UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
☐ | Preliminary Proxy Statement | |
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☒ | Definitive Proxy Statement | |
☐ | Definitive Additional Materials | |
☐ | Soliciting Material Pursuant to § 240.14a-12 |
☐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-12
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Form, Schedule or Registration Statement No.:
2401 4th Ave.Avenue, Suite 1050
Seattle, Washington 98121
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On May 27, 2020June 2, 2023
DearAptevo Stockholder:
You are cordially invited to virtually attend the 2023 annual meeting of stockholders (the “Annual Meeting”) of Aptevo Therapeutics Inc., a Delaware corporation (the ““Company”). The meeting is expected to be held on June 2, 2023 at 10 a.m. Pacific Time. To facilitate stockholder participation and save costs, the Annual Meeting will be held in a virtual meeting format only at Companywww.virtualshareholdermeeting.com/APVO2023”). The meeting will be held electronically on Wednesday, May 27, 2020 at 9:00 a.m. PDT. We are pleased to announce that this year’s annual meeting will be a virtual meeting via live webcast on the Internet. You will be able to attend the meeting and vote during the meeting by visiting www.virtualshareholdermeeting.com/APVO2020for the following purposes:
1. To elect two nominees Zsolt Harsanyi, Ph.D. and Barbara Lopez Kunz, to serve on the Company’s Board of Directors to hold office until the 20232026 Annual Meeting of Stockholders.
2. To approve the stock option exchange program, as described in the attached proxy statement.Stockholders and until their respective successors are duly elected and qualified.
3. 2.To ratify the selection by the Audit Committee of the Board of Directors of Ernst & YoungMoss Adams LLP as the Company’s independent registered public accounting firm of the Company for the year ending December 31, 2020.2023.
3. To approve, on a non-binding advisory basis, the compensation paid to the Company’s named executive officers in 2022, as disclosed in the proxy statement.
4. To conduct any other business properly brought before the meeting.Annual Meeting.
These items of business are more fully described in the Proxy Statementproxy statement accompanying this Notice.Notice (the “Proxy Statement”).
The record date for the Annual Meeting is April 9, 2020.5, 2023. Only stockholders of record at the close of business on that date may vote on the proposals being presented at the meetingAnnual Meeting or any adjournment, postponement, rescheduling, or continuation thereof.
Important Notice Regarding the Availability of Proxy Materials for the Shareholders’Stockholders’ Meeting to Be Held Virtually on May 27, 2020June 2, 2023 at 9:0010 a.m. Pacific Time at PDT by visiting www.virtualshareholdermeeting.com/APVO2020APVO2023.
The proxy statementProxy Statement and annual reportAnnual Report to shareholdersstockholders
are available at www.proxyvote.com.
By Order of the Board of Directors
/s/ Heather BoussiosSoYoung Kwon
Assistant SecretarySVP, General Counsel, Business Development and Corporate Affairs
Seattle, WA
April , 202018, 2023
You are cordially invited to “virtually”virtually attend the meeting. Whether or not you expect to virtually attend the meeting, please complete, date, sign and return the encloseda proxy card (if you received one), or vote over the telephone or the internet as instructed in these materials, as promptly as possible in order to ensure your representation at the meeting. Even if you have voted by proxy, you may still vote if you “virtually”virtually attend the meeting.
TABLE OF CONTENTS
QUESTIONS AND ANSWERS ABOUT THESE PROXY MATERIALS AND VOTING |
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2401 4th Ave.Avenue, Suite 1050
Seattle, Washington 98121
PROXY STATEMENT
FOR THE 20202023 ANNUAL MEETING OF STOCKHOLDERS
To be held on May 27, 2020June 2, 2023
QUESTIONS AND ANSWERS ABOUT THESE PROXY MATERIALS AND VOTING
Why amdid I receiving these materials?receive a notice regarding the availability of proxy materials on the internet?
WePursuant to rules adopted by the Securities and Exchange Commission (the “SEC”), we have elected to provide access to our proxy materials over the internet. Accordingly, we have sent you these proxy materialsa Notice of Internet Availability of Proxy Materials (the “Notice”) because the Board of Directors (the “Board”) of Aptevo Therapeutics Inc. (sometimes referred to as the “Company,” “Aptevo,” “we,” “us” or “our”) is soliciting your proxy to vote at the 20202023 Annual Meeting of Stockholders (the “Annual Meeting”), including at any adjournments or postponements of the meeting. You are invitedAll stockholders will have the ability to attendaccess the annual meetingproxy materials on the website referred to in the Notice or request to receive a printed set of the proxy materials. Instructions on how to access the proxy materials over the internet or to request a printed copy may be found in the Notice.
We intend to mail the Notice on or about April 18, 2023 to all stockholders of record entitled to vote on the proposals described in this proxy statement. However, you do not need to attend the meeting to vote your shares. Instead, you may simply complete, sign and return the enclosed proxy card, or follow the instructions below to submit your proxy over the telephone or through the internet.
We intend to mail these proxy materials on or about April , 2020 to all shareholders of record entitled to votebeing presented at the annual meeting.Annual Meeting.
How do I attend the Annual Meeting?
TheIn order to facilitate stockholder participation and save costs, the meeting will be held electronicallyvirtually on Wednesday, May 27, 2020June 2, 2023 at 9:0010 a.m. Pacific Time. There will not be a physical meeting PDT. For questions regardingWe have worked to offer the same participation opportunities as if you attended the Annual Meeting please call Investor Relations at 206-859-6628. Toin person and hope the online format will allow more stockholders to participate by removing any barriers caused by travel requirements. You may attend the meeting, go to Annual Meeting online, including voting and submitting questions, at www.virtualshareholdermeeting.com/APVO2020APVO2023. Haveby entering the 16-digit control number included on your Notice or your proxy card or voting instruction form available. Stockholders(if you received a printed copy of the proxy materials). We encourage you to access the Annual Meeting before it begins. Online check-in will havebegin at 9:30 a.m. Pacific Time on the abilitydate of the Annual Meeting.
Our virtual meeting provider, Broadridge, facilitates stockholders’ opportunity to vote and ask questions before and during the meeting. InformationThe Annual Meeting site will provide stockholders with information regarding (i) time guidelines for their questions, rules around what types of questions are allowed, and rules for how questions and comments will be recognized and disclosed to meeting participants; and (ii) procedures for posting appropriate questions received during the meeting and our answers on how to vote by “virtually” attendingour website as soon as is practical after the meeting. Once you are logged into the Annual Meeting, is discussed below.you will be able to submit your questions directly to the Company. Our virtual meeting will be governed by our rules of conduct and procedures will be posted at www.virtualshareholdermeeting.com/APVO2023 in advance of the Annual Meeting.
You may obtain instructions for how to access the Annual Meeting online at www.virtualshareholdermeeting.com/APVO2023. If you encounter any difficulties accessing the virtual meeting during the check-in or meeting time or need support in addressing technical and logistical issues related to accessing the virtual meeting platform, a technical assistance phone number will be made available on the virtual meeting registration page at www.virtualshareholdermeeting.com/APVO2023, 30 minutes prior to the start of the meeting
Who can vote at the Annual Meeting?
Only stockholders of record at the close of business on April 9, 20205, 2023 (the “Record Date”) will be entitled to vote on the proposals being presented at the Annual Meeting. On this record date,the Record Date, there were 3,234,1557,239,471 shares of common stock outstanding and entitled to vote.
Stockholder of Record: Shares Registered in Your Name
If on April 9, 20205, 2023 your shares were registered directly in your name with the Company’sCompany’s transfer agent, Broadridge Financial Solutions, Inc., then you are a stockholder of record. As a stockholder of record, you may vote by “virtually attending”virtually attending the meetingAnnual Meeting and voting during the Annual Meeting or vote over the telephone or the internet or by proxy.proxy card. Whether or not you plan to virtually attend the meeting,Annual Meeting, we urge you to vote by proxy to ensure your vote is counted.
Beneficial Owner: Shares Registered in the Name of a Broker or BankOther Nominee
If on April 9, 20205, 2023 your shares were held, not in your name, but rather in an account at a brokerage firm, bank, dealer, or other similar organization, or other nominee, then you are the beneficial owner of shares held in “street name” and these proxy materials arebeing forwarded to you by that organization. The organization holding your account is considered to be the stockholder of record for purposes of voting on the proposals being presented at the Annual Meeting. As a beneficial owner, you have the right to direct your broker or other agent regarding how to vote the shares in your account. You are also invited to virtually attend the Annual Meeting.
There are three matters scheduled for a vote:
Proposal 1: Election of two directors;
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What if another matter is properly brought before the meeting?
The Board of Directors knows of no other matters that will be presented for consideration at the Annual Meeting. If any other matters are properly brought before the meeting, it is the intention of the persons named in the accompanying proxy card to vote on those matters in accordance with their best judgment.judgment, subject to compliance with Rule 14a-4(c) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
YouFor the Director Election Proposal, you may either vote “For” alleach of the nominees to the Board of Directors or you may “Withhold” your vote for any nominee you specify. For the approval of the stock option exchange program,Auditor Ratification Proposal, you may either vote “For” or “Against” or abstain from voting. For the ratification of the selection of Ernst & Young LP as the auditors of the Company,Say-on-Pay Proposal, you may vote “For” or “Against” or abstain from voting.
The Board recommends that you vote:
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The procedures for voting are as follows:
Stockholder of Record: Shares Registered in Your Name
If you are a stockholder of record, you may vote by “virtually”virtually attending the Annual Meeting and voting during the Annual Meeting, vote by proxy over the telephone, or vote by proxy through the internetInternet or vote by proxy using the encloseda proxy card.card that you may request or that we may elect to deliver at a later time. Whether or not you plan to virtually attend the meeting,Annual Meeting, we urge you to vote by proxy to ensure your vote is counted. You may still “virtually”virtually attend the meetingAnnual Meeting and vote during the Annual Meeting even if you have already voted by proxy.
| To vote using the • To vote over the telephone, dial toll-free 1-800-690-6903 using a touch-tone phone and follow the recorded instructions. You will be asked to provide the company number and control number included on your Notice. Your telephone vote must be received by 11:59 p.m. EDT on June 1, 2023 to be counted. • To vote through the Internet, go to www.proxyvote.com to complete an electronic proxy card. You will be asked to provide the company number and control number from your Notice. Your internet vote must be received by 11:59 p.m. EDT on June 1, 2023 to be counted. • If you virtually attend the Annual Meeting, |
If you attend the virtual meeting, you can also vote during the meeting.
Beneficial Owner: Shares Registered in the Name of Broker or Bank
If you are a beneficial owner of shares registered in the name of your broker, bank, or other agent, these proxy materials along with anominee, you should have received voting instruction form are being provided byinstructions from that organization rather than the Company.from us. Simply follow the instructions and mailin the voting instruction form to ensure that your vote is counted. To vote by “virtually” attendingonline at the Annual Meeting, you must obtain a valid proxy from your broker, bank or other agent. Follow the instructions from your broker, bank or bankother agent included with these proxy materials, or contact your broker, bank or bankother agent to request a proxy form.
Internet proxy voting may be provided to allow you to vote your shares online, with procedures designed to ensureform well in advance of the authenticity and correctness of your proxy vote instructions. However, please be aware that you must bear any costs associated with your internet access, such as usage charges from internet access providers and telephone companies.meeting.
On each matter to be voted upon, you have one vote for each share of common stock you own as of April 9, 2020.5, 2023.
What happens if I do not vote?
Stockholder of Record: Shares Registered in Your Name
If you are a stockholder of record and do not vote by completing your proxy card, or by telephone, through the internet, or by “virtually”virtually attending the Annual Meeting and voting during the Annual Meeting, your shares will not be voted.
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Beneficial Owner: Shares Registered in the Name of Broker or BankOther Nominee
If you are a beneficial owner and do not instruct your broker, bank, or other agent how to vote your shares, the question of whether your broker or nominee will still be able to vote your shares depends on whether the particular proposal is a “routine” matter. BrokersUnder the rules of the New York Stock Exchange, which are also applicable to Nasdaq-listed companies, brokers, banks and nominees canother securities intermediaries that are subject to New York Stock Exchange rules may use their discretion to vote your “uninstructed” shares with respect toon matters that are considered to be “routine,”“routine” under New York Stock Exchange rules but not with respect to “non-routine” matters. Under theProposal 2 is considered to be a “routine” matter under New York Stock Exchange rules and interpretations of various national and regional securities exchanges, “non-routine” matters are matters that may substantially affect the rights or privileges of stockholders, such as mergers, stockholder proposals, elections of directors (eventhus if you do not contested), executive compensation (including any advisory stockholder votes on executive compensation and on the frequency of stockholder votes on executive compensation), and certain corporate governance proposals, even if management-supported. Accordingly,return voting instructions to your broker by its deadline, your shares may be voted by your broker in its discretion on Proposal 2. Proposals 1 and 3 are considered to be “non-routine” under New York Stock Exchange rules such that your broker, bank or nomineeother agent may not vote your shares on Proposals 1 or 2 without your instructions, but may vote your shares on Proposal 3 eventhose proposals in the absence of your instruction.voting instructions.
What if I return a proxy card or otherwise vote but do not make specific choices?
If you return a signed and dated proxy card or otherwise vote without marking voting selections, your shares will be voted, as applicable, “For”applicable:
If any other matter is properly presented at the meeting,Annual Meeting and any adjournments or postponements thereof, your proxyholder (one of the individuals named on yourthe enclosed proxy card) will vote your shares using his or her best judgment.
Who is paying for this proxy solicitation?
We will pay for the entire cost of soliciting proxies. In addition to these proxy materials, our directors and employees may also solicit proxies in person, by telephone or by other means of communication. Directors and employees will not be paid any additional compensation for soliciting proxies. In addition, we have engaged The Proxy Advisory Group, LLC to assist in the solicitation of proxies and provide related advice and informational support, for a services fee and the reimbursement of customary disbursements, which are not expected to exceed $16,500 in total. We may also reimburse brokeragebrokerage firms, banks and other agents for the cost of forwarding proxy materials to beneficial owners. The entire cost of soliciting proxies on behalf of the Board will be borne by the Company.
What does it mean if I receive more than one set of proxy materials?Notice?
If you receive more than one set of proxy materials,Notice, your shares may be registered in more than one name or in different brokerage accounts. Please follow the voting instructions on all proxy cards you receivethe Notices to ensure that all of your shares are voted. Remember, you may vote by telephone, Internet or by signing, dating and returning a proxy card, or by voting at the Annual Meeting.
Can I change my vote after submittingor revoke my proxy?
Stockholder of Record: Shares Registered in Your Name
Yes. You can revoke your proxy at any time before the final vote at the meeting.Annual Meeting. If you are the record holder of your shares, you may revoke your proxy in any one of the following ways:
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You may “virtually”submit a properly completed proxy card with a later date.
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Your most current proxy card or telephone or internet proxy is the one that is counted.
Beneficial Owner: Shares Registered in the Name of Broker or Bank
If your shares are held by your broker or bank as a nominee or agent, you should follow the instructions provided by your broker or bank.
When are stockholder proposals and director nominations due for next year’s annual meeting?
ToPursuant to Rule 14a-8 of the Exchange Act, to be considered for inclusion in next year’s proxy materials, your proposal must be submitted in writing by December , 2020,20, 2023, to Aptevo’s Corporate Secretary at 2401 4th Ave.Avenue, Suite 1050, Seattle, Washington 98121. AWe also encourage you to submit any such proposals via email to the Corporate Secretary at LegalAffairs@apvo.com. Such a proposal must satisfy the rules and regulations of the SECSecurities and Exchange Commission (the “SEC”). In order to avoid controversy, stockholders should submit proposals by means (including electronic) that permit them to prove the additional requirementsdate of delivery. To comply with the universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide notice that sets forth the information required by Rule 14a-19 under the Securities Exchange Act of 1934 no later than April 3, 2024.
In addition, our bylawsAmended and Restated Bylaws require that we be given advance written notice for nominations for election to be eligible for inclusion in the proxy statement forour Board and of other business that meeting. A stockholder maystockholders wish to present a proposal that is a proper subject for consideration at an annual meeting even ifof stockholders (other than those proposals of business intended to be included in our proxy statement in accordance with Rule 14a-8 under the proposal is not submitted by the deadline for inclusion in the proxy statement. To do so, the stockholder must comply with the procedures set forth in the company’s bylaws.Exchange Act). The bylawsAmended and Restated Bylaws require that a stockholder who intends to present a proposal at an annual meeting of stockholders submit the proposal to the Corporate Secretary not fewerless than 90 and notno more than 120 days before the first anniversary of the date of the previous year’s annual meeting. Therefore, to be eligible for consideration at the 2021 annual meeting,2024 Annual Meeting of Stockholders, such a proposal and any nominations for director must be received by the Corporate Secretary between January 27, 2021February 3, 2024 and February 28, 2021;March 4, 2024; provided, however, that if our 2021 Annual Meetingin the event that the date of Stockholdersthe annual meeting is held before April 27, 2021advanced by more than 20 days, or after June 26, 2021, thendelayed by more than 60 days, from the proposalfirst anniversary of the preceding year’s annual meeting, a stockholder’s notice must be so received nonot earlier than the close of business of the 120th120th day prior to such annual meeting and not later than the close of business on the later of (A) the 90th90th day prior to such annual meeting orand (B) the 10thtenth day following the day on which public announcementnotice of the date of such annual meeting iswas mailed or public disclosure of the date of such annual meeting was made, whichever first made.occurs. This advance notice period is intended to allow stockholders an opportunity to consider all business and nominees expected to be considered at the meeting. Any proposals received after the applicable deadline may be considered untimely and may be excluded.
Votes will be countedIf a stockholder who wishes to present a proposal before the 2024 Annual Meeting outside of Rule 14a-8 of the Exchange Act fails to notify us by the inspector of election appointedrequired date, the proxies that our Board solicits for the 2024 Annual Meeting will confer discretionary authority on the person named in the proxy to vote on the stockholder’s proposal if it is properly brought before that meeting who will separately count, forsubject to compliance with Rule 14a-4(c) of the proposal to elect directors, votes “For,” “Withhold” and broker non-votes and with respectExchange Act. If a stockholder makes timely notification, the proxies may still confer discretionary authority to the other proposals, votes “For” and “Against,” abstentions and, if applicable, broker non-votes. Abstentions and broker non-votes will not be considered votes cast atperson named in the Annual Meeting. Becauseproxy under circumstances consistent with the approval of allSEC proxy rules, including Rule 14a-4(c) of the proposals is based on the votes cast at the Annual Meeting, abstentions and, as applicable, broker non-votes will not have any effect on the outcome of voting on the proposals.Exchange Act.
As discussed above, whenIf you are a beneficial owner whose shares of sharesrecord are held in “street name” doesby a broker, you may instruct your broker how to vote your shares. If you do not give instructions to your broker, the broker or nominee holdingwill determine if it has the shares as to howdiscretionary authority to vote on the particular matter. Under the rules of the New York Stock Exchange, which are also applicable to Nasdaq-listed companies, brokers, banks and other securities intermediaries that are subject to New York Stock Exchange rules may use their discretion to vote your “uninstructed” shares on matters deemedconsidered to be “non-routine,”“routine” under New York Stock Exchange rules but not with respect to “non-routine” matters. A broker non-vote occurs when a broker, bank or other agent has not received voting instructions from the beneficial owner of the shares and the broker, bank or nomineeother agent cannot vote the shares. These unvoted shares because the matter is considered “non-routine” under NYSE rules.
