independent registered public accounting firm, the Audit Committee has pre-approved all audit and permissible non-audit services provided by Ernst & Young LLP.
Ernst & Young LLP did not perform any professional services with respect to information systems design and implementation for the years ended April 30, 2017 and 2016. The Audit Committee has considered whether the non-audit services provided by Ernst & Young LLP are compatible with maintaining that firm’s independence and has determined that the provision of such non-audit services is compatible with maintaining the independent registered public accounting firm’s independence.
Report of the Audit Committee of the Board of Directors
The Audit Committee reviews the Company’s financial matters and oversees the financial reporting process on behalf of our Board of Directors. The Audit Committee operates pursuant to a written Audit Committee Charter. In accordance with the Audit Committee Charter, we must meet the independence requirements and other criteria set by the NASDAQ Listing Rules and SEC rules as currently in effect. As part of our oversight of our Company’s financial statements, our Chairman of the Audit Committee reviews and discusses with both management and Ernst & Young LLP all annual and quarterly financial statements prior to their issuance. Our responsibilities include selecting, in consultation with management, an accounting firm to be hired as the Company’s independent registered public accounting firm. We are also responsible for recommending to the Board of Directors that the Company’s financial statements be included in its Annual Report on Form 10-K for the fiscal year ended April 30, 20172023 (the “Annual Report”). We have taken the following steps in making our recommendation that the Company’s financial statements be included in the Annual Report:
| 1. | Reviewed and discussed with both management and Ernst & Young LLP, the Company’s independent registered public accounting firm, for the fiscal year ended April 30, |
| 2. | Discussed with Ernst & Young LLP those matters required to be discussed by |
| 3. | Discussed with Ernst & Young LLP its independence and received from Ernst & Young LLP the written disclosures required by the applicable requirements of the PCAOB Ethics and Independence Rule 3526,Communications with Audit Committees Concerning Independence. This discussion and disclosure helped the Audit Committee in evaluating such independence. |
| 4. | Reviewed and discussed with the Company’s management and Ernst & Young LLP, the Company’s audited consolidated balance sheet at April 30, |
Based on the reviews and discussions explained above, the Audit Committee recommended to the Board of Directors that the Company’s audited consolidated financial statements be included in the Annual Report.
This report of the Audit Committee shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act or the Exchange Act, except to the extent we specifically incorporate this information by reference and shall not otherwise be deemed filed under either the Securities Act or the Exchange Act.
The Audit Committee of the Board of Directors
Carlton M. Johnson Jr. (Former Chairman and Former MemberGregory P. Sargen (Chair of the Board)Audit Committee)
David H. Pohl (Former Member of the Board)
Eric S. Swartz (Former Member of the Board)Catherine J. Mackey, Ph.D.
Esther M. Alegria, Ph.D.
Advisory Non-Binding Vote On The Compensation Of The Named Executive Compensation (“Say-On-Pay”)Officers
Background
The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) requires that stockholdersStockholders have thean opportunity to cast an advisory, (non-binding) vote on executive compensation (a so-called “say-on-pay” vote), as well as an advisory vote with respect to whether future “say-on-pay” votes will be held every one, two or three years (a so-called “say-on-frequency” vote). At the 2011 Annual Meeting, a majority of stockholders present and entitled tonon-binding vote on the proposal selected one year as the desired frequency of future stockholder “say-on-pay” votes with respect to the “say-on-frequency” proposal. As such, the Board of Directors adopted a resolution to hold “say-on-pay” votes annually. Since 2011, a majority of stockholders present and entitled to vote on the proposal have approved the “say-on-pay” proposal.
As described in detail under the heading “Compensation Discussion and Analysis,” our executive compensation programs are designed to attract, motivate and retain our named executive officers (our “NEOs”), who are criticalpaid to our success. Under these programs, our NEOs are rewarded for the achievement of both specific financial and strategic goals, which are expected to result in increased stockholder value. Please read the “Compensation Discussion and Analysis” and the tables and narrative that follow for additional details about our executive compensation programs, including information about the fiscal year ended April 30, 2017 compensation of our NEOs.
The Compensation Committee regularly reviews the compensation programs for our NEOs, including with the assistance of its independent compensation consultant, to ensure that they achieve the desired goals of aligning our executive compensation structure with our stockholders’ interests and with current market practices. This includes establishing target goals and objectives based on our strategic and operating plans. We closely monitor the compensation programs and pay levels of executives from other peer pharmaceutical and biopharmaceutical companies of similar size, stage of development and complexity, so that we may ensure that our compensation programs are within the norm of market practices. This enables us to retain our executive officers in a competitive market for executive talent.
We believe that our executive compensation programs have been effective at motivating the achievement of positive results, appropriately aligning pay and performance, and enabling us to attract and retain talented executives within our industry.
Recommendation
We request stockholder approval of our compensation of our NEOs for the fiscal year ended April 30, 2017Named Executive Officers (“NEOs”), as disclosed in this Proxy Statement pursuantStatement. This proposal, commonly known as a “Say-on-Pay” proposal, is currently conducted at each annual stockholders' meeting and gives stockholders the opportunity to either approve, reject or abstain from voting with respect to such compensation.
As discussed in the SEC’s compensation disclosure rules (which disclosure includes the “Compensation“Compensation Discussion and Analysis”, the compensation tables, and the narrative disclosures that accompany the compensation tables within the Executive CompensationAnalysis” section of this Proxy Statement). This vote is not intended to address any specific item of compensation, but ratherStatement, the overall compensationprimary objectives of our NEOsexecutive compensation program for fiscal year 2023 were to (i) attract and retain qualified executives with the philosophy, policiesrequisite skills and practices describedabilities to enable us to achieve our corporate goals and (ii) align the interests of executives with those of stockholders by rewarding executives for the Company’s achievement of its goals and increased stockholder value. While we believe that the Compensation Committee is in this Proxy Statement.the best position to determine whether the Company’s executive compensation program is appropriately tailored to meet these objectives, we appreciate and value our stockholders’ views. Your advisory, non-binding vote will serve as an additional tool for the Compensation Committee in assessing the Company’s executive compensation program.
Accordingly, we ask that youThe Board recommends a vote “FOR”in favor of the following resolution at our 2017 Annual Meeting:resolution:
“RESOLVED, that the stockholderscompensation paid to the Company’s NEOs, as disclosed pursuant to Item 402 of Peregrine Pharmaceuticals, Inc. (the “Company”) approve, on an advisory basis, the compensation of the named executive officers, as disclosedRegulation S-K in the Company’s 2023 Proxy Statement, for the 2017 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the fiscal year 2017 Summary Compensation Table and the other relatedcompensation tables and disclosure within the Executive Compensation section of this Proxy Statement.narrative discussion, is hereby APPROVED.”
Vote Required
The Say-on-Pay vote solicited for Proposal No. 3must receive the affirmative vote of at least a majority of the shares present in person (virtually) or by proxy at the meeting and entitled to vote thereon to be approved. Abstentions are considered votes present in person (virtually) or by proxy and thus have the same effect as votes “Against” the proposal. Broker non-votes, if any, will have no effect on the outcome of this proposal.
The Say-on-Pay vote is advisory, and therefore is not binding on the Company, our Board of Directors orus, our Compensation Committee nor will its outcome require the Company, our Board of Directors or our Board. The Say-on-Pay vote will, however, provide information to us regarding investor sentiment about our executive compensation philosophy, policies and practices, which the Compensation Committee to take any action. Moreover,will consider when determining executive compensation for the outcomeremainder of the current fiscal year and beyond. Our Compensation Committee values the opinions of our stockholders. To the extent there is any significant vote against the NEOs’ compensation as disclosed in this Proxy Statement, we will not be construed as overrulingendeavor to engage with stockholders to better understand the concerns that influenced the vote and consider our stockholders’ concerns. The Compensation Committee will evaluate whether any decision by the Company,actions are necessary to address those concerns.
Recommendation of the Board of Directors or the Compensation Committee. However, our Compensation Committee, which is responsible for designing and administering our executive compensation programs, values the opinions expressed by our stockholders in their vote on this Proposal and will consider the outcome of this vote when making future compensation decisions for our NEOs.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTEFOR “FOR” PROPOSAL NO. 3 TO APPROVE, ON AN ADVISORY BASIS, THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS AS DISCLOSED IN THIS PROXY STATEMENT.
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Advisory Vote On The Frequency Of An Advisory Vote On Executive Compensation (“Say-On-Pay Frequency Vote”)
Background
Pursuant to The Dodd-Frank Act and Section 14A of the Exchange Act, we are asking our stockholders to provide their input with regard to the frequency of future non-binding stockholder votes on our executive compensation programs, such as Proposal No. 3 of this Proxy Statement. In particular, we are asking whether the non-binding vote on executive compensation should occur every year, every two years or every three years. Currently, the non-binding vote on executive compensation occurs every year.
Summary
Our Board of Directors has determined that an annual advisory vote on executive compensation is the most appropriate alternative for Avid. The Board’s determination was influenced by the fact that the compensation of our named executive officers is evaluated, adjusted and approved on an annual basis. As part of the annual review process, the Board believes that stockholder sentiment should be a factor that is taken into consideration by the Board and the Compensation Committee in making decisions with respect to executive compensation. By providing an advisory vote on executive compensation on an annual basis, our stockholders will be able to provide us with direct input on our compensation philosophy, policies and practices as disclosed in the proxy statement every year. Accordingly, our Board recommends that the advisory vote on executive compensation be held every year.
You may cast your vote by choosing the option of one year, two years or three years or abstain from voting when you vote on the resolution set forth below.
Resolution
“RESOLVED, that the stockholders of the Company determine, on an advisory basis, that the frequency with which the stockholders of the Company wish to have an advisory vote on the compensation of the Company’s named executive officers as disclosed pursuant to the SEC’s compensation disclosure rules (which disclosure includes the Compensation Discussion and Analysis, the Summary Compensation Table, and the related tables and disclosure) is:
| · | Choice 1 – one year (recommended by the Board of Directors); | |
| · | Choice 2 – two years; | |
| · | Choice 3 – three years; or | |
| · | Choice 4 – abstain from voting |
Vote Required
A plurality of the shares of Common Stock present in person (virtually) or represented by proxy at the Annual Meeting and entitled to vote is required to approve, on a non-binding basis, the frequency of a non-binding vote on the compensation of our Named Executive Officers. Thus, the choice receiving the highest number of votes will be considered the frequency recommended by stockholders. Stockholders are not voting to approve or disapprove the Board’s recommendation.
Abstentions and broker non-votes will not have any effect on the outcome of this proposal because neither an abstention nor a broker non-vote represents a vote cast.
The “say-on-pay” frequency vote is advisory, and therefore not binding on the Company, the Board of Directors or the Compensation Committee. The Board may decide that it is in the best interests of our stockholders and the Company to hold future advisory resolutions to approve named executive officer compensation more or less frequently than the option approved by our stockholders. However, the Board of Directors and the Compensation Committee will consider the outcome of the vote in determining the frequency with which the Company will hold the non-binding vote on executive compensation. Although the Board and the Compensation Committee will consider the outcome of the vote in determining the frequency with which the Company will hold the non-binding vote on executive compensation, we expect the next non-binding vote on executive compensation will occur at the 2024 annual meeting of stockholders.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE CHOICE OF “ONE YEAR” AS THE FREQUENCY WITH WHICH THE COMPANY SHOULD PROVIDE ITS STOCKHOLDERS WITH THE OPPORTUNITY TO CAST A “SAY-ON-PAY” ADVISORY VOTE WITH RESPECT TO THIS PROPOSAL NO. 4.
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Security Ownership Of Certain Beneficial Owners, Directors And Management
Share Ownership
The following table sets forth certain information regarding the beneficial ownership of our common stockCommon Stock as of November 27, 2017,August 15, 2023, by: (i) each stockholder known to us to beneficially own more than 5% of our common stock; (ii) each stockholder known to us to beneficially own more than 5% of our Series E PreferredCommon Stock; (iii) each current director and director nominee; (iv) our Named Executive Officers foras of April 30, 2023 (including any individual who served as a principal executive officer or principal financial officer at any time during the fiscal year ended April 30, 2017;2023); and (v) all current directors and executive officers of the Company as a group.
Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to shares of common stock.our Common Stock. Under these rules, (i) shares of common stockCommon Stock subject to any option warrant or other right that are exercisable or convertible within 60 days of November 27, 2017, and shares of common stock that could be acquired through the conversion of our outstanding Series E Preferred Stock, and (ii) shares of our Series E Preferred Stockafter August 15, 2023 are each deemed beneficially owned and outstanding for computing the percentage ownership of the individual or entity holding such securities, but are not considered outstanding for computing the percentage ownership of any other person. Unless otherwise indicated, each person named below holds sole investment and voting power, other than the powers that may be shared with the person’s spouse under applicable law.
| Beneficial Ownership of Common Stock | |||
| Name and Address of Beneficial Owner | Number of Shares | Percent(a) | |
| 5% or Greater Stockholders: | |||
| BlackRock, Inc.(b) | 9,815,050 | 15.55% | |
| Vanguard Group Inc.(c) | 4,413,832 | 6.99% | |
| T. Rowe Price Investment Management, Inc.(d) | 3,915,867 | 6.20% | |
| State Street Corporation(e) | 3,883,819 | 6.15% | |
| AltraVue Capital, LLC (f) | 3,730,971 | 5.91% | |
| Named Executive Officers and Current Directors(g): | |||
| Nicholas S. Green | 224,970 | (h) | * |
| Daniel R. Hart | 289,221 | (h) | * |
| Richard A. Richieri | 122,970 | (h) | * |
| Matthew R. Kwietniak | 19,186 | (h) | * |
| Mark R. Ziebell | 261,974 | (h) | * |
| Esther M. Alegria, Ph.D | 6,273 | (h) | * |
| Joseph Carleone, Ph.D. | 198,261 | (h) | * |
| Richard B. Hancock | 198,720 | (h) | * |
| Catherine J. Mackey, Ph.D. | 68,816 | (h) | * |
| Gregory P. Sargen | 124,305 | (h) | * |
| Jeanne A. Thoma | 20,642 | (h) | * |
| All directors and executive officers as a group (11 persons) | 1,535,338 | 2.39% | |
All share and per share amounts of our common stock for all periods presented have been retroactively adjusted to reflect the one-for-seven reverse stock split of our issued and outstanding common stock, which took effect on July 10, 2017.
| Beneficial Ownership of Common Stock | Beneficial Ownership of Series E Preferred Stock | ||||||||||||||
| Name and Address of Beneficial Owner | Number of Shares | Percent (a) | Number of Shares | Percent (a) | ||||||||||||
| 5% or Greater Stockholders: | ||||||||||||||||
| Eastern Capital Limited (b) 10 Market Street, #773 Grand Cayman, KY1-9006 Cayman Islands | 4,300,993 | 9.40 | % | 440,000 | 26.70 | % | ||||||||||
| Tappan Street Partners, LLC (c) 33 Irving Place, Third Floor New York, NY 10003 | 3,829,504 | 8.47 | % | |||||||||||||
| Tappan Street Partners Fund L.P. 33 Irving Place, Third Floor New York, NY 10003 | ||||||||||||||||
| Tappan Street Partners Ideas Fund L.P. 33 Irving Place, Third Floor New York, NY 10003 | ||||||||||||||||
| Prasad Phatak 33 Irving Place, Third Floor New York, NY 10003 | ||||||||||||||||
| Ronin Trading, LLC (d) 350 N. Orleans Street, Suite 2N Chicago, IL 60654 | 3,310,652 | 7.30 | % | 115,299 | 7.00 | % | ||||||||||
| John S. Stafford, III 350 N. Orleans Street, Suite 2N Chicago, IL 60654 | ||||||||||||||||
| Stephen White (e) 737 N Michigan Avenue, Suite 2250 Chicago, IL 60611 | 714,047 | 1.58 | % | 11,800 | * | |||||||||||
| SW Investment Management LLC 737 N Michigan Avenue, Suite 2250 Chicago, IL 60611 | ||||||||||||||||
| SWIM Partners LP 737 N Michigan Avenue, Suite 2250 Chicago, IL 60611 | ||||||||||||||||
| Roger Farley (f) 350 N. Orleans Street, Suite 2N Chicago, IL 60654 | 301,190 | * | 1,000 | * | ||||||||||||
| Named Executive Officers and Current Directors (g): | ||||||||||||||||
| Steven W. King | 434,808 | (h) | * | |||||||||||||
| Paul J. Lytle | 234,148 | (h) | * | |||||||||||||
| Joseph S. Shan | 152,977 | (h) | * | |||||||||||||
| Shelley P.M. Fussey, Ph.D. | 139,868 | (h) | * | |||||||||||||
| Mark R. Ziebell | 135,003 | (h)(i) | * | 900 | * | |||||||||||
| Mark R. Bamforth | 56,249 | (h) | * | |||||||||||||
| Joseph Carleone, Ph.D. | 2,083 | (h) | * | |||||||||||||
| Richard B. Hancock | 2,083 | (h) | * | |||||||||||||
| Roger J. Lias, Ph.D. | – | * | ||||||||||||||
| Joel McComb | 2,083 | (h) | * | |||||||||||||
| Gregory P. Sargen | 2,083 | (h) | * | |||||||||||||
| Patrick D. Walsh | 6,249 | (h) | * | |||||||||||||
| All current directors and executive officers as a group (12 persons) | 1,167,634 | 2.53 | % | 900 |
* | |||||||||||
________________
| * | Represents less than 1% of the outstanding shares of our | |
| (a) | Applicable percentage ownership of |
| (b) | The information set forth herein is based solely on a |
| (c) | The information set forth herein is based solely on a |
| (d) | The information set forth herein is based solely on a |
| (e) | The information set forth herein is based solely on a |
| (f) | The information set forth herein is based solely on a |
| (g) | The address of all of our executive officers and directors is c/o |
| (h) | Includes shares that such individuals have the right to acquire as of |
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our executive officers and directors, and persons who own more than 10% of a registered class of our equity securities (“Reporting Persons”), to file reports of ownership and changes in ownership with the SEC and with NASDAQ. Reporting Persons are required by SEC regulations to furnish us with copies of all forms they file pursuant to Section 16(a).
