UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed
by the Registrant
☑
Filed
by a Party other than the Registrant
☐
Check
the appropriate box:
☐
Preliminary Proxy Statement
☐
Confidential, For Use of the Commission Only (As
Permitted by Rule 14a-6(e)(2))
☑
Definitive Proxy Statement
☐
Definitive Additional Materials
☐
Soliciting Material under Rule 14a-12
Cellular Biomedicine Group, Inc.
|
(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
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Payment
of Filing Fee (Check the appropriate box):
☑
No fee required
☐
Fee computed on table below per Exchange Act Rules
14a-6(i)(1) and 0-11.
(1)
Title of each class of securities to which transaction
applies:
(2)
Aggregate number of securities to which transaction
applies:
(3) Per
unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was
determined):
(4)
Proposed maximum aggregate value of transaction:
(5)
Total fee paid:
☐
Fee paid previously with preliminary
materials.
☐
Check box if any part of the fee is offset as
provided by Exchange Act Rule 0-11(a)(2) and identify the filing
for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the form or
schedule and the date of its filing.
(1)
Amount Previously Paid:
(2)
Form, Schedule or Registration Statement No.:
(3)
Filing Party:
(4)
Date Filed:
19925 Stevens Creek Blvd., Suite 100
Cupertino, CA 95014
Dear
Stockholders:
You are
invited to attend the Annual Meeting of Stockholders (the
“
Annual
Meeting
”) of Cellular Biomedicine Group, Inc. (the
“
Company
”) on April 27,
2018, which will be held at our office at 19925 Stevens Creek
Blvd., Suite 100, Cupertino, California 95014 at 9:00 a.m. Pacific
Daylight Time. Enclosed with this letter are your Notice of Annual
Meeting of Stockholders, Proxy Statement and Proxy voting card. The
Proxy Statement included with this notice discusses each of our
proposals to be considered at the Annual Meeting. Please review our
annual report for the fiscal year ended December 31, 2017, which
will be on our website at
http://www.cellbiomedgroup.com
(under “
Investor
Relations
”).
At this
year’s meeting, you will be asked to: (1) elect three (3)
“Class III” directors, each of whom will be elected for
a term of three years; (2) ratify the appointment of BDO China Shu
Lun Pan Certified Public Accountants LLP as our independent
registered public accounting firm for the fiscal year ending
December 31, 2018; and (3) transact such other business as may
properly come before the Annual Meeting or any adjournments
thereof.
The
Board of Directors has fixed the close of business on March 9, 2018
as the record date for determining the stockholders entitled to
notice of and to vote at the Annual Meeting and any adjournment and
postponements thereof (the “
Record
Date
”).
The
Board of Directors believes that a favorable vote for each
candidate for a position on the Board of Directors and for the
ratification of BDO China Shu Lun Pan Certified Public Accounts LLP
in Proposal 2 is in the best interest of the Company and its
stockholders and recommends a vote "FOR" all candidates and all
other matters. Accordingly, we urge you to review the accompanying
material carefully and to return the enclosed proxy promptly. On
the following pages, we provide answers to frequently asked
questions about the Annual Meeting.
You are
welcome to attend the Annual Meeting in person. Whether or not you
expect to attend the meeting, you are requested to read the
enclosed proxy statement and to sign, date and return the
accompanying proxy as soon as possible. This will assure your
representation and a quorum for the transaction of business at the
meeting.
Sincerely,
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/s/
Terry Belmont
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Terry
Belmont
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Chairman
of the Board of Directors
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Cupertino,
California
March
12, 2018
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Meeting Date: April 27, 2018
To the
Stockholders of Cellular Biomedicine Group, Inc.:
The
2018 Annual Meeting of Stockholders will be held at our office at
19925 Stevens Creek Blvd., Suite 100, Cupertino, California 95014
at 9:00 a.m. Pacific Daylight Time. During the Annual Meeting,
stockholders will be asked to:
(1)
|
Elect
three (3) “Class III” directors, each of whom will be
elected for a three year term, or until the election and
qualification of their successors;
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(2)
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Ratify
the appointment of BDO China Shu Lun Pan Certified Public
Accountants LLP as our independent registered public accounting
firm for the fiscal year ending December 31, 2018; and
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(3)
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Transact
any other business properly brought before the Annual Meeting or
any adjournments thereof.
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The
Board of Directors has fixed the close of business on March 9,
2018, as the record date for determining the stockholders entitled
to notice of, and to vote at, the Annual Meeting or any
adjournments thereof. If you are a stockholder as of March 9, 2018,
you may vote at the meeting. The date of disseminating this Notice
of Meeting and Proxy Statement is on or about March 16,
2018.
For a
period of 10 days prior to the Annual Meeting, a stockholders list
will be kept at our office and shall be available for inspection by
stockholders during usual business hours. A stockholders list will
also be available for inspection at the Annual
Meeting.
You are
cordially invited to attend the meeting in person. Whether or not
you expect to attend the meeting, you are requested to read the
enclosed proxy statement and to sign, date and return the
accompanying proxy as soon as possible. This will assure your
representation and a quorum for the transaction of business at the
meeting. If you attend the meeting in person, the proxy will not be
used if you so request by revoking it as described in the proxy
statement.
By
order of our Board of Directors
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/s/
Bizuo (Tony) Liu
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Bizuo
(Tony) Liu
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Chief
Executive Officer and Chief Financial Officer
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IMPORTANT NOTICE REGARDING THE INTERNET AVAILABILITY OF PROXY
MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON
APRIL 27, 2018
:
This communication presents only an overview of the more complete
proxy materials that are available to you on the Internet. We
encourage you to access and review all of the important information
contained in the proxy materials before voting.
The Notice, Proxy Statement and the Annual Report on Form 10-K for
the fiscal year ended December 31, 2017 are available at
https://www.iproxydirect.com/CBMG. If you want to receive a paper
or e-mail copy of these documents, you must request one. There is
no charge to you for requesting a copy. Please make your request
for a copy as instructed below on or before April 17, 2018 to
facilitate timely delivery.
To request by phone: 1-866-752-VOTE(8683)
To request by e-mail:
proxy@iproxydirect.com
To request on the Internet:
https://www.iproxydirect.com/CBMG
If you
have any questions about accessing materials or voting, please call
Issuer Direct at 919-481-4000 ext 120 or 117.
TABLE OF CONTENTS
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Page No.
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The Proxy Procedure
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i
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Questions and Answers About the Meeting
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1
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Governance of the Company
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3
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Proposal 1 - Election of Directors
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16
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Proposal 2 - Ratification of Appointment of Independent Registered
Public Accountant
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19
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Executive Compensation and Related Information
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21
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Security Ownership of Certain Beneficial Owners and
Management
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30
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Certain Relationships and Related Transactions
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33
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Requirements for Advance Notification of Nominations and
Stockholder Proposals
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33
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Other Matters
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34
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THE PROXY PROCEDURE
In lieu
of a paper copy of the proxy materials, on or about March 16, 2018,
we will first disseminate to our stockholders of record and
beneficial owners of shares of common stock of Cellular Biomedicine
Group, Inc. (which may be referred to in this Proxy Statement as
“
we
,”
“
us
,”
“
CBMG
,”
or the “
Company
”) a Notice of
Internet Availability of Proxy Materials (the “
Notice
”) in connection
with the solicitation of proxies by our board of directors
(“
Board
”) for our annual
meeting of stockholders to be held on April 27, 2018, at 9:00 a.m.
PDT at our office at 19925 Stevens Creek Blvd., Suite 100,
Cupertino, California 95014 (referred to as the “
Annual Meeting
”).
Stockholders who received the notice will have the ability to
access this Proxy Statement and the accompanying proxy card over
the Internet and to request a paper copy of the proxy materials by
internet, email, or telephone. Our Board encourages you to read
this document thoroughly and to take this opportunity to vote on
the matters to be decided at the Annual Meeting. Instructions on
how to access the proxy materials over the Internet or to request a
paper copy may be found in the Notice. In addition, stockholders
may request to receive proxy materials in printed form by mail or
electronically on an ongoing basis. A stockholder’s election
to receive proxy materials by mail or electronically by email will
remain in effect until the stockholder terminates such
election.
QUESTIONS AND ANSWERS ABOUT THE MEETING
What am I voting on?
At this
year’s meeting, you will be asked to:
(1)
|
Elect
three (3) “Class III” directors, each of whom will be
elected for a term of three years, or until the election and
qualification of their successors;
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(2)
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Ratify
the appointment of BDO China Shu Lun Pan Certified Public
Accountants LLP as our independent registered public accounting
firm for the fiscal year ending December 31, 2018; and
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(3)
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Transact
any other business properly brought before the Annual Meeting or
any adjournments thereof.
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Who is entitled to vote at the Annual Meeting, and how many votes
do they have?
Stockholders
of record at the close of business on March 9, 2018 (the
“
Record
Date
”) may vote at the Annual Meeting. Pursuant to the
rights of our stockholders contained in our charter documents each
share of our common stock has one vote. There were 17,003,968
shares of common stock outstanding on March 9, 2018. From April 17,
2018 through April 26, 2018, you may inspect a list of stockholders
eligible to vote. If you would like to inspect the list, please
call Andrew Chan, our Secretary, at (408) 973-7884 to arrange a
visit to our offices. In addition, the list of stockholders will be
available for viewing by stockholders at the Annual
Meeting.
How do I vote?
You may
vote over the Internet, by telephone, by mail or in person at the
Annual Meeting. Please be aware that if you vote by telephone or
over the Internet, you may incur costs such as telephone and
Internet access charges for which you will be
responsible.
Vote by Internet.
You can vote via the Internet at
www.iproxydirect.com/CBMG. You will need to use the control number
appearing on your proxy card to vote via the Internet. You can use
the Internet to transmit your voting instructions up until 11:59
p.m. Eastern Time on April 26, 2018. Internet voting is available
24 hours a day. If you vote via the Internet, you do not need to
vote by telephone or return a proxy card.
Vote by Telephone.
You can vote by telephone by calling the
toll-free telephone number
1-866-752-VOTE (8683).
You will need to
use the control number appearing on your proxy card to vote by
telephone. You may transmit your voting instructions from any
touch-tone telephone up until 11:59 p.m. Eastern Time on April 26,
2018. Telephone voting is available 24 hours a day. If you vote by
telephone, you do not need to vote over the Internet or return a
proxy card.
Vote by Mail.
If you received a printed proxy card, you can
vote by marking, dating and signing it, and returning it in the
postage-paid envelope provided to Cellular Biomedicine Group, Inc.,
c/o Issuer Direct, 500 Perimeter Park Drive, Suite D, Morrisville,
NC 27560. Please promptly mail your proxy card to ensure that it is
received prior to the closing of the polls at the Annual
Meeting.
Vote in Person at the Meeting.
If you attend the Annual
Meeting and plan to vote in person, we will provide you with a
ballot at the Annual Meeting. If your shares are registered
directly in your name, you are considered the stockholder of record
and you have the right to vote in person at the Annual Meeting. If
your shares are held in the name of your broker or other nominee,
you are considered the beneficial owner of shares held in street
name. As a beneficial owner, if you wish to vote at the Annual
Meeting, you will need to bring to the Annual Meeting a legal proxy
from your broker or other nominee authorizing you to vote those
shares.
If you
vote by any of the methods discussed above, you will be designating
Tony Liu, our Chief Executive Officer and Chief Financial Officer,
as your proxy, and he will vote your shares on your behalf as you
indicate.
Submitting
a proxy will not affect your right to attend the Annual Meeting and
vote in person.
If your
shares are held in the name of a bank, broker or other nominee, you
will receive separate voting instructions from your bank, broker or
other nominee describing how to vote your shares. The availability
of Internet voting will depend on the voting process of your bank,
broker or other nominee. Please check with your bank, broker or
other nominee and follow the voting instructions it
provides.
Can I receive future materials via the internet?
If you
vote by internet, simply follow the prompts for enrolling in
electronic proxy delivery service. This will reduce the
Company’s printing and postage costs in the future, as well
as the number of paper documents you will receive.
What is a proxy?
A proxy
is a person you appoint to vote on your behalf. By using the
methods discussed above, you will be appointing Tony Liu, our Chief
Executive Officer and Chief Financial Officer, as your proxy. He
will vote on your behalf, and will have the authority to appoint a
substitute to act as proxy. If you are unable to attend the Annual
Meeting, please vote by proxy so that your shares of common stock
may be voted.
How will my proxy vote my shares?
If you
are a stockholder of record, your proxy will vote according to your
instructions. If you choose to vote by mail and complete and return
the enclosed proxy card but do not indicate your vote, your proxy
will vote “FOR” the election of the nominated slate of
Class III directors (see Proposal 1); and “FOR” the
ratification of BDO China Shu Lun Pan Certified Public Accountants
LLP (“
BDO
China
”) as our independent registered public
accounting firm for the fiscal year ending December 31, 2018 (see
Proposal 2). We do not intend to bring any other matter for a vote
at the Annual Meeting, and we do not know of anyone else who
intends to do so. Your proxies are authorized to vote on your
behalf, however, using their best judgment, on any other business
that properly comes before the Annual Meeting.
