Item 10. Directors, Executive Officers and Corporate Governance.
DIRECTORS
Set forth below is certain biographical
information regarding our current directors.
Jonathan Christodoro
(age 43) –
Mr. Christodoro has been a director of our Company since October 2013 and the Chairman of our Board of Directors since November
2013. Mr. Christodoro is a Partner at Patriot Management LP, an investment management firm. Mr. Christodoro served as a Managing
Director of Icahn Capital LP, the entity through which Carl C. Icahn manages investment funds, from July 2012 to February 2017.
Mr. Christodoro was responsible for identifying, analyzing and monitoring investment opportunities and portfolio companies for
Icahn Capital. Prior to joining Icahn Capital, Mr. Christodoro served in various investment and research roles at P2 Capital Partners,
LLC, Prentice Capital Management, LP and S.A.C. Capital Advisors, LP. Mr. Christodoro began his career as an investment banking
analyst at Morgan Stanley, where he focused on merger and acquisition transactions across a variety of industries. Mr. Christodoro
has been a director of: PayPal Holdings, Inc., a technology platform company that enables digital and mobile payments worldwide,
since July 2015; Herbalife Nutrition Ltd., a developer and seller of nutrition solutions since March 2013; Lyft, Inc., a mobile
ride-sharing application from May 2015 to March 2019; Xerox Corporation, a provider of document management solutions, from June
2016 to December 2017 and since May 2018; Cheniere Energy, Inc., a developer of natural gas liquification and export facilities
and related pipelines, from August 2015 until August 2017; Hologic, Inc., a supplier of diagnostic, medical imaging and surgical
products, from December 2013 to March 2016; eBay Inc., a global commerce and payments company, from March 2015 to July 2015; Talisman
Energy, Inc., an independent oil and gas exploration and production company, from December 2013 to May 2015; American Railcar Industries,
Inc., a railcar manufacturing company, from June 2015 to February 2017; and Sandridge Energy, an oil and gas exploration and natural
gas exploration company, since June 2018. American Railcar Industries, Inc. is indirectly controlled by Carl C. Icahn. Mr. Icahn
has or previously had non-controlling interests in each of Xerox, Cheniere, PayPal, eBay, Lyft, Hologic, Talisman, Enzon and Herbalife
through the ownership of securities. Mr. Christodoro received an M.B.A. from the University of Pennsylvania’s Wharton School
of Business with Distinction, majoring in Finance and Entrepreneurial Management. Mr. Christodoro received a B.S. in Applied Economics
and Management Magna Cum Laude with Honors Distinction in Research from Cornell University. Mr. Christodoro also served in the
United States Marine Corps. Mr. Christodoro’s qualifications to serve as a director of our Company include his service on
boards of other public companies, as well as his extensive investment, research and investment banking experience in a variety
of industries.
Odysseas Kostas, M.D.
(age 44) –
Dr. Kostas has been a director of our Company since September 2013. Dr. Kostas is a Partner and Senior Analyst at Sarissa Capital
Management LP. Sarissa Capital focuses on improving the strategies of companies to enhance shareholder value. Prior to joining
Sarissa Capital, Dr. Kostas served as a Director at Evercore ISI (formerly ISI), covering the biotechnology and pharmaceutical
industries. Previously, Dr. Kostas practiced internal medicine as part of the Yale New Haven Health System and was engaged as a
consultant to various biotechnology companies. Dr. Kostas has been a director of Innoviva, Inc., a biopharmaceutical company, since
December 2017. Dr. Kostas has a B.S. from Massachusetts Institute of Technology (MIT) and an M.D. from University of Texas Southwestern
Medical School. Dr. Kostas’ qualifications to serve as a director of our Company include his service on the board of another
public company, as well as his extensive experience in the biotechnology and pharmaceutical industries.