Based solely on our review of the copies of such reports we received, and written representations from certain Reporting Persons that no other reports were required for those persons, to the best of our knowledge, we believe that during the year ended April 30, 2017, each of the Reporting Persons met all applicable Section 16(a) filing requirements and filed all required filings on a timely basis.
COMPENSATION DISCUSSION AND ANALYSIS
The following is a discussion and analysis of our executive compensation program and compensation decisions made for the fiscal year ended April 30, 2023 (“fiscal year 2023”). This discussion relates to the executive officers named in the Summary Compensation Table included within the Compensation Discussion and Analysis section of this Proxy Statement. We refer to these officers as the “Named Executive Officers” or “NEOs.”
IntroductionFiscal Year 2023 in Review
For the fiscal year 2023, we built upon the momentum from the prior fiscal years and continued to make strong progress towards our long-term goals. We are keenly focused on achieving our corporate goals, in alignment with our broader purpose to return long-term value to our stockholders.
Among our accomplishments for fiscal year 2023 were the following:
| · | Reported revenues of $149.3 million, an increase of 25%, or $29.7 million, compared to the fiscal year ended April 30, 2022 (“fiscal year 2022”), representing an all-time high; | |
| · | Expanded our customer base and programs with existing customers and ended fiscal year 2023 with a backlog of $191 million, representing a net increase of 25% compared to $153 million at the end of fiscal year 2022; | |
| · | Completed the final phase of our Myford facility expansion opening additional CGMP mammalian cell manufacturing suites and completed the expansion of our mammalian cell process development laboratories, adding approximately $120 million of annual revenue generating capacity; and | |
| · | Opened the analytical and process suites within our world-class, purpose-built cell and gene therapy development and CGMP manufacturing facility in Costa Mesa, California, and continued to advance the build-out of the CGMP manufacturing suites. |
In summary, fiscal year 2023 was another strong year of top line revenue growth coupled with an increase in our backlog which was well timed with the opening of our additional manufacturing capacity in our Myford mammalian cell manufacturing facility, which we believe positions Avid for long-term continued growth.
Executive Summary
The Compensation Committee of the Board is responsible for establishing, implementing and overseeing our overall compensation strategy and policies, including our executive compensation program, in a manner that supports our business objectives. The Compensation Committee believes that attracting, motivating, retaining, and rewarding superior executive talent is key to delivering attractive stockholder returns, and that an appropriately structured executive compensation program is critical to that end. For fiscal year 2023, the Compensation Committee continued to maintain an executive compensation philosophy designed to tie executive compensation to the successful execution of our overall corporate goals and adherence to our core values that best serve the interests of our stockholders. The Compensation Committee’s complete roles and responsibilities are set forth in a written charter of the Compensation Committee adopted by our Board of Directors, which can be found at our website, http://ir.peregrineinc.com/governance.cfm.ir.avidbio.com/corporate-governance.
This Compensation Discussion and Analysis explains our compensation philosophy, policies and practices
Our Named Executive Officers for the fiscal year ended April 30, 2017 for2023 were the following executive officers, who are referred to in this Compensation Discussion and Analysis and the subsequent tables as our “Named Executive Officers” or “NEOs”:individuals:
| · |
| · |
| · |
| · |
| · | Mark R. Ziebell, Vice President, General Counsel and Corporate |
Overview
| (1) | During fiscal year 2023 the Board designated Messrs. Richieri and Kwietniak as executive officers as defined by Rule 3b-7 of the Exchange Act, and therefore they were eligible to be considered NEOs for fiscal year 2023. |
Executive
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Compensation Philosophy
The Company’s compensation philosophy is to provide compensation that will attract, motivate, retain and reward high-performing talent in our industry and foster a pay-for-performance philosophy by tying a significant portion of pay to financial performance as well as other goals that support the creation of sustainable long-term stockholder value. The Company believes that the compensation of its executive officers should align the executive officers’ interests with those of the stockholders and focus executive officer behavior to achieve both near-term corporate goals and long-term business objectives and strategies.
Compensation Objectives
The Company’s compensation programs affect all employees by setting general levelsfor its executive officers are designed to provide the following:
| Element | Objective(s) |
| Base Salary | ·Provides a fixed level of compensation that is competitive with the external market and reflects each executive’s contributions, experience, responsibilities and potential to contribute to our future success |
| Annual Cash Bonus Plan | · Aligns short-term compensation with our annual corporate goals, balanced with individual accountability · Motivates and rewards the achievement of annual corporate goals that support long-term value creation |
| Long-term Equity Incentives | · Drives Company performance and aligns executives’ interests with the long-term interests of our stockholders · Motivates and rewards the achievement for stock price growth · Promotes executive retention and stock ownership, and focuses executives on enhancing stockholder value |
| Benefits | · Promotes health and wellness · Provides financial protection in the event of disability or death · Provides tax-beneficial ways for executives to save towards their retirement, and encourages savings through competitive matches to executives’ retirement savings |
The Compensation Committee believes that combining short-term compensation components (such as base salaries and annual cash incentive bonuses) and long-term compensation components (such as time-based and performance-based equity incentive awards) provides an overall compensation structure that is consistent with the compensation philosophy of both attracting and retaining key executives and providing incentive for the achievement of short and long-term corporate goals, as well as aligning executives’ interests with those of our stockholders.
Compensation Process
Role of the Compensation Committee in Setting Executive Compensation
It is the responsibility of the Compensation Committee to administer the Company’s compensation programs to ensure that they are competitive with specific peers within the contract development and helpingmanufacturing organizations industry segment, as well as companies within the broader life sciences industry having a comparable profile, and to include incentives that are designed to appropriately drive the Company’s continued efforts to create an environment of goals, rewards and expectations. Because we believestockholder value. The Compensation Committee annually evaluates the performance of every employee is importantour executive officers relative to our success, we are mindfulcorporate goals and objectives and reviews and approves all components of executive officer compensation, including base salaries, annual cash incentive compensation, and equity incentive compensation. Details of the effectCompensation Committee’s authority and responsibilities are specified in its charter, which may be accessed at http://ir.avidbio.com/corporate-governance.
In determining each executive officer’s compensation, our Compensation Committee reviews our corporate financial performance and financial condition and assesses the performance of the individual executive officers. The Chief Executive Officer evaluates the performance of the other executive officers and develops individual recommendations based upon peer group benchmarking data prepared by the Compensation Committee’s independent compensation consultant. The Chief Executive Officer and the Compensation Committee may make adjustments to the recommended compensation based upon an assessment of an individual’s performance and contributions to the Company. The compensation for the Chief Executive Officer is assessed and established by the Compensation Committee. This assessment is based on the peer group benchmarking data and other factors described in this Compensation Discussion and Analysis, and adjustments may be made based upon the non-employee directors’ evaluation, conducted under the supervision of the Corporate Governance Committee, of the Chief Executive Officer’s performance and contributions.
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Although the Compensation Committee generally makes several compensation decisions in the first quarter of the fiscal year, the compensation evaluation process is ongoing. Compensation discussions and decisions are designed to promote our fundamental business objectives and strategy. Evaluation of management performance and rewards is performed annually or more often as needed.
Independent Compensation Consultant
In establishing compensation levels for each executive officer, the Compensation Committee has the authority to engage the services of outside consultants. For fiscal year 2023 executive compensation decisions, the Compensation Committee engaged Radford as its independent compensation consultant to assist the Compensation Committee in reviewing the Company’s peer group, reviewing our executive compensation program, assessing the competitiveness and incentive programs haveeffectiveness of such program relative to our peer group, and advising our Compensation Committee on allmatters related to executive compensation. As part of our employees.its engagement, Radford assisted the Compensation Committee by providing the following services:
| · | Reviewing peer group and pay philosophy for go-forward competitiveness; | |
| · | Assessing the executive compensation program and developing recommendations covering salary, incentives and equity compensation; | |
| · | Reviewing peer long-term incentive trends, including dilution, vehicle mix and use of performance-based equity; and | |
| · | Presenting its analysis to the Compensation Committee and assisting in assessing the competitiveness of our executive officer compensation program as benchmarked against our peer group. |
Radford served at the discretion of and reported to the Compensation Committee. The Compensation Committee assessed the independence of Radford taking into account, among other things, the independence standards and factors set forth in Exchange Act Rule 10C-1 and the applicable Nasdaq Listing Standards, and concluded that there were no conflicts of interest with respect to the work that Radford performed for the Compensation Committee.
The employment marketFactors for personnelDetermining Compensation
Market Benchmarks and executivesCompetitive Analysis
In connection with experienceits engagement Radford provided the Compensation Committee with an evaluation of its peer group review which had been last updated in February 2021. As a result of this evaluation the biotechnologyCompensation Committee approved an updated peer group in which 4 companies were added to the peer group and pharmaceutical industry in Southern California is very competitive because there are several pharmaceutical, biotechnology and medical device4 companies in that region. The majority of our competitors in this geographic area have more resources than we do, which makes it more difficult for uswere removed from the peer group compared to hire and retain key personnel.the prior fiscal year. As a result, the Compensation Committee must establishfollowing 14 companies were included in the Company’s peer group for benchmarking executive compensation packages that will enable the Company to be competitive with the local market.for fiscal year 2023:
New Additions for Fiscal Year 2023 | Retained for Fiscal Year 2023 | Removals for Fiscal Year 2023 |
| CareDx | ANI Pharmaceuticals, Inc. | Catalent |
| Pacific Biosciences | ChromaDex Corporation | IBio, Inc. |
| Sangamo Therapeutics | Codexis, Inc. | Repligen |
| Twist Biosciences | Codiak BioSciences | Syneos Health |
| Emergent BioSolutions | ||
| Standard Biotools Inc. (formerly, Fluidigm Corporation) | ||
| Harvard Bioscience, Inc. | ||
| Lifecore Biomedical (formerly, Landec Corp) | ||
| Quanterix | ||
| Rigel Pharmaceuticals |
Given
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In proposing the competitive environmentabove peer group, Radford emphasized contract development and manufacturing organizations (“CDMOs”), contract manufacturing organizations and contract research organizations, and included other bio-pharmaceutical and biotechnology companies that have their own manufacturing technology and/or facility. In addition, at the time of selection most of the peer companies had annual revenues of up to $300 million, a market capitalization of between $300 million and $4 billion, and fewer than 1,000 employees. Catalent, Repligen and Syneos Health were removed from the peer group for fiscal year 2023 because they were outsized peers.
Based on the above peer group, Radford provided the Compensation Committee with an analysis of base salary, target bonus, target total cash, long-term incentive value and target total compensation for executives. The Compensation Committee uses the peer group compensation data as one of several factors in which we operate, ourdetermining appropriate compensation parameters for base salary, variable cash compensation and equity-based, long-term incentives. The Compensation Committee’s executive compensation programsdecisions are designedmade on a case-by-case basis, and specific benchmark results do not, in and of themselves, determine individual target compensation decisions.
The Compensation Committee generally targets each NEO’s total compensation to deliver compensation that is competitive with ourthe 50th percentile of the peer group, although individual elements of compensation may be above or below the 50th percentile. Additionally, the Compensation Committee considers a number of additional factors to determine the appropriate level of each NEO’s total compensation and that allows useach component of compensation, including the Company’s financial and operational performance and the relevant executive’s performance, experience, responsibilities and impact. Due to attractthese other factors, the Compensation Committee may set an NEO’s total compensation below, at or above the 50th percentile of the peer group.
Performance
One of the primary objectives of our compensation program is to motivate our Named Executive Officers to achieve our short and retain superior talent who can perform effectivelylong-term strategic goals. These corporate goals for fiscal year 2023 were tied to increasing revenue, backlog, adjusted net income and succeed in a demanding business environment. Ourearnings before interest, taxes, depreciation and amortization. In addition to linking compensation programs are also designed to rewardthe attainment of pre-approved corporate goals, individual performance is assessed against pre-established corporate and individual goals and alignsuch as continuing to diversify our client base, increasing production capacity through facilities expansion, continuing the interestsdiversification of our executivesservice offering into the cell and gene therapy market, managing operational and expansion costs and improving operational efficiencies, and more subjective, non-formulaic, criteria, such as:
| · | involvement in, and responsibility for, the development and implementation of our strategic plans and the attainment of our strategic and operating objectives; | |
| · | participation in the achievement of our corporate goals; and | |
| · | contribution to the management team and application of managerial leadership skill. |
“Say-on-Pay” Consideration
We provide our stockholders with the opportunity to cast an advisory vote on executive compensation (a “say-on-pay advisory proposal”) every year. We value our stockholders’ opinions and feedback and are committed to understanding the priorities and concerns of our stockholders. We believe that ongoing engagement builds mutual trust and alignment with our stockholders and is essential to our long-term success. At our 2022 Annual Meeting, approximately 99% of the shares that voted at the meeting approved, on an advisory basis, the compensation of our executive officers should focus executive behavior on the achievementNamed Executive Officers for fiscal year 2022. The Compensation Committee views this outcome as an indication of near-term corporate targets as well as long-term business objectives and strategies. We believe that pay-for-performance compensation programs, which reward our executives when they achieve individual and/or corporate goals, create stockholder value and thus have emphasized company and individual performance in setting compensation. We use a combinationstockholders’ positive views of base salary, annual cash incentive compensation programs, a long-term equity incentiveour compensation program, and a broad-based benefits programwill continue to create a competitive compensation package forreview our executive management team.compensation programs to ensure they appropriately address our key objectives for the fiscal year ending April 30, 2024.
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Our President and Chief Executive Officer, who attends most meetings of the Compensation Committee, assists the Compensation Committee in determining the compensation of all other executive officers by, among other things:
The other executive officers do not have a role in determining their own compensation, other than discussing their annual individual performance objectives with the President and Chief Executive Officer.
Independent Compensation Consultants
The Compensation Committee has the authority to directly retain the services of independent consultants and other experts to assist in fulfilling its responsibilities. For the fiscal year ended April 30, 2017, the Compensation Committee engaged Barney & Barney LLC, or Barney & Barney,to review our executive compensation programs and to assess our executive officers’ base salaries, short-term incentive opportunities, target and actual total cash, long-term incentive value and total direct compensation from a competitive standpoint. As described herein, Barney & Barney assisted the Compensation Committee in defining the appropriate market of our peer companies for executive compensation and practices and in benchmarking our executive compensation program against the peer group. The Compensation Committee has adopted a compensation philosophy of targeting our executive compensation to the 50th percentile of executive compensation of our peer group. Executive compensation may be above or below the 50th percentile based on an executive’s experience, scope of position, individual performance and Company constraints.
The Compensation Committee uses the information it obtains from Barney & Barney primarily for evaluating our executive compensation practices, including measuring the competitiveness of our practices. The Compensation Committee also uses the information obtained from Barney & Barney to review our cash bonus policy, equity awards, and base salary benchmarks across all levels of the Company. The Compensation Committee has assessed the independence of Barney & Barney pursuant to SEC rules and theNASDAQcorporate governance rules and concluded that no conflict of interest exists that would prevent Barney & Barney from independently advising the Compensation Committee. In compliance with the SEC and the NASDAQ corporate governance rules, Barney & Barney provided the Compensation Committee with a letter addressing each of the six independence factors described in those rules. Their responses affirm the independence of Barney & Barney and its employees who service the Compensation Committee on executive compensation matters.