If your
shares are held in the name of a bank, broker or other nominee, you
will receive separate voting instructions from your bank, broker or
other nominee describing how to vote your shares. The availability
of Internet voting will depend on the voting process of your bank,
broker or other nominee. Please check with your bank, broker or
other nominee and follow the voting instructions your bank, broker
or other nominee provides.
You
should instruct your bank, broker or other nominee how to vote your
shares. If you do not give voting instructions to the bank, broker
or other nominee, the bank, broker or other nominee will determine
if it has the discretionary authority to vote on the particular
matter. Under applicable rules, brokers have the discretion to vote
on routine matters, such as the ratification of the selection of
accounting firms, but do not have discretion to vote on non-routine
matters. Under the regulations applicable to New York Stock
Exchange member brokerage firms (many of whom are the record
holders of shares of our common stock), the uncontested election of
directors is no longer considered a routine matter. Matters related
to executive compensation are also not considered routine. As a
result, if you are a beneficial owner and hold your shares in
street name, but do not give your broker or other nominee
instructions on how to vote your shares with respect to these
matters, votes may not be cast on your behalf. If your bank, broker
or other nominee indicates on its proxy card that it does not have
discretionary authority to vote on a particular proposal, your
shares will be considered to be “broker non-votes” with
regard to that matter. Broker non-votes will be counted as present
for purposes of determining whether enough votes are present to
hold our Annual Meeting, but a broker non-vote will not otherwise
affect the outcome of a vote on a proposal that requires a majority
of the votes cast. With respect to a proposal that requires a
favorable vote of a majority of the outstanding shares, a broker
non-vote has the same effect as a vote against the
proposal.
How do I change my vote?
If you
are a stockholder of record, you may revoke your proxy at any time
before your shares are voted at the Annual Meeting by:
●
Notifying
our corporate Secretary Andrew Chan, in writing at 19925 Stevens
Creek Blvd., Suite 100, Cupertino, California 95014, that you are
revoking your proxy;
●
Submitting
a proxy at a later date via the Internet, or by signing and
delivering a proxy card relating to the same shares and bearing a
later date than the date of the previous proxy prior to the vote at
the Annual Meeting, in which case your later-submitted proxy will
be recorded and your earlier proxy revoked; or
●
Attending
and voting by ballot at the Annual Meeting.
If your
shares are held in the name of a bank, broker or other nominee, you
should check with your bank, broker or other nominee and follow the
voting instructions provided.
What constitutes a quorum?
The
holders of a majority of the Company’s eligible votes as of
the record date, either present or represented by proxy, constitute
a quorum. A quorum is necessary in order to conduct the Annual
Meeting. If you choose to have your shares represented by proxy at
the Annual Meeting, you will be considered part of the quorum. Both
abstentions and broker non-votes are counted as present for the
purpose of determining the presence of a quorum. If a quorum is not
present at the Annual Meeting, the stockholders present in person
or by proxy may adjourn the meeting to a later date. If an
adjournment is for more than 30 days or a new record date is fixed
for the adjourned meeting, we will provide notice of the adjourned
meeting to each stockholder of record entitled to vote at the
meeting.
What vote is required to approve each proposal?
Election of Directors
. For Proposal 1, the election of
directors, the nominees will be elected by a plurality of the votes
of the shares of common stock present in person or represented by
proxy and entitled to vote at the Annual Meeting. You may choose to
vote, or withhold your vote, separately for each nominee. A
properly executed proxy or voting instructions marked
“WITHHOLD” with respect to the election of one or more
directors will not be voted with respect to the director or
directors indicated, although it will be counted for the purposes
of determining whether there is a quorum.
Ratification of the Appointment of Independent Registered Public
Accounting Firm
. For Proposal 2, the affirmative vote of the
holders of shares of common stock entitled to vote must exceed the
votes cast against the proposal, in order for the proposal to be
approved.
Other Proposals
. Any other proposal that might properly come
before the meeting will require the affirmative vote of the holders
of shares of common stock entitled to vote to exceed the votes cast
against the proposal for the proposal to be approved, except when a
different vote is required by law, our certificate of incorporation
or our Bylaws. On any such proposal, abstentions will be counted as
present and entitled to vote on that matter for purposes of
establishing a quorum, but will not be counted for purposes of
determining the number of votes cast.
Abstentions
and broker non-votes with respect to any matter will be counted as
present and entitled to vote on that matter for purposes of
establishing a quorum, but will not be counted for purposes of
determining the number of votes cast. Accordingly, abstentions and
broker non-votes will have no effect on the outcome of voting with
respect to any of the Proposals.
What percentage of our common stock do our directors and officers
own?
As of
March 9, 2018, our current directors and executive officers
beneficially owned approximately 8.3% of our common stock
outstanding. See the discussion under the heading “Security
Ownership of Certain Beneficial Owners and Management” on
page 30 for more details.
Who is soliciting proxies, how are they being solicited, and who
pays the cost?
We, on
behalf of our Board, through our directors, officers, and
employees, are soliciting proxies primarily by mail. Further,
proxies may also be solicited in person, by telephone, or
facsimile. We will pay the cost of soliciting proxies. We will also
reimburse stockbrokers and other custodians, nominees, and
fiduciaries for their reasonable out-of-pocket expenses for
forwarding proxy and solicitation materials to the owners of our
common stock.
Who is our Independent Registered Public Accounting Firm, and will
they be represented at the Annual Meeting?
BDO
China has served as the independent registered public accounting
firm auditing and reporting on our financial statements for the
fiscal years ended December 31, 2015, 2016 and 2017. BDO China has
been appointed by our Board to serve as our independent registered
public accounting firm for the fiscal year ended December 31, 2018.
We expect that representatives of BDO China will not be present at
the Annual Meeting.
What are the recommendations of our Board?
The
recommendations of our Board are set forth together with the
description of each proposal of this Proxy Statement. In summary,
the Board recommends a vote:
●
FOR the election of
the three nominated Class III directors (see Proposal 1);
and
●
FOR the
ratification of BDO China Shu Lun Pan Certified Public Accountants
LLP as our independent registered public accounting firm for the
fiscal year ending December 31, 2018 (see Proposal 2).
With
respect to any other matter that properly comes before the meeting,
the proxy holders will vote as recommended by the Board or, if no
recommendation is given, in their own discretion.
If you
sign and return your proxy card but do not specify how you want to
vote your shares, the persons named as proxy holders on the proxy
card will vote in accordance with the recommendations of the
Board.
GOVERNANCE OF THE COMPANY
Our
business, property and affairs are managed by, or under the
direction of, our Board, in accordance with the Delaware General
Corporation Laws and our Bylaws. Members of the Board are kept
informed of our business through discussions with the Chief
Executive Officer and other key members of management, by reviewing
materials provided to them by management, and by participating in
meetings of the Board and its committees comprised of certain
directors (“
Committees
”).
Stockholders
may communicate with the members of the Board, either individually
or collectively, or with any independent directors as a group by
writing to the Board at 19925 Stevens Creek Blvd., Suite 100,
Cupertino, California 95014. These communications will be reviewed
by the office of the corporate Secretary who, depending on the
subject matter, will (a) forward the communication to the director
or directors to whom it is addressed or who is responsible for the
topic matter, (b) attempt to address the inquiry directly (for
example, where it is a request for publicly available information
or a stock related matter that does not require the attention of a
director), or (c) not forward the communication if it is primarily
commercial in nature or if it relates to an improper or irrelevant
topic. At each meeting of the Board, the corporate Secretary
presents a summary of communications received and will make those
communications available to any director upon request.
Independence of Directors
In
determining the independence of our directors, the Board applied
the definition of “independent director” provided under
the listing rules of The NASDAQ Stock Market LLC
(“
NASDAQ
”). Pursuant to
these rules, the Board concluded its annual review of director
independence in January, 2018. After considering all relevant facts
and circumstances, the Board affirmatively determined that Messrs.
Terry Belmont, Hansheng Zhou, Chun Kwok Alan Au and Gang Ji, each
of whom are now serving on the Board and are continuing to serve
their terms, are independent within the definition of independence
under the NASDAQ rules. Tony Liu and Wen Tao (Steve) Liu are not
independent directors. Additionally, Nadir Patel and Bosun S. Hau,
two of the directors nominated for election as a Class III
director, have been determined to meet the definition of
independence under the NASDAQ rules. If two of the candidates
nominated for Class III director positions, namely Nadir Patel and
Bosun S. Hau, are elected at the Annual Meeting, and assuming our
other directors remain in office, our Board will consist of a
majority of six independent directors out of a total of eight
directors on our Board.
Board Meetings; Annual Meeting Attendance
Our
Board of Directors held five formal meetings and four actions for
unanimous written consent during the most recently completed fiscal
year. Except that Steve Liu was unable to attend the July 2017
meeting due to a conflict, each of the other members of our Board
of Directors was present at all of the Board of Directors meetings
held. Other proceedings of the Board of Directors were conducted by
resolutions consented to in writing by all the directors and filed
with the minutes of the proceedings of the directors. Such
resolutions consented to in writing by the directors entitled to
vote on that resolution at a meeting of the directors are,
according to the corporate laws of the State of Delaware and our
bylaws, as valid and effective as if they had been passed at a
meeting of the directors duly called and held.
We
currently do not have a policy regarding the attendance of board
members at the annual meeting of stockholders.
Board Committees
On
February 20, 2013, the Board authorized formation of an audit
committee, compensation committee and nominating committee and on
March 12, 2013 adopted charters. Five of our six independent
directors have been appointed to these committees as
follows:
Name
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Audit Committee
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Compensation Committee
|
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Nominating & Corporate Governance Committee
|
Nadir
Patel
|
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Chair
|
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|
X
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Terry
A. Belmont
|
|
X
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X
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X
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Gang
Ji
|
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|
|
X
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Chun
Kwok Alan Au
|
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X
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Chair
|
Hansheng
Zhou
|
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Chair
|
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|
Audit Committee
The
Audit Committee consists of Chun Kwok Alan Au, Terry Belmont and
Nadir Patel (serving as Chairman), each of whom are
“independent” as defined under section 5605 (a)(2) of
the NASDAQ Listing Rules. In addition, the Board has determined
that each member of the Audit Committee qualifies as an
“audit committee financial expert” as defined in the
rules of the Securities and Exchange Commission (
SEC
). The Audit Committee
operates pursuant to a charter, which can be viewed on our website
at
www.cellbiomedgroup.com
(under
“
Investor
Relations
”). The Audit Committee is expected to
convene regular meetings following the Annual Meeting. The role of
the Audit Committee is to:
●
oversee
management’s preparation of our financial statements and
management’s conduct of the accounting and financial
reporting processes;
●
oversee
management’s maintenance of internal controls and procedures
for financial reporting;
●
oversee
our compliance with applicable legal and regulatory requirements,
including without limitation, those requirements relating to
financial controls and reporting;
●
oversee
the independent auditor’s qualifications and
independence;
●
oversee
the performance of the independent auditors, including the annual
independent audit of our financial statements;
●
discharge such
duties and responsibilities as may be required of the Audit
Committee by the provisions of applicable law, rule or
regulation.
Compensation Committee
The
Compensation Committee consists of
Hansheng Zhou
(serving as Chairman),
Terry Belmont and Gang Ji, each of
whom is “independent” as defined in section 5605(a)(2)
of the NASDAQ Listing Rules. The Compensation Committee is expected
to convene regular meetings after the Annual Meeting. The role of
the Compensation Committee is to:
●
develop
and recommend to the Board the annual compensation (base salary,
bonus, stock options and other benefits) for our President/Chief
Executive Officer;
●
review,
approve and recommend to the Board the annual compensation (base
salary, bonus and other benefits) for all of our
executives;
●
review,
approve and recommend to the Board the aggregate number of equity
awards to be granted to employees below the executive
level;
●
ensure
that a significant portion of executive compensation is reasonably
related to the long-term interest of our stockholders;
and
●
prepare
certain portions of our annual Proxy Statement, including an annual
report on executive compensation.
A copy
of the charter of the Compensation Committee is available on our
website at
www.cellbiomedgroup.com
(under
“
Investor
Relations
”).
The
Compensation Committee may form and delegate a subcommittee
consisting of one or more members to perform the functions of the
Compensation Committee. The Compensation Committee may engage
outside advisers, including outside auditors, attorneys and
consultants, as it deems necessary to discharge its
responsibilities. The Compensation Committee has sole authority to
retain and terminate any compensation expert or consultant to be
used to provide advice on compensation levels or assist in the
evaluation of director, President/Chief Executive Officer or senior
executive compensation, including sole authority to approve the
fees of any expert or consultant and other retention terms. In
addition, the Compensation Committee considers, but is not bound
by, the recommendations of our Chief Executive Officer or President
with respect to the compensation packages of our other executive
officers.