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A broker non-vote occurs when a broker, bank or other agent has not received voting instructions from the beneficial owner of the shares and the broker, bank or other agent cannot vote the shares because the matter is considered “non-routine” under NYSE rules. Broker non-votes, if any, will be counted for purposes of calculating whether a quorum is present at the meeting, but will not be counted for purposes of determining the number of votes cast with respect to a particular proposal.
Proposal 2 (the Auditor Ratification Proposal) is a “routine” matter. Because Proposal 2 is deemed a routine matter, a nominee holding shares in street name may vote on this proposal in the absence of instructions from the beneficial owner.
Proposal 1 (the Director Election Proposal) and Proposal 3 (the Say-on-Pay Proposal) are counted as “broker non-votes.”“non-routine” matters, and banks and brokerage firms cannot vote your shares on such proposals if you have not given voting instructions.
How many votes are needed to approve each proposal?
For the election of directors,Director Election Proposal, the two director nominees receiving the most “For” votes from the holders of shares present at the meeting or represented by proxy and entitled to vote on the election of directors will be elected. Only votes “For” orVotes “Withheld” will affecthave no effect on the outcome.Director Election Proposal. Broker non-votes will also have no effect.
To be approved, Proposal No. 2, approval of the stock option exchange program,Auditor Ratification Proposal must receive “For” votes from a majority of the votes cast by the holders of a majority all of the shares of common stock present at the meeting or represented by proxy and entitled to vote on the matter. Abstentions and broker non-votes will have no effect.
To be approved, Proposal No. 3, ratification of the selection of Ernst & Young LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2020, must receive “For” votes from the holders of a majority of shares present at the meeting or represented by proxy and entitled to votevoting on the matter.such proposal. Abstentions and broker non-votes will have no effect. effect on this proposal.
To be approved, the Say-on-Pay Proposal must receive “For” votes from a majority of the votes cast by the holders of all of the shares of common stock present or represented by proxy at the meeting and voting on such proposal. Abstentions and broker non-votes will have no effect on this proposal.
What is the quorum requirement?requirement and how will votes be counted?
A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present if stockholders holding at least a majorityone-third of the outstanding shares entitled to vote are present at the meetingAnnual Meeting or represented by proxy. On the record date, there were 3,234,1557,239,471 shares outstanding and entitled to vote.Thus, the holders of 1,617,0782,413,157 shares must be present or represented by proxy at the meetingAnnual Meeting to have a quorum.
Your shares will be counted towards the quorum only if you submit a valid proxy (or one is submitted on your behalf by your broker, bank or other nominee) or if you vote by “virtually”virtually attending the meeting. AbstentionsAnnual Meeting and voting during the Annual Meeting. Withheld votes, abstentions and broker non-votes will be counted towards the quorum requirement. If there is no quorum, the chairman of the meeting or the holders of a majority of shares present at the meetingAnnual Meeting or represented by proxy and entitled to vote may adjourn or postpone the meetingAnnual Meeting to another date.
An inspector of elections appointed for the meeting will determine whether a quorum is present and will tabulate votes cast by proxy or at the meeting. If a quorum is not present, we expect to adjourn or postpone the Annual Meeting until we obtain a quorum.
How can I find out the results of the voting at the Annual Meeting?
Preliminary voting results will be announced at the Annual Meeting. In addition, final voting results will be published in a current reportCurrent Report on Form 8-K that we expect to file within four business days after the 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 meeting,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.
What proxy materials are available on the internet?
The proxy statement, Proxy Statement and the Annual Report on Form 10-K and annual report to stockholdersfor the fiscal year ended December 31, 2022 are available atwww.proxyvote.com.
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Election Of Directors
Aptevo’sAptevo’s Board of Directors is divided into three classes. Each class consists, as nearly as possible, of one-third of the total number of directors,, and each class has a three-year term. Vacancies on the Board may be filled only by persons elected by a majority of the remaining directors. A director elected by the Board to fill a vacancy in a class, including vacancies created by an increase in the number of directors, shall serve for the remainder of the full term of that class and until the director’s successor is duly elected and qualified.
The Board presently has seven six members. There are two directors in the class whose term of office expires in 2020. 2023. Each of the nominees listed below is currently a director of the Company. If elected at the Annual Meeting, each of these director nominees would serve until the 20232026 annual meeting of stockholders and until histhe director’s successor has been duly elected and qualified, or, if sooner, until the director’s death, resignation or removal. It
Although we do not have a formal policy regarding director attendance at annual meetings, it is the Company’s practice that directors and director nominees for directornamed in Aptevo’s proxy statement attend our annual stockholder meetings. SevenAll but one of our directors attended our 20192022 Annual Meeting of Stockholders.
Directors are elected by a plurality of the votes of the holders of shares present at the meetingAnnual Meeting or represented by proxy and entitled to vote on the election of directors. Accordingly, the two nominees receiving the highest number of affirmative votes will be elected.
The enclosed proxy card will not be voted for more than two candidates or for anyone other than the Board’s nominees or designated substitutes. Unless otherwise instructed, the persons named in the enclosed proxy will vote to elect each of Zsolt Harsanyi, Ph.D. and Barbara Lopez Kunz to the Board, unless, by marking the appropriate space on the proxy card, the stockholder instructs that he, she, they or it withholds authority from the proxy holder to vote with respect to a specified candidate(s).
The following is a brief biography of each director nominee and each director whose term will continue after the Annual Meeting, as of May 27, 2020.Meeting.
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Marvin L. White |
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Daniel J. Abdun-Nabi |
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Grady Grant, III |
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Zsolt Harsanyi, Ph.D. |
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Barbara Lopez Kunz |
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John E. Niederhuber, M.D. |
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Nominees for Election for a Three-year Term Expiring at the 20232026 Annual Meeting
Zsolt Harsanyi, Ph.D. Mr. Harsanyi has served as a member of our Board since August 2016. Mr. Dr. Harsanyi has served on the boardBoard of directorsDirectors of Emergent BioSolutions, Inc., from which we were spun off in 2016 (Emergent), since August 2004 and as chairmanits Chairman since April 1, 2022 and as Chairman of the boardBoard of Directors of N-Gene Research Laboratories, Inc., a privately-held biotechnology company, since March 2011. Prior to that, Mr.Dr. Harsanyi served as chief executive officerChief Executive Officer and chairmanChairman of the boardBoard of directorsDirectors of Exponential Biotherapies Inc., a private biotechnology company, from December 2004 to February 2011. Mr.Prior to that, Dr. Harsanyi served as presidentPresident of Porton International Inc., or Porton International, a pharmaceutical and vaccine company, from January 1983 to December 2004. Mr.In 1996, Dr. Harsanyi was a founder offounded Dynport Vaccine Company LLC in September 1996.LLC. Prior to joining Porton International, Mr. Harsanyithat, he was vice presidentVice President of corporate financeCorporate Finance at E.F. Hutton, Inc. Previously, Mr.Dr. Harsanyi directed the first assessment of biotechnology for the U.S. Congress’ Office of Technology Assessment, served as a consultant to the President’s Commission for the Study of Ethical Problems in Medicine and Biomedical and Behavioral Research and was on the faculties of Microbiology and Genetics at Cornell Medical
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College. Mr.Dr. Harsanyi received his bachelor degree from Amherst College and his Ph.D. in genetics from Albert Einstein College of Medicine. The Board believes Mr.Dr. Harsanyi is qualified to serve on Aptevo’s Board because of his industry experience, including his senior executive and financial positions, and his experience aspublic company audit committee chair of various public company board of directors.experience.
Barbara Lopez Kunz Ms. Kunz has served as a member of our Board since August 2016. Ms. Kunz is currentlyretired at the end of March 2023 as the President and Global Chief Executive of the Drug Information Association, a privatenon-profit health care products company. Ms. Kunz serves as chairVice-Chair of the Board of Directors of Children’s National Health System Research Institute.Institute and on the Board of Directors of Caidyo, a clinical research organization. From January 2007 to March 2013, she worked as President of Health and Life Sciences Global Business at Battelle Memorial Institute, a private nonprofit applied science and technology development company. From August 2003Prior to December 2007,that, she worked as SeniorExecutive VP/GM for Thermo Fisher Scientific’sScientific Inc.’s Fisher Biosciences from 2003 to 2007 and led the Latin America regional business from January 2000 to July 2003 at Uniqema, a private company acquired by Croda International plc in 2006. Ms. Kunz also worked as Head of Strategy/M&A of DuPont from 1997 to 1998 and was the Global VP for the Enterprise Business Group of Imperial Chemical Industries (now AstraZeneca/Croda) from 1993 to 1997. Ms. Kunz earned bachelor degrees in both biology and chemistry from Thiel College, MBA coursework at Cleveland State University, an MS in polymer science from the University of Akron and is certified in INSEAD’s international executive program. She is also certified as a Board Director by the National Association of Corporate Directors. The Board believes that Ms. Kunz is qualified to serve on Aptevo'sAptevo’s Board because of her leadership experience, her business acumen and knowledge of the healthcare industry.
The Board Of Directors Unanimously Recommends
A Vote In Favor Of Each Named Nominee.
Directors Continuing in Office Until the 20222024 Annual Meeting
Fuad El-Hibri Mr. El-Hibri has served as the Chairman of our Board since August 2016. Mr. El-Hibri is the founder and Executive Chairman of the board of directors of Emergent. Mr. El-Hibri has served as the executive chairman of Emergent’s board of directors since April 2012. From June 2004 to March 2012, Mr. El-Hibri served as chief executive officer and chairman of Emergent’s board of directors. Mr. El-Hibri also served as president of Emergent from March 2006 to April 2007. Mr. El-Hibri served as chief executive officer and chairman of the board of directors of BioPort Corporation, or BioPort, from May 1998 until June 2004, when, as a result of Emergent’s corporate reorganization, BioPort became a wholly-owned subsidiary of Emergent and was subsequently renamed Emergent BioDefense Operations Lansing Inc. Mr. El-Hibri is chairman of East West Resources Corporation, a venture capital and business consulting firm, a position he has held since June 1990. He served as president of East West Resources from September 1990 to January 2004. Mr. El-Hibri earned a bachelor degree with honors in economics from Stanford University and a masters degree in public and private management from Yale University. Mr. El-Hibri brings an important perspective to Aptevo and the Board believes Mr. El-Hibri is qualified to serve on Aptevo’s Board due to his experience in the biotechnology industry, his familiarity with the Aptevo technology and his overall business acumen.
Marvin L. White Mr. White has served as our President, Chief Executive Officer and as a member of our Board since August 2016. Mr. White served as a director of Emergent from June 2010, until his resignation from the Emergent board of directors in May 2016. From 2008 to March 2014, Mr. White served as the Chief Financial Officer of St. Vincent Health, and was responsible for finance, materials management, accounting, patient financial services and managed care for all 19 hospitals and 36 joint ventures. Prior to joining St. Vincent Health in 2008, Mr. White was the Chief Financial Officer of Lilly USA, a subsidiary of Eli Lilly and Company, where he also held leadership positions in Treasury and Corporate Finance and Investment Banking in the Corporate Strategy Group. He serves on the board of OneAmerica Financial Insurance Partners, Inc., a mutual insurance and financial services company based in Indianapolis, Indiana. From June 2014 until August 2016, Mr. White served on the boards of Washington Prime Group, a NYSE REIT that invests in shopping centers. From July 2015 until March 2017, Mr. White served on the board of CoLucid Pharmaecuticals, Inc., a public pharmaceutical company. Mr. White earned a bachelor of science degree from Wilberforce University in Accounting and his MBA degree in Finance from Indiana University. Mr. White’s tenure as chief executive officer of Aptevo and previous director of Emergent provides valuable management and leadership experience. In addition, Mr. White provides crucial insight to the Board on company strategic planning and operations. For these reasons, the Board believes Mr. White is qualified to serve on Aptevo’s Board
John E. Niederhuber, M.D. Dr. Niederhuber has served on our Board and as our lead independent director since August 2016. From 2010 to 2019, Dr. Niederhuber served as the Executive Vice President of the Inova Health System, Founder of the Inova Translational Medicine Institute and President and CEO of Genomics and Bioinformatics Research Institute (GBR), a joint venture between Inova and the University of Virginia. Dr. Niederhuber served as a director of Emergent from August 2010, until his resignation from the Emergent board of directors in May 2016. He previously served as the director of the National Cancer Institute (NCI), the National Institutes of Health from 2006 to 2010. Dr. Niederhuber joined the Inova Health System in August 2010 as Executive Vice President of the Health System and CEO of the Inova Translational Medicine Institute.
Dr. Niederhuber is also an adjunct professor of surgery and oncology at the Johns Hopkins University School of Medicine. Prior to joining NCI, Dr. Niederhuber was Director of the University of Wisconsin Comprehensive Cancer Center and professor of surgery and oncology (member of the McArdle Laboratory) at the University of Wisconsin School of Medicine from 1997 to 2005. He chaired the Department of Surgery at Stanford University School of Medicine from 1991 to 1997 and held professorships at the Johns Hopkins University School of Medicine from 1987 to 1991 and at the University of Michigan from 1973 to 1987. Mr. Niederhuber earned a bachelor of science from Bethany College and his M.D. from The Ohio State University School of Medicine. The Board believes that Dr. Niederhuber is qualified to serve on Aptevo’s Board because he provides valuable insights to the Board through his experience in the field of oncology and in the business of healthcare.
Directors Continuing in Office Until the 2021 Annual Meeting
Daniel J. Abdun-Nabi Mr. Abdun-Nabi has served as a member of our Board since August 2016. Mr. Abdun-Nabi has served as a member of the board of directors of REGENXBIO since 2016. Mr. Abdun-Nabi served as the chief executive officerPresident and Chief Executive Officer of Emergent from April 2012 until his retirement in Marchto 2019 and as president & chief executive officer of Emergent from April 2012 to March 2018. He also served as a director of Emergent from May 2009 to April 2019. From May 2007Prior to March 2012,that, Mr. Abdun-Nabi served as Emergent's presidentin other various leadership positions at Emergent, including President and chief operating officer. Mr. Abdun-Nabi previously served as Emergent's corporate secretaryChief Operating Officer from December2007 to 2012, Corporate Secretary from 2004 to January 2008, Emergent's senior vice president, corporate affairsSenior Vice President, Corporate Affairs and general counselGeneral Counsel from December 2004 to April 2007, and Emergent's vice presidentVice President and general counselGeneral Counsel from May 2004 to December 2004. Before joining Emergent, Mr. Abdun-Nabi served as general counselwas General Counsel for IGEN International, Inc., a biotechnology company, and its successor BioVeris Corporation, from September 1999 to May 2004. Prior to joining IGEN, Mr. Abdun-Nabi served as senior vice president, legal affairs, general counsel2004, and secretarySenior Vice President, Legal Affairs, General Counsel and Secretary of North American Vaccine, Inc., a privatepublicly traded vaccine company acquired by Baxter International Inc. in 2000. Mr. Abdun-Nabi earned a bachelor degree in political science from the University of Massachusetts Amherst, a J.D. from the University of San Diego School of Law and an LLM from Georgetown University Law Center. The Board believes that Mr. Abdun-Nabi is qualified to serve on Aptevo's Board because of his extensive experience and knowledge of the biotechnology industry and Aptevo products.
Grady Grant, IIIMr. Grant has served as a member of our Board since August 2016. Mr. Grant is currently serving as EVP/Partner of Vanigent BioPharm, and until April 2022, was Senior Vice President of Evolve BioSystems, a biotechnology company that specializes in providing microbiome-based products to maintain a healthy newborn gut microbiome. Previously, from 2020 to 2021, he was Interim Chief Commercial Officer for New Vision Pharmaceuticals LLC, a contract pharmaceutical development and manufacturing company specializing in blow-fill-seal packaging, from 2018 to 2020, he was the Vice President of Sales for Tissue Tech Limited. From DecemberLimited, a regenerative medicine company, and from 2011 to August 2018, he worked as Vice President of Medical Sales for Mead Johnson Nutrition Company, a public company focused on pediatric nutrition. He had held this position since December 2011, preceded byPrior to that, he served for 30 years of service at Eli Lilly and Company which includes hisin various capacities, including service as Vice President of Sales Neuroscience from January 2006 to December 2011. Mr. Grant earned a bachelor degree in pharmaceutical science from Temple University. Mr. Grant is also certified as a Board Director by the National Association of Corporate Directors. The Board believes that Mr. Grant is qualified to serve on Aptevo's Board because of his knowledge of the pharmaceutical industry and marketed products.
Directors Continuing in Office Until the 2025 Annual Meeting
Marvin L. White has served as our President, Chief Executive Officer and as a member of our Board since August 2016. From 2010 to 2016, Mr. White served as a director of Emergent, and in 2020, he rejoined the Emergent Board of Directors. From 2008 to 2014, Mr. White served as the Chief Financial Officer of St. Vincent Health, and was
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responsible for finance, materials management, accounting, patient financial services and managed care for all 19 hospitals and 36 joint ventures. Prior to joining St. Vincent Health in 2008, Mr. White was the Chief Financial Officer of Lilly USA, LLC, a subsidiary of Eli Lilly and Company, where he also held leadership positions in treasury and corporate finance and investment banking in the Corporate Strategy Group. He serves on the Board of Directors of OneAmerica Financial Insurance Partners, Inc., a mutual insurance and financial services company based in Indianapolis, Indiana and Delta Dental of Washington, a non-profit company. Prior to taking the role of President and Chief Executive Officer of Aptevo, Mr. White served on the Board of Directors of Washington Prime Group, a New York Stock Exchange-listed real estate investment trust (REIT) that invests in shopping centers, and CoLucid Pharmaceuticals, Inc., a pharmaceutical company that was publicly-traded until its acquisition by Eli Lilly in 2017. Mr. White earned a bachelor of science degree from Wilberforce University in Accounting and his MBA degree in Finance from Indiana University. Mr. White’s tenure as Chief Executive Officer of Aptevo and his director experience at Emergent provides valuable management and leadership experience. In addition, Mr. White provides crucial insight to the Board on company strategic planning and operations. For these reasons, the Board believes Mr. White is qualified to serve on Aptevo’s Board.