Components of Our Fiscal Year 2023 Executive Compensation Program
The primary elements of our executive compensation program are:
TheOur Compensation Committee has structured our executive compensation program to ensure that executive officers are compensated in a manner consistent with stockholder interests, competitive pay practices and applicable regulatory requirements.
TheOur Compensation Committee doesdid not have any formal or informal policy or target for allocating compensation between long-term and short-term compensation, or between cash and non-cash compensation or between fixed and performance-based compensation. Instead, the Compensation Committee, after reviewing information provided by an independent compensation consulting firm, determines subjectivelythe Radford analysis, determined what it believes to be thean appropriate level and mix of the various compensation components that it believes appropriate to achieve the compensation and corporate objectives described in this discussion.
Base Salary
Base salary represents the fixed portion of an executive officer’s compensation and is used to recognize the experience, skills, knowledge and responsibilities required of all our employees, including our executives, andintended to provide a fixed amount of compensation for performing dailyday-to-day performance. The Compensation Committee believes that a competitive base salary is a necessary element of any compensation program that is designed to attract and retain talented and experienced executives. Each executive officer’s base salary is initially determined upon hire or promotion based on the executive officer’s responsibilities, prior experience, individual compensation history and also provide stabilitysalary levels of other executives within the Company and security. When reviewingsimilarly situated executives within our peer group. Base salary is typically reviewed annually. The Compensation Committee believes that the base salaries forpaid to our executive officers during the fiscal year ended April 30, 2017,2023 achieved the Compensation Committee considered various data regardingCompany’s compensation objectives. The following are the base salaries of executive officers in comparable positions at other biotechnology companies. Additional factors included, but were not limited to, company size, market capitalization, stage of development of a company’s productsour NEOs for fiscal years 2023 and geographic location.2022:
| Named Executive Officer | 2023 Annual Base Salary(1) | 2022 Annual Base Salary | Annual Base Salary Increase |
| Nicholas S. Green | $650,000 | $600,000 | 8.3% |
| Daniel R. Hart | $445,000 | $430,000 | 3.5% |
| Richard A. Richieri | $375,000 | $365,000 | 2.7% |
| Matthew R. Kwietniak | $362,000 | $350,000 | 3.4% |
| Mark R. Ziebell | $425,000 | $414,000 | 2.7% |
| (1) | In June 2022, the Compensation Committee approved the above increases in the annual base salaries of our NEOs for fiscal year 2023. The compensation report prepared by Radford showed that the 2023 annual base salaries for each of the NEOs is competitive with the 50th percentile among the Company’s peer group as disclosed above. These base salary increases were based on each named executive officer’s performance, qualifications, experience, responsibilities and Radford’s benchmarking against our peer group. |
Annual Cash Bonus Plan
Consistent with prior fiscal years, for fiscal year 2023 the Compensation Committee also consideredestablished an annual cash bonus plan (the “Annual Cash Bonus Plan”) for all eligible employees, including our NEOs. Under the individual experience level and actual performanceAnnual Cash Bonus Plan, participating employees are eligible to earn an incentive cash bonus based on their target bonus percentage, which is a percentage of each executive officer in lighttheir annual base salary, our attainment of our needs and objectives. The Compensation Committee also reviewed an analysis from Barney & Barney, our independent compensation consulting firm, to ensure that base salaries are competitive and within the competitive range of other biotechnology companies in our peer group.
Base salaries are reviewed at least annuallycertain corporate goals approved by the Compensation Committee at the beginning of the fiscal year and may be adjusted to realign salaries with market levels after taking into accounteach employee’s individual responsibilities, performance and experience, subjectcontributions towards the achievement of the corporate goals. Our CEO’s annual cash bonus is 100% based on our achievement against the corporate goals and the other NEOs’ annual cash bonus is 70% based on our achievement against the corporate goals and 30% based on each NEO’s individual performance and contributions to minimum salary requirementsthe achievement of the corporate goals.
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Target bonus percentages are benchmarked against our peer group and generally correlate to the level of responsibility of the NEO, with higher target bonus percentages generally reserved for executives having more responsibility. The target bonus percentages as approved by our Compensation Committee for fiscal year 2023, which were unchanged from fiscal year 2022, are set forth in applicable employment agreements. Base salaries may be increased for merit reasons, based on the executive’s success in meeting or exceeding individual performance objectives as well as our combined success in meeting corporate goals, including contract manufacturing revenue goals and research and development goals. An executive’s base salary is also evaluated by reviewing the executive’s other compensation components to ensure that the executive’s total compensation is in line with our overall compensation philosophy as discussed above.
The following annual base salary amounts of our Named Executive Officers for the fiscal year ended April 30, 2017 were determined based on the “Factors for Determining Compensation”, as noted below:table:
Named Executive Officer | Target Bonus Percentage | |||
| 100% | ||||
| 50% | ||||
| 40% | ||||
| 40% | ||||
| Mark R. Ziebell | 40% | |||
For fiscal year 2023, the Compensation Committee established three corporate goals and corresponding financial performance targets for each goal. The above annual base salariesthree corporate goals were Adjusted EBITDA, Revenue and Backlog. “Adjusted EBITDA” is a non-GAAP measure that is defined by the Company as net income plus interest, taxes, depreciation and amortization, determined by reference to our audited financial results, and further adjusted by stock-based compensation and other adjustments deemed appropriate and approved by the Board of Directors. “Revenue” is measured against our audited financial results for fiscal year ended2023. “Backlog” represents our signed customer orders as of April 30, 2017 reflect2023. The Compensation Committee believes use of these metrics is appropriate as they are important indicators of future growth and increased profitability, and are commonly used by investors and analysts when reviewing our performance.
For fiscal year 2023 Adjusted EBITDA determined funding of the Annual Cash Bonus Plan bonus pool with a four percent (4%) increase for Messrs. King, Lytle and Ziebell,minimum or threshold of 1% of target and a three percent (3%) increasemaximum of 130% of target. The Adjusted EBITDA target for Mr. Shan, which werefiscal year 2023 approved by the Compensation Committee on June 9, 2016 and retroactively applied towas $24.6 million, which includes the beginningaccrual of fiscal year 2017.
Annual Cash Bonus Plan2023 bonuses assuming achievement at 100% of target for the Revenue and Backlog goals. If the Company achieved positive Adjusted EBITDA, the bonus pool is then further adjusted by the Company’s performance against the goals for Revenue and Backlog, which are each given a 50% weight, with a minimum or threshold of 85% of target and a maximum of 115% of target. For actual performance levels between the “Threshold” and “Target”, the potential award percentage for each metric is interpolated on a straight-line basis, and for performance levels between “Target” and “Maximum”, the potential award percentage for each metric is interpolated applying a 2x multiplier. For example, achieving 105% of a performance metric would result in a 110% payout for such performance metric.
| Performance Metric (Dollars in millions) | Threshold | Target | Maximum | Weight |
| Revenue | $121.6 | $143.0 | $164.5 | 50% |
| Backlog | $146.2 | $172.0 | $197.8 | 50% |
In July 2011,
The determination of the Compensation Committee adopted and approved a formalbonus amounts under the Annual Cash Bonus Plan (the “Bonus Plan”) for its Named Executive Officers for performance for the fiscal year ended April 30, 2012 and for each subsequent fiscal year, unless amended, which the Compensation Committee uses to determine the annual bonuses awarded to Named Executive Officers. The Compensation Committee may also make discretionary bonuses outside of the framework of the Bonus Plan, but in general, each participant’s annual cash bonus under the Bonus Plan2023 is determined by multiplying the participant’s annual base salary for the applicable fiscal year by (a) a corporate goal achievement percentage ranging from 0% to 100%, (b) a target bonus percentage for such participant, generally targeted for the 50th percentile of our peer groups, and (c) a corporate factor ranging from 0 to 1.5, based on the Company’s achievement of corporate goals, the participant’s achievement of individual goals, the participant’s role and responsibilities within the Company, and other factorsillustrated as determined by the Compensation Committee.follows:
| Bonus Payout ($) | = | Base Salary ($) | x | Target Bonus % | x | Corporate Performance Achievement % (Weighted) | x | Individual Performance Achievement % (Weighted) |
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The Company’s corporate goals are set at or around the beginning of eachCorporate Performance Results
For fiscal year 2023, our performance against the Adjusted EBITDA bonus funding target and the two-performance metrics was as follows ($ in millions):
| Target | Actual Result | Actual Achieved | Bonus Achieved | Bonus Earned | Weight | Total Earned | |
| Adjusted EBITDA | $24.6 | $21.7 | 88% | N/A | Bonus Funded Amount (A) | 88% | |
| Revenue | $143.0 | $149.3 | 104% | 109% | 109% | 50% | 54% |
| Backlog | $172.0 | $191.0 | 111% | 122% | 122% | 50% | 61% |
| Weighted Target Earned (B) | 115% | ||||||
| Total Bonus Payout (A x B) | 102% | ||||||
As illustrated by the Compensation Committee, based on recommendations from the Company’s management. At the end of eachabove table, for fiscal year 2023 the Compensation Committee determines the extent to whichoverall achievement against the corporate goals were achieved (expressed as a percentage) andwas 102%.
Individual Performance Results
Our CEO determined the individual performance component for each participant’s corporate factorNEO (other than the CEO) to be 100%.
Fiscal Year 2023 Annual Cash Bonus Plan Payouts
The actual cash bonuses earned by our NEOs for fiscal year 2023 based on a quantitative and qualitative review of such participant’sthe performance in addition to other factors determined by the Compensation Committee. Each participant’s individual goals, which are aligned to support the corporate goals, are also set at or around the beginning of each fiscal year and are also evaluated based on a quantitative and qualitative review of performance. The chair of the Compensation Committee will recommend the President and Chief Executive Officer’s individual goals and individual factor to the Compensation Committee and the President and Chief Executive Officer will recommend other executive officers’ individual goals and individual factors to the Compensation Committee. All individual goals and individual factorsresults described above are set byforth in the Compensation Committee. Corporate goals and individual goals may be modified by the Compensation Committee during the applicable fiscal year based on operational and financial developments.following table:
Following the end of the fiscal year, the Compensation Committee reviews performance relative to each corporate goal and determines the achievement level of each corporate goal, and then calculates an overall aggregate achievement percentage (not to exceed 100%), which takes into consideration the individual weighting attributed to each corporate goal. The Compensation Committee does not use a strict formula in assessing the Company’s level of achievement with respect to each goal, but rather considers factors such as:
| Named Executive Officer | Bonus Payment(1) |
| Nicholas S. Green | $662,000 |
| Daniel R. Hart | $225,400 |
| Richard A. Richieri | $151,900 |
| Matthew R. Kwietniak | $146,700 |
| Mark R. Ziebell | $172,200 |
| Mr. Green’s bonus was based 100% on the |
| goals at 102%. All other NEOs’ bonuses were based 70% on the |
The following table sets forth the corporate goals established by the Compensation Committee for the fiscal year ended April 30, 2017 and the weighting the Compensation Committee assigned to each corporate goal, and, based on the Compensation Committee’s review of our performance during fiscal year 2017 relative to the corporate goals, the achievement percentage for each corporate goal and the adjusted weighting based on our performance:
| Goal | Weighting | Achievement | Adjusted Weighting |
| Generate $60 million in third-party contract manufacturing revenue | 45% | 96% | 43.2% |
| Implement and/or evaluate new contract manufacturing revenue opportunities | 5% | 67% | 3.3% |
| Analyze and present underlying Phase III SUNRISE data | 20% | 100% | 20% |
| Initiate an immuno-oncology company sponsored combination trial | 5% | 0% | 0% |
| Support initiation of two to five new trials through NCCN program | 5% | 100% | 5% |
| Enter into two new collaborations with immuno-oncology leaders | 5% | 50% | 2.5% |
| Advance exosome diagnostic technology | 5% | 100% | 5% |
| Evaluate new opportunities for antibody discovery program | 5% | 0% | 0% |
| Conduct preclinical studies for early stage opportunities | 5% | 100% | 5% |
| Total | 100% | 84% |
As depicted in the above table, the Compensation Committee determined that the aggregate achievement percentage with respect to our corporate goals for the fiscal year ended April 30, 2017 was 84%.
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The following table sets forth the target bonus percentage, based upon the “Factors for Determining Compensation”, as noted below,
Long-term Equity Incentive Awards
Another component of our Named Executive Officers approved byexecutive compensation program is long-term equity incentive awards. Our Compensation Committee believes that equity awards are an effective means of aligning the interests of executive officers and stockholders, rewarding executive officers for the Company’s success over the long term, and providing executive officers an incentive to remain with us. In fiscal year 2022, in an effort to improve the linkage between pay and performance and better align executive long-term incentives with the interests of stockholders, the Compensation Committee for the fiscal year ended April 30, 2017 and their respective earned cash bonusesintroduced performance stock unit (“PSU”) awards as approved by the Compensation Committee:
| Named Executive Officer | Fiscal Year 2017 Target | Fiscal Year 2017 Bonus ($)(1) | ||||
| Steven W. King | 60% | 261,661 | ||||
| Paul J. Lytle | 40% | 130,830 | ||||
| Shelley P.M. Fussey, Ph.D. | 35% | – | ||||
| Joseph S. Shan | 35% | 87,212 | ||||
| Mark R. Ziebell | 35% | 102,148 | ||||
______________
With respect to the above executive officer bonuses earned for the fiscal year ended April 30, 2017, the Compensation Committee determined that such bonuses would not be paid until the sooner of (i) completing one of several specified strategic milestones, (ii) the termination of an executive officer’s employment, or (iii) April 30, 2018.
In addition, as was discussed in our proxy statement for the fiscal year ended April 30, 2016, while the Compensation Committee had determined that 100%a component of the corporate goals for the fiscal year ended April 30, 2016 had been achieved, the Compensation Committee decided to reduce each executive’s discretionary corporate factor by 25% due to the Company’s discontinuancemix of the Phase III SUNRISE trial in February 2016 and to allocate the 25% opportunity to up to four specific new corporate goals targeted to be achieved in fiscal year 2017, which the Compensation Committee believed would help build stockholder value. During fiscal year 2017, one such new corporate goal was timely achieved, the in-licensing of the PS exosome diagnostic technology. As a result of their contributions towards attaining this new corporate goal: Mr. King received a bonus of $20,280, representing one-quarter of his total opportunity; Mr. Lytle received a bonus of $10,140, representing one-quarter of his total opportunity; Mr. Ziebell received a bonus of $10,556, representing one-third of his total opportunity; and Dr. Fussey received a bonus of $14,044, representing one-half of her total opportunity. These bonuses were paid on September 9, 2016, and are included in the Summary Compensation Table as “Non-Equity Incentive Plan Compensation” for the fiscal year ended April 30, 2017.