Nominating and Corporate Governance Committee
The
Nominating and Corporate Governance Committee, or the
“Governance Committee”, consists of Alan Au (serving as
Chairman), Nadir Patel and Terry Belmont, each of whom is
“independent” as defined in section 5605(a)(2) of the
NASDAQ Listing Rules. The Governance Committee is expected to
convene regular meetings following the Annual Meeting. The role of
the Governance Committee is to:
●
evaluate from time
to time the appropriate size (number of members) of the Board and
recommend any increase or decrease;
●
determine the
desired skills and attributes of members of the Board and its
committees, taking into account the needs of the business and
listing standards;
●
establish criteria
for prospective members, conduct candidate searches, interview
prospective candidates, and oversee programs to introduce the
candidate to us, our management, and operations;
●
review
planning for succession to the position of Chairman of the Board
and Chief Executive Officer and other senior management
positions;
●
annually recommend
to the Board persons to be nominated for election as directors and
appointment as members of committees;
●
adopt
or develop for Board consideration corporate governance principles
and policies; and review and report to the Board on the
effectiveness of corporate governance procedures and the Board as a
governing body, including conducting an annual self-assessment of
the Board and its standing committees.
●
periodically review
and report to the Board on the effectiveness of corporate
governance procedures and the Board as a governing body, including
conducting an annual self-assessment of the Board and its standing
committees.
A copy
of the charter of the Governance Committee is available on our
website at
www.cellbiomedgroup.com
(under
“
Investor
Relations
”).
Policy with Regard to Stockholder Recommendations
The
Governance Committee does not presently have a policy with regard
to consideration of any director candidates recommended by our
stockholders. No stockholder (other than members of the Governance
Committee) has recommended a candidate to date.
Director Qualifications and Diversity
The
Board seeks independent directors who represent a diversity of
backgrounds and experiences that will enhance the quality of the
Board’s deliberations and decisions. Candidates should have
substantial experience with one or more publicly traded companies
or should have achieved a high level of distinction in their chosen
fields. The Board is particularly interested in maintaining a mix
that includes individuals who are active or retired executive
officers and senior executives, particularly those with experience
in biomedicine, medical and drug regulation in China, intellectual
property, early-stage companies, research and development,
strategic planning, business development, compensation, finance,
accounting and banking.
In
evaluating nominations to the Board of Directors, the Governance
Committee also looks for certain personal attributes, such as
integrity, ability and willingness to apply sound and independent
business judgment, comprehensive understanding of a
director’s role in corporate governance, availability for
meetings and consultation on Company matters, and the willingness
to assume and carry out fiduciary responsibilities. The Governance
Committee took these specifications into account in formulating and
re-nominating its present Board members.
The
current Class III director candidates, Wen Tao (Steve) Liu, Nadir
Patel and Bosun S. Hau, were recommended by management and the
Governance Committee and nominated by the full board of
directors.
Code of Business Conduct and Ethics
We have
adopted a code of ethics, which applies to all our directors,
officers and employees and comprises written standards that are
reasonably designed to deter wrongdoing and to promote the behavior
described in Item 406 of Regulation S-K promulgated by the SEC. A
copy of our “Code of Business Conduct and Ethics” is
available on our website at
www.cellbiomedgroup.com
(under
“
Investor
Relations/Corporate Governance
”). In the event that we
make any amendments to, or grant any waivers of, a provision of our
Code of Business Conduct and Ethics for Officers, Directors and
Employees that applies to the principal executive officer,
principal financial officer or principal accounting officer that
requires disclosure under applicable SEC rules, we intend to
disclose such amendment or waiver and the reasons therefor in a
Form 8-K or in our next periodic report.
Conflicts of Interest
Members
of our management are associated with other firms involved in a
range of business activities. Consequently, there are potential
inherent conflicts of interest in their acting as officers and
directors of our company. Although the officers and directors are
engaged in other business activities, we anticipate they will
devote an important amount of time to our affairs.
Our
officers and directors are now and may in the future become
stockholders, officers or directors of other companies, which may
be formed for the purpose of engaging in business activities
similar to ours. Accordingly, additional direct conflicts of
interest may arise in the future with respect to such individuals
acting on behalf of us or other entities. Moreover, additional
conflicts of interest may arise with respect to opportunities which
come to the attention of such individuals in the performance of
their duties or otherwise. Currently, we do not have a right of
first refusal pertaining to opportunities that come to their
attention and may relate to our business operations.
Our officers and directors are, so long as they are our officers or
directors, subject to the restriction that all opportunities
contemplated by our plan of operation which come to their
attention, either in the performance of their duties or in any
other manner, will be considered opportunities of, and be made
available to us and the companies that they are affiliated with on
an equal basis. A breach of this requirement will be a breach of
the fiduciary duties of the officer or director. If we or the
companies with which the officers and directors are affiliated both
desire to take advantage of an opportunity, then said officers and
directors would abstain from negotiating and voting upon the
opportunity. However, all directors may still individually take
advantage of opportunities if we should decline to do so. Except as
set forth above, we have not adopted any other conflict of interest
policy with respect to such transactions.
Review, Approval or Ratification of Transactions with Related
Persons
The Board of Directors reviews issues involving potential conflicts
of interest, and reviews and approves all related party
transactions, including those required to be disclosed as a
“related party” transaction under applicable federal
securities laws. The Board has not adopted any specific procedures
for conducting reviews of potential conflicts of interest and
considers each transaction in light of the specific facts and
circumstances presented. However, to the extent a potential related
party transaction is presented to the Board, the Company expects
that the Board would become fully informed regarding the potential
transaction and the interests of the related party, and would have
the opportunity to deliberate outside of the presence of the
related party. The Company expects that the Board would only
approve a related party transaction that was in the best interests
of, and fair to, the Company, and further would seek to ensure that
any completed related party transaction was on terms no less
favorable to the Company than could be obtained in a transaction
with an unaffiliated third party.
Board Leadership Structure and Risk Oversight
The
Chairman of the Board, who is a different individual from the Chief
Executive Officer, presides at all meetings of the Board. The
Chairman is appointed by majority vote of the directors, excluding
the vote of the appointee.
Enterprise
risks are identified and prioritized by management and each
prioritized risk is assigned to a Board committee or the full Board
for oversight as follows:
Full Board
- Risks and exposures associated with strategic,
financial and execution risks and other current matters that may
present material risk to our operations, plans, prospects or
reputation.
Audit Committee
- Risks and exposures associated with
financial matters, particularly financial reporting, tax,
accounting, disclosure, internal control over financial reporting,
financial policies, investment guidelines and credit and liquidity
matters.
Nominating and Corporate Governance Committee
- Risks and
exposures relating to corporate governance and management and
director succession planning.
Compensation Committee
- Risks and exposures associated with
leadership assessment, and compensation programs and arrangements,
including incentive plans.
Compliance with Section 16(a) of the Exchange Act
Section
16(a) of the Securities and Exchange Act of 1934, as amended (the
“
Exchange
Act
”) requires the Company’s directors and
executive officers, and persons who beneficially own more than ten
percent of a registered class of our equity securities, to file
with the SEC initial reports of beneficial ownership and reports of
changes in beneficial ownership of our common stock. The rules
promulgated by the SEC under Section 16(a) of the Exchange Act
require those persons to furnish us with copies of all reports
filed with the Commission pursuant to Section 16(a). The
information in this section is based solely upon a review of Forms
3, Forms 4, and Forms 5 received by us.
We
believe that all of the Company's executive officers, directors and
10% stockholders have timely complied with their filing
requirements during the year ended December 31, 2017, except that
Mr. Andrew Chan inadvertently reported late three acquisitions of
company securities, Mr. Tony Liu inadvertently reported late three
acquisitions and one disposition of the Company’s securities
and Mr. Yihong Yao inadvertently reported late two acquisitions and
one disposition of the Company’s securities transpired in
2017.
REPORT OF THE AUDIT COMMITTEE
The
following Report of the Audit Committee shall not be deemed
incorporated by reference into any of our filings under the
Securities Act of 1933, as amended, or the Exchange Act, except to
the extent we specifically incorporate it by reference
therein.
The
Audit Committee of the Board has:
●
reviewed and
discussed the Company’s audited financial statements for the
year ended December 31, 2017 with management;
●
discussed with the
Company’s independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61, as amended
(AICPA, Professional Standards, Vol. 1 AU section 380), as adopted
by the Public Company Accounting Oversight Board in Rule 3200T;
and
●
received the
written disclosures and letter from the independent auditors
required by the applicable requirements of the Public Accounting
Oversight Board regarding the independent auditor communications
with the Audit Committee concerning independence, and has discussed
with BDO China matters relating to its independence.
In
reliance on the review and discussions referred to above, the Audit
Committee recommended to the Board that the financial statements
audited by BDO China for the fiscal year ended December 31, 2017 be
included in its Annual Report on Form 10-K for such fiscal
year.
The
Audit Committee and the Board have also, respectively, recommended
and approved the selection of the Company’s current
independent auditor, which approval is subject to ratification by
the Company’s stockholders.
Submitted
by:
The
Audit Committee of the Board of Directors
/s/
Nadir Patel, Chairman
/s/
Chun Kwok Alan Au
/s/
Terry Belmont
REPORT OF THE COMPENSATION COMMITTEE
The
following Report of the Compensation Committee shall not be deemed
incorporated by reference into any of our filings under the
Securities Act of 1933, as amended, or the Exchange Act, except to
the extent we specifically incorporate it by reference
therein.
Our
Compensation Committee has reviewed and discussed with management
the Compensation Discussion and Analysis (“CD&A”)
for the fiscal year ended December 31, 2017 included in this proxy
statement. Based on that review and discussion, the Compensation
Committee has recommended to the Board that the CD&A be
included in this proxy statement.
Submitted
by:
The
Compensation Committee of the Board of Directors
/s/
Hansheng
Zhou, Chairman
/s/
Gang Ji
/s/
Terry Belmont
COMPENSATION DISCUSSION AND ANALYSIS
2017 Named Executive Officers
Bizuo
(Tony) Liu – Chief Executive Officer and Chief Financial
Officer
Richard
Wang – Former Chief Operating Officer (resigned in February
2017)
Xia
Meng – Former Chief Operating Officer (from June 2017 to
February 2018)
Yihong
Yao – Chief Scientific Officer
Andrew
Chan – Chief Legal Officer (General Counsel), Secretary and
Senior Vice President
This
section explains how the Compensation Committee of the Board of
Directors oversees our executive compensation programs and
discusses the compensation earned by CBMG’s named executive
officers, also referenced to herein as our listed officers. For
additional information about compensation to our named officers,
see "Executive Compensation" in this proxy statement.
Executive Summary
BUSINESS PERFORMANCE AND PAY
2017
was a critical year for CBMG, reflected in our prioritization of
our cancer therapeutic technologies and a focus of our efforts on
developing CAR-T clinical trials.
For the
fiscal year ended December 31, 2017, we achieved net revenue of
$0.3 million, down 50% from 2016, operating loss of $27.6 million,
or $0.8 million better than 2017, and diluted loss per share of
$1.78, an improvement of $0.31 per share, or 15% from 2016. This
improvement is mainly resulted from (i) the decrease in impairment
of certain legacy investments and (ii) the receipt of more
government subsidies. Total Shareholder Return (“TSR”)
is a measure of the performance of the Company’s stock over
time. It combines stock price appreciation and dividends paid, if
any, to show the total return to the shareholder expressed as an
annualized percentage. The Company’s TSR was 66.5% for 2015,
-39% for 2016 and -14.1% for 2017. The Nasdaq Healthcare Index was
6.9%, -16.9% and 21.3% and Russell 3000 Index was 0.48%, 12.74% and
24.1%. The five-year cumulative TSR is 288.5% for the Company,
217.3% for the Nasdaq Healthcare Index and 211.3% for the Russell
3000 Index. Because our Stock and Option grants and awards are
based on the grant date and cannot be accrued in accordance with
U.S. GAAP, the earned awards are reported in arrears. For our stock
performance graph of years 2012 to 2017 and related discussions,
please refer to Item 5- Market for Registrant’s Common Stock,
Related Stockholder Matters and Issuer Purchases of Equity
Securities of our Annual Report on Form 10-K for the fiscal year
ended December 31, 2017.
We used
the Black Scholes model for our stock options grant
valuation. Specifically we used the following
assumptions in our modeling for the 2017 issued
options:
●
Expected
volatility – 85.41% to 89.62%;
●
Risk-free rate
of return – 1.86% to 2.29%;
●
Dividend yield
–zero; and
●
Time
to exercise – six years.
In
addition, we did not consider non-transferability but used an 11%
risk of forfeiture for employees, advisors and Directors and
Officers.