John E. Niederhuber, M.D. has served on our Board and as our Chairman (previously Vice Chairman and Lead Independent Director) since August 2016. Dr. Niederhuber is currently an adjunct professor of surgery and oncology at The Johns Hopkins University School of Medicine. Dr. Niederhuber is the former Executive Vice President of the Inova Health System, Founder of the Inova Translational Medicine Institute (“Inova”), and founding President and Chief Executive Officer of the Genomics and Bioinformatics Research Institute, a joint venture between Inova and the University of Virginia. Dr. Niederhuber joined the Inova Health System in 2010 as Executive Vice President of the Health System and Chief Executive Officer of Inova. He officially retired from his position at Inova in 2019. Prior to Inova, he served as the Director of the National Cancer Institute, the National Institutes of Health from 2006 to 2010 and as the Director of the University of Wisconsin Comprehensive Cancer Center and professor of surgery and oncology (member of the McArdle Laboratory) at the University of Wisconsin School of Medicine from 1997 to 2005. He chaired the Department of Surgery at Stanford University School of Medicine from 1991 to 1997 and held professorships at The Johns Hopkins University School of Medicine from 1987 to 1991 and at the University of Michigan from 1973 to 1987. Dr. Niederhuber also previously served on the Board of Directors of Emergent from 2010 to 2016. Dr. Niederhuber earned a bachelor of science from Bethany College and his M.D. from The Ohio State University School of Medicine. He is a member of the National Academy of Medicine. The Board believes that Dr. Niederhuber is qualified to serve on Aptevo's Board because he provides valuable insights to the Board through his experience in the field of oncology, immunology, genomics and in the business of healthcare.
information regarding the board of directors and corporate governance
Corporate Governance Guidelines
The Board adopted Corporate Governance Guidelines to assist with its exercise of its duties and responsibilities and to serve the best interests of the Company and its stockholders. The Board, with the assistance of the Nominating and Corporate Governance Committee, continuously evaluates the Company’s Corporate Governance Guidelines to ensure such guidelines are effectively serving the interests of the Company’s stockholders and are up-to-date with respect to current corporate governance best practices. Accordingly, in October 2022, the Board amended its Corporate Governance Guidelines to, among other things, specify that with respect to environmental, social and governance (“ESG”) matters, the Nominating and Corporate Governance Committee shall coordinate with the Audit Committee, in the Audit Committee’s primary oversight over the Company’s ESG activities.
Independence of The Board of Directors
As required under the Nasdaq Stock Market (“Nasdaq”) listing standards, a majority of the members of a listed company’s Board of Directors must qualify as “independent,” as affirmatively determined by the Board of Directors. The Board consults with the Company’s in-house counsel to ensure that the Board’s determinations are consistent with relevant securitiessecurities and other laws and regulations regarding the definition of “independent,“independence,” including those set forth in pertinent listing standards of Nasdaq,, as in effect from time to time.
Consistent with these considerations, after review of all relevant identified transactions or relationships between each director, or any of his or her family members, and the Company, its senior management and its independent auditors,
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the Board has affirmatively determined that the following sixfive directors, representing a majority of the members of the Board, are independent directors within the meaning of the applicable Nasdaq listing standards: Mr. El-Hibri, Mr. Abdun-Nabi, Mr. Grant, Mr.Dr. Harsanyi, Ms. Kunz and Dr. Niederhuber. In making this determination, the Board found that none of these directors had a material or other disqualifying relationship with the Company. In determining thatAs Mr. El-HibriWhite serves as our President and Mr. Abdun-Nabi were independent,Chief Executive Officer, he is not independent. Additionally, in accordance with our Corporate Governance Guidelines, the Board considereddetermined that all members of the Audit, Compensation, and Nominating and Corporate Governance (“Nom/Gov”) committees of the Board are independent. Additionally, information regarding our Board committees and their respective roles at Emergent,members is provided below.
83% Board Independence
100% Committee Independence for Audit, Compensation, and previous transactions betweenNom/Gov Committees
Audit | Compensation | Nominating and Corporate Governance | ||
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Board Skills and Diversity
Our directors bring to our Board a wide variety of skills, qualifications, and viewpoints that strengthen the CompanyBoard’s ability to carry out its oversight role on behalf of our stockholders. The table below is a summary of the range of skills and Emergent.
experiences that each director brings to the Board, Leadersheach of which we find to be relevant to our business. Because it is a summary, it does not include all of the skills, experiences, and qualifications that each director offers, and the fact that a particular experience, skill, or qualification is not listed does not mean that a director does not possess it. All of our directors exhibit high integrity, an appreciation for diversity of background and thought, innovative thinking, a proven record of success, and deep knowledge of corporate governance requirements and best practices.
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ATTRIBUTES, EXPERTISE & SKILLS | Marvin L. White | Daniel J. Abdun-Nabi | Grady Grant, III | Zsolt Harsanyi, Ph.D. | Barbara Lopez Kunz | John E. Niederhuber, M.D. |
Leadership Experience | X | X | X | X | X | X |
Strategic Planning and Operations | X | X | X | X | X | X |
Corporate Governance Experience | X | X | X | X | X | X |
Relevant Industry Experience | X | X | X | X | X | X |
ESG and/or Human Capital Management Experience | X | X | X | X | X | X |
Risk Management Expertise | X | X | X | X | X | X |
Finance Experience | X | X | X | X | X | X |
Sales / Marketing Experience | X | X | ||||
Legal Expertise | X | |||||
Public Company Board Experience | X | X | X | X | X | X |
Aptevo Institutional Knowledge | X | X | X | X | X | X |
As discussed below, while we do not have a formal policy on diversity, we are committed to comprising our Board with well-rounded individuals possessing a diversity of complementary skills, core-competencies and expertise, including diversity with respect to age, gender, national origin and race, for the optimal functioning of the Board.
Below provides a snapshot of certain characteristics of our current Board.
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We believe it is important that our Board of Directors reflects the diversity of employees and the communities that we serve. Diversity is an important part of the process that our Nom/Gov Committee follows when identifying nominees to serve as directors. As required by rules of Nasdaq, we are providing information about the gender and demographic diversity of our directors in the format required by Nasdaq rules. The information in the matrix below is based solely on information provided by our directors about their gender and demographic self-identification.
As permitted by Nasdaq rules, we have also provided supplemental information provided by our directors in a separate table below the Board Diversity Matrix. Nasdaq rules do not require companies to provide supplemental information, and the supplemental information does not affect our compliance with Nasdaq rules.
Board Diversity Matrix as of April 5, 2023 | ||||
Total Number of Directors | 6 | |||
| Female | Male | Non-Binary | Did Not Disclose Gender |
Part I: Gender Identity | ||||
Directors | 1 | 5 |
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Part II: Demographic Background | ||||
African American |
| 2 |
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Alaskan Native |
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Asian |
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Black |
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Hispanic | 1 |
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Latino |
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Native American |
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Native Hawaiian or Pacific Islander |
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White |
| 3 |
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Two or More Races or Ethnicities |
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LGBTQ+ |
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Did Not Disclose Demographic Background |
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Supplemental Director Background | |
Directors who are Military Veterans: | 1 |
Directors who are Person with Disability/Disabilities: | |
Directors who identify as Middle Eastern: | 1 |
Directors who identify as North African: | |
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ipBoard Leadership Structure
Our corporate governance guidelinesCorporate Governance Guidelines provide the Board flexibility in determining its leadership structure. The Board has decided to keep separate the positions of chief executive officer and chairman of the Board. The Board believes this separate governance structure is optimal because it enables Mr. White to focus his entire energy on running the companyCompany while affording us the benefits of additional leadership and other contributions from Mr. El-Hibri.Dr. Niederhuber.
Our corporate governance guidelinesCorporate Governance Guidelines provide that in the event that the chairmanChairman of the Board is not an independent director, the Nominating and Corporate Governance Committee may nominate an independent director to serve as lead director, who shall be approved by a majority of the Board’s independent directors may appoint an independent director, who has been nominated by a majority of our independent directors, to serve as lead director. Because Mr. El-Hibri was not an independent director in 2016, our independent directors appointed Dr. Niederhuber as lead director in August 2016.directors. The lead director, servesamong other things, would serve as the presiding director at all executive sessions, determinesdetermine the need for special meetings of the Board, and consultsconsult with directors on matters relating to corporate governance and Board performance. Because the Chairman of the Board is currently an independent director, the Board does not have a lead director at this time.
Our Corporate Governance Guidelines also provide that the Board may elect a vice chairman of the Board. The vice chairman, among other things, would assist the Chairman of the Board in performing his or her duties and responsibilities, perform the duties of the Chairman of the Board during his or her absence or disability, and if an independent director, serve as chair of the Nominating and Corporate Governance Committee. We do not currently have a vice chairman of the Board.
Role of the Board in Risk Oversight
Our Board is actively engaged in the oversight of risks Aptevo faces and consideration of the appropriate responses to those risks. The Board is responsible for oversight of Aptevo’s risk management programs and, in performing this function, will receive periodicreviews the long- and short-term internal and external risks facing the Company through its participation in an annual risk assessment survey. On an annual basis, key risks, mitigation activities and mitigation initiatives for informationpotential new or emerging risks are discussed with management and approvalfurther addressed with our Audit Committee as necessary. The Audit Committee periodicallyannually discusses with senior management the company’sCompany’s cybersecurity risk profile, environmental and social risk and risk management, product risk and risk management, including guidelines and policies to govern the process by which Aptevo’s exposure to risk is handled. The Audit Committee also reviews and comments on a periodican annual risk assessment performed by management. After the Audit Committee performs its review and comment function, it reports any significant findings to the Board. The Compensation Committee strives to create incentives that encourage a reasonable and appropriate level of risk-taking consistent with our business strategy. Our Compensation Committee assesses risks relating to our executive compensation plans and arrangements, and whether our compensation policies and programs have the potential to encourage excessive risk taking. The Nominating and Corporate Governance Committee is responsible for reviewing our corporate governance and developing and maintaining corporate governance policies and procedures that are appropriate in light of the risks we face.
Meetings of The Board of Directors
Our corporate governance guidelinesCorporate Governance Guidelines provide that the directors are responsible for attending Board meetings and meetings of committees on which they serve. The Board of Directors met seven6 times during 2019.2022. Each Board member attended 75% or more of the aggregate number of meetings of the Board and of the committees on which she or he served, held during the portion of 20192022 for which she or he was a director or committee member.
Information Regarding CommitteesCommittees of the Board of Directors
The Board has three permanentfour standing committees: an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee and an Executive Committee. The duties and responsibilities of each committee is set forth in such committee’s written charter. The charters of the Audit, Compensation, and Nominating and Corporate Governance Committees are available to stockholders on the Company’s website at https://aptevotherapeutics.gcs-web.com/corporate-governance/overview/. The following table provides membership and meeting information for 2019 for each of the Board committees:
Name |
| Audit |
| Compensation |
| Nominating
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| Executive | ||||||||
Marvin L. White |
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| X | |||
Daniel J. Abdun-Nabi | X | X |
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| X | ||||
Grady Grant, III | X |
| X |
| X |
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Zsolt Harsanyi, Ph.D. |
| X* | X |
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Barbara Lopez Kunz |
| X |
| X* |
| X | ||||
John E. Niederhuber, M.D. |
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| X |
| X* | X |
* Committee Chairperson
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Below is a description of each committee of the Board of Directors. Board.
Each of the committees has authority to engage legal counsel or other experts or consultants, as it deems appropriate to carry out its responsibilities. The Board of Directors has determined that each member of each committee meetsthe Audit, Compensation, and Nominating and Corporate Governance Committees meet the applicable Nasdaq rules and regulations regarding “independence” and each member is free of any relationship that would impair his or her individual exercise of independent judgment with regard to the Company.
Audit Committee
The Audit Committee of the Board of Directors was established by the Board in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), to oversee the Company’s corporate accounting and financial reporting processes and audits of its financial statements. For this purpose, the Audit Committee performs several functions, includingincluding: (1) appointing, approving the compensation of and assessing the independence of our independent registered public accounting firm; (2) overseeing the work of our independent registered public accounting firm; (3) reviewing and discussing with management and the independent registered public accounting firm our annual and quarterly financial statements and related disclosures; (4) monitoring our internal control over financial reporting, disclosure controls and procedures and code of business conduct and ethics; (5) overseeing our internal audit function;function, if any; (6) assisting the boardBoard in overseeing our compliance with legal and regulatory requirements; (7) periodically discussing our risk management policies, and reviewing and commenting on a periodic risk assessment by management; (8) establishing policies regarding hiring employees from our independent registered public accounting firm and procedures for the receipt and retention of accounting related complaints and concerns; (9) meeting independently with our internal auditing staff, independent registered public accounting firm and management; (10) reviewing and approving or ratifying any related party transactions; and (11) preparing audit committee reports required by SEC rules. In addition, the Audit Committee has been delegated by the Board to have primary oversight over the Company’s ESG activities, including disclosures. The Audit Committee shall coordinate with and solicit input from the Compensation Committee and the Nominating and Corporate Governance Committee in formulating the approach to the Company’s ESG activities, including disclosures.
The Audit Committee is composed of threefour directors: Dr. Harsanyi, Mr. Abdun-Nabi, Mr. Grant, and Ms. Kunz and Mr. Harsanyi.Kunz. The Audit Committee met six4 times during 2019. 2022.
The Board has adopted a written Audit Committee charter that is available to stockholders on the Company’s website at https://aptevotherapeutics.gcs-web.com/corporate-governance/overview.
The Board of Directors reviews the Nasdaq listing standards definition of independence for Audit Committee members on an annual basis and has determined that all members of the Company’s Audit Committee are independent (as independence is currently defined in Rule 5605(c)(2)(A)(i) and (ii) of the Nasdaq listing standards).
The Board of Directors has also determined that Mr. Harsanyi qualifieseach of the members of the Audit Committee qualify as an “audit committee financial expert,” as defined in the applicable SEC rules.The Board made a qualitative assessment of Mr. Harsanyi’s level of knowledge and experience based on a number of factors, including serving as vice president of corporate finance of E.F. Hutton, serving as chief executive officer and chairman of the board of directors of Exponential Biotherapies Inc. and serving as chair of the audit committee of other public company board of directors. The Board of Directors has determined that this simultaneous service does not impair Mr. Harsanyi’s ability to effectively serve on the Company’s Audit Committee.
Compensation Committee
The Compensation Committee is composed of three directors: Mr. Grant, Ms. Kunz and Dr. Niederhuber. All members of the Company’s Compensation Committee are independent (as independence is currently defined in Rule 5605(a)(2) of the Nasdaq listing standards). The Compensation Committee met six times during 2019. The Board has adopted a written Compensation Committee charter that is available to stockholders on the Company’s website at https://aptevotherapeutics.gcs-web.com/corporate-governance/overview.
The Compensation Committee of the Board of Directors acts on behalf of the Board to review, recommend for adoption and oversee the Company’s compensationcompensation strategy, policies, plans and programs, includingincluding: (1) annually reviewing and approving corporate goals and objectives relevant to the compensation of our executive officers; (2) determining the compensation of our chief executive officer; (3) reviewing and approving the compensation of our other named executive officers; (4) overseeing the evaluation of our senior executives; (5) overseeing and administering our cash and equity incentive plans; and (6) preparing the compensation committeeCompensation Committee report, if required by SEC rules.
To the extent permitted by applicable law and the provisions of a given equity-based plan, and consistent with the requirements of applicable law and such equity-based plan, the Compensation Committee may delegate to one or more executive officers of the Company the power to grant options or other stock awards pursuant to such equity-based plan to employees of the Company or any subsidiary of the Company who are not directors or executive officers of the Company. The Compensation Committee may also form and delegate authority to one or more subcommittees as it deems appropriate from time to time under the circumstances (including (a) a subcommittee consisting of a single member and (b) a subcommittee consisting of at least two members, each of whom qualifies as a “non-employee director,” as such term is defined from time to time in Rule 16b-3 promulgated under the Exchange Act, and the rules and regulations thereunder, and an “outside director,” as such term is defined from time to time in Section 162(m) of the Internal Revenue Code of 1986, as amended, and the rules and regulations thereunder).
The Compensation Committee is composed of five directors: Ms. Kunz, Mr. Abdun-Nabi, Mr. Grant, Dr. Harsanyi, and Dr. Niederhuber. The Compensation Committee met 6 times during 2022.
Compensation Committee Processes and Procedures
The Compensation Committee meets as often as it deems necessary in order to perform its responsibilities. The agenda for each meeting is usually developed by the Chair of the Compensation Committee, in consultation with the Chief Executive Officer, the General Counsel, Business Development and head of Human ResourcesCorporate Affairs, and Willis Towers Watson, our independent compensation consultant. consultant. The Compensation Committee meets regularly in executive session. From time to time, various members of management and other employees as well as outside advisors or consultants may be invited by the Compensation Committee to make presentations, to provide financial or other background information or advice or to otherwise participate in Compensation Committee meetings. The Compensation Committee shall review and approve, or recommend for approval by the Board, the compensation of the Company’s Chief Executive Officer and the Company’s other executive officers, including salary, bonus and incentive compensation levels; deferred compensation; executive perquisites; equity compensation (including awards to induce employment); severance arrangements; change-in-control benefits and other forms of executive officer compensation. The Chief Executive Officer may not participate in, or be present during, any deliberations or determinations of the Compensation Committee regarding his compensation or individual performance objectives. Under the charter, the Compensation Committee has the authority to obtain, at the expense of the Company, advice and assistance from compensation consultants and internal and external legal, accounting or other advisors and other external resources that the Compensation Committee considers necessary or appropriate in the performance of its duties and the authority to conduct or authorize investigations into any matters within the scope of its responsibilities as it shall deem appropriate, including the authority to request any officer, employee or advisor of the Company to meet with the Compensation Committee. The Compensation Committee has direct responsibility for the oversight of the work of any consultants or advisers engaged for the purpose of advising the Compensation Committee. In particular, the Compensation Committee has the sole authority to retain, in its sole discretion, compensation consultants to assist in its evaluation of executive and director compensation, including the authority to approve the consultant’s reasonable fees and other retention terms. Under the charter, the Compensation Committee may select, or receive advice from, a compensation consultant, legal counsel or other adviser to the Compensation Committee, other than in-house legal counsel and certain other types of advisers, only after taking into consideration six factors, prescribed by the SEC and Nasdaq, that bear upon the adviser’s independence.
During 2019,after taking into consideration the six factors prescribed by the SEC and Nasdaq, 2022, the Compensation Committee engaged Willis Towers Watsonas a compensation consultant. Willis Towers Watson formerly provided executive compensation advisory support for Emergent and given their historical consulting relationship with Emergent as well as experience with spin-offs and IPOs, they were uniquely qualified to support us.consultant. The Compensation Committee requested that Willis Towers Watson:Watson:
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assistAssist in refining the Company’spreviously developed peer group of companies and perform analyses of competitive performance and compensation strategylevels for that group; and
Willis Towers Watson did not provide any additional services to the Company in 2022 other than as described above. Although our Board and Compensation Committee consider the advice and recommendations of such independent compensation consultants as to our executive and non-employee director compensation program, to execute that strategy.
As part of its engagement, Willis Towers Watson was requested by the Board and Compensation Committee to provide recommendations for Aptevo’s 2019 peer group, review compensation philosophy and guiding principles in support of executive pay program design considerations, review and assess executive and Board compensation recommendations, advise on performance contingent equity programs and provide recommendations for 2019 long-term incentive grant guidelines.ultimately make their own decisions regarding these matters.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee of the Board of Directors acts on behalf of the Board to (1) develop and recommend corporate governance guidelines for review, (2) identify individuals qualified to become board members, (3) recommend persons to be nominated for election as directors, (4) oversee the evaluation of the board and (5) provide board education recommendations.