Equity Awards
Stock Option Awards and Grant Practices. Based on market practice and our objective to align executives’ interest with those of our stockholders, we currently use stock option awards as the primary form of long-term incentive compensation for executives and other employees. In the fiscal year ended April 30, 2012, the Compensation Committee implemented a policy of a routine annual broad-based grant of stock optionequity awards to our executive officers and other employees, with the grant typically occurring during the initial weeks of ourcontinued this practice for fiscal year. The grant date ofyear 2023. As such, annual award and of other grants (e.g., for new hires) is either on the date the Compensation Committee approves the grants or on a pre-selected later date, such as a future hire date. In determining the size and types of equity grantsfiscal year 2023 awards to executive officers, 50% of the Compensation Committee considers, among other things, comparative industry data provided bytotal target long-term incentive value (“Target LTI Value”) was delivered as PSUs and 50% of the Compensation Committee’s independent compensation consultant, our outstanding shares at the timeTarget LTI Value was delivered as restricted stock unit (“RSU”) awards. The following is a summary of grant, the number andeach type of long-term equity awards granted to such individuals in prior years, the equity available under our long-term incentive plan and desirable run rate and aggregate estimated equity usage in the future, each executive officer’s ownership in our Company, our corporate performance, and each executive officer’s individual performance, role and responsibilities.award:
PSUs:
| · | Share denominated units; | |
| · | Vests as to one-third per year over three one-year performance periods tied to our fiscal years (each a “Performance Period”); | |
| · | Vests based on performance against weighted revenue and adjusted net income targets for each Performance Period; | |
| · | Adjusted net income means the Company’s net income before income taxes for the applicable Performance Period as adjusted, subject to approval by the Board, for share based compensation, changes in accounting practice, Board-directed initiatives and other non-routine items; | |
| · | 0% to 200% payout opportunity for each Performance Period based on fiscal year performance against the approved targets with linear interpolation where performance falls between the threshold, target, mid and maximum levels; | |
| · | Vests effective the last day of the Performance Period but shares are not released to the respective NEOs until financial results for the applicable Performance Period have been audited by our independent public accounting firm, and the audited financial results against the performance targets are certified by our chief financial officer and approved by the Compensation Committee; and | |
| · | Payouts are made in stock. |
RSUs:
| · | Share denominated units; | |
| · | Vest quarterly in equal increments over a period of four years following the grant date; and | |
| · | Paid in stock. |
Fiscal 2023 Annual LTI Awards
The Compensation Committee exercises discretion in selectingapproved the information it considers, as well as any weighting of particular information, in determining the equity awards. The determination offollowing equity awards isto the NEOs, which awards were made by the Compensation Committee after evaluating the information and areas of consideration described aboveon July 9, 2022, in their totality. For the fiscal year ended April 30, 2017,accordance with our annual broad-based stock option grant was approved by the Compensation Committee on June 2, 2016.long-term equity incentive plan design, as detailed below:
| Named Executive Officer | Target LTI Value(1) | Number of RSUs(2) | Target Number of PSUs(2) |
| Nicholas S. Green | $4,200,000 | 141,219 | 141,219 |
| Daniel R. Hart | $1,000,000 | 33,623 | 33,623 |
| Richard A. Richieri | $ 450,000 | 15,130 | 15,130 |
| Matthew R. Kwietniak | $ 600,000 | 20,174 | 20,174 |
| Mark R. Ziebell | $ 600,000 | 20,174 | 20,174 |
| (1) | Target LTI Values were approved by the Compensation Committee in June 2022 for purposes of the fiscal year 2023 long-term equity incentive awards and are based on the peer group benchmarking report provided by Radford. Based on the Company’s financial performance for fiscal year 2022, the NEO award amounts targeted the 75th percentile of the Company’s peer group. | |
| (2) | Number of RSUs and target PSUs determined based on the average closing price of our common stock on the Nasdaq Stock Market for the 30-day calendar period ending on the grant date of the award. |
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Stock option grant
Vesting of Outstanding PSU Awards Based on Fiscal Year 2023 Performance Period
The following tables reflect the vesting calculation for each NEOs outstanding PSU awards based on the fiscal year 2023 performance period.
| Measure and Targets for Fiscal Year 2023 Performance Period of the Fiscal Year 2023 Award (Dollars in millions) | |||
| Performance Payout | Percentage Vested | Revenue (50%) | Adjusted Net Income (50%) |
| Maximum (200%) | 100% | $184.0 | $22.2 |
| Mid (150%) | 75% | $163.0 | $18.4 |
| Target (100%) | 50% | $143.0 | $14.4 |
| Threshold (50%) | 25% | $123.0 | $10.0 |
| Below Threshold (<50%) | 0% | < $123.0 | < $10.0 |
| Results and Payout for Fiscal Year 2023 Performance Period of the Fiscal Year 2023 Award (Dollars in millions) | ||||
| Performance Target | Actual Results | Payout Earned | Weight | Total |
| Revenue | $149.3 | 116% | 50% | 58% |
| Adjusted Net Income | $13.0 | 84% | 50% | 42% |
| Total Payout | 103% | |||
| Percentage Vested | 52% | |||
| Measure and Targets for Fiscal Year 2023 Performance Period of the Fiscal Year 2022 Award (Dollars in millions) | |||
| Performance Payout | Percentage Vested | Revenue (60%) | Adjusted Net Income (40%) |
| Maximum (200%) | 100% | $180.0 | $27.9 |
| Mid (150%) | 75% | $160.0 | $24.9 |
| Target (100%) | 50% | $140.0 | $21.9 |
| Threshold (50%) | 25% | $120.0 | $18.6 |
| Below Threshold (<50%) | 0% | < $120.0 | < $18.6 |
| Results and Payout for Fiscal Year 2023 Performance Period of the Fiscal Year 2022 Award (Dollars in millions) | ||||
| Performance Target | Actual Results | Payout Earned | Weight | Total |
| Revenue | $148.7 | 122% | 60% | 73% |
| Adjusted Net Income | $20.2 | 75% | 40% | 30% |
| Total Payout | 103% | |||
| Percentage Vested | 52% | |||
The equity award information for the fiscal year ended April 30, 2017,2023 is set forth below under “Grants of Plan-Based Awards for the Fiscal Year Ended April 30, 2017”2023”. See footnote 2 to the “Option Exercises and Stock Vested” table below for the number of earned PSUs for each NEO.
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Executive Severance Plan, Employment Agreements and Change in Control Benefits
Stock Awards and Award Practices. In addition to stock options, we have in
Effective December 5, 2022, based on the past used stock awards as a formrecommendation of long-term incentive compensation for executives and other employees. Stock awards are shares of common stock that vest in accordance with the terms established by the Compensation Committee. Such awards are generally subject to vesting upon the Company’s timely attainment of certain predetermined clinical, financial or operational milestones with specific targeted attainment dates or vest over a specific predetermined period of performance. However, the Compensation Committee following its review of current market practices in consultation with Radford, its independent compensation consultant, our Board approved and adopted an Executive Severance Plan (“Plan”) applicable to all individuals employed by us at its discretion, may issue discretionary stock awardsthe C-level and vice president level, including NEOs. The Plan provides for severance benefits and payments upon certain involuntary terminations, including in connection with a change in control. Our Compensation Committee believes that severance and change in control protections are not subjectnecessary to any future vesting requirements. There were no discretionary stock award grantsattract and retain executive talent and are a customary component of executive compensation. We are also a party to our Named Executive Officers during the fiscal year ended April 30, 2017.
Employment Agreements, Severance and Change-in-Control Benefits
We havecertain legacy employment agreements with allMessrs. Green, Hart and Ziebell and an offer letter with Mr. Kwietniak, each of our Named Executive Officers providingwhich provides for severance payments and accelerated vesting benefits triggered by various termination events. To the extent an Executive Participant, including Messrs. Green, Hart, Kwietniak and Ziebell, is currently a party to an existing agreement with us providing for severance benefits, such Executive Participant has the ability, following the occurrence of an event entitling such Executive Participant to receive severance benefits, to elect whether to receive, in total, the benefits under the existing agreement or the Plan. For a description of these agreementsthe Plan and employment agreements/offer letter and our potential payment obligations under the Plan or employment agreements/offer letter as of the fiscal year ended April 30, 2023, please see “Overview of Employment Agreements and Potential Payments Upon Termination or Change-in-Control” and the related tabular disclosure below.
When entering intoWith regard to the Plan and employment agreements which provide for post-termination compensation for our Named Executive Officers, the Compensation Committee considers, among multiple factors, peer company practice, retention needs and consistency of post-termination compensation among our executives. Gains from prior equity awards are not a material consideration in setting the level of such compensation. In particular,agreements/offer letter, we believe such employment agreements benefit us and our stockholders by attracting and retaining executives in a marketplace where such protections are commonly offered by our peer companies. We also believe that severance protection triggered by a change-in-control allows our executives to assess a potential change-in-control objectively, from the perspective of what is best for our stockholders, without regard to the potential impact of the transaction on their own job security. We use a “double trigger” with respect to benefits that are to be provided in connection with a change-in-control. A change-in-control does not itself trigger benefits; rather, benefits are paid only if the employment of the executive is terminated by us other than for cause“cause” or due toby the executive’s death or disability during a specified period before or afterexecutive of “good reason,” each as defined in the employment agreements, in connection with a change ofin control. We believe a “double trigger” benefit maximizes stockholder value because it prevents a windfall to executives in the event of a change of control in which the executive retains significant responsibility as defined in his or her individual agreement, while still providing our executives appropriate incentives to cooperate in negotiating any change of control that may put their jobs at risk. Further, we believe the severance protection offered under the Plan and employment agreements is balanced with the interests of the Company and its stockholders, as the executives are bound by non-disclosure, non-competition, and non-solicitation arrangements and must execute a general release in favor of the Company as a condition to receiving benefits under these agreements. None of the agreements include any tax gross-up payments for “golden parachute” excise taxes. All of the Named Executive OfficersNEOs are “at will” employees.
These employment agreements areNon-Qualified Deferred Compensation Plan
In July 2023, the Board adopted the Avid Bioservices, Inc. Deferred Compensation Plan, effective as of July 7, 2023. The plan provides non-employee directors and certain highly compensated employees with an opportunity to defer up to 80% of their base compensation, up to 100% of their cash bonuses (if applicable), and up to 100% of certain restricted stock unit and performance stock unit awards. The plan also allows for discretionary employer contributions, which, if made, will be subject to automatic one-year extensions annuallyvesting and as part ofother conditions established by the Compensation Committee’s review of all of our executive compensation practices, are reviewed to ensure that they continue to serve our interests in retaining these key executives, remain consistent with packages offered by our peers, and provide reasonable levels of severance protection and compensation.Committee.
Perquisites and Other Benefits
We maintainOur NEOs are eligible to participate in broad-based benefits thatbenefit plans in which our regular employees are providedeligible to all employees,participate, including health, dental, and vision insurance, life and disability insurance, a 401(k) plan, and an Employee Stock Purchase Plan.
Under the 401(k) plan, Named Executive OfficersNEOs are allowed to contribute on the same basis as other employees of the Company as determined by IRS regulations. During theFor fiscal year ended April 30, 2017,2023, the Company voluntarily agreed to matchmatched 50% of all employee contributions, (for employees with up to five years of service), 75% of all employee contributions (for employees with six to nine years of service), and 100% of all employee contributions (for employees with ten or more years of service), including Named Executive Officers,NEOs, up to the first 6% of a participant’s annual salary for all 401(k) plan contributions, subject in each case to certain IRS limitations. In addition, the plan allows for additional discretionary matching contributions in excess of the 50% match. Under the 401(k) plan, each participating employee, including Named Executive Officers,NEOs, is fully vested in his or her contributions to the 401(k) plan and Company contributions to the 401(k) plan will fully vest after six years of service.
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Under the Employee Stock Purchase Plan, Named Executive OfficersNEOs are allowed to participate on the same basis as other employees of the Company, which allows employees on a voluntarily basis to purchase shares of our common stockCommon Stock directly from the Company through accumulated payroll deductions whichat a purchase price equal to the lesser of 85% of the fair market value of our Common Stock (i) on the first trading day of the six-month offering period or (ii) the last trading day of the six-month offering period. The Company believes the Employee Stock Purchase Plan closely aligns the interests of participants with the interests of stockholders.
In addition, Named Executive OfficersNEOs are eligible to participate in the same employee benefit plans as all other employees. The cost of health and dental insurance was 100% covered by the Company for Named Executive OfficersNEOs during the fiscal year ended April 30, 2017.2023. In addition, all employees, including Named Executive Officers,NEOs, receive one (1) times their annual salary in term-life insurance, long-term disability benefits, and vision insurance at no cost to the employee. We also provide all employees, including Named Executive Officers,NEOs, the option to make pre-tax payroll deductions up to $2,600$3,050 per year under a flexible spending account plan that can be utilized for out-of-pocket medical, dental and other allowable expenses. The Company also provides paid-time-off benefits to cover vacation and sick time and annually determined Company holidays.
Factors for Determining CompensationTax and Accounting Considerations
Performance. OneWe have not provided or agreed to provide any of the primary objectivesCompany’s NEOs or directors with a gross-up or other reimbursement for tax amounts they might pay pursuant to Section 4999 or Section 409A of the Code. Sections 280G and 4999 of the Code provide that executive officers, directors who hold significant stockholder interests and certain other service providers could be subject to significant additional taxes if they receive payments or benefits in connection with a change in control of the Company that exceed certain limits, and that we or our compensation program is to motivate our Named Executive Officers to achieve our short and long-term strategic goals. These goals are tied to, among other things, increasing contract manufacturing revenue,successor could lose a deduction on the advancement of our product pipeline, the attainment of clinical and regulatory milestones, the development, acquisition and out-licensing of key technologies, and the securing of capital funding. In addition to linking compensationamounts subject to the attainmentadditional tax. Section 409A of pre-approved goals, individual performance is assessedthe Code also imposes additional significant taxes on the basisindividual in the event that an employee, director or service provider receives “deferred compensation” that is not exempt from or does not meet the requirements of more subjective, non-formulaic, criteria, such as:Section 409A.
For the Company’s financial statements, cash compensation, such as salary and bonus, is expensed and for income tax returns, cash compensation is generally deductible except as set forth below. For equity-based compensation, we expense the fair value of such grants over the requisite service period.
“Say-on-Pay” Consideration.At our 2016 Annual Meeting, approximately 53%
Generally, Section 162(m) of the shares voted at the meeting approved, on an advisory basis, the compensationCode disallows a federal income tax deduction for public corporations of our Named Executive Officers. Given that less than 70%remuneration in excess of $1 million paid for any fiscal year to a “covered employee” of the shares votedCompany. With respect to approvetaxable years beginning before January 1, 2018, remuneration in excess of $1 million was exempt from this deduction limit if it qualified as “performance-based compensation” within the “say-on-pay” advisory proposal,meaning of Section 162(m) of the Code.
Pursuant to the Tax Cuts and Jobs Act of 2017, effective for taxable years beginning after December 31, 2017, Section 162(m) was amended to: (1) expand the scope of individuals who are “covered employees,” including anyone who was a covered employee in any prior taxable year beginning after December 31, 2016, (2) expand the types of companies that are subject to the limitations of Section 162(m), and (3) eliminate the exception for performance-based compensation and commissions. Transition relief provided that any payment made pursuant to a written and binding agreement that was in effect as of November 2, 2017 and not subsequently materially modified, would be subject to the limitations of Section 162(m) as in effect prior to the amendment. Accordingly, compensation paid to our covered employees in excess of $1 million will not be deductible unless it qualifies for the transition relief applicable to certain arrangements in place as of November 2, 2017, as described above. Furthermore, because of the uncertainties as to the application and interpretation of Section 162(m) as revised by the Tax Cuts and Jobs Act of 2017, including the uncertain scope of the transition relief, no assurance can be given that previously granted compensation intended to satisfy the requirements for performance-based compensation will, in fact, qualify for such exception.
The Compensation Committee believes that stockholder interests are best served if the Compensation Committee spent additional time with its independent compensation consultant, reviewing the Company’s compensation practices, analyzing the various elements ofretains maximum flexibility to design executive compensation for each Named Executive Officer and how such elements compare to the median compensation for the Company’s peer group, assessing the Company’s progress towards the attainment of corporate goals, and considering other factors affecting the Company’s strategic objectives. Following thoughtful deliberation,programs that meet stated business objectives. For these reasons, the Compensation Committee, determinedwhile considering tax deductibility as a factor in determining executive compensation, may not limit such compensation to implement specific changes and continued with its compensation philosophy and its balanced approach to various components of its compensation program, after giving consideration to the level of attainment of corporate goals and benchmarking compensation with the Company’s peer group. Furthermore, the Compensation Committee does monitor the resultsthose levels that will be deductible, particularly in light of the annual advisory “say-on-pay” proposalexpansion of the covered employee group and refers to such results as onethe elimination of many factors considered, along with peer group benchmarking, in connection with the discharge of its responsibilities, although the Compensation Committee does not assign a quantitative weighting to any such factors.exception for performance-based compensation.
Market Benchmarks and Competitive Analysis. We believe that our select peer group provides useful information to help us establish competitive compensation practices and levels of compensation that allow us to attract, retain and motivate a talented executive team and, at the same time, aligns the interests of our executives with those of our stockholders. Accordingly, in the fiscal year ended April 30, 2017, Barney & Barney, the independent compensation consultant engaged by the Compensation Committee with experience in evaluating public biopharmaceutical companies, helped the Compensation Committee collect and analyze data and to compare all components of our compensation program, including base salary, annual cash bonus and long-term equity awards, to the practices of peer companies. In the fiscal year ended April 30, 2017, Barney & Barney developed a list of peer group of pharmaceutical and biopharmaceutical companies based on several characteristics, including, being publicly traded, relative company size (e.g., market capitalization and number of employees), stage of development, performance and geographic location as compared to peer companies, as well as the specific responsibilities of our executives. In addition, this peer group includes companies with which we believe we must compete for talent. The Compensation Committee intends to review and modify this peer group periodically to ensure that this list remains aligned with our size and stage of development. For the fiscal year ended April 30, 2017, our peer group consisted of the following 23 companies:
The executive employment market in the biotechnology and pharmaceutical industry in Southern California is very competitive because there are many pharmaceutical, biotechnology and medical device companies in that region, many of which are similar to us in size and stage of development. We believe our executive compensation must be competitive within such a peer group, yet fully aligned with our current stage of development and our responsibilities to stockholders. Our general philosophy and practice is to target each of our executive’s overall compensation to be at approximately the market median for our peer group. This benchmarking indicated that the total direct compensation for our President and Chief Executive Officer, Chief Financial Officer and Vice President, General Counsel for the fiscal year ended April 30, 2017 was below the 25th percentile of our peer group, and the compensation of the other two Named Executive Officers were below the 50th percentile. The Compensation Committee considered this benchmarking information as one consideration in making the compensation decisions reflected above, primarily to determine whether compensation paid to Named Executive Officers, in light of Company and individual performance, is at, above or below the median of executive compensation among the Company’s peer group.