Because
the majority of our executive compensation is tied to performance
and TSR, our Chief Executive Officer, Chief Scientific Officer,
Secretary and Senior Vice President saw an increase in their total
compensation in 2017 as compared to 2016. The increase is mainly a
result of increased number of option awards. In 2017 we initiated
the Long Term Incentive Plan (“
LTIP
”) and granted
restricted stock units ("
RSU
s") to our listed officers,
which better align their compensation with the long-term interests
of CBMG stockholders by focusing our executive officers on TSR. We
believe the compensation structure, including the grant of
restricted stock awards to the listed officers in 2017, is
commensurate with industry standards, namely for executives in the
highly in-demand immune cell therapy industry and executives with
substantial experience at larger pharmaceutical companies in the
industry. However, attracted by a potentially large cancer immune
cell therapy market in China, some U.S. companies have made inroads
in China. Specifically, these U.S. companies had established their
foothold in geographical areas close to our China operations. The
presence of these companies in China created a talent retention
risk that we addressed through the addition of the LTIP for
officers beginning in 2017.
Stockholder Engagement and “Say on Pay”
Vote
At our
annual meeting of stockholders in 2014, our shareholders approved
by advisory vote the Company’s compensation to its executives
and determined to conduct advisory votes every three years. We also
provided our shareholder with a nonbinding advisory vote on
executive compensation at our 2017 annual meeting of stockholders.
We plan to next provide shareholders with a nonbinding advisory
vote on executive compensation at our 2020 annual meeting of
stockholder. The Compensation Committee plans to take into
consideration the percentage of votes cast “For” our
advisory “say on pay” proposal. The Board believes that
“say on pay” “For” results can be an
affirmation of the structural soundness of our executive
compensation programs, which will include our long-term incentive
plan for business continuity and talent retention.
2017 Compensation of Our Listed Officers
PERFORMANCE AND INCENTIVE PAY FOR 2017
CBMG
has a long-standing commitment to pay-for-performance that we
implement by providing the majority of compensation through
arrangements that are designed to hold our executive officers
accountable for business results and reward them for strong
corporate performance and creation of value for our stockholders.
Our executive compensation programs are periodically adjusted over
time so that they support our business goals and promote long-term
growth of the company.
As
illustrated below, approximately 85% of targeted total direct
compensation in 2017 for Mr. Liu, our Chief Executive Officer, was
performance-based, consisting of approximately 80% equity, and 5%
annual incentive cash bonus. Only 14% of his compensation, in the
form of base salary, was fixed, ensuring a strong link between his
targeted total direct compensation and the company result. The
remaining 1% of other compensation is healthcare insurance premium
expense.
Note:
2017 Officers Compensation data is prepared on the below basis: (i)
Salary, bonus and all other compensation is on a cash basis. and
(ii) For restricted stock and option awards, the illustrated amount
is the grant date fair value calculated according to U.S. GAAP
without amortizing over the vesting periods. Under this method, the
compensation cannot be accrued due to the Company's inability to
ascertain the stock option exercise price and grant date, and the
amount of cash bonus that the Compensation Committee may grant to
each officer as of the fiscal year end.
The
following chart shows the allocation of the listed officers’
total direct compensation paid or granted for 2017, reflecting the
extent to which their total direct compensation consists of
performance-based compensation.
The
majority of executive compensation for our listed officers is
delivered through programs that link pay realized by executive
officers with both operational results and with. As noted below,
equity-based compensation comprises a significant portion of each
listed officer’s compensation package and consists of
variable performance-based stock options and RSUs, which we believe
aligns compensation with the long-term interests of CBMG’s
stockholders by focusing our listed officers on TSR. As a result,
total compensation for each listed officer varies with both
individual performance and CBMG’s performance in achieving
financial and nonfinancial objectives established by our
Compensation Committee.
2017 Cash
Compensation
As
reflected in the table below and commensurate with the
industry’s practice, Mr. Tony Liu, Mr. Yihong Yao and Mr.
Andrew Chan’s salary were increased to reflect increased
responsibilities.
On
January 18, 2018, the Compensation Committee reviewed peer
companies’ compensation and incentive information,
competitive landscape of the cell therapy industry as well as major
aspects of the management’s achievements in 2017, including
launch of the GMP facility, significant strategic partnerships,
achievements in clinical trials and addition of key talents. Based
on review of such factors, the Compensation Committee approved
salary increases of the three executive officers as listed in the
above table.
2017 Incentive Compensation Payouts
Based
in part on the significant achievement in the December 2017 closing
of a $14.5 million funding at a premium to market share price, the
formation of the General Electric and Thermo Fisher strategic
partnership, implementation of the U.S. GMP facility to produce
master cell bank from donor adipose tissue which will enable filing
the U.S. FDA IND for the allogeneic KOA clinical trial, addition of
key talents, and launch of the new world class GMP facility, the
Chief Executive Officer received a performance cash bonus paid out
in 2017.
In
addition, we strive to be competitive with other similarly situated
companies in our industry. The process of developing
biopharmaceutical products and bringing those products to market is
a long-term proposition and outcomes may not be measurable for
several years. Therefore, in order to build long-term value for us
and our stockholders, and in order to achieve our business
objectives, we believe that we must compensate our officers and
employees in a competitive and fair manner that reflects our
current activities but also reflects contributions to building
long-term value. On January 28, 2018, the Compensation Committee
reviewed the 2017 annual performance results evaluated how each
listed officer met his performance targets in 2017 and determined
the final performance-based payouts as follows:
|
|
|
|
Bizuo
(Tony) Liu
|
150,000
|
|
|
Andrew
Chan
|
115,000
|
|
|
Yihong
Yao
|
78,600
|
The
table below summarizes the 2017 performance goals criteria which
the Compensation Committee uses to evaluate the listed
officers’ performance and determine their incentive
compensation payouts.
Category
|
|
2017 Goals
|
Financials
|
|
Financing;
progress in clinical trials development, talents acquisition,
management of approved budget, and maintenance of ample
working capital
|
Corporate Development
|
|
Develop
strategic partnership and acquisition of complementary
technologies
|
Product Development
|
|
Manage
Clinical Trials execution
|
2017
Officers Compensation data is prepared on the below basis: (i)
salary, bonus and all other compensation is on a cash basis. and
(ii) for stock and option awards, the illustrated amount is the
grant date fair value calculated according to U.S. GAAP without
amortizing over the vesting periods. Under this method, the
compensation cannot be accrued due to the Company's inability to
ascertain the stock option exercise price and grant date, and the
amount of cash bonus that the Compensation Committee may grant to
each officer as of the fiscal year end. For purpose of clarity and
in order to reflect the Compensation Committee’s 2018
decision as to 2017 performance, we are providing a pro-forma 2017
Officers Compensation to indicate all compensation that has been
earned and accrued by each listed officer in 2017.
Note 1:
Approved by Compensation Committee in January 2018 as earned 2017
performance award. included in 2017 year end general
accruals.
Note 2:
All these are restricted common stock and options under long-term
incentive plan approved by Compensation Committee in January and
June 2017.
Note 3:
Predominantly health insurance expenses.
Changes To Compensation Program
We
believe that 2017 was an outstanding year for us due, in large
part, to our achievement of significant talent recruitment, talent
retention in a fiercely competitive China market, clinical,
manufacturing, strategic alliance and funding milestones. With
respect to the 2017 compensation decisions, our Compensation
Committee and our Board focused on ensuring that a significant
portion of the total compensation awarded to the executive officers
were linked to meeting our long-term strategic plan and to create
long-term stockholder value. We further aligned our
executives’ interests with those of our stockholders through
the LTIP that we implemented in early 2017. The majority of our
2017 compensation to the executive officers was in the form of
equity incentive awards. We believe that equity awards incentivize
our executive officers to create long-term stockholder value.
Attracted by a potentially large cancer immune cell therapy market
in China, U.S. biopharmaceutical companies started to make inroads
in China, establishing their foothold in geographical areas close
to our China operations. We have spent many years recruiting talent
and training our people. Our employees are highly coveted and have
cultivated valuable relationships with the cell therapy clinical
partners. However, cell therapy is a relatively new science, the
talent pool is limited and there is a dearth of trained specialists
in this discipline. Against this backdrop, the Compensation
Committee conducted a review of our compensation program in late
January 2017. The Committee reviewed its compensation structure and
its individual components to ensure we provide a competitive
executive compensation scheme commensurate to retain and attract
talented leaders to bolster our continued journey to advance our
clinical trials and to bring our cell therapies to
commercialization. The Committee established a LTIP that took
effect in 2017 to mitigate increased talent retention risk. We
believe this new addition of the long-term incentive plan has
helped retain key personnel. One of the elements in the long-term
incentive is tied to long-term stock price performance. We believe
that upon diligent execution and product commercialization the
fundamentals will speak for itself and the stock price will
eventually reflect our value. The 2017 LTIP has not only encouraged
talent retention, it has further aligned our executive officers
with stockholders’ best interests. Hence the
Compensation Committee decided in January 2018 that there will not
be additional grant in equity compensation. However, commensurate
with the industry’s standard the Compensation Committee made
adjustment to the three key named executive officers’
salary.
Elements of Our Compensation Program and Why We Chose
Each
Main Compensation Components
Our
companywide compensation program, including for our key executives,
is broken down into three main components: base salary, performance
cash bonuses and potential long-term compensation in the form of
stock options or RSUs. We believe these three components constitute
the minimum essential elements of a competitive compensation
package in our industry. In January 2017, in an effort to boost
talent retention, we also created an LTIP for our named executives
and selected senior officers, which compensates such employees with
performance-based RSUs as well as time-based RSUs and stock
options.
Salary
Base
salary is used to recognize the leadership, experience, skills,
knowledge, execution, and responsibilities required of our
executives as well as recognizing the fiercely competitive nature
of the biopharmaceutical industry. This is determined partially by
evaluating our peer companies as well as the degree of
responsibility and experience levels of our executives and their
overall vision, execution and contributions to our company. Base
salary is one component of the compensation package for our key
executives; the other components being cash bonuses, annual equity
grants, a long-term incentive plan and our benefit programs. Base
salary is determined in advance whereas the other components of
compensation are awarded in varying degrees following an assessment
of the performance of the executive. This variegated approach to
compensation reflects the philosophy of our board of directors and
its Compensation Committee to emphasize and reward, on an annual
basis, performance levels achieved by our executives.
Performance Cash Bonus Plan
We have
a performance cash bonus plan under which bonuses are paid to our
executives based on achievement of our performance goals and
objectives established by the Compensation Committee and/or our
Board as well as on individual performance. The bonus program is
discretionary and is intended to: (i) strengthen the
connection between individual compensation and the Company’s
corporate achievements; (ii) encourage teamwork among all
disciplines within our company; (iii) reinforce our
pay-for-performance philosophy by awarding higher bonuses to higher
performing employees; and (iv) help ensure that our cash
compensation is competitive. The Compensation Committee and our
Board also has the discretion, after consulting with our CEO, to
not pay cash bonuses in order that we may conserve cash and support
ongoing development programs and commercialization efforts.
Regardless of our cash position, we consistently grant annual
merit-based stock options to continue incentivizing both our senior
management and our employees.
Based
on their employment agreements, each executive is assigned a target
payout under the performance cash bonus plan, expressed as a
percentage of base salary for the year. Actual payouts under the
performance cash bonus plan are based on an assessment of both
individual and corporate achievements, each of which is separately
weighted as a component of such officer’s target payout. For
executive officers, the corporate goals receive the highest
weighting in order to ensure that the bonus system for our
management team is closely tied to our corporate performance. Each
such employee also has specific individual goals and objectives as
well that are tied to the overall corporate goals the performance
of which is evaluated by the Compensation Committee and the
Board.
Equity Incentive Compensation
We view
long-term compensation, currently in the form of stock options and
RSUs, as a tool to align the interests of our executives and
employees generally with the creation of stockholder value, to
motivate our employees to achieve and exceed corporate and
individual objectives and to encourage them to remain employed by
us. While cash compensation is a significant component of
employees’ overall compensation, the Compensation Committee
and our Board, together with our CEO, believe that the driving
force of any employee working in a small biotechnology company
should be strong equity participation. We believe that this not
only creates the potential for substantial longer-term corporate
value but also motivates employees and fosters loyalty and
commitment with appropriate personal compensation. The Compensation
Committee believes that stock options and RSUs equity grants
constitute a significant retention incentive and a tool to foster
continuity of management, an important factor in business
continuity in a company with rich talents in a rapidly growing
industry in China.
Long Term Incentive Plan (LTIP)
In
January 2017, in anticipation of the commencement of substantial
clinical trials initiation towards product commercialization and to
mitigate risk of talent retention, the Compensation Committee
approved our LTIP. The LTIP is designed as an attractive incentive
for our senior management to focus on creating shareholder value
for us by advancing the clinical trials towards product
commercialization.
The
LTIP is a four-year long-term incentive award comprised of the
following grants from the 2014 Equity Incentive Plan:
1)
Stock Price
Sensitive Performance RSU awards (“Performance RSUs”)
to be vested and delivered in 2021; and
2)
Time Sensitive RSUs
and Stock Options, which vest monthly over a period of 48
months.