Jennifer McNealey
(age 45) –
Ms. McNealey has been a director of our Company since September 2013. Since December 2016, Ms. McNealey has been Vice President,
Investor Relations and Strategy of Calithera Biosciences, Inc. From February 2015 to December 2016, Ms. McNealey was Senior Director
Investor Relations and served as a member of the management team at Calithera Biosciences, Inc. Prior to joining Calithera Biosciences,
Inc., Ms. McNealey served as an advisor to biotechnology companies. In 2005, Ms. McNealey founded Laurient LLC, a research company
focused on the biotechnology and pharmaceutical industries, where she worked until 2012. Prior to founding Laurient LLC, Ms. McNealey
served as a portfolio manager and biotechnology analyst at various firms, including Paramount Capital, Franklin Templeton, Amerindo
Investment Advisors and Morgan Stanley Dean Witter Advisors. Ms. McNealey has a B.A. and an M.H.A. from Cornell University. Ms.
McNealey’s qualifications to serve as a director of our Company include her service as a member of the management team of
another public company, as well as her extensive experience in the biotechnology and pharmaceutical industries.
EXECUTIVE OFFICERS
Set forth below is certain biographical
information regarding our current executive officers.
Andrew Rackear
(age 65) – Mr.
Rackear has served as our Chief Executive Officer and Secretary since March 2016. Prior to that, since November 2013, Mr. Rackear
provided consulting services to the Company. Mr. Rackear previously served as the Company’s Vice President and General Counsel
from April 2010 to November 2013. Prior to that, Mr. Rackear served as Senior Vice President and General Counsel for NPS Pharmaceuticals,
and Vice President and General Counsel for Chugai Pharma USA and Amersham Biosciences Corp, where he also served as President of
North American Operations. Prior to that, Mr. Rackear engaged in litigation and commercial law practice at Marks & Murase and
served as Associate General Counsel at Sharp Electronics Corp. Mr. Rackear holds a J.D. from New York University School of Law.
Mr. Rackear currently serves as our Chief
Executive Officer and Secretary on a consulting basis at a rate of $300 per hour for each hour worked, together with reimbursement
for reasonable expenses incurred in performing his services, pursuant to the terms of a separation agreement, as amended.
Richard L. Feinstein
(age 75) –
Mr. Feinstein has served as our Vice President-Finance and Chief Financial Officer since March 2016. Prior to that, Mr. Feinstein
served as our Vice President - Finance and Principal Financial Officer since December 2013. Mr. Feinstein is a retired partner
of KPMG LLP and currently a private consultant providing management and financial advice to clients in a variety of industries.
From 2014 to 2018, he provided financial consulting services to General Cannabis Corp, a public company. During July 2016, he provided
consulting services to Hamaspik, Inc. From September 2010 to July 2013, as a consultant, he was the Chief Financial Officer of
Ameritrans Capital Corporation. From April 2004 to December 2004, Mr. Feinstein, as a consultant, served as Chief Financial Officer
for Image Technology Laboratories, Inc., a developer and provider of radiological imaging, archiving and communications systems.
From December 1997 to October 2002, Mr. Feinstein was a Senior Vice-President and Chief Financial Officer for The Major Automotive
Companies, Inc., formerly a diversified holding company, but now engaged solely in retail automotive dealership operations. Mr.
Feinstein has served on boards of both publicly-held and not-for-profit enterprises. Mr. Feinstein previously served as a board
member and chair of the audit committee of MKTG, Inc.; a board member and chief financial officer of the not-for-profit USA Fitness
Corps; a board member and chair of the audit committee of EDGAR Online, Inc., a board member and chair of the finance committee
of the New York Road Runners and a member of the executive committee of the Association for a Better New York. Mr. Feinstein, a
certified public accountant, received a BBA degree from Pace University. Mr. Feinstein also served in the United States Marine
Corps.