The Nominating and Corporate Governance Committee is composed of three directors: Dr. Niederhuber, Ms. Kunz and Mr. Harsanyi. All members of the Company’s Nominating and Corporate Governance Committee are independent (as independence is currently defined in Rule 5605(a)(2) of the Nasdaq listing standards).Grant. The Nominating and Corporate Governance Committee met four4 times during 2019. The Board adopted the Nominating and Corporate Governance Committee charter on May 31, 2017 and amended it on March 12, 2018. It is available to stockholders on the Company’s website at https://aptevotherapeutics.gcs-web.com/corporate-governance/overview.2022.
The Nominating and Corporate Governance Committee exercises general oversight with regard to the Board and identifies individuals qualified to become board members and recommends director nominees for the annual meeting of stockholders. The process followed by the Nominating and Corporate Governance Committee to identify and evaluate director candidates includes identifying qualified individuals consistent with guidelines approved by the Board and recommending to the Board the candidate for election as director.
In considering whether to recommend any particular candidate for inclusion in the Board’s slate of director nominees, the Nominating and Corporate Governance Committee considers the candidate’s integrity, character, demonstrated track record, education, experience and time dedication. The Nominating and Corporate Governance Committee believes that candidates for director should have certain minimum qualifications, including the ability to read and understand basic financial statements, being over 21 years of age and having the highest personal integrity and ethics. The Nominating and Corporate Governance Committee does not assign specific weights to particular criteria and no particular criterion is a prerequisite for a prospective nominee. However, the Nominating and Corporate Governance Committee retains the right to modify these qualifications from time to time. The Nominating and Corporate Governance committeeCommittee does not have a formal policy with respect to diversity, but believes that the backgrounds and qualifications of its directors, considered as a group, should provide a composite mix of experience, knowledge and abilities that will allow it to fulfill its responsibilities. Additionally, our corporate governance guidelinesCorporate Governance Guidelines state that it is a goal of the Board to strive for diversity in the composition of the membership of the Board. Moreover, the Board will specifically consider a candidate’s gender, nationality, race, ethnicity, and sexual orientation as part of its criteria in considering any such candidate for service on the Board.
In the case of incumbent directors whose terms of office are set to expire, the Nominating and Corporate Governance Committee reviews these directors’ overall service to the Company during their terms, including the number of meetings attended, level of participation, quality of performance and any other relationships and transactions that might impair the directors’ independence. The Nominating and Corporate Governance Committee also takes into account the results of the Board’s self-evaluation, conducted annually on a group and individual basis. In the case of new director candidates, the Nominating and Corporate Governance Committee also determines whether the nominee is independent for Nasdaq purposes, which determination is based upon applicable Nasdaqlisting standards, applicable SEC rules and regulations and the advice of counsel, if necessary. The Nominating and Corporate Governance Committee then uses its network of contacts to compile a list of potential candidates, but may also engage, if it deems
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appropriate, a professional search firm. The Nominating and Corporate Governance Committee conducts any appropriate and necessary inquiries into the backgrounds and qualifications of possible candidates after considering the function and needs of the Board. The Nominating and Corporate Governance Committee meets to discuss and consider the candidates’ qualifications and then selects a nominee for recommendation to the Board by majority vote.
In making such recommendations, the Nominating and Corporate Governance Committee shall consider candidates proposedrecommended by stockholders, consistent with requirements of our bylaws.stockholders. The Nominating and Corporate Governance Committee does not intend to alter the manner in which it evaluates candidates, including the minimum criteria set forth above, based on whether or not the candidate was recommended by a stockholder. The Nominating and Corporate Governance Committee shall reviewreviews and evaluateevaluates information available to it regarding candidates proposedrecommended by stockholders and shall applyapplies the same guidelines, and shall followfollows substantially the same process in considering them, as it does in considering other candidates. Stockholders who wish to recommend individuals for consideration by the Nominating and Corporate Governance Committee to become nominees for election to the Board at an Annual Meeting of the Stockholders may do so by delivering a written recommendation to the Nominating and Corporate Governance Committee at our principal executive office not earlier than the 120th120th day prior to such Annual Meeting of the Stockholders and not later than the close of business on the later of (A) the 90th90th day prior to such Annual Meeting of the Stockholders and (B) the tenth day following the day on which notice of the date of such Annual Meeting of the Stockholders was mailed or made public. public. Submissions must include the full name of the proposed nominee, a description of the proposed nominee’s business experience for at least the previous five years, complete biographical information, a description of the proposed nominee’s qualifications as a director and a representation that the nominatingrecommending stockholder is a beneficial or record holder of our stock and has been a holder for at least one year.stock. Any such submission must be accompanied by the written consent of the proposed nominee to be named as a nominee and to serve as a director if elected.
The purpose of the Executive Committee is to exercise such authority of the Board as may be necessary or appropriate during intervals between Board meetings, which includes, without limiting the generality of the foregoing, managing the business and affairs of the Company on behalf of the Board. The Executive Committee generally has the same authority as the Board and, except as otherwise required by law, may take any and all actions as if such actions were taken by the full Board. The Executive Committee provides the Company with the ability to respond and take action quickly, as may be necessary, with respect to matters that may arise in between routine, scheduled meetings of the Board. Without limiting the foregoing, the Executive Committee enables the Board to act quickly with respect to financing matters, collaboration arrangements, and other partnership opportunities that may require quick or immediate action. The Executive Committee met once in 2022.
The Executive Committee is composed of four directors: Dr. Harsanyi, Mr. Abdun-Nabi, Dr. Niederhuber, and Mr. White. Dr. Harsanyi is the Chairman of the Executive Committee.
Overboarding
The Board recognizes the substantial time commitment required of directors of public company boards. Accordingly, as set forth in our Corporate Governance Guidelines, directors are encouraged to limit the number of other public company boards on which he or she serves to three; however, directors may serve on more than three public company boards upon consent of the Board. Directors are required to advise the Chairman of the Board in advance of accepting an invitation to serve on another public company board.
Board Refreshment
While the Board recognizes the value of onboarding new directors who may offer fresh perspectives, the Board does not believe that it should establish term limits as a means to accomplish this. The Board believes that term limits could result in the loss of directors who have been able to develop, over a period of time, increasing insight into the Company and its operations and an institutional memory that benefits the entire membership of the Board as well as management. Pursuant to our Corporate Governance Guidelines and as an alternative to term limits, the Nominating and Corporate Governance Committee is charged with the duty of reviewing each director’s continuation on the Board at least once every three years. This will allow each director the opportunity to conveniently confirm his or her desire to continue as a member of the Board and allow the Company to conveniently replace directors who are no longer interested or effective.
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Director Continuing Education
The Board encourages and expects each director to partake in continuing director education on an ongoing basis to enable him or her to better perform his or her duties and to recognize and deal appropriately with issues that arise. The Company has a policy of paying for all reasonable expenses related to continuing director education.
Stockholder Communications With The Board Of Directors
Our Board will give appropriate attention to written communications that are submitted by stockholders and other interested parties and will respond if and as appropriate. The lead director,Chairman, with the assistance of Aptevo’s Corporate Secretary, will be primarily responsible for monitoring communications from stockholders and other interested parties and for providing copies or summaries to the other directors as the lead directorChairman considers appropriate.
Communications will be forwarded to all directors if they relate to important substantive matters and include suggestions or comments that the lead directorChairman considers to be important for the directors to know. In general, communications relating to corporate governance and corporate strategy are more likely to be forwarded than communications relating to ordinary business affairs, personal grievances and matters as to which Aptevo receives repetitive or duplicative communications.
Stockholders and other interested parties who wish to send communications on any topic to the Board, lead directorChairman or independent directorsIndependent Directors as a group should address such communications to the Board, Lead DirectorChairman or Independent Directors, as applicable, c/o Corporate Secretary, Aptevo Therapeutics Inc., 2401 4th Ave.,Avenue, Suite 1050, Seattle, Washington 98121. The Corporate Secretary will review all such correspondence and forward to the Board, lead directorChairman or independent directorsIndependent Directors a summary and/or copies of any such correspondence that deals with the functions of the Board or its committees or that shethe Corporate Secretary otherwise determines requires their attention.
Employee, Officer and Director Hedging
Our policy prohibits our directors, officers or employees from purchasing financial instruments that are designed to hedge or offset any decrease in the market value of the Company's equity securities held by such persons.
Code of Ethics
The Company has adopted the Aptevo Therapeutics Inc. Code of Conduct and Business Ethics that applies to all officers, directors and employees. The Code of Conduct and Business Ethics is available on the Company’s website at https://aptevotherapeutics.gcs-web.com/corporate-governance/overview. If the Company makes any substantive amendments to the Code of Conduct and Business Ethics or grants any waiver from a provision of the Code to any executive officer or director, the Company will promptly disclose the nature of the amendment or waiver on its website.
APPROVAL OF THE STOCK OPTION EXCHANGE PROGRAM
GeneralEnvironmental, Social, and Corporate Governance and Human Capital Management
On April 7, 2020,Environmental, Social, and Corporate Governance
Our directors and management are focused on environmental, social, and governance matters (“ESG”). We are committed to social responsibility and making ethical business decisions. As we continue to grow, Aptevo remains dedicated to its one simple mission - to enhance the lives of others. We must be unwavering in our Board, uponcommitment to operating with honesty and integrity. This includes protecting the recommendationhealth, safety, and welfare of our Compensation Committee, authorized a stock option exchange program, oremployees.
In addition, we are committed to adopting and implementing sound ESG policies and practices across our business. Protecting the Option Exchange, pursuantenvironment is important to whichus and we would give eligible employees (including executive officers), certain consultantsstrive to act sustainably as an organization and outside directorsto be in compliance with all applicable environmental laws, rules, and regulations.
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We operate on the opportunity to exchange eligible stock options for new stock options with an exercise price equalpremise that good corporate governance, strong oversight, and rigorous risk management are fundamental to the fair market valuefuture success of our common stock atbusiness. We believe that our ESG and sustainability policies and practices are well aligned with the time the new stock options are granted. An eligible stock option generally includes any stock option held by an Eligible Option Holder (as defined below) that has an exercise price equal to or greater than $21.00 per share, which is not set to expire in calendar year 2020, and which was granted pursuant to our 2018 Stock Incentive Plan, or the 2018 Plan, 2016 Amended and Restated Stock Plan, or our 2016 Plan, or our Converted Equity Awards Incentive Plan, or our Converted Plan, and together with our 2018 Plan and 2016 Plan, our Equity Plans. Employees, including executive officers, employed by us at the start of the Option Exchange, certain consultants providing services as consultants at the start of the Option Exchange and non-employee members of our Board providing services to us as directors at the start of the Option Exchange, collectively Eligible Option Holders, are eligible to participate in the Option Exchange.
As of March 31, 2020, we had outstanding stock options held by employees (including executive officers), and outside directors to purchase 388,627 shares of our common stock with a weighted average exercise price of $25.77 per share. Of these stock options, there were 226,396 shares with an exercise price equal to or greater than $21.00 per share with a weighted average exercise price of $35.88 that are not set to expire in 2020 and that would be considered eligible for purposes of the Option Exchange.
The Board believes that the Option Exchange is in thelong-term best interests of our stockholders and the businesses and communities that we serve.
Human Capital Management
Employees and Office Location
Aptevo employed 45 full-time persons as weof December 31, 2022. The team is comprised of a dedicated group of accomplished professionals who bring a broad range of academic achievements combined with significant industry experience. We believe that new stock options granted underour future success will depend in part on our continued ability to attract, hire and retain qualified personnel. To this end, we strive to maintain competitive base compensation structures and comprehensive benefits packages, and to engage our employees through ongoing development and training. None of our employees are represented by a labor union or covered by collective bargaining agreements. We believe our relationships with our employees are positive.
Our principal executive offices are located at 2401 4th Avenue, Suite 1050, Seattle, Washington 98121. Our telephone number is (206) 838-0500.
Corporate Values
Leading by our core values unifies Aptevo and enables every employee to be an agent of positive culture. We believe that our success depends on creating an environment that is personally and professionally rewarding and creating opportunities for personal and professional development. These values, which are the Option Exchange will provide a better incentivefoundation of our Company culture, are:
We consider these values to be an integral part of our corporate goal setting and review process. We believe in empowering our employees and consider them as owners of the business. We treat each other with respect and
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maintain a high level of professionalism and accountability. Our Board of Directors and executive officers thanteam continues to monitor and focus on our human capital resources to ensure we live by our core values.
Diversity, Equity, and Inclusion
Diversity, equity, and inclusion (DEI) is of great importance to our culture, day-to-day operations, and future success. Aptevo is an equal opportunity employer, and we are committed to fostering DEI within our work environment and beyond. We believe DEI promotes our business growth, drives innovation in the underwater options they currently holdtherapeutic product candidates we develop, and would surrender, while balancingin the need to minimize dilutionway we solve problems. Our efforts are focused on hiring and retaining qualified candidates, and promoting a supportive and inclusive working environment for our stockholders. Receipt of new options at a lower exercise price will increase the retentionall of our employees. The Company is resolute on its commitment to the development and fair treatment of all candidates and employees, including equal opportunity hiring and advancement practices and policies, and anti-harassment and anti-retaliation policies. We believe that fostering diversity, equity, and inclusion is a key element to discovering, developing, and bringing transformative therapies to patients. As of December 31, 2022, 60% of our workforce and 50% of our leadership (at the Director level and above) were female. In addition, 40% of our workforce and 36% of our leadership (at the Director level and above) were racially or ethnically diverse. We strive to build a workforce representative of the people we serve and to nurture an inclusive culture where all voices are welcomed, heard, and respected.
Recruiting and Retention
We invest in resources to recruit, develop, and retain the talent needed to achieve our business goals. We believe in supporting our employees to reach their full potential and strive to promote internally. We have been successful in attracting and retaining talented personnel reduceto support our business, though competition for personnel in our industry is intense.
Compensation and Benefits
Our compensation packages are designed to attract and retain talent, drive Company performance and achieve business goals. In setting appropriate compensation levels, we look at the costsaverage base pay rate for each position based on market data. We also offer an annual cash incentive program and disruptions associatedlong-term equity incentive plans designed to assist in attracting, retaining, and motivating employees and promoting the creation of long-term value for stockholders. Further, all employees are eligible for health insurance and other health benefits, paid and unpaid leaves, retirement benefits with resignationsCompany match, and life and disability coverage/insurance. We have an unlimited paid time off policy that provides employees with considerable flexibility in scheduling time away from work.
Health, Safety and the Changing Workplace Model
Employee safety and well-being is of such individuals, minimize dilution for our stockholdersparamount importance to us and better ensure our performance asis of continued focus in 2023. The Company adjusted its working environment and operations since the onset of the COVID-19 global pandemic and maintains a company. The number of shares covered by new options granted to participating Eligible Option Holders will be less than the number of shares covered by exchanged options. Any new options issued in exchange for vested options will have a minimum of a one-year vesting period before they can be exercised. As an alternative to a cash-based retention program, the Option Exchange will allow us to devote more of our cash resources toward advancinghybrid working environment. Our essential employees, which mainly include our research and development programsteam, work onsite, and movingnon-essential employees have the option to work remotely or hybrid in consultation with their managers. We equip our product candidates intoemployees working remotely or hybrid with necessary equipment and through the clinic. In addition, it will provide the opportunitytools to reduce the “overhang” of outstanding stock options, many ofcontinue to collaborate and remain productive. This hybrid work environment that combines working onsite and working remotely offers our employees flexibility and better work-life balance, which are well out of the money.we believe has helped to drive productivity and employee engagement.
Rationale for Option Exchange
We have been thoughtfully considering the idea of an Option Exchange since 2019. In early January 2020, we began internal discussions to consider various ways to better incentivize employees to accelerate research and development activities for the organization. In February, we began discussions with our compensation consultants, Willis Towers Watson, to evaluate the equity compensation alternatives available to Aptevo. We evaluated several alternatives to the Option Exchange for remaining competitive within our industry, including granting additional stock options or restricted stock awards, exchanging underwater options for full value shares or exchanging underwater options for a cash payment. While equity awards and cash compensation are part of our overall compensation packages, we do not believe that relying exclusively on such approaches is an ideal use of our resources. For example, granting additional stock options or restricted stock awards would cause dilution to our current stockholders, and introducing a cash-based retention program would reduce the cash resources we can devote to our research and development programs. We have decided that executive officers should be eligible to participate in the Option Exchange, as they currently hold approximately 70% of outstanding equity awards. As such, if we were to exclude them, we may not fully achieve the intentions of the program with respect to retention and dilution. In addition, during this critical time in the life of the organization, we need to keep our executives incentivized in order to maintain continuity and try to ensure achievement of the critical endpoints that would bring value to the organization. Outside directors are being included in the interest of treating all option holders consistently. Accordingly, we determined that the Option Exchange was the most attractive alternative for stockholders for the reasons set forth below.
We face significant competition for experienced and talented personnel with critical and high demand skills in our industry, and stock options are an important part of our incentive compensation. The price of our common stock has significantly decreased since August 2018, at which point our stock price was approximately $70 per share (as adjusted to account for the 14-to-1 reverse stock split of our common stock effected on March 26, 2020, or the Split). WhileAdditionally, we have made significant progress in developing our product candidatesan Environmental, Health and advancing our ADAPTIR platform,Safety program that focuses on implementing and while we remain optimistic regarding our growth potential, the price of our common stock remains relatively low. On March 31, 2020, the closing price of our common stock on The Nasdaq Capital Market was $3.70 per share, resulting in 100% of our outstanding stock options held by employees, executive officersupdating policies and outside directors being underwater, which means that the stock option exercise price exceeded the market price of our common stock on such date. Our compensatory stock options cannot be sold. They can either be voluntarily exercised if the market price of our common stock exceeds the exercise price or they will expire unexercised. Stock options that are so significantly underwater are not effective as performance incentives because they provide less or no perceived value to option holders. In addition, because all of our options are significantly underwater, the likelihood that there will be a positive spread between their exercise prices and the near-term price of our common stock is too low to provide meaningful incentive to option holders.
Personnel Retention
We designed the Option Exchange to restore equity value, increase retention and motivation in a competitive labor market, provide non-cash compensation incentives and better align our employee and stockholder interests for long-term growth. Underwater stock option awards are of limited benefit in motivating and retaining our employees. Through the Option Exchange, we believe that we will be able to enhance long-term stockholder value by increasing our ability to retain experienced and talented personnel and by better aligning the interests of these individuals with the interests of our stockholders. As of March 31, 2020, 100% of the stock options held by our employees, including executive officers, and outside directors were underwater and, for a large number of such individuals, significantly so. As a result, we may face a considerable challenge in retaining our employees, and there is a possibility that our competitors may be able to offer equity incentives that are more attractive and that, in some cases, could make the terms of employment with such competitor more attractive than what we offer to our existing employees. The Option Exchange is designed to address these concernstraining programs, as well as maintain positive morale among our personnel generally and reinvigorate a culture where equity compensation is a key component of our overall compensation package.performing self-audits to enhance work safety.