The
total number of Performance RSUs currently contemplated to be
issuable under the LTIP is 568,000. The Performance RSUs under the
LTIP will not vest upon granting, but instead are subject to
potential vesting in 2021 depending on the achievement of certain
stock price performance by us. Performance RSUs will be valued on
the date of issuance and will vest and be delivered in
2021.
The
total number of time sensitive RSUs currently contemplated to be
issuable under the LTIP is 283,500. The total number of time
sensitive stock options covered by the LTIP is 282,500. Both the
time sensitive RSUs and Stock Options are subject to monthly
vesting over a 4 year term.
Other Compensation
In
addition to the main components of compensation outlined above, the
LTIP also provides contractual severance and/or change in control
benefits to the executives and certain key members of management.
The change in control benefits for all applicable persons has a
“double trigger.” A double-trigger means that the
executive officers will receive the change in control benefits
described in the agreements only if there is both (1) a Change
in Control of our company (as defined in the agreements) and
(2) a termination by us of the applicable person’s
employment “without cause” or a resignation by the
applicable persons for “good reason” (as defined in the
agreements) within a specified time period following the Change in
Control. We believe this double trigger requirement creates the
potential to maximize stockholder value because it prevents an
unintended windfall to management as no benefits are triggered
solely in the event of a Change in Control while providing
appropriate incentives to act in furtherance of a change in control
that may be in the best interests of the stockholders. We believe
these severance/change in control benefits are important elements
of our compensation program that assist us in retaining talented
individuals at the executive and senior managerial levels and that
these arrangements help to promote stability and continuity of our
executives and senior management team. We also believe that the
interests of our stockholders will be best served if the interests
of these members of our management are aligned with theirs.
Furthermore, we believe that providing change in control benefits
lessens or eliminates any potential reluctance of members of our
management to pursue potential change in control transactions that
may be in the best interests of the stockholders. Finally, we
believe that it is important to provide severance benefits to
members of our management, to promote stability, business
continuity and to focus on the job at hand.
We do
not have deferred compensation plans, pension arrangements or
post-retirement health coverage for our executive officers or
employees. All of our employees not specifically under contract are
“at-will” employees, which mean that their employment
can be terminated at any time for any reason by either us or the
employee. Our key executives (as well as certain of our senior
managers) have employment agreements that provide lump sum
compensation in the event of their termination without cause or,
under certain circumstances, upon a Change of Control.
Determination of Compensation Amounts
A
number of factors impact the determination of compensation amounts
for our executives, including the individual’s role in our
company and individual performance, length of service with us,
competition for talent, individual compensation package,
assessments of internal pay equity and industry data. Stock price
performance has generally not been a significant factor in
determining annual compensation because the price of our common
stock is subject to a variety of factors outside of our
control.
Utilizing
publicly available information, our Compensation Committee
establishes a list of peer companies to best assure ourselves that
we are compensating our executives on a fair and reasonable basis.
We also utilize Hewitt-prepared data for below-executive level
personnel, which data focuses on similarly sized life science
companies in China. The availability of peer data is used by the
Compensation Committee strictly as a guide in determining
compensation levels with regard to salaries, cash bonuses and
performance related annual equity grants to all employees. However,
the availability of this data does not imply that the Compensation
Committee is under any obligation to follow peer companies in
compensation matters.
Pay Ratio Disclosure
In
August 2015 pursuant to a mandate of the Dodd-Frank Wall Street
Reform and Consumer Protection Act (the “
Dodd – Frank Act
”),
the SEC adopted a rule requiring annual disclosure of the ratio of
the median employee’s annual total compensation to the total
annual compensation of the principal executive officer
(‟
PEO
”). The
Company’s PEO is Mr. Liu. The purpose of the new required
disclosure is to provide a measure of the equitability of pay
within the organization.
We
identified the median employee by examining the 2017 total cash
compensation for all individuals, excluding our CEO, who were
employed by us as of December 31, 2017. We included all employees,
whether employed on a full-time, part-time, or seasonal basis. In
terms of geographic locations, 116 of our 125 employees are based
in China while the rest are based in the United
States.
The
following assumptions, adjustments, or estimates applied to our
analysis of total compensation: share based compensation has been
taken into consideration of total annual compensation, which is
calculated based on the grant date fair value calculated according
to U.S. GAAP without amortizing over the vesting periods.
Additionally, we annualized the compensation for all full-time and
temporary employees as of December 31, 2017. We believe that the
use of cash and equity compensation for all employees is a
consistently applied compensation measure because annual equity
awards to employees are a key component of our compensation program
and approximately 73% of our current employees receive annual
equity awards as part of their compensation. After identifying the
median employee based on total cash and equity compensation, we
calculated annual total compensation of such employee.The medical
benefits and other social funds borne by the Company was included
in the total compensation. The Company did not have a 401(k) Plan
in 2017.
As
illustrated in the table below, our 2017 PEO to median employee pay
ratio is 70:1.
Median Employee
total annual compensation
|
$
29,212
|
Mr. Liu
(‟PEO”) total annual compensation
|
$
2,051,063
|
Ratio of PEO to
Median Employee Compensation
|
70:1
|
Compensation of Directors
Prior
to the February 2013 merger with acquire Cellular Biomedicine Group
Ltd. (the “
Merger
”), by which the
Company acquired its primary biomedicine business, the Company
compensated directors through options to purchase common stock as
consideration for their joining our Board and/or providing
continued services as a director. Directors were not provided with
cash compensation, although the Company would reimburse their
expenses.
After
the Merger, the Company determined that the annual cash
compensation (prorated daily) to be paid to each director shall
consist of $30,000 for each independent director and $20,000 for
each non-independent director. In addition, each independent
director of the Board is eligible to receive a non-qualified option
grant under the Plan, under which such director’s initial
option grant shall be for a number of shares of common stock as set
forth in the Independent Director Agreement for each such director
and shall include such other terms to be determined by the Board
and or its Compensation Committee.
On
September 19, 2015, the Company held a Board meeting and approved
new director compensation plan. The director compensation
adjustment was made as a result of a compensation review undertaken
by a professional, independent firm which included a comparison
with industry peers. The Committee determined that annual cash
compensation (prorated daily based on a 360 day year for any
portion of the year if such director serves for less than a full
term) to be paid to each non-independent director shall consist of
: (i) $36,000 per year for services as a director, plus (ii) either
(x) $40,000 for each committee on which such director serves, or
(y) $110,000 for each committee on which such director serves as
chairperson (or, if such director is the chairman of the full
board, for such chair position). Such compensation shall be paid,
at each director’s election, in either (a) thirty percent
(30%) in cash and seventy percent (70%) in non-qualified stock
options, or (b) fifty percent (50%) in cash and fifty percent (50%)
in non-qualified stock options. On January 28, 2018, the
Compensation Committee reviewed our compensation of the Directors
and decided that there will be no change to the current
compensation structure.
Accordingly,
compensation for independent non-executive directors in calendar
year 2017, as expressed on an annualized basis (reflecting
adjustments during the year due to changes in committee
composition), was as follows:
|
Cash compensation for 2017 ($)
|
Options granted for 2017 (note)
|
|
|
|
|
|
|
|
Terry
A. Belmont
|
67,800
|
14,648
|
1
|
226,000
|
|
|
|
|
|
Chun
Kwok Alan Au
|
55,800
|
12,056
|
1
|
186,000
|
|
|
|
|
|
Nadir
Patel
|
93,000
|
8,611
|
1
|
186,000
|
|
|
|
|
|
Zhou
Hansheng
|
55,800
|
12,056
|
1
|
186,000
|
|
|
|
|
|
Ji
Gang
|
22,800
|
4,926
|
1
|
76,000
|
Note 1: These non-qualified options with exercise price of $10.8
were all granted on April 28, 2017 and will be fully vested on
April 28, 2018.
PROPOSAL 1 — ELECTION OF DIRECTORS
Nominees for Election
The
Board determined it was in the best interest of the Company to
authorize the nomination of Wen Tao (Steve) Liu, Nadir Patel and
Bosun S. Hau for a new Class III term. Accordingly, the Board has
authorized the nomination of these three nominees to serve as Class
III directors, and Class III has three director positions up for
election at the Annual Meeting.
Subsequent
to stockholder approval of this proposal, the Board will have a
total of eight members, divided into three classes as
follows:
Class
|
|
Term
|
|
Directors
|
|
|
|
|
|
Class
I
|
|
Class I
directors serve for a term of three years, and are elected by the
stockholders at the beginning of each term. The next full 3-year
term for Class I directors extends from the date of the 2019 annual
meeting to the date of the 2022 annual meeting.
|
|
1.
Terry A. Belmont
2.
Hansheng Zhou, Ph.D
|
|
|
|
|
|
Class
II
|
|
Class
II directors serve for a term of three years, and are elected by
the stockholders at the beginning of each term. The next full
3-year term for Class II directors extends from the date of the
2017 annual meeting to the date of the 2020 annual
meeting.
|
|
3. Chun
Kwok Alan Au
4. Gang
Ji
5.
Bizuo (Tony) Liu
|
|
|
|
|
|
Class
III
|
|
Class
III directors serve for a term of three years, and are elected by
the stockholders at the beginning of each term. The next full
3-year term for Class III directors extends from the date of this
2018 Annual Meeting to the date of the 2021 annual
meeting.
|
|
6. Wen
Tao (Steve) Liu
7.
Nadir Patel
8.
Bosun S. Hau
|
Our
Board has nominated three Class III director candidates for
election at the Annual Meeting, who are the same individuals listed
above in position numbers 6, 7 and 8. Each nominee has agreed, if
elected, to serve a three-year term or until the election and
qualification of his successor. If any nominee is unable to stand
for election, which circumstance we do not anticipate, the Board
may provide for a lesser number of directors or designate a
substitute. In the latter event, shares represented by proxies may
be voted for a substitute nominee.
If a
quorum is present at the Annual Meeting, then nominees will be
elected by a plurality of the votes of the shares of common stock
present in person or represented by proxy and entitled to vote at
the meeting. There is no cumulative voting in the election of
directors.
The
following biographical information is furnished as to each nominee
for election as a Class III director:
Wen Tao (Steve) Liu, Director
Wen Tao
(Steve) Liu has been a director of the Company since October 2013.
Dr. Liu has over 30 years of professional career encompassing
biomedicine, clean energy and semiconductor industries. He has led
multi-national businesses as well as entrepreneurial companies,
with a proven track record of delivering financial results and
shareholder value. He served on board of directors of various
public and private companies in the United States, China, Hong
Kong, Canada, and Australia. Dr. Liu previously served
as Chairman and CEO of Cellular Biomedicine Group Inc. In
October 2013, he transitioned to the role of Executive
Chairman of the Board and, in February 2016, to the role of
director and strategic advisor to CBMG’s management. Prior to
CBMG, Dr. Liu served as President and CEO of Seeo Inc. from July
2010 to Feb 2012, and as director to Aug 2015 where he led a team
of scientists and entrepreneurs for the development of solid-state
lithium ion battery for electric vehicles and smart grid
applications. Under his leadership, Seeo received multiple funding
from Department of Energy and venture capital firms. Seeo was
elected to Global Cleantech 100 and top Energy Technology Startups
in 2011. Before that, Mr. Liu worked 25 years in semiconductor
industry. From 2003 to 2009, he was President and CEO of Shanghai
Huahong NEC Electronics Company (now HHGRACE), for which he
received the White Magnolia Award from Shanghai Government for his
contribution to international collaboration and economic
development of the city. From 1989 to 2002, he was Vice President
and GM of Peregrine Semiconductor, Vice President and GM of
Integrated Device Technology, Vice President and General Manager of
Quality Semiconductor and Managing Director of Quality
Semiconductor Australia. Mr. Liu served Cypress Semiconductor in
various engineering capacity from 1984 to 1989. Mr. Liu earned a
Bachelor’s degree in Chemistry from Nanjing University,
Nanjing China. He holds a Doctorate in Physical Chemistry from
Rensselaer Polytechnic Institute, Troy New York. In considering Dr.
Liu’s eligibility to serve on the Board, the Board considered
Dr. Liu’s board experience as well as his prior experience as
a leader and executive officer.
Nadir Patel – Director
Mr.
Patel has served as an independent director of the Company since
July 2014. Mr. Patel is a senior Canadian diplomat currently
serving in India. He previously held the position of Chief
Financial Officer for Canada’s Department of
Foreign Affairs, Trade and Development, which included the
responsibilities of strategic planning, corporate finance and
operations, risk management and performance. Mr. Patel has
previously served as Canada’s Consul General in Shanghai,
promoting trade and investment between Canada and China, as well as
Canada’s Chief Air Negotiator where he negotiated
bilateral treaties on behalf of the Canadian
government. Mr. Patel also served on the Board of
Governors of the International Development Research Centre (and on
its Audit and Finance Committee), as well as the Advisory Board of
Wilfrid Laurier University’s School of Business and
Economics. He has a Master of Business Administration (MBA) from
New York University’s Stern School of Business, the London
School of Economics and Political Science, and the HEC Paris
School of Management. In considering Mr. Patel’s
eligibility to serve on the Board, the Board considered his
financial expertise, international experience, and knowledge of
corporate governance practices through his past participation on
public sector Boards. Mr. Patel serves as Chair of the Audit
Committee and as a member of the Nominating and Governance
Committee for CBMG.