Mr. Feinstein currently serves as our Vice
President-Finance and Chief Financial Officer on a consulting basis at a rate of $300 per hour for each hour worked, together with
reimbursement for reasonable expenses incurred in performing his services, pursuant to the terms of an independent contractor agreement,
as amended.
There are no family relationships among
any of our directors or executive officers.
CORPORATE GOVERNANCE
Director Independence
Although our common stock is no longer listed
on The Nasdaq Stock Market (“Nasdaq”), our Board of Directors (our “Board”) continues to use the definition
of independence set forth in the listing standards of Nasdaq in evaluating the independence of our directors. Our Board has determined
that each current member of our Board is independent as defined by the listing standards of Nasdaq.
Meetings and Attendance
Our Board held six meetings during fiscal
year 2018. Each director attended at least 75% of the total number of meetings held during fiscal year 2018 by our Board and committees
of our Board of which such director was a member.
Board Leadership Structure
Our Board is led by a Chairperson appointed
by our Board annually. The Chairperson leads our Board in its role of providing advice to, and overseeing the performance of, our
Chief Executive Officer. Mr. Christodoro currently serves as the Chairman of the Board, and Mr. Rackear currently serves as our
Chief Executive Officer. Our Board does not have a formal policy with respect to the separation of the positions of Chairperson
and Chief Executive Officer. However, our Board believes that separating these positions allows the Chief Executive Officer to
focus on day-to-day operations, while allowing the Chairperson to lead our Board in its primary role of review and oversight of
management.
Communications with Directors
Stockholders may communicate directly with
our directors. All communications should be sent in care of our Secretary at our address and should prominently indicate on the
outside of the envelope that it is intended for our Board or for a specific director. If no director is specified, the communication
will be forwarded to the entire Board.
Standing Committees of our Board
Finance and Audit Committee
All three current members of our Board currently
constitute the Finance and Audit Committee. Accordingly, our entire Board currently acts as the Finance and Audit Committee. When
our Board acts as the Finance and Audit Committee, Mr. Christodoro acts as the Chairman of the Finance and Audit Committee. Our
Board acting as the Finance and Audit Committee held four meetings during fiscal year 2018.
In evaluating the composition of our Board
when acting as the Finance and Audit Committee, our Board has determined that each current member of our Board is independent
as defined by the listing standards of Nasdaq and Rule 10A-3 under the Securities Exchange Act of 1934. Our Board has determined
that Mr. Christodoro satisfies the definition of “audit committee financial expert” within the meaning of Item 407(d)(5)
of Regulation S-K.
The primary purpose of the Finance and Audit
Committee is to monitor the integrity of our Company’s financial reporting process and financial statements, the systems
of internal controls and controls over financial reporting, our Company’s compliance with legal and regulatory requirements,
and the performance and independence of our Company’s independent registered public accounting firm. The Finance and Audit
Committee is responsible for discussing with management the adequacy of our Company’s internal controls and the financial
reporting process. The Finance and Audit Committee also is responsible for discussing these matters with our Company’s independent
registered public accounting firm. In addition, the Finance and Audit Committee is responsible for reviewing our financial statements
and discussing them with management and our Company’s independent registered public accounting firm before those financial
statements are filed with the SEC. The charter of the Finance and Audit Committee may be found on our website at www.enzon.com.
Compensation Committee
All three current members of our Board currently
constitute the Compensation Committee. Accordingly, our entire Board currently acts as the Compensation Committee. When our Board
acts as the Compensation Committee, Ms. McNealey acts as the Chairwoman of the Compensation Committee. Our Board acting as the
Compensation Committee held one meeting during fiscal year 2018.
In evaluating the composition of our Board
when acting as the Compensation Committee, our Board has determined that each current member of our Board is independent as defined
by the listing standards of Nasdaq.
The primary duties and responsibilities
of the Compensation Committee are to oversee our overall compensation structure, policies and programs, and assess whether our
compensation structure establishes appropriate incentives for management.