As discussed in more detail below, none of the new stock options issued under the Option Exchange will be vested on the date of grant. Stock options issued in the Option Exchange will vest depending on whether such options are already vested at the time we implement the Option Exchange. Any stock options issued in the Option Exchange pursuant to eligible stock options that are already fully vested at the time of exchange will be issued with a one-year vesting schedule, in which 100% of shares vest after 12 months. Any options issued in the Option Exchange pursuant to eligible stock options that are not yet fully vested will vest in the same proportions and over the same periods as the existing stock options. The Compensation Committee believes that implementing a new extended vesting schedule for fully vested stock options is appropriate because it encourages retention of such option holders over the next 12 months, which will be an important period for the company, given the potential for getting potentially significant clinical trial data in the next 12 months. The Compensation Committee believes that implementing a new extended vesting schedule for stock options that are already subject to vesting would negatively impact participation in the Option Exchange, thereby reducing the intended impact of the program.20
Impact on Compensation Expense
The value of the stock options eligible for exchange was based on the then fair market value of our common stock on the applicable grant date. Under applicable accounting rules, we will recognize a total of approximately $0.1 million in non-cash compensation expense related to eligible underwater stock options, which we will continue to be obligated to expense, even if these stock options are never exercised because they remain underwater, except to the extent any such options are cancelled due to termination of service of any eligible option holder prior to vesting. Replacing current stock options that have little or no retention or incentive value with new stock options that will provide both retention and incentive value while not creating significant additional compensation expense will make efficient use of our resources.
Reduce Stock Overhang
Under the Option Exchange, Eligible Option Holders will receive new stock options covering a smaller number of shares than are covered by the surrendered stock options. Therefore, if we implement and Eligible Option Holders participate in the Option Exchange, we would meaningfully reduce the number of outstanding stock options. The number of shares covered by the new stock options are based on exchange ratios developed by using a Black-Scholes calculation that values the old grant relative to the projected value of the new grant, such that the new stock options will have a fair value, on an aggregate basis, proportionate to the fair value of the eligible stock options they replace. Our Compensation Committee, in consultation with Willis Towers Watson, our compensation consultant, established the exchange ratios, which vary based on the original exercise price of the eligible stock option, as described further in the section titled “Exchange Ratios” below.
As of March 31, 2020, we had a total of 388,627 shares of common stock subject to outstanding stock options under our Equity Plans, with exercise prices ranging from $6.97 per share to $76.86 per share, each on a post-Split basis. As a result, we have developed a significant stock option “overhang” consisting of outstanding but unexercised options that are not serving their intended purposes of motivating and retaining personnel. Not only do the underwater stock options have diminished personnel retention value, but also they cannot be removed from our equity award overhang until they are exercised, expire or otherwise cancelled (for example, upon termination of an individual’s service with the company). Significant overhang may portend additional dilution to existing and potential stockholders and may therefore have the effect of inhibiting additional investment in our common stock, which can have a negative impact on stock price and trading volume. By replacing stock options through the Option Exchange, we estimate that we can reduce our overhang of outstanding stock options by as much as 130,004 shares 4.0% of our outstanding common stock.
Decrease Pressure for Additional Grants
If we are unable to conduct an Option Exchange in which underwater options with diminished incentive value may be exchanged for equity awards covering a lesser number of shares that provide higher motivation and retentive value, we may find it necessary to issue significant additional equity awards above and beyond our ongoing equity grant practices in order to provide renewed incentive to such individuals. Any such additional grants would increase our overhang as well as our compensation expense and would result in additional potential dilution to stockholders.
Alignment of Interests
Employees, including our executive officers, and outside directors are eligible to participate in the Option Exchange. Because the equity awards to be issued pursuant to the Option Exchange are stock options, our employees will only receive value for such equity awards based on positive stock price performance. This aligns the interests of our employees with our stockholders. Additionally, because executive officers currently hold approximately 60% of our outstanding equity awards, to exclude them from the Option Exchange would limit the impact of the program with respect to reducing dilution and overhang. Outside directors are being included in the interest of treating all option holders consistently.
Alternatives Considered
Our Compensation Committee considered alternatives to the Option Exchange to provide a meaningful performance and retention incentive, including providing new option or restricted stock awards, exchanging underwater options
for full value shares or exchanging underwater options for a cash payment. After careful consideration, our Compensation Committee determined that, compared to other alternatives, the Option Exchange provides better performance and retention incentives at a lower cost to the company and/or with less dilution to stockholders, when compared with other alternatives.
Structure of the Option Exchange
The Board, upon recommendation of our Compensation Committee, authorized the Option Exchange on April 7, 2020, subject to stockholder approval. We currently plan to commence the Option Exchange on a date as soon as practicable following the Annual Meeting, or the Commencement Date. At the start of the Option Exchange, Eligible Option Holders holding eligible stock options will receive a written exchange offer that will set forth the terms of the Option Exchange. The written offer will be governed by the tender offer rules of the SEC. At or before the Commencement Date, we will file the offer to exchange and other related documents with the SEC as part of a tender offer statement on Schedule TO. We will give Eligible Option Holders at least 20 business days to elect to participate in the Option Exchange. Eligible Option Holders may choose which eligible option grants they wish to exchange and may choose to not exchange portions of eligible option grants. Set forth below is a description of the key features of the Option Exchange.
Eligible Participants
The Option Exchange will be available to employees, including executive officers, certain consultants and outside directors who on the Commencement Date are providing services to us and hold outstanding eligible stock options. Members of our Board and our executive officers are eligible to participate in the Option Exchange. As of March 31, 2020, eligible stock options were held by approximately 100% of our employees and outside directors. Participants in the Option Exchange must continue to be employed by or providing services as an outside director to us on the date the surrendered options are cancelled and replacement stock options are granted. Any employee, consultant or outside director holding eligible stock options who elects to participate in the Option Exchange but whose service with us terminates for any reason before the date the new stock options are granted, including due to voluntary resignation, retirement, involuntary termination, layoff, death or disability, would retain his or her eligible options subject to their existing terms and would not be eligible to receive new stock options in the Option Exchange.
Eligible Stock Options
As of March 31, 2020, we had outstanding eligible stock options to purchase 388,627 shares of common stock under our Equity Plans at a weighted-average exercise price of $25.77 per share and with a weighted-average remaining life of 7.32 years. These eligible stock options represent approximately 12.02% of the issued and outstanding shares of our common stock as of March 31, 2020. If 100% of Eligible Option Holders as of March 31, 2020 participate in the Option Exchange, and based on the exchange ratios established by our Compensation Committee, eligible stock options to purchase approximately 226,396 shares of common stock may be surrendered and cancelled in the Option Exchange, which would result in the company issuing stock options for approximately 96,392 shares of common stock and would result in a net reduction in our stock option overhang of approximately 130,004 shares of common stock (or 4.0% of our issued and outstanding shares).
Exchange Ratios; Exercise Price of New Options
The Option Exchange is not a one-for-one exchange. We designed the exchange ratios for the Option Exchange to result in a fair value of the new stock options that will be proportionate, on an aggregate basis, to the fair value of the eligible stock options that individuals would surrender (based on valuation assumptions made when the design of the Option Exchange was approved by our Compensation Committee). We established the exchange ratios by grouping together eligible stock options with similar exercise prices. At the time the Compensation Committee approved the general design of the Option Exchange, including the exchange ratios, the fair market value of our common stock was $3.86 per share (the closing price of our common stock on The Nasdaq Capital Market on March 20, 2020, on a post-Split basis). The exchange ratios are based on the fair value of the eligible stock options (calculated using the Black-Scholes model) within the relevant grouping. Calculation of fair value takes into account variables such as the volatility of our stock, the expected term of a stock option and interest rates. As illustrated in the table below, the applicable exchange ratios will vary based on the exercise price of the eligible stock option. All numbers are reported on a post-Split basis.
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The total number of shares of common stock issuable upon exercise of new stock options will be determined by dividing the number of shares underlying the surrendered stock option by the applicable exchange ratio and rounding up to the nearest whole share. For purposes of illustration, if an option holder holds a stock option to purchase 1,000 shares of common stock with an exercise price of $70 per share, the option holder would be entitled to exchange that option for a replacement stock option to purchase 286 shares of common stock after applying the applicable 3.5:1 exchange ratio. For further illustration, an eligible option holder who holds an option to purchase 1,000 shares of common stock with an exercise price of $30 per share could exchange that option for a replacement stock option to purchase 500 shares of common stock after applying the applicable 2.0:1 exchange ratio. All replacement stock options granted based on the foregoing exchange ratios will have an exercise price equal to the fair market value of our common stock at the time we grant replacement options at the end of the exchange period.
Vesting Schedules for New Options
New stock option awards will not be vested on the date of grant. Eligible stock options that are vested as of the exchange date may be exchanged for new stock options with a new one-year vesting schedule, vesting in full at the end of 12 months, subject to the applicable option holder’s continued service at the end of such period. Eligible stock options that are not vested as of the exchange date may be exchanged for new stock options with vesting schedules that match the existing stock options, vesting in the same proportions over the same vesting term, subject to the applicable option holder’s continued service through each vest date. These vesting schedules support the nature of stock options as an incentive vehicle, recognize the prior services and contributions of Eligible Option Holders and provide us with valuable additional years of personnel retention during an important time for the company while also reducing the chance that Eligible Option Holders decline to participate in the Option Exchange, which would reduce the intended impact of the Option Exchange program with respect to dilution and overhang.
Term for New Options
The new stock options will expire ten years following the date we grant the new stock options.
Intended Implementation of the Option Exchange As Soon As Practicable Following the Date of the Annual Meeting
We currently plan to commence the Option Exchange as soon as practicable after the date of the Annual Meeting. Our Board reserves the right in its discretion to amend, postpone or, under certain circumstances, cancel the Option Exchange once it has commenced, but the Option Exchange will not be materially amended in a manner that is more beneficial to eligible participants without first seeking additional stockholder approval.
Impact of Option Exchange on Surrendered Options
Assuming all Eligible Option Holders participate in the Option Exchange with respect to 100% of their eligible stock options, we estimate that there will be 130,004 shares of common stock underlying stock options that are surrendered under the Option Exchange but are not replaced by new stock options, based on the number of shares subject to outstanding options on March 31, 2020. These shares will be returned to the share reserve of the 2018 Plan and will be available for future grant of equity awards under the 2018 Plan.
Additional information regarding how we expect to conduct the Option Exchange, provided it is approved by stockholders, is set forth below. While the terms of the Option Exchange are expected to conform to the material terms described in this Proposal 2 we may find it necessary or appropriate to change the terms of the Option Exchange to take into account our administrative needs, accounting rules, or company policy decisions or to comply with any comments we receive from the SEC. We may decide not to implement the Option Exchange even if we obtain stockholder approval, or we may delay, amend or terminate the Option Exchange once it is in progress. The final terms of the Option Exchange will be described in the exchange offer documents that will be filed with the SEC and available at www.sec.gov.
Overview of the Option Exchange Process
Upon commencement of the Option Exchange, those individuals holding eligible stock options will receive a written offer setting forth the terms of the Option Exchange and may voluntarily elect to participate. All employees and outside directors who are employed by or providing service as a board member to us on the Commencement Date, are still employed by or providing service to us on the grant date of the new stock options, and hold eligible stock option awards may participate in the Option Exchange. We will give Eligible Option Holders at least 20 business days to elect to surrender eligible stock options in exchange for a smaller number of new stock options. Upon completion of the Option Exchange, surrendered stock options will be cancelled and new stock options will be granted.
The 2018 Plan will govern all terms and conditions of new stock options not specifically addressed by the Option Exchange described in this proxy statement. Additionally, it is anticipated that new options will be non-qualified stock options.
Election to Participate
Eligible Option Holders will receive a tender offer document and will be able to voluntarily elect to participate in the Option Exchange. If you are both a stockholder and an Eligible Option Holder holding stock options that may be subject to the Option Exchange, please note that voting to approve the Option Exchange pursuant to this Proposal 2 does not constitute an election to participate in the Option Exchange. The written exchange offer documents described above will be provided if and when the Option Exchange is commenced, and you can only elect to participate after that time.
Impact of Option Exchange on Number of Options Issued
Our Compensation Committee established exchange ratios that will result in the issuance of a lesser number of stock options through the Option Exchange than the number of stock options originally granted to Eligible Option Holders. The exchange ratios have been grouped together based on similar exercise prices. The following table illustrates the impact of the Option Exchange on the number of stock options outstanding as of March 31, 2020, assuming that 100% of Eligible Option Holders to participate as of March 31, 2020 exchange 100% of their eligible stock options in the Option Exchange.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Outstanding Eligible Options |
|
|
|
| Exchange |
| ||||||||||
Exchange Price Range per Share |
| Number of Existing Options (shares) |
|
| Weighted Average Exercise Price ($) |
|
| Exchange Ratio |
| Total New Options Granted (shares) |
|
| Potential Net Shares Recaptured |
| ||||
$21.00 to $34.30 |
|
| 98,812 |
|
| $ | 25.60 |
|
| 2.0 to 1 |
|
| 49,406 |
|
|
| 49,406 |
|
$34.31 to $42.00 |
|
| 74,963 |
|
| $ | 38.37 |
|
| 2.5 to 1 |
|
| 29,985 |
|
|
| 44,978 |
|
$42.01 to $59.50 |
|
| 41,281 |
|
| $ | 44.04 |
|
| 3.0 to 1 |
|
| 13,760 |
|
|
| 27,521 |
|
$59.51 and above |
|
| 11,340 |
|
| $ | 76.30 |
|
| 3.5 to 1 |
|
| 3,240 |
|
|
| 8,100 |
|
Totals |
|
| 226,396 |
|
| $ | 35.88 |
|
|
|
|
| 96,392 |
|
|
| 130,004 |
|
As described above under the section titled “Exchange Ratios,” the total number of shares of common stock issuable upon exercise of new stock options that a participating option holder will receive with respect to a surrendered stock
option will be determined by dividing the number of shares surrendered by the applicable exchange ratio and rounding up to the nearest whole share.
Effect on Stockholders
Under the terms of the Option Exchange, the new stock options are meant to have a fair value that will be proportionate, on an aggregate basis, to the fair value of the cancelled stock options they would replace. While we cannot predict how many option holders will elect to participate in the Option Exchange, assuming that 100% of Eligible Option Holders as of March 31, 2020 participate in the Option Exchange, and based on the exchange ratios established by our Compensation Committee, eligible stock options to purchase approximately 226,396 shares of common stock may be surrendered and cancelled in the Option Exchange, which would result in the company issuing stock options for approximately 96,392 shares of common stock and would result in a net reduction in our stock option overhang of approximately 130,004 shares of common stock (or 4.0% of our issued and outstanding shares).
Accounting Impact
The incremental compensation expense associated with the Option Exchange will be measured as the excess, if any, of the fair value of new stock option granted to participants in the Option Exchange, measured as of the date the new stock options are granted, over the fair value of the stock options surrendered in exchange for the new stock options, measured immediately prior to the cancellation. We do not expect the incremental compensation expense, if any, to be material. We will recognize any such incremental compensation expense ratably over the vesting period of the new stock options.
Material U.S. Federal Income Tax Consequences of the Option Exchange
The exchange of stock options pursuant to the Option Exchange should be treated as a non-taxable exchange because the new stock options will have an exercise price equal to or greater than the fair market value of our common stock on the grant date. Neither the company nor the participants in the Option Exchange should recognize any income for U.S. federal income tax purposes upon the grant of the new stock options. New stock options granted under the Option Exchange will be non-qualified stock options for U.S. federal income tax purposes. Tax effects may vary in other countries. A more detailed summary of tax considerations will be provided to all participants in the Option Exchange documents.
Financial Statements
Our financial statements and other information required by Item 13(a) of Schedule 14A under the Exchange Act are incorporated by reference from our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the SEC on March 25, 2020.
Vote Required
Approval of the Option Exchange requires the affirmative vote of the majority of the votes cast at the Annual Meeting by the holders of the shares represented in person or represented by proxy and entitled to vote on the proposal. Abstentions and broker non-votes will have no effect on the vote.
If you are both a stockholder and an eligible option holder holding eligible stock options, please note that voting to approve the Option Exchange does not constitute an election to participate in the Option Exchange.
The Board Of Directors Recommends A Vote In Favor Of Proposal 2
Ratification of Selection of Independent Registered Public Accounting Firm
Ernst & YoungMoss Adams LLP currently serves as the Company’s independent registered public accounting firm. After consideration of the firm’s qualifications and past performance, the Audit Committee of the Board of Directors has selected Ernst & YoungMoss Adams LLP as the Company’s independent registered public accounting firm for the year ending December 31,, 2020 2023 and has further directed that management submit the selection of its independent registered public accounting firm for ratification by the stockholders at the Annual Meeting. Ernst & YoungMoss Adams LLP has audited the Company’s financial statements since 2015.2020. Representatives of Ernst & YoungMoss Adams LLP are expected to be present at the Annual Meeting. They will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions.
NeitherNone of the Company’s Amended and Restated Certificate of Incorporation, Bylaws nor other governing documents or law require stockholder ratification of the selection of Ernst & YoungMoss Adams LLP as the Company’s independent registered public accounting firm. However, the Audit Committee of the Board is submitting the selection of Ernst & YoungMoss Adams LLP to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the selection, the Audit Committee of the Board will reconsider whether or not to retain that firm. The Audit Committee, however, will be under no obligation to retain a new or different independent registered public accounting firm. Even if the selection is ratified, the Audit Committee of the Board in its discretion may direct the appointment of different independent auditors at any time during the year if they determine that such a change would be in the best interests of the Company and its stockholders.
The affirmative vote of the holders of a majority of the shares present at the meeting or represented by proxy and entitled to vote on the matter at the Annual Meeting will be required to ratify the selection of Ernst & Young LLP.
Principal Accountant Fees and Services
The following table summarizes the fees of Ernst & YoungMoss Adams LLP, our Independent Registered Public Accounting Firm, billed to us for their audit and other services for the years ended December 31, 20182021 and 2019.2022. The audit fees include an estimate of amounts not yet billed.
For the years ended December 31, 2021 and 2022, fees paid or accrued to Moss Adams LLP were:
|
| Year Ended December 31, |
| |||||||||||||
|
| 2019 |
|
| 2018 |
|
| Year Ended December 31, |
|
| Year Ended December 31, |
| ||||
|
| (in thousands) |
|
| 2022 |
|
| 2021 |
| |||||||
Audit Fees |
| $ | 543,000 |
|
| $ | 567,000 |
|
| $ | 407,000 |
|
| $ | 281,400 |
|
Audit-related Fees |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Tax Fees |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
All Other Fees |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Total Fees |
| $ | 543,000 |
|
| $ | 567,000 |
|
| $ | 407,000 |
|
| $ | 281,400 |
|
Audit Fees.Audit fees consist of fees from our principal auditor for the audit of our consolidated financial statements and other professional services provided in connection with statutory and regulatory filings or engagements and comfort letters.
Pre-Approval Policies and Procedures.Procedures
The Audit Committee has policies and procedures that require the pre-approval by the Audit Committee (or one of its members) of all services performed by the Company’s independent registered public accounting firm and related fee arrangements. In the early partfirst half of each year, the Audit Committee approves the proposed services, including the nature, type and scope of services contemplated, and the related fees, to be rendered by these firms during the year. In accordance with this policy, the Audit Committee or one of its members pre-approved all services to be performed by the Company’s independent registered accounting firm.
The Board Of Directors Unanimously Recommends A Vote In Favor Of Proposal 2.