Compensation Risk
As part of its oversight of our compensation policies, the Compensation Committee considers the incentives created by our executive compensation program and the impact that our compensation policies could have on our overall risk profile. In addition, the Compensation Committee annually reviews our compensation policies and procedures for all employees, including the NEOs, to determine whether they create risks that are reasonably likely to have a material adverse effect on the Company. Based on its latest review, theour Compensation Committee has concluded that our compensation policies and procedures dodid not create such risks.
Compensation Clawback Policy
In October 2017 theThe Compensation Committee adoptedmaintains a compensation “clawback” policy. Theclawback policy permits us to recover cash or equity performance-based compensation from executive officers (andconsistent with the principal accounting officer if not an executive officer) whose fraud or intentional illegal conduct materially contributed to a financial restatement. The policy allows for the recoveryrequirements of Section 954 of the difference betweenDodd-Frank Act, pursuant to which, to the extent permitted by governing law, the Company may seek to recoup certain incentive-based compensation awarded or paid andin the amount which would have been paid had it been calculated based onevent the restatedCompany is required to restate its publicly-reported financial statements excludingdue to material noncompliance with any tax payments.financial reporting requirement under the securities laws as a result of misconduct. This policy will be reviewed from time to time to ensure that it is compliant with any SEC requirements.
SummaryStock Ownership Guidelines
In June 2022, the Board adopted a share ownership policy relating to ownership of the Company’s securities by the Company’s NEOs and the non-employee directors. Subject to the terms of the policy, (i) the CEO is required to acquire over a five-year period and hold shares of Common Stock of the Company equal to three times his or her base salary as of a specified measuring date, (ii) each of the Company’s other NEOs is required to acquire over a five-year period and hold shares of Common Stock of the Company equal to one and one-half times his or her base salary as of a specified measuring date, and (iii) each of the Company’s non-employee directors is required to acquire over a five-year period and hold shares of Common Stock of the Company equal to three times the Company’s annual cash retainer paid to each such non-employee director. Unvested RSUs, PSUs and unexercised stock options (regardless of whether they are vested or unvested or in-the-money) are not included in the total number of shares owned by the NEOs or directors for purposes of the share ownership policy. Each NEO and non-employee director is required to hold at least 50% of all net shares (after shares withheld or sold to pay tax obligations) of RSUs and PSUs that vest until such individual gains compliance with the stock ownership guidelines. The Corporate Governance Committee annually reviews the progress NEOs and non-employee directors are making toward achieving compliance with these guidelines.
Securities Trading Policy
The Compensation Committee believesCompany’s policy on securities trading prohibits our directors, officers and employees from trading in our securities during certain designated blackout periods and otherwise while they are aware of material non-public information, and from engaging in hedging transactions or short sales and trading in options with respect to our securities. The policy also prohibits: selling any of the Company’s compensation programs are designed and administered in a manner consistent with its compensation philosophy and objectives. The Compensation Committee monitors these programs in recognition of the dynamic marketplace in which the Company competes for talent. The Compensation Committee intends to continue to emphasize pay-for-performance and equity-based incentive programs that reward executives for actual results andsecurities that are consistentnot owned by such person at the time of sale (“short selling”); purchasing the Company’s stock on margin account; investing in Company-based derivative securities, such as options, puts, calls or other derivatives; hedging transactions with stockholder interests.respect to the Company’s securities; or pledging Company securities as collateral for a loan.
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Executive Officers
The following table sets forth information regarding our current executive officers as of December 7, 2017:August 15, 2023:
| Executive Officer | Age | Position | ||
| 59 | President and Chief Executive Officer | |||
| Daniel R. Hart | 49 | Chief Financial Officer | ||
| 58 | ||||
| 54 | ||||
| Mark R. Ziebell | 59 | Vice President, General Counsel and Corporate Secretary |
_______________________
(1) On November 14, 2017, Mr. Shan gave notice of his resignation as Vice President, Clinical & Regulatory Affairs of the Company, effective December 31, 2017.
The following biographies describe the business experience of our executive officers.
Steven W. KingNicholas S. Green’s has served as our President and Chief Executive Officer since March 2003 and was a memberbiography is set forth above under the “Nominee Biographies” section of the Board of Directors from October 2003 to November 2017. From August 2002 to March 2003, Mr. King served as our Chief Operating Officer and from February 2000 to August 2002 served as our Vice President of Technology and Product Development. Mr. King joined Peregrine in 1997 as Director of Research and Development. Additionally, Mr. King was responsible for launching our wholly-owned biomanufacturing subsidiary, Avid Bioservices, Inc., in 2002, for which he served as President until September 2017. Mr. King was previously employed at Vascular Targeting Technologies, Inc., which was acquired by Peregrine in 1997. Mr. King previously worked at the University of Texas Southwestern Medical Center with Dr. Philip Thorpe, the inventor of our Phosphatidylserine (PS)-targeting antibody and VTA technology platforms, and is co-inventor on over 40 U.S. and foreign patents and patent applications in the Vascular Targeting Agent field. Mr. King received his Bachelor’s and Master’s degrees from Texas Tech University in Cell and Molecular Biology.this Proxy Statement.
Paul J. LytleDaniel R. Hart has served as Chief Financial Officer since August 20022018 and has over 25 years of financefinancial accounting and accountingoperational experience. Mr. Lytle oversees various functions, including finance and accounting, financial reporting, corporate governance, investor relations, human resources and information technology. Mr. Lytle started with us in March 1997 as Corporate Controller and has held positions of increasing responsibility with us. Mr. Lytle was promoted to Vice President of Finance and Accounting and was elected as our Corporate Secretary from 2000 through July 2012. Prior to joining us,Avid, Mr. LytleHart served as Chief Financial Officer of ENO Holdings, Inc. Prior to that, Mr. Hart served SM&A, Inc. for almost a decade in several roles, including most recently as Senior Vice President, Chief Financial Officer. Earlier in his career, Mr. Hart worked forin the audit practice of Deloitte & Touche LLP. Mr. LytleHart holds a B.S.Bachelor of Science in Business Administrationbusiness administration with an emphasis in accounting from the California Polytechnic State University, at Long BeachSan Luis Obispo and is a certified public accountant in the State of California (inactive).
Shelley P.M. Fussey, Ph.D.Richard A. Richieri has served as our Vice President, Intellectual PropertyChief Operations Officer since February 2005. Dr. Fussey plays a keyOctober 2019 and has over 29 years of biopharmaceutical industry experience spanning the areas of drug discovery, CGMP operations, contract manufacturing and process development. Mr. Richieri previously spent 15 years with Avid Bioservices (when it was known as Peregrine Pharmaceuticals), including serving in the role of senior vice president of manufacturing. During that time, he was instrumental in our U.S.launching, building and international patenting, patent analysisgrowing Avid's CDMO business and patent defense. Dr. Fussey’s expertise includes patent strategy for technologies developed both in-house and in-licensed from universities. She has broad experience in intellectual property consulting for areas including cancer treatment, immunology, and antiviral technology, as well as other areas central to pharmaceutical and biotechnology drug development.helping the company diversify its production capabilities. Prior to joining us, Dr. Fussey workedthe Company he spent the previous five years serving as an advisor and acting head of biologics production for Syngene International, a global discovery, development and manufacturing organization serving the law firms of Williams, Morgan & Amerson and Arnold, White and Durkee. Shepharmaceutical industry. Mr. Richieri holds a Ph.D.Bachelor of Science in Biochemistry and a B.Sc. in Biochemistry with First Class Honours (Summa Cum Laude) from the University of Newcastle upon Tyne, U.K.
Joseph S. Shan has served as Vice President, Clinical & Regulatory Affairs since March 2009 and has served as our head of Clinical and Regulatory Affairs since January 2003. He is responsible for the design and execution of our clinical trials and overseeing regulatory submissions. Since joining us in 2000, Mr. Shan has been instrumental in advancing the clinical development of our lead immunotherapy candidate, bavituximab. Prior to joining us, Mr. Shan held positions of increasing responsibility in clinical and regulatory affairs at Edwards Lifesciences (formerly Baxter Healthcare Corporation) and Sulzer Medica. Mr. Shan received his B.S. degree in Physiological Scienceschemical engineering from the University of California, Los Angeles and his M.P.H. degreea Masters Degree in chemical engineering from the George Washington University in Washington, D.C. He is a member of the American Society of Clinical Oncology, the Association of Clinical Research Professionals and the Regulatory Affairs Professionals Society.California, San Diego.
Matthew R. Kwietniak has served as Chief Commercial Officer since October 2021 and has over 30 years of sales experience spanning CDMO offerings, clinical development services and scientific products. Most recently he served as head of drug product sales for the Americas within the Pharma Services Group at Thermo Fisher Scientific. In this role, Mr. Kwietniak is credited with record sales growth and consistent overachievement of quarterly and annual goals during his tenure and leadership. He also spent over a decade as a senior sales executive in the Clinical Development Services business at Covance, Inc., a division of LabCorp. Throughout his time with Covance, Mr. Kwietniak held multiple escalating sales leadership roles, culminating in a three-year tenure as Executive Director of sales in the Clinical Development Services division during which time he expanded and managed a U.S. commercial team of Business Development Directors that included the signing of several large Phase III contracts. In his leadership career, he has been responsible for growing and supporting sales teams generating in excess of $1 billion annually. Mr. Kwietniak holds a Bachelor of Science in business administration/management from The College of New Jersey.
Mark R. Ziebell has served as Vice President, General Counsel since June 2012 and Corporate Secretary since July 2012, and has been practicing corporate and securities law for over 2025 years. Prior to joining us, Mr. Ziebell was a partner with the Costa Mesa, California office of Snell & Wilmer LLP where he worked from March 2004 to June 2012.LLP. Mr. Ziebell has represented public and private companies in a wide range of corporate and securities matters, mergers and acquisitions, strategic alliance matters and corporate governance. His experience involves a variety of industries, including biopharmaceutical and life sciences. Mr. Ziebell was our outside corporate counsel from 1999 to June 2012. He earned his B.S. in accounting in 1986 from the University of San Francisco and his Juris Doctorate in 1994 from the University of San Francisco School of Law. Prior to earning his law degree, Mr. Ziebell was a certified public accountant with BDO Seidman in San Francisco, California.
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Compensation Summary
The following table contains information with respect to the compensation for the fiscal years ended April 30, 2017, 20162023, 2022 and 2015 by each individual who acted as2021 for our chief executive officer, our chief financial officer, and our three other most highly compensated executive officers during“Named Executive Officers” for the fiscal year ended April 30, 2017. We refer2023, as determined pursuant to the executive officers identified in this table as our “Named Executive Officers.”SEC regulations.
SUMMARY COMPENSATION TABLE
| Name and Principal Position | Fiscal Year | Salary ($)(1) | Bonus ($)(2) | Stock Awards ($)(3) | Option Awards ($)(3) | Non-Equity Incentive Plan Compensation ($)(4) | All Other Compensation ($)(5) | Total ($) |
| Nicholas S. Green, | 2023 | 642,308 | — | 5,112,128 | — | 662,000 | 45,348 | 6,461,784 |
| President and Chief | 2022 | 600,000 | — | 4,642,450 | — | 895,200 | 44,174 | 6,181,824 |
| Executive Officer | 2021 | 420,962(6) | 137,500 | 1,089,000 | 347,153 | 723,227 | 127,441 | 2,845,283 |
| Daniel R. Hart, | 2023 | 442,692 | — | 1,217,152 | — | 225,400 | 51,654 | 1,936,898 |
| Chief Financial | 2022 | 430,000 | — | 1,266,100 | — | 320,780 | 50,328 | 2,067,208 |
| Officer | 2021 | 423,698 | 116,112 | 135,004 | 315,054 | 310,624 | 48,846 | 1,349,338 |
| Richard A. Richieri, | 2023 | 373,462 | — | 547,706 | — | 151,900 | 36,319 | 1,109,387 |
| Chief Operations Officer(7) | ||||||||
| Matthew R. Kwietniak, | 2023 | 360,154 | — | 730,298 | — | 146,700 | 46,732 | 1,283,884 |
| Chief Commercial Officer(7) | ||||||||
| Mark R. Ziebell, | 2023 | 423,308 | — | 730,298 | — | 172,200 | 51,593 | 1,377,399 |
| General Counsel and | 2022 | 414,000 | — | 580,260 | — | 247,075 | 50,373 | 1,291,708 |
| Corporate Secretary | 2021 | 395,503 | 38,117 | 105,015 | 245,017 | 225,460 | 48,667 | 1,057,779 |
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| (1) | Salary information is reported as of the last payroll paid prior to or immediately after April 30th of each fiscal year. |
| (2) | Represents a one-time discretionary bonus approved by the Compensation Committee based on fiscal year 2021 performance. | |
| (3) | Represents the aggregate grant date fair value of the awards made in each fiscal year as computed in accordance with ASC Topic 718. For fiscal years 2023 and 2022, stock awards granted to executive officers consisted of RSUs, as to fifty percent (50%), and PSUs, as to fifty percent (50%). For fiscal year 2021, the |
| (4) | Represents performance bonuses earned under the Company’s Annual Cash Bonus Plan. |
| (5) | Amounts shown in this column reflect the cost of benefits paid on behalf of the Named Executive Officer for health, dental, and vision benefits in addition to premiums paid for disability and term life insurance (collectively referred to as | |
| (6) | Represents base salary paid to Mr. Green commencing July 30, 2020, Mr. Green’s date of hire. | |
| (7) | During fiscal year 2023, Mr. Richieri and Mr. Kwietniak were designated as executive officers as defined by Rule 3b-7 of the Exchange Act, and therefore were eligible to be Named Executive Officers for the fiscal year 2023. |
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Grants of Plan-Based Awards For the Fiscal Year Ended April 30, 20172023
The following table set forth certain summary information with respect to non-equity incentive plans and each plan-based award granted during the fiscal year ended April 30, 20172023 to our Named Executive Officers. All share and per share amounts of our common stock for all periods presented have been retroactively adjusted to reflect the one-for-seven reverse stock split of our issued and outstanding common stock, which took effect on July 10, 2017.