The Compensation Committee has the authority
to retain, at our expense, such outside counsel, experts and other advisors as it determines appropriate to assist it in the performance
of its functions, including the sole authority to retain and terminate any compensation consultant and to approve the consultant’s
fees and other retention terms.
The charter of the Compensation Committee
may be found on our website at www.enzon.com.
Governance and Nominating Committee
All three current members of our Board currently
constitute the Governance and Nominating Committee. Accordingly, our entire Board currently acts as the Governance and Nominating
Committee. When our Board acts as the Governance and Nominating Committee, Dr. Kostas acts as the Chairman of the Governance and
Nominating Committee. Our Board acting as the Governance and Nominating Committee held one meeting during fiscal year 2018.
In evaluating the composition of our Board
when acting as the Governance and Nominating Committee, our Board has determined that each current member of our Board is independent
as defined by the listing standards of Nasdaq.
The Governance and Nominating Committee
is responsible for reviewing and setting corporate governance policy and is responsible for making recommendations on organization
and procedures, performance evaluation of our Board and individual directors, and nomination of directors. The Governance and Nominating
Committee’s Charter may be found on our website at www.enzon.com.
Code of Conduct
Our Board has adopted a Code of Conduct
that is applicable to all of our directors and executive officers. Any material changes made to the Code of Conduct or any waivers
granted to any of our directors and executive officers will be publicly disclosed on our website at www.enzon.com within four business
days of such material change or waiver. A copy of our Code of Conduct is available on the Corporate Governance page of our website
at www.enzon.com or upon request, without charge, by contacting us at (732) 980-4500 or through an e-mail request to investor@enzon.com.
Section 16(a) Beneficial Ownership Reporting Compliance
Ownership of and transactions in our common
stock by our executive officers and directors and owners of 10% or more of outstanding our common stock are required to be reported
to the SEC pursuant to Section 16(a) of the Securities Exchange Act of 1934 (the “Exchange Act”). Based solely on our
review of these reports and written representations from certain reporting persons, during fiscal year 2018, all such reports were
filed in a timely manner.
Item 11. Executive Compensation.
Named Executive Officers
The following individuals were our named
executive officers for fiscal year 2018, whom we refer to in this Form 10-K/A as our named executive officers:
Andrew Rackear
– Mr. Rackear
currently serves as our Chief Executive Officer and Secretary. During fiscal year 2018, Mr. Rackear served as our Chief Executive
Officer and Secretary on a consulting basis at a rate of $300 per hour for each hour worked, together with reimbursement for reasonable
expenses incurred in performing his services, pursuant to the terms of a separation agreement, as amended.
Richard L. Feinstein
– Mr.
Feinstein currently serves as our Vice President - Finance and Chief Financial Officer. During fiscal year 2018, Mr. Feinstein
served as our Vice President-Finance and Principal Financial Officer on a consulting basis at a rate of $300 per hour for each
hour worked, together with reimbursement for reasonable expenses incurred in performing his services, pursuant to the terms of
an independent contractor agreement, as amended.
Historical
Compensation of our Named Executive Officers
The
following table sets forth information concerning compensation earned for services rendered to us by our named executive officers
for fiscal year 2018 and fiscal y
ear 2017.
Summary Compensation Table
Name and Principal
Position
|
|
Year
|
|
Bonus
($)
(1)
|
|
|
All Other
Compensation
($)
(2)
|
|
|
Total ($)
|
|
Andrew Rackear
|
|
2018
|
|
|
0
|
|
|
|
161,796
|
|
|
|
161,796
|
|
Chief Executive Officer and Secretary
|
|
2017
|
|
|
40,000
|
|
|
|
150,039
|
|
|
|
190,039
|
|
Richard L. Feinstein
|
|
2018
|
|
|
0
|
|
|
|
151,116
|
|
|
|
151,116
|
|
Vice President - Finance and Chief Financial Officer
|
|
2017
|
|
|
10,000
|
|
|
|
162,521
|
|
|
|
172,521
|
|
(1) The amounts in
this column reflect discretionary bonuses paid in respect of fiscal year 2017 and fiscal year 2018.