21
Equity Compensation Plan Information
The following table sets forth additional information as of December 31, 2022 about shares of our common stock that may be issued upon the exercise of options and other rights under our existing equity compensation plans and arrangements. The information includes the number of shares covered by, and the weighted-average exercise price of, outstanding options and other rights and the number of shares remaining available for future grants excluding the shares to be issued upon exercise of outstanding options, warrants, and other rights.
Plan Category |
| Number of securities to be issued upon exercise of outstanding options, RSUs, warrants and rights |
|
| Weighted-average exercise price of outstanding options, RSUs, warrants and rights |
|
| Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) |
| |||
|
| (a) |
|
| (b) |
|
| (c) |
| |||
Equity compensation plans approved by security holders |
|
| 588,041 |
|
| $ | 7.80 |
|
|
| 360,261 |
|
Equity compensation plans not approved by security holders |
|
| — |
|
| $ | — |
|
|
| — |
|
Total |
|
| 588,041 |
|
| $ | 7.80 |
|
|
| 360,261 |
|
22
Proposal 3.
ADVISORY VOTE ON COMPANY’S 2022 EXECUTIVE COMPENSATION
As required by Section 14A of the Exchange Act, the Board is providing stockholders with a non-binding advisory vote on the compensation paid to our named executive officers in 2022, as disclosed in the accompanying compensation tables and the related narrative disclosure in this Proxy Statement, commonly referred to as the “Say-on-Pay” vote. At the 2022 Annual Meeting, stockholders voted to indicate their preference that the Company solicit a Say-on-Pay vote every year. The Board has adopted a policy that is consistent with that preference. In accordance with that policy, this year, the Company is again asking the shareholders to approve, on an advisory basis, the compensation of the Company’s named executive officers as disclosed in this proxy statement in accordance with SEC rules.
The Say-on-Pay vote is advisory; therefore, the result will not be binding on the Company, the Board, or the Compensation Committee and it will not affect, limit, or augment any existing compensation or awards. The Board and the Compensation Committee, however, value the opinions of our stockholders and will review and consider the voting results when making future compensation decisions for our named executive officers.
You should read the compensation tables and the related narrative disclosure in determining whether to approve this proposal.
The Board submits the following resolution for a stockholder vote at the Annual Meeting:
RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed in the Company’s Proxy Statement for the 2023 Annual Meeting of Stockholders pursuant to Item 402 of Regulation S-K, including the executive compensation tables and the related narrative discussion, is hereby APPROVED.
The Board of Directors recommends a vote FOR the approval, on an advisory basis, of the compensation paid to our named executive officers in 2022 as disclosed in this Proxy Statement.
23
Report of the Audit Committee of the Board of Directors
The Audit Committee has reviewed and discussed the audited financial statements for the fiscal year ended December 31, 2019 2022 with management of the Company. The Audit Committee has discussed with the independent registered public accounting firm the matters required to be discussed by Auditing Standard No. 1301, Communications with Audit Committees, as adopted by the Public Company Accounting Oversight Board (“PCAOB”). The Audit Committee has also received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the PCAOB regarding the independent accountants’ communications with the Audit Committee concerning independence, and has discussed with the independent registered public accounting firm the accounting firm’s independence. Based on the foregoing, the Audit Committee has recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019.2022.
Grady Grant, III
Zsolt Harsanyi, Ph.D.
Daniel J. Abdun-Nabi
Barbara Lopez Kunz
The material in this report is not “soliciting material,” is not deemed “filed” with the Commission and is not to be incorporated by reference in any filing of the Company under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
Of
Certain Beneficial Owners andAnd Management
The following table sets forth certain information regarding the ownership of the Company’s common stock as of April 1, 20205, 2023 by: (i) each director and nominee for director; (ii) each of the executive officers named in the Summary Compensation Table; (iii) all executive officers and directors of the Company as a group; and (iv) all those known by the Company to be beneficial owners of more than five percent of its common stock. Unless otherwise indicated, the address of the individuals and entities below is c/o Aptevo Therapeutics Inc., 2401 4th Ave.Avenue, Suite 1050, Seattle, Washington 98121.
|
| Beneficial Ownership(1) | |||||||
| Number of Shares |
|
| Percent of Total | |||||
Armistice Capital (2) |
|
| 323,092 |
|
|
| 9.99 | % |
|
Stonepine Capital Management, LLC (3) |
|
| 323,092 |
|
|
| 9.99 | % |
|
Point72 Asset Management (4) |
|
| 278,137 |
|
|
| 8.60 | % |
|
AIGH Capital Management (5) |
|
| 227,685 |
|
|
| 7.04 | % |
|
Renaissance Technologies LLC (6) |
|
| 170,117 |
|
|
| 5.26 | % |
|
Fuad El-Hibri (Director) (7) |
|
| 201,851 |
|
|
| 6.23 | % |
|
Marvin White (Officer & Director) (8) |
|
| 59,491 |
|
|
| 1.82 | % |
|
Jane Gross, Ph.D. (Officer) (9) |
|
| 26,213 |
|
| * |
|
| |
Jeffrey G. Lamothe (Officer) (10) |
|
| 22,737 |
|
| * |
|
| |
Daniel J. Abdun-Nabi (Director) (11) |
|
| 11,828 |
|
| * |
|
| |
John E. Niederhuber, M.D. (Director) (11) |
|
| 4,819 |
|
| * |
|
| |
Zsolt Harsanyi (Director) (11) |
|
| 7,588 |
|
| * |
|
| |
Grady Grant III (Director) (11) |
|
| 4,731 |
|
| * |
|
| |
Barbara Lopez Kunz (Director) (11) |
|
| 4,731 |
|
| * |
|
| |
All executive officers and directors as a group (10 persons) (12) |
|
| 364,329 |
|
|
| 10.88 | % |
|
|
| Beneficial Ownership(1) | ||||
|
| Number of Shares |
|
| Percent of Total | |
Marvin L. White (Officer & Director) (2) |
|
| 135,128 |
|
| 1.9% |
Jeffrey G. Lamothe (Officer) (3) |
| 56,177 |
|
| * | |
SoYoung Kwon (Officer) (4) |
| 22,000 |
|
| * | |
Daniel J. Abdun-Nabi (Director) (5) |
|
| 12,212 |
|
| * |
John E. Niederhuber, M.D. (Director) (6) |
| 9,555 |
|
| * | |
Zsolt Harsanyi, Ph.D. (Director) (7) |
|
| 12,348 |
|
| * |
Grady Grant, III (Director) (8) |
| 8,753 |
|
| * | |
Barbara Lopez Kunz (Director) (9) |
| 8,753 |
|
| * | |
All executive officers and directors as a group (9 persons) (10) |
| 281,463 |
|
| 3.7% | |
| * Less than one percent. |
|
|
|
|
|
|
|
|
|
|
|
|
63,076This table is based upon information supplied by officers and directors. The Company does not have principal stockholders who own 5% or more of our outstanding common stock based on Schedules 13D, 13G, and 13-F. Unless otherwise indicated in the footnotes to this table and subject to community property laws where applicable, the Company believes that each of the stockholders named in this table has sole voting and investment power with respect to the shares heldindicated as beneficially owned. Applicable percentages are based on 7,239,471 shares outstanding on April 5, 2023, adjusted as required by Intervac, L.L.C.;
54,434 shares held by BioVac, L.L.C.;
80,324 shares held directly by Mr. El-Hibri; and
4,017Includes 94,991 shares of common stock issuable upon the exercise of options that are exercisable and vesting RSUs on or within 60 days of April 1, 2020.
|
|
|
|
|
|
|
|
|
|
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires the Company’s directors and executive officers, and persons who own more than ten percent of a registered class of the Company’s equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities of the Company. Officers, directors and greater than ten percent stockholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file.
To the Company’sour knowledge, based solely on aour review of the copies of such reports furnishedfiled on EDGAR and the written representations of reporting persons, we believe that for fiscal 2022, all required reports were filed on a timely basis under Section 16(a), except for Dr. Niederhuber who had a Form 4 relating to the Company and written representationspurchase of shares on June 14, 2019 that no other reports were required, during 2019, and that all Section 16(a) filing requirements applicable to its officers, directors and greater than ten percent beneficial owners were complied with andwas filed timely.
Executive Officerslate on June 3, 2022.
25
Executive Officers
Set forth below is information regarding the positions, ages and business experience of each of our executive officers as of April 8, 2020:5, 2023. Biographical information with regard to Mr. White is presented under “Proposal 1—Election of Directors” in this Proxy Statement.
Name |
| Age |
| Position(s) |
|
|
| Chief Executive Officer and President | |
Jeffrey G. Lamothe |
|
| Executive Vice President and Chief Operating Officer | |
Daphne Taylor | 57 |
| Senior Vice President, | |
|
|
|
| Senior Vice President, |
|
|
|
Jeffrey G. Lamothe Mr. Lamothe has served as our Executive Vice President and Chief Operating Officer since March 2023, previously Executive Vice President and Chief Financial Officer since February 2022 and Senior Vice President and Chief Financial Officer since July 2016. He previously served as Emergent’s Vice President Finance, Biosciences Division. Mr. Lamothe assumed this role in February 2014 when Emergent concluded the acquisition of Cangene Corporation (“Cangene”), where he was Chief Financial Officer. Mr. Lamothe assumed the role of Chief Financial Officer of Cangene in August 2012. Prior to that, Mr. Lamothe was the Chief Financial Officer for Smith Carter Architects and Engineers Incorporated, a position which he held from January 2010 until July 2012. He also previously served as President and Chief Executive Officer of Kitchen Craft Cabinetry after occupying the position of VP Finance and Chief Financial Officer with that organization. Mr. Lamothe’s other past experience includes serving as Chief Financial Officer for Motor Coach Industries and he has held various roles at James Richardson & Sons, Limited and Ernst & Young LLP. Mr. Lamothe earned his Bachelor of Commerce (honours)(honors) degree from the University of Manitoba and is a Chartered Accountant/CPA.
Randy J. Maddux
Mr. MadduxDaphne Taylor has served as our Senior Vice President, Operations since July 2016 and Chief ManufacturingFinancial Officer since March 2018. In this capacity, Mr. Maddux leads2023 and previously served as Aptevo’s Senior Vice President of Finance where she held responsibility for all strategic planning and budgeting, treasury activities, internal and external reporting, and financial compliance. Prior to Aptevo, Daphne’s career includes 25 years of financial experience in the Quality, Processlife sciences and Analytical Development, Bioprocess Technologies, Supply Chain, and Site Services functions for the company.technology industries. Prior to joining Aptevo, he spent 4 yearsMs. Taylor served as Chief Financial Officer at BioLife Solutions. She also served as VP, Chief Accounting Officer, and Site DirectorController at GSK, where he ledCardiac Science Corporation and in multiple other roles, including Controller at LookSmart, SpeedTrak, CoreMark International and Pacific Telesis. Ms. Taylor began her career at Coopers & Lybrand in San Francisco. She is active in her community and serves on the largest biopharmaceutical site withinFinance Committee of the GSK global manufacturing network. Prior to GSK, Mr. Maddux spent 9 years at Human Genomes Sciences as VP QualityNorthshore Schools Foundation. Ms. Taylor holds a B.A. from Sonoma State University and Operations and 8 years with Biogen in positions of increasing responsibility within the Quality organization. Mr. Maddux is a past member of the Life Sciences Foundation Board at Montgomery College. Mr. Maddux earned a BachelorsLicensed CPA in Chemistry from East Carolina UniversityWashington and pursued post-graduate work in analytical chemistry before earning an MBA from the Fuqua School of Business at Duke University.California.
Jane Gross, Ph.D.
Dr. GrossSoYoung Kwon has served as our Senior Vice President, General Counsel, Business Development and Chief Scientific OfficerCorporate Affairs since March 2023, and Senior Vice President, General Counsel, Corporate Affairs and Human Resources since May 2021. She previously served as the Global SVP, General Counsel and Corporate Secretary at AGC Biologics, a contract development and manufacturing organization with facilities in the US, Europe and Asia. Ms. Kwon assumed this role after CMC Biologics, where she was VP, General Counsel and Corporate Secretary since September 2016. Dr. Gross served as VP of Research and Non-Clinical Development at Aptevo from July 2016 to September 2016. Dr. Gross leads the discovery of novel protein therapeutics based on the ADAPTIR™ platform2015, was acquired by AGC Inc. in immuno-oncology, leading research efforts in molecular biology and protein engineering, immunology, protein and cell sciences, pharmacology and translational research.December 2016. Prior to joining Aptevo, Dr. Gross servedthat, Ms. Kwon was the VP, General Counsel and Corporate Secretary at Onvia, Inc. from 2008 to 2015. Ms. Kwon’s other past experience includes serving as Vice President, Applied ResearchSenior Counsel at Safeco Corporation and Non-Clinical Developmenta Corporate Associate at Emergent. Dr. Gross has a Ph.D. in Immunology and over twenty-five yearsGraham & Dunn PC. Ms. Kwon earned her Bachelor of experience inArts from the discovery and development of novel protein therapeutics in autoimmune, infectious disease and oncology indications.. Prior to joining Emergent, Dr. Gross served as VP of Immunology Research at ZymoGenetics Inc., where she led efforts in discovery and development of therapeutics from novel genes for treatment of AIID and cancer. Dr. Gross holds Ph.D. in Immunology from University of California at Berkeley.
Executive CompensationWashington and her Juris Doctorate from Willamette University College of Law.
26
Executive Compensation
Summary Compensation Table
The following table shows for 20182021 and 20192022 compensation awarded to or paid to, or earned by, the Company’s Chief Executive Officer and its two other most highly compensated executive officers as of December 31, 20192022 (the “named executive officers”).
Name and Principal Position |
| Year |
| Salary |
|
| Bonus(1) |
|
| Option Awards(2) |
|
| All Other Compensation(4) |
|
| Total |
| |||||
Marvin L. White |
| 2019 |
| $ | 547,300 |
|
| $ | 224,071 |
|
| $ | 194,281 |
|
| $ | 8,400 |
|
| $ | 974,052 |
|
Chief Executive Officer and President |
| 2018 |
| $ | 565,123 |
|
| $ | 213,334 |
|
| $ | 318,112 |
|
| $ | 8,250 |
|
| $ | 1,104,819 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey G. Lamothe |
| 2019 |
| $ | 390,196 |
|
| $ | 135,214 |
|
| $ | 107,382 |
|
| $ | 8,400 |
|
| $ | 641,192 |
|
Senior Vice President and Chief Financial Officer |
| 2018 |
| $ | 402,903 |
|
| $ | 139,405 |
|
| $ | 141,430 |
|
| $ | 8,250 |
|
| $ | 691,987 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jane Gross, Ph.D. |
| 2019 |
| $ | 354,452 |
|
| $ | 122,828 |
|
| $ | 102,269 |
|
| $ | 8,400 |
|
| $ | 587,949 |
|
Senior Vice President and Chief Scientific Officer |
| 2018 |
| $ | 365,995 |
|
| $ | 120,046 |
|
| $ | 141,435 |
|
| $ | 8,970 |
|
| $ | 636,446 |
|
Name and Principal Position |
| Year |
| Salary |
|
| Bonus(1) |
|
| Equity |
|
| Non-Equity Incentive Plan Compensation(3) |
|
| All Other |
|
| Total |
| ||||||
Marvin L. White |
| 2022 |
| $ | 565,123 |
|
| $ | - |
|
| $ | 278,307 |
|
| $ | 318,588 |
|
| $ | 9,150 |
|
| $ | 1,171,168 |
|
Chief Executive Officer and |
| 2021 |
| $ | 565,123 |
|
| $ | - |
|
| $ | 1,926,250 |
|
| $ | 296,831 |
|
| $ | 8,700 |
|
| $ | 2,796,904 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Jeffrey G. Lamothe (5) |
| 2022 |
| $ | 459,693 |
|
| $ | - |
|
| $ | 252,631 |
|
| $ | 222,526 |
|
| $ | 9,150 |
|
| $ | 944,000 |
|
Executive Vice President |
| 2021 |
| $ | 419,737 |
|
| $ | - |
|
| $ | 737,000 |
|
| $ | 162,120 |
|
| $ | 8,700 |
|
| $ | 1,327,557 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
SoYoung Kwon(6) |
| 2022 |
| $ | 404,732 |
|
| $ | - |
|
| $ | 187,483 |
|
| $ | 174,151 |
|
| $ | 9,150 |
|
| $ | 775,516 |
|
Senior Vice President, General |
| 2021 |
| $ | 220,577 |
|
| $ | 75,000 |
|
| $ | 575,300 |
|
| $ | 87,676 |
|
| $ | - |
|
| $ | 958,553 |
|
|
|
|
|
|
|
Employment, Severance and Change in Control Agreements with Named Executive Officers
The Company does not have any employment contracts with its named executive officers; however, the Company does have aan Amended and Restated Senior Management Severance Plan (“Severance(the “Severance Plan”) effectivein which each of our named executive officers participates. For more information regarding the Severance Plan, see the section entitled “Severance and Change in Control.”
Base Salaries and Target Bonuses
The Compensation Committee (the “Committee”) approved annual base salaries and target bonuses for 2022. Annual target bonuses are calculated as a percentage of July 29, 2016 through December 31, 2021, renewing thereafterthe named executive officer’s base salary and payout of the annual target bonuses is based on the achievement of pre-established corporate performance goals as determined by the Committee, as well as individual performance and other factors deemed relevant by the Committee. 90% of our Chief Executive Officer’s bonus payout is based on corporate performance with 10% based on individual performance whereas 70% of our other named executive officers’ bonus payout is based on corporate performance with 30% based on individual performance. For 2022, the Committee established corporate performance goals that were challenging, but attainable. They included goals related to Aptevo’s business, such as clinical trial enrollment, as well as strategic milestones and financial metrics. The following table sets forth the base salary, target bonus percentages, and target bonus amounts for one year increments unless terminated ninety (90) days prior2022:
Name and Title |
| 2022 Base |
|
| 2022 Target |
| 2022 Target |
| ||
Marvin L. White |
| $ | 565,123 |
|
| 55% |
| $ | 310,818 |
|
Chief Executive Officer and President |
|
|
|
|
|
|
|
| ||
Jeffrey G. Lamothe |
| $ | 460,001 |
|
| 45% |
| $ | 207,000 |
|
Executive Vice President and Chief Operating Officer |
|
|
|
|
|
|
|
| ||
SoYoung Kwon |
| $ | 405,001 |
|
| 40% |
| $ | 162,000 |
|
Senior Vice President, General Counsel, Business Development and Corporate Affairs |
|
|
|
|
|
|
|
| ||
Consistent with historic practice, in the first quarter of 2023, the Committee reviewed the Company’s 2022 performance against the corporate performance goals. After taking into consideration the challenges and management’s response thereto, as well as individual performance, the Committee determined to pay out the annual target bonuses at 100% for the corporate weighting factor of the target bonus for each named executive officer and 125% for the individual performance weighting factor of the target bonus for each named executive officer.