GRANTS OF PLAN-BASED AWARDS FOR THE FISCAL YEAR ENDED APRIL 30, 20172023
Estimated Future Payouts Under Non-Equity Incentive Plan Awards (2) | Estimated Future Payouts Under Equity Incentive Plan Awards (3) | ||||||||||
| Name | Grant Date | Approval Date(1) | Threshold ($) | Target ($) | Maximum | Threshold | Target (#) | Mid (#) | Maximum (#) | All Other Stock Awards: Number of Shares of Stock or Units (#)(4) | Grant Date Fair Value of Stock and Option Awards ($)(5) |
| Nicholas S. | — | — | 552,500 | 650,000 | 1,098,500 | — | — | — | — | — | — |
| Green | 7/9/2022 | 6/23/2022 | — | — | — | 70,610 | 141,219 | 211,829 | 282,438 | — | 2,556,064 |
| 7/9/2022 | 6/23/2022 | — | — | — | — | — | — | — | 141,219 | 2,556,064 | |
| Daniel R. | — | — | 189,125 | 222,500 | 376,025 | — | — | — | — | — | — |
| Hart | 7/9/2022 | 6/23/2022 | — | — | — | 16,812 | 33,623 | 50,435 | 67,247 | — | 608,576 |
| 7/9/2022 | 6/23/2022 | — | — | — | — | — | — | — | 33,623 | 608,576 | |
| Richard A. | 127,500 | 150,000 | 253,500 | — | — | — | — | — | — | ||
| Richieri | 7/9/2022 | 6/23/2022 | — | — | — | 7,565 | 15,130 | 22,696 | 30,261 | 273,853 | |
| 7/9/2022 | 6/23/2022 | — | — | — | — | — | — | — | 15,130 | 273,853 | |
| Matthew R. | 123,080 | 144,800 | 244,712 | — | — | — | — | — | — | ||
| Kwietniak | 7/9/2022 | 6/23/2022 | — | — | — | 10,087 | 20,174 | 30,261 | 40,348 | — | 365,149 |
| 7/9/2022 | 6/23/2022 | — | — | — | — | — | — | — | 20,174 | 365,149 | |
| Mark R. | — | — | 144,500 | 170,000 | 287,300 | — | — | — | — | — | — |
| Ziebell | 7/9/2022 | 6/23/2022 | — | — | — | 10,087 | 20,174 | 30,261 | 40,348 | — | 365,149 |
| 7/9/2022 | 6/23/2022 | — | — | — | — | — | — | — | 20,174 | 365,149 | |
| Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | All Other Stock Awards: Number of Shares of | All Other Option Awards: Number of Securities Underlying | Exercise or Base Price of Option | Grant Date Fair Value of Stock or Option | ||||||||||
| Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Stock or Units (#) | Options | Awards ($/sh) | Awards ($) (3) | ||||||
| Steven W. King | — | — | 324,480 | 486,720 | — | — | — | — | ||||||
| 6/2/2016 | — | — | — | — | 71,429 | 3.50 | 209,500 | |||||||
| Paul J. Lytle | — | — | 162,240 | 243,360 | — | — | — | — | ||||||
| 6/2/2016 | — | — | — | — | 35,714 | 3.50 | 104,750 | |||||||
| Shelley P.M. Fussey | — | — | 112,350 | 168,525 | — | — | — | — | ||||||
| 6/2/2016 | — | — | — | — | 21,429 | 3.50 | 62,850 | |||||||
| Joseph S. Shan | — | — | 108,150 | 162,225 | — | — | — | — | ||||||
| 6/2/2016 | — | — | — | — | 21,429 | 3.50 | 62,850 | |||||||
| Mark R. Ziebell | — | — | 126,672 | 190,008 | — | — | — | — | ||||||
| 6/2/2016 | — | — | — | — | 21,429 | 3.50 | 62,850 | |||||||
______________
| (1) | ||
| (2) | Reflects threshold, target and maximum award amounts established for fiscal year 2023 under the Company's Annual Cash Bonus | |
| (4) | The RSU awards were granted under our |
| The assumptions used in determining the grant date fair value of |
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Outstanding Equity Awards at Fiscal Year-End
The following table sets forth certain information regarding unexercised stock options and unvested stock awards held by our Named Executive Officers as of fiscal year ended April 30, 2017:
| Option Awards | ||||||||
| Named Executive Officer | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | ||||
| Steven W. King | 7,143 | – | 13.65 | 01/11/2018 | ||||
| 31,571 | – | 20.51 | 02/01/2020 | |||||
| 20,357 | – | 17.08 | 05/02/2021 | |||||
| 37,519 | – | 6.65 | 02/17/2022 | |||||
| 35,714 | – | 3.22 | 05/04/2022 | |||||
| 28,571 | – | 8.26 | 12/27/2022 | |||||
| 57,143 | – | 9.87 | 05/06/2023 | |||||
| 35,714 | – | 9.73 | 10/15/2023 | |||||
| 57,143 | – | 12.25 | 05/06/2024 | |||||
| 37,500 | 5,357(1) | 9.17 | 05/11/2025 | |||||
| 26,787 | 44,642(2) | 3.50 | 06/02/2026 | |||||
| Paul J. Lytle | 4,286 | – | 13.65 | 01/11/2018 | ||||
| 17,143 | – | 20.51 | 02/01/2020 | |||||
| 8,214 | – | 17.08 | 05/02/2021 | |||||
| 20,000 | – | 6.65 | 02/17/2022 | |||||
| 28,571 | – | 3.22 | 05/04/2022 | |||||
| 28,571 | – | 8.26 | 12/27/2022 | |||||
| 28,571 | – | 9.87 | 05/06/2023 | |||||
| 28,571 | – | 12.25 | 05/06/2024 | |||||
| 18,751 | 2,678(1) | 9.17 | 05/11/2025 | |||||
| 13,394 | 22,320(2) | 3.50 | 06/02/2026 | |||||
| Shelley P.M. Fussey | 4,286 | – | 13.65 | 01/11/2018 | ||||
| 10,715 | – | 20.51 | 02/01/2020 | |||||
| 4,286 | – | 17.08 | 05/02/2021 | |||||
| 8,286 | – | 6.65 | 02/17/2022 | |||||
| 17,857 | – | 3.22 | 05/04/2022 | |||||
| 21,429 | – | 8.26 | 12/27/2022 | |||||
| 14,286 | – | 9.87 | 05/06/2023 | |||||
| 14,286 | – | 12.25 | 05/06/2024 | |||||
| 9,375 | 1,339(1) | 9.17 | 05/11/2025 | |||||
| 8,037 | 13,392(2) | 3.50 | 06/02/2026 | |||||
| Joseph S. Shan | 2,857 | – | 29.40 | 07/06/2017 | ||||
| 2,857 | – | 13.65 | 01/11/2018 | |||||
| 10,715 | – | 20.51 | 02/01/2020 | |||||
| 4,286 | – | 17.08 | 05/02/2021 | |||||
| 20,000 | – | 6.65 | 02/17/2022 | |||||
| 21,429 | – | 3.22 | 05/04/2022 | |||||
| 21,429 | – | 8.26 | 12/27/2022 | |||||
| 14,286 | – | 9.87 | 05/06/2023 | |||||
| 14,286 | – | 12.25 | 05/06/2024 | |||||
| 12,501 | 1,785(1) | 9.17 | 05/11/2025 | |||||
| 8,037 | 13,392(2) | 3.50 | 06/02/2026 | |||||
| Mark R. Ziebell | 32,143 | – | 3.29 | 06/20/2022 | ||||
| 21,429 | – | 8.26 | 12/27/2022 | |||||
| 25,000 | – | 9.87 | 05/06/2023 | |||||
| 25,000 | – | 12.25 | 05/06/2024 | |||||
| 12,501 | 1,785(1) | 9.17 | 05/11/2025 | |||||
| 8,037 | 13,392(2) | 3.50 | 06/02/2026 | |||||
______________
Option Exercises and Stock Vested
There were no stock option exercises or vesting of restricted stock by the Company’s Named Executive Officers during the fiscal year ended April 30, 2017.2023:
| Option Awards | Stock Awards | |||||||||
| Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable(1) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#)(2) | Market Value of Shares or Units of Stock That Have Not Vested ($)(4) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(3) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(4) | |
| 7/30/2020 | 37,500 | 37,500 | 7.26 | 7/30/2027 | — | — | — | — | ||
| 7/30/2020 | — | — | — | — | 75,000 | 1,353,750 | — | — | ||
| Nicholas S. Green | 7/9/2021 | — | — | — | — | 50,161 | 905,406 | — | — | |
| 7/9/2022 | — | — | — | — | 114,741 | 2,071,075 | ||||
| 7/9/2021 | — | — | — | — | — | — | 29,725 | 536,536 | ||
| 7/9/2022 | — | — | — | — | — | — | 94,146 | 1,699,335 | ||
| 8/1/2018 | 104,000 | — | 5.66 | 8/1/2028 | — | — | — | — | ||
| 7/10/2019 | 41,070 | 13,690 | 6.07 | 7/10/2026 | — | — | — | — | ||
| 7/10/2020 | 35,560 | 35,560 | 6.95 | 7/10/2027 | — | — | — | — | ||
| Daniel R. Hart | 7/10/2019 | — | — | — | — | 5,867 | 105,899 | — | — | |
| 7/10/2020 | — | — | — | — | 9,713 | 175,320 | — | — | ||
| 7/9/2021 | — | — | — | — | 13,680 | 246,924 | — | — | ||
| 7/9/2022 | — | — | — | — | 27,319 | 493,108 | ||||
| 7/9/2021 | — | — | — | — | — | — | 8,107 | 146,331 | ||
| 7/9/2022 | — | — | — | — | — | — | 22,416 | 404,609 | ||
| 10/9/2019 | 37,500 | 18,750 | 5.30 | 10/9/2026 | — | — | — | — | ||
| 7/10/2020 | 18,864 | 29,634 | 6.95 | 7/10/2027 | — | — | — | — | ||
| 7/10/2020 | — | — | — | — | 8,093 | 146,079 | — | — | ||
| Richard A. Richieri | 7/9/2021 | — | — | — | — | 4,560 | 82,308 | — | — | |
| 7/9/2022 | — | — | — | — | 12,294 | 221,907 | — | — | ||
| 7/9/2021 | — | — | — | — | — | — | 2,703 | 48,780 | ||
| 7/9/2022 | — | — | — | — | — | — | 10,087 | 182,070 | ||
| 10/11/2021 | — | — | — | — | 6,693 | 120,809 | — | — | ||
| Matthew R. Kwietniak | 7/9/2022 | — | — | — | — | 16,392 | 295,876 | — | — | |
| 10/11/2021 | — | — | — | — | — | — | 3,570 | 64,439 | ||
| 7/9/2022 | — | — | — | — | — | — | 13,450 | 242,763 | ||
| 5/6/2013 | 25,000 | — | 9.87 | 5/6/2023 | — | — | — | — | ||
| 5/6/2014 | 25,000 | — | 12.25 | 5/6/2024 | — | — | — | — | ||
| 5/11/2015 | 14,286 | — | 9.17 | 5/11/2025 | — | — | — | — | ||
| 6/2/2016 | 21,429 | — | 3.50 | 6/2/2026 | — | — | — | — | ||
| 7/10/2019 | 73,590 | 24,530 | 6.07 | 7/10/2026 | — | — | — | — | ||
| Mark R.Ziebell | 7/10/2020 | 27,656 | 27,654 | 6.95 | 7/10/2027 | — | — | — | — | |
| 7/10/2019 | — | — | — | — | 10,513 | 189,760 | — | — | ||
| 7/10/2020 | — | — | — | — | 7,556 | 136,386 | — | — | ||
| 7/9/2021 | — | — | — | — | 6,270 | 113,174 | — | — | ||
| 7/9/2022 | — | — | — | — | 16,392 | 295,876 | — | — | ||
| 7/9/2021 | — | — | — | — | — | — | 3,715 | 67,056 | ||
| 7/9/2022 | — | — | — | — | — | — | 13,450 | 242,763 | ||
| (1) | All options vest over a four (4) year period at the rate of 25% on each anniversary of the date of grant until fully-vested, subject to the NEO’s continued service with us through the applicable vesting dates. | |
| (2) | The amounts reflected in this column represent unvested RSU awards. The RSU awards granted on July 9, 2022 and July 9, 2021 vest quarterly in equal installments over a four (4) year period commencing on the grant date and all other RSU awards vest over a four (4) year period at the rate of 25% on each anniversary of the date of grant, in each case until fully-vested, subject to the NEO’s continued service with us through the applicable vesting dates. | |
| (3) | All amounts in this column represent unvested PSU awards. The amounts reported in the table reflect the number of PSUs that would vest assuming target achievement of the performance goals during the final two one-year performance periods of the PSU awards made July 9, 2022 and the final one-year performance period of the PSU awards made July 9, 2021. Additional information regarding the PSUs can be found under the heading “Compensation Discussion and Analysis — Components of Our Fiscal Year 2022 Executive Compensation Program — Long-Term Equity Incentive Awards”. | |
| (4) | Market value is calculated based on the closing price of our Common Stock of $18.05 per share on April 28, 2023, the last trading day of the fiscal year, times the number of shares subject to the applicable stock award. |
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Option Exercises and Stock Vested
The following table sets forth certain information with respect to the exercise of stock options and vesting of stock awards by our Named Executive Officers during the fiscal year ended April 30, 2023.
| Option Awards | Stock Awards | ||||
| Name | Number of Shares Acquired on Exercise(#) | Value Realized on Exercise($)(1) | Number of Shares Acquired on Vesting(#) | Value Realized on Vesting($)(2) | |
| Nicholas S. Green | — | — | 239,868 | 4,371,035 | |
| Daniel R. Hart | 2,500 | 33,350 | 61,735 | 1,110,187 | |
| Richard A. Richieri | — | — | 24,400 | 438,746 | |
| Matthew R. Kwietniak | — | — | 28,387 | 510,252 | |
| Mark R. Ziebell | 6,428 | 64,601 | 41,739 | 751,577 | |
| (1) | The value realized equals the difference between the exercise price and the market price of our Common Stock on the Nasdaq Stock Market at exercise, multiplied by the number of shares acquired on exercise. | |
| (2) | Includes shares of Common Stock underlying the fiscal year 2023 and fiscal year 2022 PSUs awards which vested effective April 30, 2023 based on our performance for the first performance period and second performance period, respectively, ended April 30, 2023 against the financial targets. The value realized on vesting of RSUs and PSUs is based on the closing price of our Common Stock on the date vesting or the trading date immediately preceding the date of vesting if such vesting date is not a trading day. The actual number of shares received by a NEO may be lower to the extent any shares were sold upon vesting in order to satisfy applicable tax withholding obligations. |
Overview of Executive Severance Plan, Employment Agreements and Potential Payments Upon Termination or Change-in-ControlChange in Control
Executive Severance Plan
Effective December 5, 2022, based on the recommendation of the Compensation Committee following its review of current market practices in consultation with Radford, its independent compensation consultant, our Board approved and adopted an Executive Severance Plan (“Plan”) applicable to all individuals employed by us at the C-level and vice president level, including the NEOs (collectively, “Executive Participants”). To the extent an Executive Participant, including our NEOs, is currently a party to an existing agreement with us providing for severance benefits, such Executive Participant has the ability, following the occurrence of an event entitling such Executive Participant to receive severance benefits, to elect whether to receive the benefits under the existing agreement or the Plan.
Under the Plan, in the event of a termination of the Executive Participant’s employment by us without cause (as defined in the Plan) or a resignation by the Executive Participant for good reason (as defined in the Plan) three (3) or more months prior to a change in control (as defined in the Plan) or more than twelve (12) months following a change in control, the severance benefits for the Executive Participant shall generally consist of continued payment of base salary following the date of such Executive Participant’s termination of employment, plus reimbursement for the cost of continued group health insurance coverage, for the applicable severance period, which is twelve (12) months for C-level Executive Participants and six (6) months for Executive Participants who are vice presidents.
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Under the Plan, in the event of a termination of the Executive Participant’s employment by us without cause or a resignation by the Executive Participant for good reason, in each case within three (3) months prior to a change in control or within twelve (12) months following a change in control, the severance benefits for the Executive Participant shall consist of the following:
· payment of a lump sum amount equal to the Executive’s base salary and target bonus, plus reimbursement for the cost of continued group health insurance coverage, for the number of months in the applicable severance period, which is twenty-four (24) months for C-level Executive Participants and twelve (12) months for Executive Participants who are vice presidents; and
· immediate vesting in full of all of the Executive Participant’s outstanding equity awards; provided, however, if vesting is otherwise based on satisfaction of performance objectives, such objectives shall be deemed satisfied at 100% of target for each performance period.
Receipt of severance benefits under the Plan is conditioned upon the Executive Participant’s execution of a separation agreement containing, among other provisions, a general release of all claims in favor of us.
Payments are designed to comply with Section 409A of the Internal Revenue Code (the “Code”). In addition, if any payment under the Plan would constitute an excess parachute payment within the meaning of Section 280G of the Code, the payments will be reduced to the minimum extent necessary so that no portion of any payment or benefit will constitute an excess parachute payment, provided however, that the reduction will be made only if and to the extent that such reduction would result in an increase in the aggregate payment and benefits to be provided, determined on an after tax basis (taking into account the excise tax imposed pursuant to Section 4999 of the Code, or any successor provision, or any other tax).
Employment Agreements
We have entered intoAs of the end of fiscal year 2023, we are a party to certain legacy employment agreements with Messrs. Green, Hart and Ziebell and an offer letter with Mr. Kwietniak. Each employment agreement with each of our Named Executive Officers, each of which areis subject to automatic one-year extensions annually unless either party gives written notice of such party’s intent not to renew the employment agreement at least ninety (90) days prior to the commencement of the next year’s period.
Each employment agreementagreement/offer letter provides that the executive officer must devote his or her full business time to the performance of services to the Company. In addition, each executive officer has agreed to maintain the confidentiality of the Company’s proprietary information, and that all work product discovered or developed by him or her in the course of his or her employment belongs to the Company. Each executive officer has further agreed that he or she will not (i) compete with the Company, directly or indirectly, during the course of such executive’s employment within the United States or any foreign country in which the Company has done business or has actually investigated doing business or where its products are sold or distributed, or (ii) solicit Company employees or customers during the course of employment and for a period of one year following the termination of such executive’s employment.