Bosun S. Hau– Director
Mr. Hau
has been a director of the Company since February 2018. Mr. Hau has
nearly 15 years of healthcare industry experience, primarily as an
investor in both private and publicly-listed companies. Since
October 2015, Mr. Hau has served as a Managing Director and Partner
of Sailing Capital. From August 2009 to October 2015, Mr. Hau
served as a Partner of MVM Life Science Partners. From July 2004 to
August 2007, Mr. Hau served as an equity research analyst covering
the medical device and pharmaceutical industries for JP Morgan
Securities, Inc. and Prudential Securities, Inc. Since 2009, Mr.
Hau has served as a member of the board of directors of several
private biotechnology, specialty pharmaceutical and medical device
companies. Mr. Hau received a B.S. in Molecular and Cellular
Biology, a B.S.H.S. in Physiological Sciences and a B.A. in
Psychology from the University of Arizona, an M.Sc. in
Biotechnology from Johns Hopkins University and an M.B.A in Finance
and Health Management from the Wharton School at the University of
Pennsylvania. The Company believes Mr. Hau’s extensive
experience in the venture capital/private equity and financial
services industries qualifies him to serve on our Board. In
considering Mr. Hau’s eligibility to serve on the Board, the
Board considered Mr. Hau’s extensive biomedicine and
pharmaceutical background as well as venture capital tenure in the
industry. Mr. Hau was nominated by Sailing Capital Overseas
Investment Ltd. in accordance with the terms of the private
placement consummated in February 2018.
Compensation of Directors
The
Company has determined that the annual cash compensation (prorated
daily) to be paid to each director shall consist of $36,000 for
each director. In addition, each independent director of the Board
is eligible to receive a non-qualified option grant under the
Company’s stock incentive plan, under which such
director’s initial option grant shall be for a number of
shares of common stock as set forth in the Independent Director
Agreement for each such director and shall include such other terms
to be determined by the Board and or its Compensation
Committee.
Non-Executive Director Agreement
The
Company has and will continue to enter into agreements with
independent non-executive directors. Effective January 2016,
directors are paid based on three components from the September
2015 Compensation Committee’s engagement with Deloitte
Consulting LLP (“
Deloitte Consulting
”) to
review the competitiveness of the Company’s non-employee
director compensation program. The three components (each prorated
daily based on a 360 day year for any portion of the year if he
serves for less than a full term) are: (i) $36,000 per year for
services as a director, plus (ii) $40,000 for each committee on
which such director serves, and/or (iii) $110,000 for each
committee for which such director serves as chairperson (or if such
director is chair of the full board, for such chair position). Such
compensation shall be paid, at each director’s election, in
either (x) thirty percent (30%) cash and seventy percent (70%) in
non-qualified stock options, or (y) fifty percent (50%) in cash and
fifty percent (50%) in non-qualified stock options. Such options
shall vest on the anniversary date of the director’s
appointment to the committee or to his position as committee chair,
or on the next annual meeting date as the case may be. Deloitte
Consulting was solely engaged to review the competitiveness of the
Company’s non-employee director compensation program. It
determined different components of the director compensation based
on custom industry peer group data and the National Association of
Corporate Directors’ ("
NACD
”) 2014-2015 Director
Compensation Report. Director compensation data from the industry
peer group was used as the predominant source to understand the
competitiveness of the Company’s director compensation
program, while information from the NACD survey provided a
supplemental market reference. Deloitte Consulting’s analysis
of director compensation included these components of pay: annual
retainer, board and committee meeting fees, additional committee
retainers (including both chair and member retainers), total cash
compensation (the sum of annual cash retainer and meeting fees),
annual equity awards and total compensation (the sum of total cash
compensation and annual equity awards). The Company reviewed the
director’s compensation program again in January 2018 and
determined that no changes should be made.
Consulting Agreement with Wen Tao (Steve) Liu
The
Company entered into a consulting agreement with Wen Tao (Steve)
Liu, which is effective as of February 7, 2016 and was to terminate
on February 7, 2018, pursuant to which Steve Liu will advise the
Chief Executive Officer on strategic opportunities, advise the
Company on Chinese hospitals management and provide other
consulting services and advice as reasonably requested by the
Company from time to time. The Company agreed to: (i)
pay cash compensation of $3,666 per month; (ii) reimburse the
actual travel and other out-of-pocket expenses incurred solely in
connection with services performed pursuant to the Company’s
request; and (iii) pay premiums changed to continue medical
coverage pursuant to the Company’s existing employee health
plan. Provided Steve Liu is ineligible to receive, or
the Company is not able to provide, continuation coverage under the
Company’s existing employee health plan, the Company shall
pay cash payment equal to $1,667 for each month during the period
and aggregate cash payment should not exceed $20,000; (iv) the
terms of stock options shall be amended as additional consideration
for the services rendered as follows: (1) all options will expire
on May 6, 2017 or 3 months after Steve Liu ceases to serve on the
Board, whichever is later; (2) Any unvested portion of the
non-qualified stock option issued in 2013 with a strike price of
$3.00 will continue to vest at a monthly rate until fully vested;
and (3) Any unvested portion of the non-qualified stock option
issued in 2015 with a strike price of $15.53 will continue to vest
at a monthly rate until fully vested.
On
January 28, 2018 the Compensation Committee approved the renewal of
Steve Liu’s agreement for another two-year term, increased
the cash compensation from $3,666 per month to $5,333 per month,
and increased the continuation coverage under the Company’s
existing employee health plan from $20,000 to $36,000.
The
following table sets forth compensation actually paid to directors
as of December 31, 2017:
2017 DIRECTOR COMPENSATION TABLE
|
Year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
and Principal Position
|
|
|
|
|
|
|
|
|
|
Terry
A. Belmont
|
2017
|
67,800
|
-
|
-
|
116,334
|
-
|
-
|
-
|
184,134
|
Bizuo
(Tony) Liu *
|
2017
|
36,000
|
-
|
-
|
-
|
-
|
-
|
-
|
36,000
|
Wen Tao (Steve) Liu *
(note 3)
|
2017
|
36,000
|
-
|
-
|
-
|
-
|
-
|
79,735
|
115,735
|
Nadir
Patel
|
2017
|
80,600
|
-
|
-
|
68,389
|
-
|
-
|
-
|
148,989
|
Chun
Kwok Alan Au
|
2017
|
55,800
|
-
|
-
|
95,749
|
-
|
-
|
-
|
151,549
|
Hansheng
Zhou
|
2017
|
43,868
|
-
|
-
|
95,749
|
-
|
-
|
-
|
139,617
|
Gang
Ji
|
2017
|
-
|
-
|
-
|
39,122
|
-
|
-
|
-
|
39,122
|
*
Non-independent director
Note 1:
Salary disclosed above is on
cash basis. As of December 31, 2017, there was director fee of
$25,882 due to Mr. Gang Ji.
Note 2:
Option awards is the grant date
fair value calculated according to U.S. GAAP without amortizing
over the vesting periods.
Note 3
: In January 2016, the Company and Steve Liu mutually
agreed not to renew their employment agreements at the end of their
respective terms. The Company then entered into consulting
agreements with Steve Liu, which became effective as of February 7,
2016. These consultation fees are included as all other
compensation in above table. Details of the consulting agreement
could be referred to in the section entitled
“—Consulting Agreement with Wen Tao (Steve) Liu”
above.
Risk Management in Compensation Policies and
Procedures
Due to
the Company's lack of cash flow, it has historically compensated
its officers predominantly in stock and with a smaller cash salary.
By compensating these officers predominantly in stock, we believe
they have a greater incentive to take steps to increase the value
of the Company's stock than they would if compensated in cash. As
the Company's value is largely based on the value of the equity it
receives from its stockholders, paying the officers using Company
stock may incentivize them to take additional risks in an attempt
to increase the value of the Company's stock.
Vote and Recommendation
The
affirmative vote of the holders of a plurality of the shares of
common stock present in person or represented by proxy and entitled
to vote on the nominees will be required to approve each nominee.
This means that the three nominees with the greatest number votes
for election will be elected.
Our Board recommends a vote “FOR” each of the
nominees.
PROPOSAL 2 – RATIFICATION OF APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The
Audit Committee of the Board has appointed BDO China as our
independent registered public accounting firm to audit our
financial statements for the fiscal year ending December 31, 2018.
BDO China has also served as our independent registered public
accounting firm for the fiscal years ended December 31, 2017, 2016
and December 31, 2015.
Stockholder
ratification of the selection of BDO China as our independent
registered public accounting firm is not required by our Bylaws or
the Delaware General Corporation Law. The Board seeks such
ratification as a matter of good corporate practice. Should the
stockholders fail to ratify the selection of BDO China as our
independent registered public accounting firm, the Audit Committee
will reconsider whether to retain that firm for fiscal year 2018.
In making its recommendation to the Board that stockholders ratify
the appointment of BDO China as our independent registered public
accounting firm for the fiscal year ending December 31, 2018, the
Audit Committee considered whether BDO China’s provision of
non-audit services is compatible with maintaining the independence
of our independent registered public accounting firm.
Audit Fees
The
Company paid or accrued the following fees in each of the prior two
fiscal years to its accountants, including to its principal
accountants, BDO China:
|
Year ended
December 31,
2017
|
Year ended
December 31,
2016
|
|
|
|
Audit
and review fees
|
|
|
BDO
USA, LLP
|
25,000
|
166,051
|
BDO
China Shu Lun Pan Certified Public Accountants LLP
|
314,634
|
296,681
|
Shanghai
Ying Ming De CPA SGP
|
768
|
710
|
Wuxi
Zhong Xing CPA Co., Ltd.
|
838
|
710
|
C.K.Lam
& Co.
|
1,733
|
-
|
|
342,973
|
464,152
|
|
|
|
Other
assurance and tax fees
|
|
|
Shanghai
Ying Ming De CPA SGP
|
1,536
|
1,421
|
Wuxi
Zhong Xing CPA Co., Ltd.
|
2,792
|
2,415
|
C.K.Lam
& Co.
|
385
|
1,764
|
Total
of audit related and tax fees
|
4,713
|
5,600
|
|
|
|
Overall
total of audit, review and assurance fees
|
$
347,686
|
$
469,752
|
Audit
fees include fees for the audit of our annual financial statements,
reviews of our quarterly financial statements, and related consents
for documents filed with the SEC. All other fees include fees for
auditing of listing agreement clients as required by the SEC for
listing.
The
Audit Committee is required to review and approve in advance the
retention of the independent auditors for the performance of all
audit and lawfully permitted non-audit services (if any) and the
fees for such services. The Audit Committee may delegate to one or
more of its members the authority to grant pre-approvals for the
performance of non-audit services, and any such Audit Committee
member who pre-approves a non-audit service must report the
pre-approval to the full Audit Committee at its next scheduled
meeting. All of the services provided by our independent registered
public accountants described above were approved by our Audit
Committee.
Our
principal accountants did not engage any other persons or firms
other than the principal accountant’s full-time, permanent
employees.
The
Board has received and reviewed the written disclosures and the
letter from the independent registered public accounting firm
required by Public Company Accounting Oversight Board
(“PCAOB”), and has discussed with its auditors its
independence from the Company. The Board has considered whether the
provision of services other than audit services is compatible with
maintaining auditor independence.
Auditor Representatives at Annual Meeting
We
expect that representatives of BDO China will not be present at the
Annual Meeting.
Vote Required and Recommendation
The
affirmative vote of the holders of shares of common stock entitled
to vote must exceed the votes cast against this proposal for the
proposal to be approved.
The Board recommends that stockholders vote “FOR”
ratification of the appointment of BDO China Shu Lun Pan Certified
Public Accountants LLP
as
our independent registered public accounting firm for the fiscal
year ending December 31, 2018 as described in this Proposal
2.
EXECUTIVE COMPENSATION AND RELATED INFORMATION
Executive Officers and Directors
Set
forth below is information regarding the Company's current
directors and executive officers as of the date of this Proxy
Statement. The executive officers serve at the pleasure of the
Board of Directors.
Effective
February 3, 2017, Richard Wang resigned as the Company’s
Chief Operating Officer. Additionally, on June 26, 2017, Meng Xia
was appointed as the Company’s Chief Operating Officer but
transitioned to the role of Head of Early Diagnosis and
Intervention on February 6, 2018. As a result, although they are
not listed as a current officer below, Mr. Wang and Ms. Xia are
listed as “named executive officers” (as such term is
defined in Item 402 of Regulation SK promulgated under the Exchange
Act) and the terms of their compensation is disclosed
herein.