Option and RSU Awards
The Committee approved the following option and RSU grants to our named executive officers in 2022:
Name and Title |
| RSUs (# of shares) |
|
| Options (# of shares) |
| ||
Marvin L. White |
|
|
|
|
|
| ||
Chief Executive Officer and President |
|
| 28,750 |
|
|
| 28,750 |
|
Jeffrey G. Lamothe |
|
|
|
|
|
| ||
Executive Vice President and Chief Operating Officer |
|
| 40,458 |
|
|
| 16,500 |
|
SoYoung Kwon |
|
|
|
|
|
| ||
Senior Vice President, General Counsel, Business Development and Corporate Affairs |
|
| 29,750 |
|
|
| 11,000 |
|
At the time of the annual grant, there were insufficient shares available for issuance under Aptevo Therapeutics Inc. 2018 Stock Incentive Plan to make the full annual grant of equity awards to the expirationnamed executive officers that was approved for issuance by the Committee. As such, the equity awards were split into two separate grants with the first half (option awards) granted on March 4, 2022 and the second half (RSU awards) granted on June 7, 2022, with all awards vesting over three years: one-third on March 3, 2023, one-third on March 3, 2024, and the final one-third on March 3, 2025. On August 9, 2022, a special recognition grant of RSU awards were granted to each of Mr. Lamothe and Ms. Kwon and vest over two years: one-half on August 8, 2023 and one-half on August 8, 2024.
Stock Ownership Guidelines
Aptevo’s Board of Directors and Section 16 Officer Stock Ownership and Retention Policy (“Stock Ownership Guidelines”) encourages our executive officers and non-employee directors to own shares of Company stock in order to promote the then current term. A participant in this Severance Plan is an employeealignment of our executive officers and directors with the long-term interests of our stockholders and to further promote our commitment to sound corporate governance. The Stock Ownership Guidelines require the Company’s Chief Executive Officer, non-employee directors and other Section 16 officers (“Covered Persons”) to own a target number of qualifying stock of the Company with(beneficially owned stock and unvested restricted stock units) by Company grant and through individual purchase within five years of becoming a Covered Person. Our non-employee directors are expected to obtain a target number of qualifying shares of stock that has a value equal to one time the titleBoard annual retainer fees. Our Chief Executive Officer is expected to obtain a target number of qualifying shares of stock that has a value equal to three times the Chief Executive Vice President, Senior Vice PresidentOfficer’s base salary. Our other Section 16 officers are expected to obtain a target number of qualifying stock that has a value equal to one time their base salary. Covered Persons must retain 50% of after-tax shares after vesting or Vice President, whoexercise until ownership guidelines are met.
28
Outstanding Equity Awards at December 31, 2022
The following table sets forth information regarding unexercised Aptevo stock options and unvested restricted stock unit awards outstanding as of December 31, 2022 for each of our named executive officers.
|
| 2022 Outstanding Equity Awards at Fiscal Year-End |
|
| |||||||||||||||||||||
|
| Options Awards |
|
| Stock Awards |
|
| ||||||||||||||||||
|
| Number of Securities Underlying |
|
|
|
|
|
|
|
| |||||||||||||||
Name |
| Exercisable |
|
| Unexercisable |
|
| Option Award Exercise Price |
|
| Option Award Expiration Date |
|
| Unvested Stock Awards |
|
| Market Value Unvested Stock Awards |
|
| ||||||
Marvin L. White |
|
| 2,707 |
| (1) |
| — |
|
| $ | 8.56 |
|
| 7/27/2030 |
|
|
| — |
|
| $ | — |
|
| |
|
| 5,728 |
| (1) |
| — |
|
| $ | 8.56 |
|
| 7/27/2030 |
|
|
| — |
|
| $ | — |
|
| ||
|
| 13,563 |
| (2) |
| — |
|
| $ | 8.06 |
|
| 11/1/2029 |
|
|
| — |
|
| $ | — |
|
| ||
|
| 14,438 |
| (3) |
| 7,219 |
| (3) | $ | 6.97 |
|
| 2/18/2030 |
|
|
| — |
|
| $ | — |
|
| ||
|
| 5,414 |
| (4) |
| — |
|
| $ | 8.56 |
|
| 7/27/2030 |
|
|
| — |
|
| $ | — |
|
| ||
|
|
| 14,375 |
| (5) |
| 28,750 |
| (5) | $ | 33.50 |
|
| 1/29/2031 |
|
|
| — |
|
| $ | — |
|
| |
|
| 1,273 |
| (1) |
| — |
|
| $ | 8.56 |
|
| 7/27/2030 |
|
|
| — |
|
| $ | — |
|
| ||
|
| 3,609 |
| (6) |
| — |
|
| $ | 8.56 |
|
| 7/27/2030 |
|
|
| — |
|
| $ | — |
|
| ||
|
| 2,707 |
| (1) |
| — |
|
| $ | 8.56 |
|
| 7/27/2030 |
|
|
| — |
|
| $ | — |
|
| ||
|
|
| — |
|
|
| 28,750 |
| (10) | $ | 5.30 |
|
| 3/4/2032 |
|
|
| — |
|
| $ | — |
|
| |
|
|
| — |
|
|
| — |
|
| $ | — |
|
|
| — |
|
|
| 9,583 |
| (8) | $ | 22,233 |
|
|
|
|
| — |
|
|
| — |
|
| $ | — |
|
|
| — |
|
|
| 28,750 |
| (11) | $ | 66,700 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Jeffrey G. Lamothe |
|
| 1,204 |
| (1) |
| — |
|
| $ | 8.56 |
|
| 7/27/2030 |
|
|
| — |
|
| $ | — |
|
| |
|
| 9,670 |
| (2) |
| — |
|
| $ | 8.06 |
|
| 11/1/2029 |
|
|
| — |
|
| $ | — |
|
| ||
|
| 6,419 |
| (3) |
| 3,209 |
| (3) | $ | 6.97 |
|
| 2/18/2030 |
|
|
| — |
|
| $ | — |
|
| ||
|
| 2,407 |
| (4) |
| — |
|
| $ | 8.56 |
|
| 7/27/2030 |
|
|
| — |
|
| $ | — |
|
| ||
|
| 5,500 |
| (5) |
| 11,000 |
| (5) | $ | 33.50 |
|
| 1/29/2031 |
|
|
| — |
|
| $ | — |
|
| ||
|
| 1,078 |
| (1) |
| — |
|
| $ | 8.56 |
|
| 7/27/2030 |
|
|
| — |
|
| $ | — |
|
| ||
|
| 1,251 |
| (1) |
| — |
|
| $ | 8.56 |
|
| 7/27/2030 |
|
|
| — |
|
| $ | — |
|
| ||
|
| 771 |
| (1) |
| — |
|
| $ | 8.56 |
|
| 7/27/2030 |
|
|
| — |
|
| $ | — |
|
| ||
|
| 1,605 |
| (6) |
| — |
|
| $ | 8.56 |
|
| 7/27/2030 |
|
|
| — |
|
| $ | — |
|
| ||
|
| 1,204 |
| (1) |
| — |
|
| $ | 8.56 |
|
| 7/27/2030 |
|
|
| — |
|
| $ | — |
|
| ||
|
|
| — |
|
|
| 11,000 |
| (10) | $ | 5.30 |
|
| 3/4/2032 |
|
|
| — |
|
| $ | — |
|
| |
|
|
| — |
|
|
| 5,500 |
| (12) | $ | 4.32 |
|
| 8/9/2032 |
|
|
| — |
|
| $ | — |
|
| |
|
|
| — |
|
|
| — |
|
| $ | — |
|
|
| — |
|
|
| 3,667 |
| (8) | $ | 8,507 |
|
|
|
|
| — |
|
|
| — |
|
| $ | — |
|
|
| — |
|
|
| 11,000 |
| (11) | $ | 25,520 |
|
|
|
|
| — |
|
|
| — |
|
| $ | — |
|
|
| — |
|
|
| 5,500 |
| (13) | $ | 12,760 |
|
|
|
|
| — |
|
|
| — |
|
| $ | — |
|
|
| — |
|
|
| 23,958 |
| (14) | $ | 55,583 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
SoYoung Kwon |
|
| 5,500 |
| (7) |
| 11,000 |
| (7) | $ | 26.15 |
|
| 6/1/2031 |
|
|
| — |
|
| $ | — |
|
| |
|
|
| — |
|
|
| 11,000 |
| (10) | $ | 5.30 |
|
| 3/4/2032 |
|
|
| — |
|
| $ | — |
|
| |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 3,667 |
| (9) | $ | 8,507 |
|
|
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 11,000 |
| (11) | $ | 25,520 |
|
|
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 18,750 |
| (14) | $ | 43,500 |
|
|
29
Tax-Qualified Defined Contribution Plan
Aptevo has been employed byestablished a defined contribution savings plan under Section 401(k) of the CompanyInternal Revenue Code, as amended. The 401(k) Plan covers all employees, including the named executive officers. Under the 401(k) Plan, employees may make elective salary deferrals. Aptevo currently provides for at least six (6) months, has been designatedmatching of qualified deferrals up to participate50% of 401(k) employee deferral contributions, based on a maximum employee deferral rate of 6% of compensation.
Severance and executedChange in Control
Pursuant to the plan acknowledgement form. InSeverance Plan, in the event a participant in the Severance Plannamed executive officer is terminated by the Company without cause,Cause (as defined in the participant shall becomeSeverance Plan), such named executive officer is entitled to the following:
unpaid base salary
accrued but unused paid time offpaid-time-off through date of termination
reimbursement for any unreimbursed expense incurred by participantthe named executive officer prior to date of termination
employee and fringe benefits and perquisites to which such participantthe named executive officer may be entitled to as of the date of termination
an amount equal to the percentage of such participant’sthe named executive officer’s base salary plus target bonus set forth in the table below opposite such participant’snamed executive officer’s title, to be paid, in equal installments over the period set forth in the table below opposite such participant’snamed executive officer’s title:
Title |
| Percentage of Compensation |
|
| Period (months) |
Chief Executive Officer |
| 150% |
|
| 18 |
Executive Vice President |
| 125% |
|
| 15 |
Senior Vice President |
| 75% |
|
| 9 |
Vice President |
| 50% |
|
| 6 |
Title |
| Percentage of |
| Period |
Chief Executive Officer (Mr. White) |
| 150% |
| 18 |
Executive Vice President (Mr. Lamothe) |
| 125% |
| 15 |
Senior Vice President (Ms. Kwon) |
| 75% |
| 9 |
any bonus earned but unpaid as of the date of termination for any previously completed year, to be paid in a lump sum
pro rata target annual bonus in respect of the year of termination, to be paid in a single lump-sum
continued eligibility for such participantnamed executive officer and his/her eligible dependents to receive employee benefits.
30
If during the term of the Severance Plan, (i) the participant’snamed executive officer’s employment is terminated by the Company without Cause, or a named executive officer resigns for Good Reason (as defined in the Severance Plan), in each case within eighteen (18) months following a Change of Control (as defined in the Severance Plan), or (ii) a named executive officer’s employment with cause, then participant shall not be entitled to receive any compensation, benefits or rights and any stock options or other equity participation benefits vested on orthe Company is terminated prior to a Change of Control (which subsequently occurs) at the daterequest of a party involved in such termination, shall immediately terminate.
A participantChange of Control, or otherwise in connection with or in anticipation of a Change of Control, a named executive officer may also be provided a cash lump sum payment within thirty (30) days of termination of employment equal to the sum of:
Title | Percentage of | |
Chief Executive Officer (Mr. White) | 250% | |
Executive Vice President (Mr. Lamothe) | 200% | |
Senior Vice President (Ms. Kwon) | 150% |
Additionally, any unvested company stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-unit awards held by such participantnamed executive officer that are outstanding on the date of the termination of employment shallwould become fully vested as of such date and the period during which any Equity Awardequity award held by such participantnamed executive officer that is outstanding on such date may be exercised shallwould be extended to a date that is the later of the fifteenth day of the third month following the date, or December 31 of the calendar year in which such Equity Awardequity award would otherwise have expired if the exercise period had not been extended but not beyond the final date such Equity Awardequity award could be exercised if the participant employment had not terminated, in each case based on the terms of such Equity Awardequity award at the original grant date. The named executive officer would be entitled to any employee benefits to which he or she may be entitled as of the date of termination of employment under the relevant plans, policies and an amount equal toprograms of the percentage of such participant’s compensation set forth in the table below opposite such participant’s title:
Company. The participantnamed executive officer and his/her eligible dependents shall continue towould also be eligible for continued benefits for a period of 30 months in the case of Mr. White, 24 months in the case of Mr. Lamothe and 12 months in case of Ms. Kwon. Additionally, all rights such named executive officer has to indemnification from the Company immediately prior to the Change of Control will be retained for the maximum period permitted by applicable law and any director’s and officer’s liability insurance would continue through the period of any applicable statute of limitations. The Company would also be required to advance the named executive officer all costs and expenses, including all attorneys’ fees, incurred in connection with any legal proceedings relating to his or her termination or the interpretation of the Severance Plan.
If during the term of the Severance Plan, the named executive officer’s employment is terminated with Cause, then the named executive officer would not be entitled to receive any compensation, benefits or rights and any stock options or other equity participation benefits vested on or prior to the date of such termination, would immediately terminate.
The payment of certain amounts provided for by the Severance Plan is subject to: (1) the named executive officer’s continued compliance with the non-solicit and non-competition terms of his or her executed acknowledgment form; (2) the named executive officer’s cooperation with any reasonable request that may be made by the Company (upon reasonable notice and at the Company’s expense) in connection with any investigation, litigation, or other similar activity to which the Company or any affiliate is or may be a party or otherwise involved and for which such named executive officer may have relevant information; and (3) the named executive officer’s execution of a suitable waiver
31
and release under which the named executive officer releases and discharges the Company and its affiliates from and on account of any and all claims that relate to or arise out of the employment relationship between the Company and the named executive officer.
Compensation Recovery Policy
In April 2023, our Compensation Committee adopted a policy for the recovery of certain incentive-based compensation from current and former executive officers in the event of a “material” financial restatement, regardless of whether the executive was at fault, in accordance with rules issued by the following chart:SEC and the Nasdaq Stock Market. The policy allows for the recovery of compensation that is erroneously received during the three-year period preceding the date the Company is required to prepare an accounting restatement of previously issued financial statements of the Company due to the material noncompliance of the Company with any financial reporting requirement under the securities laws, including any required accounting restatement to correct an error in previously-issued financial statements that is material to the previously-issued financial statements or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period. There are limited exceptions to recovery of erroneously awarded compensation under the policy and indemnification of executive officers is prohibited. Cash incentives under the Company’s bonus plan would not be considered incentive-based compensation subject to recovery under the policy since such awards are generally earned upon satisfaction of strategic or operational metrics. In addition, the Company's equity awards for executive officers, such as stock options and restricted stock units, would not be subject to recovery under the policy since such awards are not contingent upon the attainment of any financial reporting measures and vesting is contingent solely upon completion of a specific employment period.
Title |
| Percentage of Compensation |
|
| Period (months) |
Chief Executive Officer |
| 250% |
|
| 30 |
Executive Vice President |
| 200% |
|
| 24 |
Senior Vice President |
| 125% |
|
| 12 |
Vice President |
| 65% |
|
| 6 |
Base Salaries and Target BonusesPay versus Performance
The Compensation Committee (“Committee”) approved annual base salaries and target bonus percentages for 2019. The 2019 bonuses were determined by a review of the achievement of Company and individual performance goals and other factors deemed relevant by the Committee.
The following table sets forthshows the base salarytotal compensation for our principal executive officer and target performance bonus percentagesthe average compensation for 2019:our other named executive officers during the last two fiscal years ended December 31, 2022 and 2021 compared to our net income and total shareholder return for the last two fiscal years.
Year |
| Summary of Compensation Table Total for Principal Executive Officer (“PEO”) (1) |
|
| Compensation Actually Paid to PEO (2) |
|
| Average Summary Compensation Table Total for non-PEO Named Executive Officers (“Non-PEO NEOs”) (1) |
|
| Average Compensation Actually Paid to non-PEO NEOs (2) |
|
| Value of Initial Fixed $100 Investment Based On |
|
| Net Income (Loss) |
| ||||||
2022 |
| $ | 1,171,168 |
|
| $ | 786,510 |
|
| $ | 859,758 |
|
| $ | 662,672 |
|
| $ | 6 |
|
| $ | 8,027,000 |
|
2021 |
| $ | 2,796,904 |
|
| $ | 451,877 |
|
| $ | 1,179,426 |
|
| $ | 425,596 |
|
| $ | 21 |
|
| $ | (28,457,000 | ) |
Name and Title |
| 2019 Base Salary |
|
| 2019 Target Performance Percentage |
| ||
Marvin L. White Chief Executive Officer and President |
| $ | 547,300 |
|
|
| 50 | % |
Jeffrey G. Lamothe Senior Vice President and Chief Financial Officer |
| $ | 390,196 |
|
|
| 40 | % |
Senior Vice President and Chief Scientific Officer |
| $ | 354,452 |
|
|
| 40 | % |
PEO | Average of Non-PEOs | |
Total compensation reported in the Summary Compensation Table | 1,171,168 | 859,758 |
Deduct the equity compensation reported in the Summary Compensation Table in column (Stock Awards) and column (Option Awards), | (278,307) | (220,057) |
Add year end fair value all awards granted during 2022 that are outstanding and unvested as of the end of the fiscal year; | 100,338 | 97,776 |
Add change in fair value (from prior year-end) of prior year equity awards that are unvested and outstanding | (156,100) | (56,438) |
Add the amount equal to the change as of the vesting date (from the end of the prior year) in fair value of any awards granted in any prior year for which all applicable vesting conditions were satisfied at the end of or during the covered fiscal year | (50,589) | (18,367) |
Compensation Actually Paid for Fiscal Year 2022 | 786,510 | 662,672 |
Outstanding Equity Awards at December 31, 2019
The 2021 compensation actually paid to our PEO and the average compensation actually paid to our non-PEO NEOs reflects the following table sets forth information regarding unexercised Aptevo stock options and unvested restricted stock unit awards outstanding as of December 31, 2019 for each of our named executive officers. All share and per share information have been adjusted to reflectadjustments from total compensation reported in the impactSummary Compensation Table:
PEO | Average of Non-PEOs | |
Total compensation reported in the Summary Compensation Table | 2,796,904 | 1,179,426 |
Deduct the equity compensation reported in the Summary Compensation Table in column (Stock Awards) and column (Option Awards), | (1,926,250) | (683,100) |
Add year end fair value all awards granted during 2021 that are outstanding and unvested as of the end of the fiscal year; | 239,488 | 63,122 |
Add change in fair value (from prior year-end) of prior year equity awards that are unvested and outstanding | (428,348) | (63,484) |
Add the amount equal to the change as of the vesting date (from the end of the prior year) in fair value of any awards granted in any prior year for which all applicable vesting conditions were satisfied at the end of or during the covered fiscal year | (229,917) | (70,368) |
Compensation Actually Paid for Fiscal Year 2021 | 451,877 | 425,596 |
Analysis of the 14-to-1 reverse stock splitInformation Presented in the Pay Versus Performance Table
We generally seek to incentivize long-term performance, and therefore do not specifically align our performance measures with “compensation actually paid” (as computed in accordance with Item 402(v) of our common stock effected on March 26, 2020.Regulation S-K) for a particular year. In accordance with Item 402(v) of Regulation S-K, we are providing the following descriptions of the relationships between information presented in the Pay Versus Performance table.