The Company has the right to terminate each executive’s employment for “cause” if such executive (a) breaches in any material respect or fails to fulfill in any material respect his or her fiduciary duty owed to Company; (b) breaches in any material respect his or her employment agreementagreement/offer letter or any other confidentiality or non-solicitation, non-competition agreement with the Company; (c) pleads guilty to or is convicted of a felony; (d) is found to have engaged in any reckless, fraudulent, dishonest or grossly negligent misconduct, (e) fails to perform his or her duties to the Company, provided that he or she fails to cure any such failure within thirty (30) days after written notice from Company of such failure, provided further, however, that such right to cure shall not apply to any repetition of the same failure previously cured under the agreement; or (f) violates any material rule, regulation or policy of the Company that may be established and made known to Company’s employees from time to time, including without limitation, the Company’s employee handbook. If an executiveexecutive’s employment is terminated for “cause”, he or she shall have no right to receive any compensation or benefit under his or her employment agreementagreement/offer letter after such termination other than base salary and paid time-off earned or accrued but unpaid as of the date of termination.
The following discussion describes the amounts that we would pay or provide to our Named Executive Officers or, as applicable, their beneficiaries under these employment agreements as a result of (i) termination without cause or resignation for good reason, (ii) termination following a change-in-control, (iii) death or disability, and (iv) voluntary resignation with extended notice.
Payments Upon Termination Without Cause or Resignation for Good Reason
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If we terminate Mr. King’s,Green’s, Mr. Lytle’sHart’s or Mr. Ziebell’s employment without cause or Mr. Green, Mr. Hart or Mr. Ziebell, as the executivecase may be, terminates his employment for “good reason”, such executive is entitled to (i) continued base salary and group insurance benefits for a period of twelve (12) months, and (ii) other than with respect to Mr. Green, the payment of any prorated earned target bonus.bonus, as determined by the Compensation Committee in its sole discretion. In addition, each of Mr. King, Mr. Lytle and Mr. Ziebellexecutive shall have a period of time equal to the lesser of two years, following the date of such termination or until the original expiration date of the applicable option agreement to exercise any vestedfor Mr. Ziebell, and outstanding stock options as of the date of such termination. If we terminate Dr. Fussey’s ortwelve months, for Mr. Shan’s employment without cause or such executive terminates his or her employment for good reason, such executive shall be entitled to (i) continued base salary and group insurance benefits for a period of twelve (12) months, and (ii) the payment of any prorated target bonus. In addition, each of Dr. Fussey and Mr. Shan shall have a period of time equal to the lesser of twelve (12) monthsHart, following the date of such termination or until the original expiration date of the applicable option agreement to exercise any vested and outstanding stock options as of the date of such termination. An executive’s receipt of the foregoing severance benefits shall be conditioned upon such executive’s execution of a general release of known and unknown claims in favor of the Company and its affiliates. Pursuant to his offer letter, if we terminate Mr. Kwietniak’s employment without cause or he terminates his employment for “good reason”, Mr. Kwietniak is entitled to continuation of his base salary and group benefits paid in equal installments for a period of six months.
Each employment agreement defines “good reason” as (a) the Company relocates executive’s principal place of work to a location more than fifty (50) miles from the original location, without the executive’s prior written approval; (b) the executive’s position and/or duties are modified so that his or her duties are no longer consistent with the executive’s title; or (c) the executive’s annual base salary and related benefits, as adjusted from time to time, are reduced without his or her written authorization.
The following table sets forth the potential payments to our Named Executive Officers assuming a termination without cause or resignation for good reason with estimated benefits calculated as if the termination occurred on or about April 30, 2017:
| Named Executive Officer | Base Salary | Target Bonus ($)(2) | Group Benefits ($)(3) | Total ($) | |||||
| Steven W. King | 540,800 | 324,480 | 36,756 | 902,036 | |||||
| Paul J. Lytle | 405,600 | 162,240 | 37,348 | 605,188 | |||||
| Shelley P.M. Fussey | 321,000 | 112,350 | 14,651 | 448,001 | |||||
| Joseph S. Shan | 309,000 | 108,150 | 37,229 | 454,379 | |||||
| Mark R. Ziebell | 361,920 | 126,672 | 37,298 | 525,890 | |||||
______________
Payments Upon a Termination in Connection with a Change-in-Control
In the event of a change-in-control of Peregrine,Avid, if (i) a Named Executive Officer’sMr. Green’s, Mr. Hart’s, Mr. Kwietniak’s or Mr. Ziebell’s employment is terminated other than for cause within three (3) months prior or thirty-six (36) months following a change-in-control (in the case of Mr. King) or twenty-four (24) months following asuch change-in-control, (in the case of the other Named Executive Officers), or (ii) such Named Executive Officerexecutive officer terminates his or her employment for “good reason” within twenty-four (24) months, for Mr. Green and Mr. Hart, or twelve (12) months, for Mr. Kwietniak or Mr. Ziebell, following asuch change-in-control, the executive shall be paid a lump sum amount equal to (a) thirty-six (36) months’, in the case of Mr. King,Kwietniak, six months’, and twenty-four (24)Mr. Green, twelve (12) months’, base salary, payable monthly in twelve equal installments, and in the case of the other Named Executive Officers,Mr. Hart and Mr. Ziebell, twenty-four (24) months base salary, thenpayable in effect,a single lump sum, and (b) other than with respect to Mr. Green and Mr. Kwietniak, one hundred percent (100%) of such executive’s earned target bonus. Each Named Executive Officerbonus as determined by the Compensation Committee in its sole discretion. Mr. Hart and Mr. Ziebell will also be paid a single lump sum payment equal to group insurance benefits for the Named Executive Officerappliable NEO and his or her family for thirty-six (36)twenty-four (24) months and in the case of Mr. King,Kwietniak and twenty-four (24) months,his family payable monthly in the caseequal installments for a period of the other Named Executive Officers.six months. In addition, each of the Named Executive Officers’executive officers’ outstanding unvested stock optionsequity awards shall immediately become fully vested, provided however that PSUs shall only vest as to the “target” level of performance, and, with respect to stock options, Mr. Green shall have a period of one year following the date of such termination, and Mr. Hart and Mr. Ziebell each shall have a period of time equal to the lesser of two years, for Mr. Hart following the date of such termination, and for Mr. Ziebell, following the date of the change-in-control, or until the original expiration date of the applicable option agreement to exercise any vested and outstanding stock options as of the date of such termination. An executive’s receipt of the foregoing severance benefits is conditioned upon such executive’s execution of a general release of known and unknown claims in favor of the Company and its affiliates.
Payments Upon Termination Without Cause or Resignation for Good Reason
The following table sets forth the potential payments to our Named Executive OfficersNEOs assuming a termination without cause or resignation for good reason not in connection with a change-in-control,change in control with estimated benefits calculated assumingas if the change-in-control and termination of employment occurred on or about April 30, 2017:2023:
Named Executive Officer | Base Salary($)(1) | Target Bonus ($)(2) | Stock Option Acceleration ($)(3) | Group Benefits ($)(4) | Total ($) | |||||
| Steven W. King | 1,622,400 | 324,480 | 36,093 | 110,268 | 2,093,241 | |||||
| Paul J. Lytle | 811,200 | 162,240 | 18,046 | 74,696 | 1,066,182 | |||||
| Shelley P.M. Fussey | 642,000 | 112,350 | 10,827 | 29,302 | 794,479 | |||||
| Joseph S. Shan | 618,000 | 108,150 | 10,827 | 74,458 | 811,435 | |||||
| Mark R. Ziebell | 723,840 | 126,672 | 10,827 | 74,596 | 935,935 |
| Named Executive Officer | Base Salary(4) | Target Bonus(5) | Group Benefits(6) | Total |
| Nicholas S. Green(1) | $650,000 | — | $42,257 | $692,257 |
| Daniel R. Hart(2) | $445,000 | $222,500 | $42,257 | $709,757 |
| Richard A. Richieri(3) | $375,000 | — | $27,007 | $402,007 |
| Matthew R. Kwietniak(3) | $362,000 | — | $42,478 | $404,478 |
| Mark R. Ziebell(2) | $425,000 | $170,000 | $42,257 | $637,257 |
______________
| (1) | The benefits payable to Mr. Green are the same under both the Plan and his employment agreement. | |
| Represents the benefits payable to Mr. Hart and Mr. Ziebell under their respective employment agreements which are more favorable to them than the benefits set forth under the Plan. | ||
| (3) | Represents the benefits payable to Mr. Richieri and Mr. Kwietniak under the Plan. Mr. Richieri does not have an employment agreement, and in the case of Mr. Kwietniak the Plan benefits are more favorable than the benefits set forth under his offer letter. | |
| (4) | Represents payment of base salary for a period of |
| Represents estimated payments to reimburse executive’s monthly benefits premiums for continued group health, dental, and vision benefits in addition to premiums for disability and term life insurance during the severance period of |
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Payments Upon a Termination in Connection with a Change in Control
The following table sets forth the potential payments to our NEOs assuming a termination without cause or resignation for good reason in connection with a change in control, with estimated benefits calculated assuming the change in control and termination of employment occurred on April 30, 2023:
| Named Executive Officer | Base Salary(3) | Target Bonus(4) | Acceleration of Equity Awards(5) | Group Benefits(6) | Total |
| Nicholas S. Green(1) | $1,300,000 | $1,300,000 | $6,970,728 | $84,514 | $9,655,242 |
| Daniel R. Hart(1) | $890,000 | $445,000 | $2,130,913 | $84,514 | $3,550,427 |
| Richard A. Richieri(1) | $750,000 | $300,000 | $1,249,144 | $54,014 | $2,353,158 |
| Matthew R. Kwietniak(1) | $724,000 | $289,600 | $723,886 | $84,956 | $1,822,442 |
| Mark R. Ziebell(2) | $850,000 | $170,000 | $1,645,843 | $84,514 | $2,750,357 |
| (1) | Represents the benefits payable to Mr. Green, Mr. Hart, Mr. Richieri and Mr. Kwietniak under the Plan which are more beneficial than any benefits to be received under their respective employment agreements or offer letter, as applicable. Mr. Richieri does not have an employment agreement. | |
| (2) | Represents the benefits payable to Mr. Ziebell under his employment agreement which are more favorable to him than the benefits set forth under the Plan. | |
| (3) | Represents payment of base salary for a period of twenty-four (24) months, or in the case of Mr. Ziebell, as a lump sum. | |
| (4) | Represents payment of target bonus for a period of twenty-four (24) months, except in the case of Mr. Ziebell who would receive a lump sum payment equal to twelve (12) months’ target bonus, assuming the Compensation Committee determined, in its sole discretion, that Mr. Ziebell earned the full target bonus for the fiscal year. The target bonuses are equal to a percentage of the NEO’s annual base salary as follows Mr. Green – 100%; Mr. Hart – 50%; Mr. Richieri – 40%; Mr. Kwietniak – 40%; and Mr. Ziebell – 40%. | |
| (5) | Amounts shown in this column reflect the value of unvested stock options and market value of unvested restricted stock units and performance stock units that would have accelerated if the NEO’s employment was terminated on April 30, 2023 in connection with a change-in-control. Per the terms of the 2018 Plan, unvested performance stock units vest at an assumed achievement of all relevant performance goals at the target level. Values were derived using $18.05, the closing price of our Common Stock on the Nasdaq Stock Market on the last trading day of our fiscal year ended April 30, 2023. For stock options, this value equals the difference between the closing market price of $18.05 or our Common Stock and the exercise price, multiplied by the number of option shares subject to accelerated vesting upon termination. | |
| (6) | Represents estimated payments to reimburse executive’s monthly benefits premiums for continued group health, dental, and vision benefits in addition to premiums for disability and term life insurance during the twenty-four (24) severance period. Amounts were calculated based on current premiums paid for executive’s benefits. |
Payments upon Death or Disability
In the event of the death or disability of Mr. Hart or Mr. Ziebell, as defined in thetheir employment agreements, of a Named Executive Officer, the Company will not pay any further compensation or benefits after such event other than the payment by the Company of group insurance benefits previously provided to our Named Executive Officerssuch executive officers for a period of twelve (12) months, in the case of Mr. King, Mr. Lytle and Mr. Ziebell, and nine (9) months, in the case of Dr. Fussey and Mr. Shan.months. Amounts were calculated based on current premiums paid for executive’s benefits as follows:
| Named Executive Officer | Group Benefits | |
| Mark R. Ziebell |
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Payments upon Executive’s Voluntary Resignation with Extended Notice Period
In the event that a Named Executive OfficerMr. Ziebell voluntarily resigns, and in connection therewith provides ninety (90) days’ advance written notice (the “Extended Notice Period”) to the Company, and provided the executive shall have been employed by the Company for a period of at least five (5) years (in the case of Dr. Fussey, Mr. Shan and Mr. Ziebell), the Company will pay the Named Executive Officer’sMr. Ziebell’s base salary then in effect and shall continue to provide other contractual benefits including group insurance benefits during the Extended Notice Period and for a period of nine (9) months in the case of Mr. King and six (6) months in the case of the other Named Executive Officers afterfollowing the Extended Notice Period, provided the executiveMr. Ziebell makes themselveshimself telephonically available to the Board of Directors and the Company’s executive team for up to two (2) hours per week.
Compensation Committee Interlocks and Insider Participation
During the fiscal year ended April 30, 2017,2023, the following non-employee directors served on the Compensation Committee of the Board of Directors: Messrs. Carlton M. Johnson, Jr., David H. Pohl and Eric S. Swartz. The current members of the Compensation Committee are Dr. Joseph Carleone (chairman of the committee), Mr. Richard B. Hancock andCatherine J. Mackey, Mr. Gregory P. Sargen.Sargen and Ms. Jeanne A. Thoma. There are not currently, and during the fiscal year ended April 30, 2017,2023, there were not, any interlocks of executive officers or directors of the Company serving on the compensation committee or equivalent committee of another entity, which has any director or executive officer serving on the Compensation Committee, other committees or the Board of Directors.
Certain Relationships and Related Transactions
Except for the compensation arrangements between us and our executive officers and directors described above under “Compensation Discussion and Analysis,” since May 1, 2016,2022, we have not been a party to any transactions involving more than $120,000 and in which any director, nominee for director, executive officer, holder of more than 5% of our common stockCommon Stock or any immediate family member of the foregoing has a direct or indirect material interest, nor are any such transactions currently proposed.
The Audit Committee’s charter requires that it review and approve any related-party and conflicts of interest transactions. In considering related-party transactions, the Audit Committee would consider the relevant available facts and circumstances, including, but not limited to, (i) the risks, costs and benefits to us, (ii) the impact on a director’s independence in the event the related party is a director, immediate family member of a director or an entity with which a director is affiliated, (iii) the terms of the transaction, (iv) the availability of other sources for comparable services or products, and (v) the terms available to or from, as the case may be, unrelated third parties or to or from employees generally. In the event a director has an interest in the proposed transaction, the director must recuse himself or herself from the deliberations and approval. In determining whether to approve, ratify or reject a related-party transaction, the Audit Committee evaluates whet her,whether, in light of known circumstances, the transaction is in, or is inconsistent with, our best interests and those of our stockholders.
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The Report of the Compensation Committee of the Board of Directors shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act or under the Exchange Act, except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts.
The Compensation Committee of our Company has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.
The Compensation Committee of the Board of Directors
Eric S. Swartz (Former Chairman and Former Member
Catherine J. Mackey, Ph.D. (Chair of the Board)Compensation Committee)
Carlton M. Johnson, Jr. (Former Member of the Board)
David H. Pohl (Former Member of the Board)Jeanne A. Thoma
Gregory P. Sargen
Proposal No. 4:Advisory Vote On The Frequency Of An Advisory Vote On Executive Compensation (“Say-On-Pay Frequency Vote”)
Background
Pursuant to Section 14A of the Exchange Act, we are asking our stockholders to provide their input with regard to the frequency of future non-binding stockholder votes on our executive compensation programs, such as the proposal contained in Proposal No. 3 of this Proxy Statement. In particular, we are asking whether the non-binding vote on executive compensation should occur every year, every two years or every three years. Currently, the non-binding vote on executive compensation occurs every year.
Summary
Our Board of Directors has determined that an annual advisory vote on executive compensation is the most appropriate alternative for Peregrine. The Board’s determination was influenced by the fact that the compensation of our named executive officers is evaluated, adjusted and approved on an annual basis. As part of the annual review process, the Board believes that stockholder sentiment should be a factor that is taken into consideration by the Board and the Compensation Committee in making decisions with respect to executive compensation. By providing an advisory vote on executive compensation on an annual basis, our stockholders will be able to provide us with direct input on our compensation philosophy, policies and practices as disclosed in the Proxy Statement every year. Accordingly, our Board recommends that the advisory vote on executive compensation be held every year.