(2) The amounts in
this column for Mr. Rackear reflect fees and expenses related to his services rendered as our Chief Executive Officer and Secretary
on a consulting basis. The amounts in this column for Mr. Feinstein reflect fees and expenses related to his services rendered
as our Vice President - Finance and Principal Financial Officer on a consulting basis. Neither Mr. Rackear nor Mr. Feinstein received
a base salary for fiscal year 2018 or 2017.
Outstanding Equity Awards at December 31, 2018
The following table sets forth information
with respect to outstanding equity awards held by each of our named executive officers as of December 31, 2018.
|
|
OPTION
AWARDS
|
|
|
STOCK
AWARDS
|
|
Name
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
(1)
|
|
|
Number
of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
|
|
Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
|
|
Option
Exercise
Price
(1)
($)
|
|
|
Option
Expiration
Date
|
|
|
Number
of
Shares or
Units of Stock
That Have
Not Vested
(#)
|
|
|
Market
Value
of Shares or
Units of Stock
That Have
Not Vested
($)
|
|
|
Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested (#)
|
|
|
Equity
Incentive
Plan
Awards:
Market or
Payout
Value
of Unearned
Shares,
Units
or Other
Rights That
Have Not
Vested ($)
|
|
Andrew Rackear
|
|
|
25,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1.49
|
|
|
|
1/17/2022
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Richard L. Feinstein
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
(1)
|
The amounts in this column reflect equitable adjustments
that were approved by the Compensation Committee and made to the stock options in connection with the special cash dividend of
$1.60 per share of common stock that we paid on June 4, 2013, the special cash dividend of $0.45 per share of common stock that
we paid on December 23, 2013, the special cash dividend of $0.10 per share of common stock that we paid on January 28, 2015, the
special cash dividend of $0.50 per share of common stock that we paid on August 12, 2015, the special cash dividend of $0.25 per
share of common stock that we paid on December 29, 2015, the special cash dividend of $0.15 per share of common stock that we
paid on December 12, 2016 and the special cash dividend of $0.15 per share of common stock that we paid on September 28, 2017.
The special cash dividend of $0.06 per share of common stock that was paid on March 21, 2019 is not reflected in this column.
|
Potential Payments Upon Termination or Change in Control
None of our named executive officers is
covered by a severance or change in control agreement and, accordingly, none of our named executive officers would have been entitled
to receive any termination or change in control-related payments as of December 31, 2018.
DIRECTOR COMPENSATION
Amended and Restated 2013 Outside Director Compensation
Plan
Under the Amended and Restated 2013 Outside
Director Compensation Plan, each non-employee director (i) receives an annual cash retainer of $30,000, (ii) for service as chair
of the Finance and Audit Committee receives an additional annual cash retainer of $10,000 and (iii) for service as a non-chair
member of the Finance and Audit Committee receives an additional annual cash retainer of $5,000. These annual cash retainers are
payable quarterly at the end of each quarter.
Total Director Compensation
A summary of compensation paid to each of
our directors during fiscal year 2018 is set forth below.
Name
|
|
Fees Earned or
Paid in Cash ($)
|
|
|
Stock Awards
($)
(1)
|
|
|
Option Awards
($)
(2)
|
|
|
Total ($)
|
|
Jonathan Christodoro
|
|
|
40,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
40,000
|
|
Odysseas Kostas, M.D.
|
|
|
35,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
35,000
|
|
Jennifer McNealey
|
|
|
35,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
35,000
|
|
|
(1)
|
As of December 31, 2018, none of our directors held any
outstanding unvested restricted stock units.
|
|
(2)
|
As of December 31, 2018, none of our directors held any
outstanding stock options.
|