On
February 5, 2018, the Company closed a private placement of
approximately $30.6 million. Pursuant to the securities purchase
agreement for this private placement, the investors have the right
to nominate one director to the board of directors of the Company
to stand for election at the 2018 Annual Meeting of Stockholders.
Effective as of the closing of above private placement, Bosun S.
Hau was appointed as a nonexecutive Class III director of the
Company pursuant to the Company’s agreement with investors in
connection with the private placement consummated in February
2018.
The
directors are divided into three classes and serve three year
terms, as follows:
Name
|
|
Age
|
|
Position
|
|
Term
|
Wen Tao (Steve) Liu
|
|
62
|
|
Director
|
|
Class III
|
Hansheng Zhou (2)
|
|
54
|
|
Independent Director
|
|
Class I
|
Tony (Bizuo) Liu
|
|
53
|
|
Chief Executive Officer and Chief Financial Officer
|
|
Class II
|
Chun Kwok Alan Au (1)(3)
|
|
45
|
|
Independent Director
|
|
Class II
|
Gang Ji (2)
|
|
43
|
|
Independent Director
|
|
Class II
|
Terry A. Belmont (1)(2)(3)
|
|
71
|
|
Chairman of the Board and Independent Director
|
|
Class I
|
Nadir Patel (1)(3)
|
|
47
|
|
Independent Director
|
|
Class III
|
Bosun S. Hau
|
|
39
|
|
Independent Director
|
|
Class III
|
Yihong Yao
|
|
50
|
|
Chief Scientific Officer
|
|
N/A
|
Andrew Chan
|
|
60
|
|
Chief Legal Officer (General Counsel) Secretary and Senior Vice
President
|
|
N/A
|
(1)
|
Member
of Audit Committee
|
(2)
|
Member
of Compensation Committee
|
(3)
|
Member
of Nominating and Corporate Governance Committee
|
There
are no family relationships between any of our directors or
executive officers. There is no arrangement or understanding
between any of the directors or officers of the Company and any
other person pursuant to which any director or officer was or is to
be selected as a director or officer, and there is no arrangement,
plan or understanding as to whether non-management stockholders
will exercise their voting rights to continue to elect the current
directors to the Company’s Board. Except for the board
observer seat granted to Wuhan Dangdai as a condition of its $43.3
million investment in the Company and the nomination of Bosun S.
Hau as a Class III director at this Annual Meeting, there are no
arrangements, agreements or understandings between non-management
stockholders that may directly or indirectly participate in or
influence the management of the Company’s affairs. There are
no agreements or understandings for any officer or director to
resign at the request of another person, and none of the officers
or directors are acting on behalf of, or will act at the direction
of, any other person.
The
following is a brief description of the business experience during
the past five years of our executive officers and directors as of
the date of this Proxy Statement who are not up for election at
this Annual Meeting:
Bizuo (Tony) Liu, Chief Executive Officer, Chief Financial Officer
and Director
Tony
Liu has served as the Company’s Chief Executive Officer since
February 2016 and Chief Financial Officer and Secretary since
January 2014.He has also served as Director of the Company from
February 2013 to January 2014. Since January 2013, Mr. Liu has
served as the Corporate Vice President at Alibaba Group, handling
Alibaba’s overseas investments. Since joining
Alibaba in 2009, Mr. Liu has severed in various positions including
Corporate Vice President at B2B corporate investment, corporate
finance, and General Manager for a global ecommerce
platform. From July 2011 to December 2012, he served as
CFO for HiChina, a subsidiary of Alibaba, an internet
infrastructure service provider. Prior to joining
Alibaba, Mr. Liu spent 19 years at Microsoft Corporation where he
served a variety of finance leadership roles. He was the General
Manager at Corporate Strategy looking after Microsoft China
investment strategy and Microsoft corporate strategic planning
process. Mr. Liu was a leader in Microsoft corporate
finance organization during the 1990s as Corporate Accounting
Director. Mr. Liu earned a B.S. degree in Physics from
Suzhou University, Suzhou, China and has completed MBA/MIS course
work at Seattle Pacific University. Mr. Liu obtained his Washington
State CPA certificate in 1992.
In
considering Mr. Liu’s eligibility to serve on the Board, the
Board considered Mr. Liu’s leadership, extensive accounting
and financial control background, as well as multinational
corporate executive management experience in diverse
industries.
Hangsheng Zhou – Director
Dr.
Zhou has been a director of the Company since July 2016. Dr. Zhou
is a well-respected and seasoned executive with over 28 years of
experience in the science and technology industries in China. He
currently serves as Chief Executive Officer and Chairman of Wuhan
Dangdai Science & Technology Industries Group Co., Ltd.
(“Wuhan Dangdai”), a China based privately held
conglomerate with a substantial medical and pharmaceutical
portfolio in China. Dr. Zhou previously served as Chief Financial
Officer and Managing Director of Wuhan Humanwell Healthcare Group
Co., Ltd. He holds a bachelor’s degree in Cell Biology and
masters in Animal Biology from Wuhan University and has also earned
his PhD degree in Applied Chemistry from Beijing Institute of
Technology. Dr. Zhou is a member of the Company’s
Compensation Committee. In considering Dr. Zhou’s eligibility
to serve on the Board, the Board considered his leadership
experience in managing both large pharmaceutical company in China
and multinationals in substantially similar
industries.
Chun Kwok Alan Au - Director
Alan
was served as a member of our Board since November 2014. He
currently serves as a member of the Audit Committee and Chair of
the Nomination Committee.
Alan
has over 15 years of experience across healthcare investment
banking, private equity and venture capital investments in
Asia/China. He is Founder/Managing Partner at GT Healthcare Group,
a private equity fund focusing on cross border healthcare
investments.
Alan is
an Adviser to Simcere Pharmaceutical Group, a leading
pharmaceutical company in China (previously listed on NYSE:SCR,
privatized in Dec 2013, when Alan was Chairman of the Special
Committee on the Board of Directors). He was also a member of the
Board, Audit Committee and Compensation Committee of China Nepstar
Chain Drugstore Ltd. (NYSE: NPD, privatized in Sep 2016) from 2013
to 2016. Alan also serves as a panel member for the Entrepreneur
Support Scheme (ESS Program) of the Innovation and Technology Fund
of the Hong Kong SAR Government since 2014.
Before
that, Alan was Head of Asia Healthcare Investment Banking of
Deutsche Bank Group, advising healthcare IPOs and M&A in the
region between 2011 and 2012. Prior to that, he was Executive
Director at JAFCO Asia Investment Group, responsible for healthcare
investments in China from 2008 to 2010, and Investment Director at
Morningside Group, responsible for healthcare investments in Asia
from 2000 to 2005. From 1995 to 1999, Mr. Au worked at KPMG and
KPMG Corporate Finance Ltd., responsible for regional M&A
transactions and financial advisory services.
Alan is
a Certified Public Accountant in the U.S. and holds the Chartered
Financial Analyst (CFA) designation. He is an associate member of
the Hong Kong Institute of Financial Analysts and member of the
American Institute of Certified Public Accountants. Alan received
his Bachelor's degree in Psychology from the Chinese University of
Hong Kong, and a Master's degree in Management from Columbia
Business School in New York. In considering Mr. Au’s
eligibility to serve on the Board, the Board considered his
expertise in healthcare investment and his financial
acumen.
Terry A. Belmont – Chairman of the Board and
Director
Mr.
Belmont has been serving CBMG as an Independent Director since
December 2013 and as Vice Chairman of the Board from March 2015 to
January 2016, when he was elected to serve as Chairman of the
Board. He also serves as a member of the Audit Committee and the
Compensation Committee.
Mr.
Belmont has over 20 years of experience in leading major academic
and non-academic medical centers and healthcare entities with
multi-campus responsibility. Since 2009, Mr. Belmont has overseen
UC Irvine Medical Center, the main campus of UC Irvine Health, in
Orange, Calif., and its licensed ambulatory facilities in Orange,
Irvine, Costa Mesa, Anaheim and Santa Ana. Since his arrival in
2009, Mr. Belmont has led several expansion and renovation
projects. He helped open the state-of the-art UC Irvine Douglas
Hospital and led the development of a patient-centered healing
garden and a 7-story clinical laboratory building. Mr. Belmont
launched a 10-year facility master planning project for facility
development at UC Irvine Medical Center and clinics throughout
Orange County. Prior to joining UC Irvine Medical Center, Mr.
Belmont served as CEO of Long Beach Memorial Medical Center and
Miller Children’s Hospital from 2006-2009. He has also served
as president and chief executive officer in several entities,
including St. Joseph Hospital of Orange, Pacific Health Resources,
California Hospital Medical Center and HealthForward.
Mr.
Belmont’s substantial community involvement includes board
positions with the Orange County World Affairs Council, Southern
California College of Optometry, American Heart Association and
Children’s Fund. He serves on the Board of Trustees of the
University of Redlands. Mr. Belmont received his master’s in
public health with a major in hospital administration from UC
Berkeley, and a bachelor’s in business from the University of
Redlands. In considering Mr. Belmont's eligibility to serve on the
Board, the Board considered Mr. Belmont's business acumen in
the healthcare industry.
Gang Ji – Director
Mr. Ji
has been a director of the Company since October 2016. Mr. Ji has
sixteen years of experience in finance and investment. He has been
serving as Vice President of Ant Financial since January 2016
responsible for global strategic investments of Ant Financial.
Before joining Ant Financial, he served Alibaba Group as Vice
President responsible for strategic investment for seven years.
Prior to joining Alibaba, Mr. Ji worked for several venture capital
funds and also served as an auditor of KPMG. He currently serves as
a director of Asia Game Technology Ltd., a company listed on the
Hong Kong Stock Exchange (HKEX: 8279) as well as several private
technology companies. Mr. Ji holds a bachelor’s degree in
international business management from University of International
Business and Economics (Beijing). He currently serves on the
Company’s Compensation Committee. In considering Mr.
Ji’s eligibility to serve on the Board, the Board considered
Mr. Ji’s board experience, leadership, extensive accounting
and financial control background, venture capital tenure as well as
multinational corporate executive management experience in a highly
regulated industry.
Yihong Yao – Chief Scientific Officer
Mr. Yao
has been Chief Scientific Officer since August 2015. Mr. Yao brings
nearly twenty years of experience in the life sciences industry and
academia with strong expertise in clinical biomarker discovery and
development, strategy and personalized medicine. From 2005 until
his appointment as Chief Scientific Officer, Mr. Yao served in
various senior scientific positions at MedImmune, including most
recently as director and head of pharmacogenomics and
bioinformatics in the department of Translational Sciences from
2011 to July 2015. From 2001 to 2005, Mr.Yao served as Senior
Scientist, Translational Science at Abbott Bioresearch Center. He
holds a bachelor’s degree in Biochemistry from Fudan
University, Shanghai, China, a master’s degree in
Bioinformatics from Boston University, and a PhD in Molecular
Biology and Biochemistry from the University of Kansas, and he was
a postdoctoral fellow at Johns Hopkins University School of
Medicine.
Andrew Chan – Secretary, Senior Vice President and Chief
Legal Officer (General Counsel)
Mr.
Chan served as Senior Vice President of Corporate Business
Development since January 2014, and was appointed Secretary and
General Counsel in September 2016 and February 2018, respectivelly.
He previously served as Secretary and Chief Financial Officer from
February 2011 to January 2014. From 2003 until 2011, Mr. Chan was
with Jazz Semiconductor and held various management roles focusing
on business operations, business and corporate development. Prior
to 2003, Mr. Chan was Vice President of Business Operations and
Supply Chain Management for Mindspeed Technologies. In 2000, Mr.
Chan served as Vice President of Supply Chain Management at
Conexant Systems. Mindspeed and Jazz were spin-offs of Conexant.
Previously, Mr. Chan’s focus was in aviation and aerospace
services. He served in diverse technical and operations management
roles at Eastern Airlines, Continental Express and at Allied Signal
(now called Honeywell) as Sr. Director of Strategic Business
Development. Mr. Chan earned a B.S. degree in Management from Embry
Riddle Aeronautical University and an MBA with specialization in
Computer System Management and Operations Research from Nova
University. He also holds a Jurisprudence Doctorate (J.D.) degree
from South Texas College of Law.