You may cast your vote by choosing the option of one year, two years or three years or abstain from voting when you vote on the resolution set forth below.
Resolution
“RESOLVED, that the stockholders of the Company determine, on an advisory basis, that the frequency with which the stockholders of the Company wish to have an advisory vote on the compensation of the Company’s named executive officers as disclosed pursuant to the SEC’s compensation disclosure rules (which disclosure includes the Compensation Discussion and Analysis, the Summary Compensation Table, and the related tables and disclosure) is:
Required Vote
A plurality of the shares of common stock present in person or represented by proxy at the 2017 Annual Meeting and entitled to vote is required to approve, on a non-binding basis, the frequency of a non-binding vote on the compensation of our Named Executive Officers. Thus, the choice receiving the highest number of votes will be considered the frequency recommended by stockholders.
Abstentions and broker non-votes will not have any effect on the outcome of this proposal because neither an abstention nor a broker non-vote represents a vote cast.
The “say-on-pay” frequency vote is advisory, and therefore not binding on the Company, the Board of Directors or the Compensation Committee. The Board may decide that it is in the best interests of our stockholders and the Company to hold future advisory resolutions to approve named executive officer compensation more or less frequently than the option approved by our stockholders. However, the Board of Directors and the Compensation Committee will consider the outcome of the vote in determining the frequency with which it will hold the non-binding vote on executive compensation.
Recommendation
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE CHOICE OF “ONE YEAR” AS THE FREQUENCY WITH WHICH THE COMPANY SHOULD PROVIDE ITS STOCKHOLDERS WITH THE OPPORTUNITY TO CAST A “SAY-ON-PAY” ADVISORY VOTE WITH RESPECT TO THIS PROPOSAL NO. 4.
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Equity
As required by Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the median of the annual total compensation of our employees (excluding Nicholas S. Green, our CEO on April 30, 2023) and the annual total compensation of our CEO. The pay ratio included below is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K.
For fiscal year 2023, the median of the annual total compensation for our employees (other than our CEO) was $104,595, and the annual total compensation of our CEO, as reported in the Summary Compensation Plan InformationTable above was $6,461,784. Based on this information, for fiscal year 2023 the ratio of the annual total compensation of our CEO to the median of the annual total compensation of all of our employees was approximately 62 to 1.
We currently maintain six equitytook the following steps to identify the employee at the median of the annual total compensation plans: the 2002 Stock Incentive Plan (the “2002 Plan”), the 2003 Stock Incentive Plan (the “2003 Plan”), the 2005 Stock Incentive Plan (the “2005 Plan”), the 2009 Stock Incentive Plan (the “2009 Plan”), the 2010 Stock Incentive Plan (the “2010 Plan”) and the 2011 Stock Incentive Plan, as amended on October 15, 2015 (the “2011 Plan”), in addition to which we maintainof all our Employee Stock Purchase Plan. The 2003 Plan, 2005 Plan, 2009 Plan, 2010 Plan and 2011 Plan,employees (other than our CEO), as well as to determine the Employee Stock Purchase Plan, were approved byannual total compensation of our stockholders, while we did not submit the 2002 Plan for stockholder approval.median employee and our CEO:
The 2002 Plan, which expired in June 2012, was a broad-based non-qualified stock option plan for the issuance of up to 85,714 options. The 2002 Plan provided for the granting of options to purchase shares of our common stock at prices not less than the fair market value of our common stock at the date of grant and generally expired ten years after the date of grant. No additional options can be granted under the expired 2002 Plan, however, the terms of the 2002 Plan remain in effect with respect to outstanding options granted under the 2002 Plan until they are exercised, canceled or expired.
The following table sets forth certain information as of April 30, 2017 concerning our common stock that may be issued upon the exercise of options or pursuant to purchases of stock under all of our equity compensation plans approved by stockholders and equity compensation plans not approved by stockholders in effect as of April 30, 2017:
| Plan Category | (a) Number of Securities to be Issued Upon the Exercise of Outstanding Options, Warrants and Rights | (b) Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights ($/share) | (c) Number of Shares Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) | |||||
| Equity compensation plans approved by stockholders(1) | 4,050,332 | 8.72 | 1,549,324 | |||||
| Equity compensation plans not approved by stockholders(1) | 31,216 | (2) | 14.79 | – | ||||
| Employee Stock Purchase Plan approved by stockholders(1) | – | – | 1,359,736 | |||||
| Total | 4,081,548 | (3) | 8.77(4) | 2,909,060 | ||||
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| 1. | ||
| 2. | For the annual total compensation of our median employee, we identified and calculated the elements of that employee’s compensation for fiscal year 2023 in accordance with the |
| 3. |
The SEC rules do not specify a single methodology for identification of the median employee or calculation of the pay ratio, and other companies may use assumptions and methodologies that are different from those used by us in calculating their pay ration. Accordingly, the pay ratio disclosed by other companies may not be comparable to our pay ratio as disclosed above.
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The disclosure included in this section is prescribed by SEC rules and does not necessarily align with how the Company or the Compensation Committee views the link between the Company’s performance and its NEOs’ pay. For a discussion of how the Company views its executive compensation structure, including alignment with Company performance, see “Compensation Discussion and Analysis” above.
The use of the term compensation actually paid, or CAP, is required by the SEC’s rules. Neither CAP nor the total amount reported in the Summary Compensation Table reflect the amount of compensation actually paid, earned or received during the applicable fiscal year. Per SEC rules, CAP was calculated by adjusting the Summary Compensation Table totals for the applicable fiscal year as described in the footnotes to the following table.
Pay Versus Performance Table
Value of Initial Fixed $100 Investment Based on: | ||||||||||||||
Fiscal Year (a) | Summary Compensation Table Total for First PEO(1) (b)($) | Summary Compensation Table Total for Second PEO(1) (b)($) | Compensation Actually Paid to First PEO(2) (c)($) | Compensation Actually Paid to Second PEO(2) (c)($) | Average Summary Compensation Table Total for Non-PEO NEOs(3) (d)($) | Average Compensation Actually Paid to Non-PEO NEOs(3) (e)($) | Total Shareholder Return(4) (f)($) | Peer Group Total Stockholder Return(5) (g)($) | Net Income (h)($ in 000’s) | Revenue (i)($ in 000’s)(6) | ||||
| 2023 | — | 6,461,784 | — | 7,893,707 | 1,426,892 | 1,979,765 | 295.90 | 149.87 | 560 | 149,266 | ||||
| 2022 | — | 6,181,824 | — | 3,173,970 | 1,679,458 | 488,844 | 220.66 | 140.06 | 127,672 | 119,597 | ||||
| 2021 | 926,201 | 2,845,283 | 3,504,213 | 5,855,070 | 1,203,559 | 3,735,263 | 350.90 | 115.50 | 11,212 | 95,868 | ||||
| (1) | During fiscal year 2021, Mr. Hancock served as our Principle Executive Officer ("First PEO”) until July 30, 2020. Mr. Green became our PEO (“Second PEO”) during fiscal year 2021 on July 30, 2020. | |
| (2) | The following table sets forth the adjustments made during the fiscal year presented to arrive at CAP to our First PEO during the fiscal year: |
| Fiscal Year 2021($) | |
| Summary Compensation Table (SCT) Total Compensation for First PEO | 926,201 |
| Deduct for amounts reported under “Stock Awards” and “Option Awards” in SCT | (650,066) |
| Fair value as of fiscal year-end of equity awards granted during the fiscal year that remain unvested | 2,509,152 |
| Change in fair value of outstanding prior fiscal years’ equity awards that remain unvested as of fiscal year-end | 706,862 |
| Fair value on vesting date for awards granted and vested in the same fiscal year | – |
| Change in fair value from prior fiscal year-ended to vesting date of prior years’ awards that vested during the fiscal year | 12,064 |
| Fair value as of prior fiscal year-end of equity awards granted in prior fiscal years that failed to meet applicable vesting conditions during fiscal year | – |
| Compensation Actually Paid (CAP) to First PEO | 3,504,213 |
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The following table sets forth the adjustments made during each fiscal year presented to arrive at CAP to our Second PEO during each fiscal year:
Fiscal Year 2023($) | Fiscal Year 2022($) | Fiscal Year 2021($) | |
| SCT Total Compensation for Second PEO | 6,461,784 | 6,181,824 | 2,845,283 |
| Deduct for amounts reported under “Stock Awards” and “Option Awards” in SCT | (5,112,128) | (4,642,450) | (1,436,153) |
| Fair value as of fiscal year-end equity awards granted during the fiscal year that remain unvested | 3,770,410 | 1,775,441 | 4,445,940 |
| Change in fair value of outstanding prior fiscal years’ equity awards that remain unvested as of fiscal year-end | 870,673 | (1,301,754) | – |
| Fair value on vesting date for awards granted and vested in the same fiscal year | 1,316,033 | 930,938 | – |
| Change in fair value from prior fiscal year-ended to vesting date of prior years’ awards that vested during the fiscal year | 979,038 | 229,971 | – |
| Fair value as of prior fiscal year-end of equity awards granted in prior fiscal years that failed to meet applicable vesting conditions during fiscal year | (392,103) | – | – |
| CAP to Second PEO | 7,893,707 | 3,173,970 | 5,855,070 |
| (3) | The following table sets forth the adjustments made during each fiscal year presented to arrive at average CAP for our Non-PEO NEOs as a group for each fiscal year: |
| Fiscal Year 2023($) | Fiscal Year 2022($) | Fiscal Year 2021($) | |
| Average SCT Total Compensation for Non-PEO NEOs | 1,426,892 | 1,679,458 | 1,203,559 |
| Deduct for amounts reported under “Stock Awards” and “Option Awards” in SCT | (806,364) | (923,180) | (400,045) |
| Fair value as of fiscal year-end equity awards granted during the fiscal year that remain unvested | 594,743 | 353,069 | 1,426,623 |
| Change in fair value of outstanding prior fiscal years’ equity awards that remain unvested as of fiscal year-end | 310,754 | (961,026) | 1,478,099 |
| Fair value on vesting date for awards granted and vested in the same fiscal year | 207,565 | 185,111 | – |
| Change in fair value from prior fiscal year-ended to vesting date of prior years’ awards that vested during the fiscal year | 324,766 | 155,412 | 27,027 |
| Fair value as of prior fiscal year-end of equity awards granted in prior fiscal years that failed to meet applicable vesting conditions during fiscal year | (78,593) | – | – |
| Average CAP to Non-PEO NEOs | 1,979,763 | 488,844 | 3,735,263 |
The Non-PEO NEOs included in average compensation shown in columns (d) and (e) above are as follows:
| Fiscal Year 2023 | Fiscal Year 2022 | Fiscal Year 2021 | ||
| Daniel R. Hart | Daniel R. Hart | Daniel R. Hart | ||
| Matthew R. Kwietniak | Mark R. Ziebell | Mark R. Ziebell | ||
| Richard A. Richieri | ||||
| Mark R. Ziebell |
| (4) | This column represents cumulative Company total shareholder return (“TSR”). TSR is calculated by dividing the sum of the cumulative amount of dividends for each measurement period (fiscal 2021, fiscals 2021-2022 and fiscals 2021-2023), assuming dividend reinvestment, and the difference between the Company’s share price at the end and the beginning of the measurement period by the Company’s share price at the beginning of the measurement period. | |
| (5) | This column represents cumulative peer group TSR computed in accordance with Note (4). The peer group used for this purpose is the Nasdaq U.S. Benchmark Pharmaceuticals TR Index, which we also use for purposes of the stock performance graph included in our Annual Report for the year ended April 30, 2023, reflected as of the end of each respective fiscal year. | |
| (6) | SEC rules require us to designate a “company-selected measure” that in our assessment represents the most important financial performance measure (that is not TSR or net income) used by the Company to link the CAP of our NEOs, for the most recently completed fiscal year, to our performance. We selected Revenue as this measure for fiscal year 2023 as reflected in column (i) in the first table above. Revenue is a Generally Accepted Accounting Principle measure reported in the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the fiscal year ended April 30, 2023. This performance measure may not have been the most important financial performance measure for fiscal years 2022 and 2021 and we may determine a different financial performance measure to be the most important financial performance measure in future years. |
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Tabular List of Financial Performance Measures
Following is an unranked list of the Avid financial performance measures we consider most important in linking the compensation actually paid to our Named Executive Officers for fiscal year 2023 with Avid’s performance.
| · | Revenue (as used in our Annual Cash Bonus Plan and Annual LTI Awards) | |
| · | Adjusted EBITDA (as defined in the discussion of our Annual Cash Bonus Plan included in the Compensation Discussion and Analysis above and as used in our Annual Cash Bonus Plan) | |
| · | Backlog (as defined in the discussion of our Annual Cash Bonus Plan included in the Compensation Discussion and Analysis above and as used in our Annual Cash Bonus Plan) | |
| · | Adjusted Net Income (as used in our Annual LTI) |
In addition to the financial performance measures listed above, we view our stock price, upon which the value of all of our equity awards is dependent, as a key performance-based component of our executive compensation program in order to further align the interests of our senior management with the interests of our stockholders.
Pay Versus Performance: Graphical Description
The illustrations below provide a graphical description of the relationship between CAP (as calculated in accordance with the SEC rules) and the following measures:
| · | The Company’s cumulative TSR and the Peer Group’s cumulative TSR; |
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| · | The Company’s Net Income; and |
| · | The Company’s Selected Measure, for which we have selected Revenue. |
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Other Matters
Neither the Board of Directors nor the management knows of any other business to be presented at the 2017 Annual Meeting, but if other matters do properly come before the 2017 Annual Meeting, it is intended that the persons named on the proxy card will vote on those matters in accordance with their best judgment.
Annual Report on Form 10-K
A copy of the Company’s Annual Report on Form 10-K, as filed with the SEC (exclusive of Exhibits), will be furnished by first class mail, within one business day of receipt of request, without charge to any person from whom the accompanying proxy is solicited upon written request to Peregrine Pharmaceuticals,Avid Bioservices, Inc., Attention: Corporate Secretary, 2642 Michelle Drive,14191 Myford Road, Tustin, California 92780. If Exhibit copies are requested, a copying charge of $.20$0.20 per page will be made. In addition, all of the Company’s public filings, including the Annual Report on Form 10-K, can be found on our website atwww.peregrineinc.com. www.avidbio.com.
By Order of the Board of Directors | |
/s/ Mark R. Ziebell | |
Mark R. Ziebell | |
Vice President, General Counsel and | |
Corporate Secretary |
December 7, 2017
August 28, 2023
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY
|
PEREGRINE PHARMACEUTICALS, INC.This Proxy is Solicited on Behalf of the Board of DirectorsFor the 2017 Annual Meeting of StockholdersTo Be Held Thursday, January 18, 2018, at 10:00 a.m. PST
The undersigned hereby appoints Roger J. Lias, Ph.D. and Paul J. Lytle, or any one or all of them, with full power of substitution, attorneys and proxies to represent the undersigned at the annual meeting of stockholders of PEREGRINE PHARMACEUTICALS, INC. to be held on January 18, 2018 and at any adjournment or postponement thereof, with all the power which the undersigned would possess if personally present and to vote, as specified on the reverse side, all shares of Common Stock which the undersigned may be entitled to vote at said meeting.
IF NO OTHER INDICATION IS MADE ON THE REVERSE SIDE OF THIS FORM, THIS PROXY WILL BE VOTEDFOR ALL NOMINEES FOR DIRECTOR LISTED IN PROPOSAL 1,FOR PROPOSALS 2 AND 3 ANDONE YEAR FOR PROPOSAL 4 AS MORE SPECIFICALLY DESCRIBED IN THE PROXY STATEMENT AND IN THE DISCRETION OF THE PERSONS NAMED ABOVE IN ANY OTHER MATTER WHICH MAY PROPERLY COME BEFORE THE ANNUAL MEETING. IF SPECIFIC INSTRUCTIONS ARE INDICATED, THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THOSE INSTRUCTIONS.
YOU MAY REVOKE THIS PROXY AT ANY TIME PRIOR TO THE VOTE AT THE ANNUAL MEETING.
PLEASE COMPLETE, DATE AND SIGN THIS PROXY AND RETURN IT IN THE ACCOMPANYING ENVELOPE.
Address change/comments:
(If you noted any Address Changes and/or Comments above, please mark corresponding box on the reverse side.)
Continued and to be signed on reverse side
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