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| 2019 Outstanding Equity Awards at Fiscal Year-End |
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| Number of Securities Underlying |
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Name |
| Exercisable |
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| Unexercisable |
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| Price |
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| Expiration Date |
| |||
Marvin White |
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| 2,545 |
| (1) |
| — |
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| $ | 25.20 |
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| 5/22/2021 |
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| 14,319 |
| (2) |
| — |
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| $ | 41.16 |
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| 8/3/2026 |
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| 3,609 |
| (3) |
| 1,805 |
| (3) | $ | 27.44 |
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| 2/23/2027 |
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| 3,609 |
| (4) |
| 1,805 |
| (4) | $ | 30.10 |
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| 5/31/2027 |
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| 3,609 |
| (10) |
| 7,219 |
| (10) | $ | 43.82 |
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| 3/9/2028 |
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| — |
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| 10,828 |
| (8) | $ | 21.28 |
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| 2/8/2029 |
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| — |
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| 13,563 |
| (9) | $ | 8.06 |
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| 11/1/2029 |
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Jeffrey G. Lamothe |
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| 2,695 |
| (5) |
| — |
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| $ | 34.58 |
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| 3/10/2021 |
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| 1,928 |
| (6) |
| — |
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| $ | 35.70 |
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| 3/9/2022 |
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| 3,128 |
| (7) |
| — |
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| $ | 41.58 |
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| 2/28/2026 |
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| 1,604 |
| (3) |
| 803 |
| (3) | $ | 27.44 |
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| 2/23/2027 |
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| 1,604 |
| (4) |
| 803 |
| (4) | $ | 30.10 |
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| 5/31/2027 |
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| 1,604 |
| (10) |
| 3,210 |
| (10) | $ | 43.82 |
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| 3/9/2028 |
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| — |
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| 4,814 |
| (8) | $ | 21.28 |
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| 2/8/2029 |
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| — |
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| 9,670 |
| (9) | $ | 8.06 |
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| 11/1/2029 |
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Jane Gross, Ph.D. |
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| 2,072 |
| (5) |
| — |
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| $ | 34.58 |
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| 3/10/2021 |
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| 2,779 |
| (6) |
| — |
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| $ | 35.70 |
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| 3/9/2022 |
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| 3,908 |
| (7) |
| — |
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| $ | 41.58 |
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| 2/28/2026 |
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| 1,604 |
| (3) |
| 803 |
| (3) | $ | 27.44 |
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| 2/23/2027 |
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| 1,604 |
| (4) |
| 803 |
| (4) | $ | 30.10 |
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| 5/31/2027 |
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| 1,604 |
| (10) |
| 3,210 |
| (10) | $ | 43.82 |
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| 3/9/2028 |
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| — |
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| 4,814 |
| (8) | $ | 21.28 |
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| 2/8/2029 |
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| — |
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| 8,784 |
| (9) | $ | 8.06 |
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| 11/1/2029 |
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Compensation Actually Paid and Net Income (Loss)
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Director CompensationSince we are not a commercial-stage company, we did not have net income during the periods presented, other than non-recurring net income in 2022 associated with an amendment to a royalty purchase agreement with an entity managed by HealthCare Royalty Management, LLC. Consequently, we have not historically looked to net income (loss) as a performance measure for our executive compensation program. Moreover, as an early-stage pre-commercial company with no revenue, we do not believe there is any meaningful relationship between our net loss and compensation actually paid to our NEOs during the periods presented. In 2021 and 2022, our net income (loss) and the compensation actually paid for both our PEO and non-PEO NEOs increased between 2021 and 2022.
Compensation Actually Paid and Cumulative TSR
The chart below shows the relationship between the compensation actually paid to our PEO and the average compensation actually paid to our non-PEO NEOs, on the one hand, to the Company’s cumulative TSR over the two years presented in the table, on the other. We utilize several performance measures to align executive compensation with our performance, but those tend not to be financial performance measures, such as TSR. For example, as described in more detail above, part of the compensation our NEOs are eligible to receive consists of annual performance-based cash bonuses which are designed to provide appropriate incentives to our executives to achieve defined annual corporate goals and to reward our executives for individual achievement towards these goals.
33
All information provided above under the heading “Pay Versus Performance” will not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing, except to the extent the Company specifically incorporates such information by reference.
Director Compensation
The following table shows for 20192022 certain information with respect to the compensation of all non-employee directors of the Company:
Name |
| Fees Earned |
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| Stock Awards ($) (1) |
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| Total |
| |||
Fuad El-Hibri (2) |
| $ | 11,875 |
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| $ | — |
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| $ | 11,875 |
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Daniel J. Abdun-Nabi |
| $ | 64,167 |
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| $ | 15,427 |
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| $ | 79,594 |
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Grady Grant, III |
| $ | 61,876 |
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| $ | 15,427 |
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| $ | 77,303 |
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Zsolt Harsanyi, Ph.D. |
| $ | 80,834 |
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|
| $ | 15,427 |
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|
| $ | 96,261 |
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Barbara Lopez Kunz |
| $ | 72,501 |
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| $ | 15,427 |
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|
| $ | 87,928 |
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John E. Niederhuber, M.D. |
| $ | 86,666 |
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| $ | 15,427 |
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| $ | 102,093 |
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Name |
| Fees Earned or Paid in Cash ($) |
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| Option Awards ($)(1)(2) |
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| Total ($) |
| |||
Fuad El-Hibri |
| $ | 36,000 |
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| $ | 9,041 |
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| $ | 45,041 |
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Daniel J. Abdun-Nabi |
| $ | 36,000 |
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| $ | 9,041 |
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| $ | 45,041 |
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Grady Grant, III |
| $ | 53,500 |
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| $ | 9,041 |
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| $ | 62,541 |
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Zsolt Harsanyi, PhD. |
| $ | 61,000 |
|
| $ | 9,041 |
|
| $ | 70,041 |
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Barbara Lopez Kunz |
| $ | 66,000 |
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| $ | 9,041 |
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| $ | 75,041 |
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John E. Niederhuber, M.D. |
| $ | 73,500 |
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| $ | 9,041 |
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| $ | 82,541 |
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As of December 31, 2022, each of our non-employee directors held the following outstanding option and RSU awards:
34
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Name |
| Number of |
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| Number of |
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| Number of |
| |||
Fuad El-Hibri (2) |
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| 9,526 |
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| - |
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| - |
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Daniel J. Abdun-Nabi |
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| 6,551 |
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| 2,975 |
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| 4,166 |
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Grady Grant, III |
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| 6,551 |
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| 2,975 |
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| 4,166 |
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Zsolt Harsanyi, Ph.D. |
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| 6,551 |
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| 2,975 |
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| 4,166 |
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Barbara Lopez Kunz |
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| 6,551 |
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| 2,975 |
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| 4,166 |
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John E. Niederhuber, M.D. |
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| 6,551 |
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| 2,975 |
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| 4,166 |
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Name |
| Number of Shares Vested as of December 31, 2019 |
|
| Number of Shares Subject to Outstanding Options as of December 31, 2019 |
| ||
Fuad El-Hibri |
|
| 2,529 |
|
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| 3,272 |
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Daniel J. Abdun-Nabi |
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| 2,529 |
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| 3,272 |
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Grady Grant, III |
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| 2,529 |
|
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| 3,272 |
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Zsolt Harsanyi, Ph.D. |
|
| 2,529 |
|
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| 3,272 |
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Barbara Lopez Kunz |
|
| 2,529 |
|
|
| 3,272 |
|
John E. Niederhuber, M.D. |
|
| 2,529 |
|
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| 3,272 |
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Under the Aptevo Directors Compensation Program, Aptevo’s non-employee directors receive the compensation set forth in the table below. We also reimburse Aptevo’s non-employee directors for reasonable out-of-pocket expenses incurred in connection with attending our board and committee meetings.
Element |
| Program |
| |
Annual Cash Retainer |
| $ | 40,000 |
|
Committee Chair Retainer |
| $20,000 Audit $15,000 Compensation $10,000 Nominating/Governance |
| |
Committee Member Retainer |
| $10,000 Audit $7,500 Compensation $5,000 Nominating/Governance |
| |
Lead Independent Director |
| $ | 20,000 |
|
| 1,786 Options |
| ||
Element | Program | |
Annual Cash Retainer | $40,000 | |
Board Chair | $50,000 | |
Committee Chair Retainer | $20,000 Audit | |
Committee Member Retainer | $10,000 Audit | |
Annual Equity Grant | 3,571 RSUs | |
Initial Equity Grant | 3,571 RSUs |
The Board of Directors appointed Dr. Niederhuber as the Company’s Chairman of the Board effective April 1, 2022 when Mr. El-Hibri retired as Chairman of the Board as of the same date. The Board of Directors did not appoint a new Vice Chairman when Dr. Niederhuber became Board Chair. Upon a review of competitive market data and based upon advice from Willis Towers Watson, the Compensation Committee’s independent consultant, the Board of Directors established a cash retainer of $50,000 for the Board Chair in 2022. In addition, the mix of equity of annual grants for the Board of Directors was shifted to 100% RSUs (from 50% options and 50% RSUs) since the role of equity for non-employee directors is primarily to ensure compensation that is shareholder aligned and should avoid focus on stock price volatility. Shifting to RSUs will maximize intrinsic value and may support attraction and retention of Board members. Also, the vesting of annual equity grants to non-employee directors was adjusted to 1-year cliff vesting on the first anniversary of the date of grant from 3-year ratable vesting, consistent with peer and broader market practice. 3-year vesting on initial equity grants remains unchanged. The Board also established an annual retainer for the Executive Committee Chair of $20,000 and an annual retainer of $10,000 for each non-employee Executive Committee Member in 2022.
35
Related Person Transaction Policy
In 2016, we adopted a written Related Person Transaction Policy (“Policy”) that sets forth our policies and procedures for the review and approval or ratification of related person transactions. For purposes of our policy only, a “Related Person Transaction” is a transaction, arrangement or relationship in which we and any “related persons” are participants involving an amount that exceeds $120,000. A related person is an executive officer, director, or more than 5% stockholder of any class of our voting securities, including any of their immediate family member.members.
Any Related Person Transaction proposed to be entered into by the Company must be reported to the Company’s General Counsel and shall be reviewed and approved by the Audit Committee of the Board (the “Committee”) in accordance with the terms of this Policy. If the General Counsel determines that advance approval of a Related Person Transaction is not practicable under the circumstances, the Committee shall review and, in its discretion, may ratify the Related Person Transaction at the next meeting of the Committee, or at the next meeting following the date that the Related Person Transaction comes to the attention of the General Counsel. Any Related Person Transaction previously approved by the Committee or otherwise already existing that is ongoing in nature shall be reviewed by the Committee annually.
A Related Person Transaction reviewed under this Policy will be considered approved or ratified if it is authorized by the Committee in accordance with the standards set forth in this Policy after full disclosure of the Related Person’s interests in the transaction. As appropriate for the circumstances, the Committee shall review and consider: (a) the Related Person’s interest in the Related Person Transaction; (b) the approximate dollar value of the amount involved in the Related Person Transaction; (c) the approximate dollar value of the amount of the Related Person’s interest in the transaction without regard to the amount of any profit or loss; (d) whether the transaction was undertaken in the ordinary course of business of the Company; (e) whether the transaction with the Related Person is proposed to be, or was, entered into on terms no less favorable to the Company than terms that could have been reached with an unrelated third party; (f) the purpose of, and the potential benefits to the Company of, the transaction; and (g) any other information regarding the Related Person Transaction or the Related Person in the context of the proposed transaction that would be material to investors in light of the circumstances of the particular transaction.
The Committee will review all relevant information available to it about the Related Person Transaction. The Committee may approve or ratify the Related Person Transaction only if the Committee determines that, under all of the circumstances, the transaction is in, or is not inconsistent with, the best interests of the Company. The Committee may, in its sole discretion, impose such conditions as it deems appropriate on the Company or the Related Person in connection with approval of the Related Person Transaction.
There were no Related Person Transactions during fiscal 2022 or 2021.
Indemnity Agreements
The Company has entered into indemnity agreements with certain officers and directors which provide, among other things, that the Company will indemnify such officer or director, under the circumstances and to the extent provided for therein, for expenses, damages, judgments, fines and settlements he or she may be required to pay in actions or proceedings which he or she is or may be made a party by reason of his or her position as a director, officer or other agent of the Company, and otherwise to the fullest extent permitted under Delaware law and the Company’s Bylaws.
Householding of Proxy Materials
The SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for Notices of Internet Availability of Proxy Materials or other Annual Meeting materialswith respect to two or more stockholders sharing the same address by delivering a single setNotice of Internet Availability of Proxy Materials or other Annual Meeting materials addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially means extra convenience for stockholders and cost savings for companies.
This year, a number of brokers with account holders who are Aptevo stockholders will be “householding” the Company’s proxy materials. A single setNotice of Annual Meeting materialsInternet Availability of Proxy Materials will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that they will be “householding” communications to your address, “householding” will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in “householding” and would prefer to receive a separate setNotice of Annual Meeting materials,Internet Availability of Proxy Materials, please notify your broker or Aptevo.Aptevo. Direct your written request to Aptevo Therapeutics Inc., Attn: Heather Boussios, AssistantSoYoung Kwon, Corporate Secretary, 2401 4th Ave.Avenue, Suite 1050, Seattle, Washington 98121 or contact Heather Boussios SoYoung Kwon at (206) 838-0500. (206) 496-3966. Stockholders who currently receive multiple copies of the Annual Meeting materialsNotices of Internet Availability of Proxy Materials at their addresses and would like to request “householding” of their communications should contact their brokers.
Other Matters
The Board of Directors knows of no other matters that will be presented for consideration at the Annual Meeting. If any other matters are properly brought before the meeting, it is the intention of the persons named in the accompanying proxy card to vote on such matters in accordance with their best judgment.
By OrderForward-Looking Statements
This Proxy Statement contains a number of “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management’s current expectations, estimates, projections and beliefs, as well as a number of assumptions concerning future events. When used in this Proxy Statement, the words “estimates,” “projected,” “expects,” “anticipates,” “forecasts,” “plans,” “intends,” “believes,” “seeks,” “may,” “will,” “should,” “future,” “propose” and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements.
Websites
The information contained on the websites referenced in this Proxy Statement are not incorporated by reference into this Proxy Statement. Further, references to website URLs are intended to be inactive textual references only.
LOGO APTEVO THERAPEUTICS INC.C/O BROADRIDGE CORPORATE ISSUER SOLUTIONS 2401 FOURTH AVE., SUITE 1050 SEATTLE, WA98121 Graphic SCAN TO VIEW MATERIALS & VOTEVOTE BY INTERNET Before The Meeting – Go to www.proxyvote.com or scan the QR Barcode above Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time on June 6, 2022. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. During The Meeting – Go. To www.virtualshareholdermeeting.com/APVO2022 You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE – 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 pm. Eastern Time on June 6,2022. Have proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way Edgewood, NY 11717.TO VOTE, MARK BLOCK BELOW IN BLUE OR BLACK INK AS FOLLOWS: D84015-P68629 KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED DETACH AND RETURN THIS PORTION ONLY APTEVO THERAPEUTICS INC. The Board of Directors recommends you vote FOR the following: 1. Election of Directors Nominees: 01) Marvin L. White 2) John E. Niederhuber, M.D. For Withhold For ALL ALL ALL Except To withhold authority to vote for any individual nominee(s), mark “For ALL Except” and write the number(s) of the nominee(s) on the line below The Board of Directors
A copy recommends you vote FOR the following proposal: For Against Abstain The Board of Directors recommends you vote 1 YEAR on the following proposal: 1 Year 2 Year 3 Year abstain 2. Ratification of the appointment of Moss Adams LLP as the independent registered public accounting firm. The Board of Directors recommends you vote FOR the following proposal” 3. To approve the Aptevo Therapeutics Inc. 2018 Stock Incentive Plan (as Amended and Restated). NOTE: Such other business as may properly come before the meeting or any adjournment thereof. 4. To approve, on a non-binding advisory basis, the compensation of the Company’s Annual Report tonamed executive officers, as disclosed in the Securities and Exchange Commission on Form 10-K for the fiscal year ended December 31, 2019 is available without charge upon written request to: Corporate Secretary, Aptevo Therapeutics Inc.proxy statement. Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature(Joint Owners) Date, 2401 4th Ave. Suite 1050, Seattle, Washington 98121.
APTEVO TM THERAPEUTICS ANNUAL MEETING OF STOCKHOLDERS OF APTEVO THERAPEUTICS INC. MAY 15, 2019 Dear Stockholder: Please take note of the important information accompanying this proxy card. These are matters related to the operation of Aptevo Therapeutics Inc. that require your prompt attention. Your vote counts and you are strongly encouraged to exercise your right to vote these shares. Please vote these shares using one of the methods described on the reverse side of this proxy card. Thank you in advance for your attempt consideration of these matters. Sincerely, Board of Directors of Aptevo Therapeutics Inc. Important Notice Regarding the Availability of Proxyproxy Materials for the Annual Meeting:Meeting The Annual Report on Form 10-KNotice and Proxy Statement, is/Annual Report and Form 10-K are available at www.proxyvote.com. E66305-P18810www.proxyvote. com.D84016-P68629 APTEVO THERAPEUTICS INC. Annual Meeting of Stockholders May 15, 2019 9:00 AM PDT This proxy is solicited by the Board of DirectorsTHIS PROXY IS SOLICITED ON BEHALD FO THE BOARD OF DIRECTORS ANNUAL MEETING OF STOCKHOLDERS JUNE 7, 2022 The undersigned, revoking all prior proxies,stockholder(s) hereby appointsappoints(s) Jeffrey G. Lamothe and Shawnte M. MitchellSoYoung Kwon, or either of them, as proxies, each with fullwit the power of substitution,to appoint his or her substitute, and hereby authorizes each ofauthorize(s) them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of common stockCommon Stock of Aptevo Therapeutics Inc. (the "Company") held of record by the undersigned as of March 20, 2019that tha stockholder(s) is/are entitled to vote at the virtual Annual Meeting ofo Stockholders to bee held on May 15, 2019 at 9:10:00 a.m., Pacific time at the World Trade Center Seattle, 2200 Alaskan Way, Seattle, WA 98121Time on Tuesday, June 7, 2022, and at any adjournment or postponement thereof, and, in their discretion, on any matters properly presented for a vote at the Annual Meeting.thereof. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED.DIRECTED BY THE STHOCKHOLDER(S). IF NO DIRECTION IS GIVEN WITH RESPECT TO A PARTICULAR PROPOSAL,SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED "FOR"“FOR” THE ELECTION OF ALL DIRECTORTHE NOMINEES LISTED ON THE REVERSE SIDE FOR THE BOARD OF DIRECTORS, “FOR” PROPOSALS 2, 3, AND "FOR"4, “1 YEAR” ON PROPOSAL 2. IN THEIR DISCRETION, THESE PROXIES OF5. PLEASE MARK , SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE UNDERSIGNED ARE AUTHORIZEDENCLOSED REPLY ENVELOPE CONTINUED AND TO VOTE UPON ANY AND ALL OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING. Continued and to be signed on reverse side