Summary Compensation Table
The
following table sets forth for the years ended December 31, 2017,
2016, and 2015 compensation awarded to, paid to, or earned by,
Bizuo (Tony) Liu (our current CEO and CFO), Andrew Chan (our former
CFO, Senior Vice President, Corporate Business Development and
Secretary), Richard L Wang (our former COO), Yihong Yao (our CSO)
and Xia Meng, (our former COO).
|
Year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
and Principal Position
|
|
|
|
|
|
|
|
|
Bizuo
(Tony) Liu, Chief Executive Officer, Chief Financial Officer and
Director
|
2017
|
300,000
|
100,000
|
238,750
|
1,384,800
|
-
|
-
|
27,513
|
|
2016
|
240,000
|
-
|
-
|
637,240
|
-
|
-
|
23,017
|
|
2015
|
226,750
|
-
|
-
|
3,507,780
|
-
|
-
|
-
|
Andrew
Chan, Senior Vice President, Corporate Business Development,
Company Secretary
|
2017
|
259,796
|
80,000
|
45,745
|
351,630
|
-
|
-
|
38,028
|
|
2016
|
242,584
|
80,000
|
-
|
206,700
|
-
|
-
|
26,015
|
|
2015
|
228,338
|
61,217
|
-
|
-
|
-
|
-
|
-
|
Richard
L. Wang, Former Chief Operating Officer
|
2017
|
35,442
|
50,000
|
-
|
|
-
|
-
|
|
|
2016
|
225,000
|
41,664
|
-
|
137,800
|
-
|
-
|
14,126
|
|
2015
|
128,461
|
-
|
590,800
|
659,100
|
-
|
-
|
-
|
Yihong
Yao, Chief Scientific Officer
|
2017
|
259,375
|
75,000
|
52,716
|
244,065
|
-
|
-
|
25,225
|
|
2016
|
250,000
|
30,648
|
-
|
137,800
|
-
|
-
|
23,985
|
|
2015
|
116,045
|
-
|
613,865
|
490,000
|
-
|
-
|
-
|
Xia
Meng, Former Chief Operating Officer(2)
|
2017
|
91,550
|
-
|
37,094
|
161,650
|
-
|
-
|
19,863
|
|
2016
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
2015
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(1)
All other
compensation of these officers represents health insurance
expenses.
(2)
Xia Meng was
appointed as COO of the Company on June 22, 2017 and transitioned
to the role of Head of Early Diagnosis and Intervention in February
6, 2018. Before June 22, 2017, she was the consultant of the
Company and all other compensation comprised of consulting fee of
$7,459 before the employment of COO and health insurance expense of
$12,404.
(3)
Stock awards is
comprised of fair value of the delivered stock and cash payout of
surrendered restricted stock for individual income tax payment
purpose.
(4)
Salary, bonus and
all other compensation included above are on a cash basis. Pursuant
to the Compensation Committee’s January 28, 2018 meeting and
the Board’s Executive Session on January 28, 2018 the Board
has granted the following compensation and awards for 2017. In
approving the cash bonuses listed below, the Compensation Committee
reviewed the performance results of the executives listed and the
challenges they managed to overcome in 2017.
|
|
|
|
Bizuo
(Tony) Liu
|
150,000
|
|
|
Andrew
Chan
|
115,000
|
|
|
Yihong
Yao
|
78,600
|
The
following table sets forth information concerning outstanding stock
options for each named executive officer and director as of
December 31, 2017.
|
Outstanding
Equity Awards at Fiscal Year-End
|
|
Name
|
Option awards
|
Stock awards
|
|
Number of securities underlying unexercised options(#)
exercisable
|
Number of securities underlying unexercised options (#)
unexercisable
|
Equity incentive plan awards: Number of securities underlying
unexercised unearned options (#)
|
Option exercise price ($)
|
|
Number of shares or units of stock that have not
vested(#)
|
Market value of shares of units of stock that have not
vested($)
|
Equityincentive plan awards: Number of unearned shares, units or
other rights that have not vested (#)
|
Equityincentive plan awards: Market or payout value of unearned
shares, units or other rights that have not vested ($)
|
(a)
|
|
|
|
|
|
|
|
|
|
Wen
Tao (Steve) Liu (1)
|
146,667
|
-
|
-
|
$
3.00
|
2017-5-6
or 3 months after board role ends, whichever is later
|
-
|
-
|
-
|
-
|
Wen
Tao (Steve) Liu (2)
|
22,444
|
-
|
-
|
$
15.53
|
2017-5-6
or 3 months after board role ends, whichever is later
|
-
|
-
|
-
|
-
|
Andrew
Chan, Company Secretary, Senior Vice President, Corporate Business
Development (3)
|
38,880
|
-
|
-
|
$
3.00
|
|
-
|
-
|
-
|
-
|
Andrew
Chan (4)
|
37,904
|
-
|
-
|
$
5.61
|
|
-
|
-
|
-
|
-
|
Andrew
Chan (5)
|
4,500
|
-
|
-
|
$
18.61
|
|
-
|
-
|
-
|
-
|
Andrew
Chan (6)
|
-
|
10,500
|
-
|
$
18.61
|
|
-
|
-
|
-
|
-
|
Andrew
Chan (7)
|
15,000
|
-
|
-
|
$
12.55
|
|
-
|
-
|
-
|
-
|
Andrew
Chan (8)
|
4,790
|
18,210
|
-
|
$
12.40
|
|
-
|
-
|
-
|
-
|
Bizuo
(Tony) Liu, Chief Executive Officer and Chief Financial Officer
(9)
|
255,000
|
-
|
-
|
$
5.00
|
|
-
|
-
|
-
|
-
|
Bizuo
(Tony) Liu (10)
|
5,300
|
-
|
-
|
$
7.23
|
|
-
|
-
|
-
|
-
|
Bizuo
(Tony) Liu (11)
|
15,000
|
-
|
-
|
$
20.63
|
|
-
|
-
|
-
|
-
|
Bizuo
(Tony) Liu (12)
|
15,000
|
-
|
-
|
$
20.63
|
|
-
|
-
|
-
|
-
|
Bizuo
(Tony) Liu (13)
|
97,800
|
-
|
-
|
$
15.53
|
|
-
|
-
|
-
|
-
|
Bizuo
(Tony) Liu (14)
|
8,000
|
-
|
-
|
$
15.53
|
|
-
|
-
|
-
|
-
|
Bizuo
(Tony) Liu (15)
|
18,000
|
12,000
|
-
|
$
35.53
|
|
-
|
-
|
-
|
-
|
Bizuo
(Tony) Liu (16)
|
12,000
|
28,000
|
-
|
$
20.00
|
|
-
|
-
|
-
|
-
|
Bizuo
(Tony) Liu (17)
|
30,000
|
-
|
-
|
$
12.55
|
|
-
|
-
|
-
|
-
|
Bizuo
(Tony) Liu (18)
|
25,000
|
95,000
|
-
|
$
12.40
|
|
-
|
-
|
-
|
-
|
Terry
A. Belmont (19)
|
4,000
|
-
|
-
|
$
12.94
|
|
-
|
-
|
-
|
-
|
Terry
A. Belmont (20)
|
3,000
|
-
|
-
|
$
15.62
|
|
-
|
-
|
-
|
-
|
Terry
A. Belmont (21)
|
8,761
|
-
|
-
|
$
20.00
|
|
-
|
-
|
-
|
-
|
Terry
A. Belmont (22)
|
11,895
|
-
|
-
|
$
13.35
|
|
-
|
-
|
-
|
-
|
Terry
A. Belmont (23)
|
-
|
14,648
|
-
|
$
10.80
|
|
-
|
-
|
-
|
-
|
Nadir
Patel (24)
|
5,000
|
-
|
-
|
$
5.00
|
|
-
|
-
|
-
|
-
|
Nadir
Patel (25)
|
2,000
|
-
|
-
|
$
15.62
|
|
-
|
-
|
-
|
-
|
Nadir
Patel (26)
|
5,000
|
-
|
-
|
$
13.79
|
|
-
|
-
|
-
|
-
|
Nadir
Patel (27)
|
5,946
|
-
|
-
|
$
20.00
|
|
-
|
-
|
-
|
-
|
Nadir
Patel (28)
|
6,992
|
-
|
-
|
$
13.35
|
|
-
|
-
|
-
|
-
|
Nadir
Patel (29)
|
-
|
8,611
|
|
$
10.80
|
|
-
|
-
|
-
|
-
|
Chun
Kwok Alan Au (30)
|
4,000
|
-
|
-
|
$
15.62
|
|
-
|
-
|
-
|
-
|
Chun
Kwok Alan Au (31)
|
5,056
|
-
|
-
|
$
20.00
|
|
-
|
-
|
-
|
-
|
Chun
Kwok Alan Au (32)
|
2,060
|
-
|
-
|
$
20.00
|
|
-
|
-
|
-
|
-
|
Chun
Kwok Alan Au (33)
|
9,789
|
-
|
-
|
$
13.35
|
|
-
|
-
|
-
|
-
|
Chun
Kwok Alan Au (34)
|
-
|
12,056
|
-
|
$
10.80
|
|
-
|
-
|
-
|
-
|
Yihong
Yao, Chief Scientific Officer (35)
|
15,000
|
10,000
|
-
|
$
26.53
|
|
-
|
-
|
-
|
-
|
Yihong
Yao (36)
|
-
|
-
|
-
|
-
|
N/A
|
10,000
|
$
237,700
|
-
|
-
|
Yihong
Yao (37)
|
3,000
|
7,000
|
-
|
$
18.61
|
|
-
|
-
|
-
|
-
|
Yihong
Yao (38)
|
5,520
|
20,980
|
-
|
$
12.40
|
|
-
|
-
|
-
|
-
|
Hansheng
Zhou (39)
|
5,300
|
-
|
-
|
$
16.00
|
|
-
|
-
|
-
|
-
|
Hansheng
Zhou (40)
|
-
|
12,056
|
-
|
$
10.80
|
|
-
|
-
|
-
|
-
|
Gang
Ji (41)
|
3,620
|
-
|
-
|
$
14.70
|
|
-
|
-
|
-
|
-
|
Gang
Ji (42)
|
-
|
4,926
|
-
|
$
10.80
|
|
-
|
-
|
-
|
-
|
Xia
Meng, Chief Operation Officer (43)
|
3,864
|
22,636
|
-
|
$
8.30
|
|
-
|
-
|
-
|
-
|
Bizuo
(Tony) Liu (44)
|
-
|
-
|
-
|
-
|
N/A
|
95,000
|
N/A
|
240,000
|
N/A
|
Andrew
Chan (45)
|
-
|
-
|
-
|
-
|
N/A
|
18,210
|
N/A
|
48,000
|
N/A
|
Yihong
Yao (46)
|
-
|
-
|
-
|
-
|
N/A
|
20,980
|
N/A
|
54,000
|
N/A
|
Xia
Meng (47)
|
-
|
-
|
-
|
-
|
N/A
|
22,636
|
N/A
|
53,000
|
N/A
|
(1)
|
Represents
an option to purchase up to 146,667 shares that were issued on
2/20/2013 with a monthly vesting schedule over a 36 month period,
an exercise price of $3.00 and an expiration date will be May 6,
2017 or 3 months after his board role ends, whichever is
later.
|
(2)
|
Represents
an option to purchase up to 22,444 shares that were issued on
2/11/2015 vesting at monthly rate until February 6, 2017, an
exercise price of $15.53 and an expiration date will be May 6, 2017
or 3 months after his board role ends, whichever is
later.
|
(3)
|
Represents
an option to purchase up to 46,667 shares that were issued on
2/20/2013 with a monthly vesting schedule over a 36-month period,
an exercise price of $3.00 and an expiration date of 2/20/2023,
within which 7,787 shares has been exercised in 2015 and
2016.
|
(4)
|
Represents
an option to purchase up to 47,000 shares that were issued on
5/16/2014 with a monthly vesting schedule over a 31-month period,
an exercise price of $5.61 and an expiration date of 5/16/2024,
within which 9,096 shares has been exercised in 2015 and
2016.
|
(5)
|
Represents
an Incentive Stock Option (ISO) to purchase up to 4,500 shares that
were issued on 4/8/2016, with full vesting at the one year
anniversary of the grant date, an exercise price of $18.61 and an
expiration date of 4/8/2026.
|
(6)
|
Represents
an option to purchase up to 10,500 shares that were issued on
4/8/2016, with 4,500 shares vesting on February 7, 2018 and 6,000
shares vesting on February 7, 2019, an exercise price of $18.61 and
an expiration date of 4/8/2026.
|
(7)
|
Represents
an option to purchase up to 15,000 shares that were issued on
1/20/2017, with an exercise price of $12.55 and an expiration date
of 1/20/2027, which were all vested and became exercisable on
1/20/2017.
|
(8)
|
Represents
an option to purchase up to 23,000 shares that were issued on
3/3/2017 with a monthly vesting schedule over a 48-month period, an
exercise price of $12.4 and an expiration date of
3/3/2027.
|
(9)
|
Represents
an option to purchase up to 255,000 shares that were issued on
1/3/2014 with a monthly vesting schedule over a 36-month period, an
exercise price of $5 and an expiration date of
1/3/2024.
|
(10)
|
Represents
an option to purchase up to 5,300 shares that were issued on
3/5/2013 with a monthly vesting schedule over a 36-month period, an
exercise price of $7.23 and an expiration date of
3/5/2023.
|
(11)
|
Represents
an option to purchase up to 15,000 shares that were issued on
2/11/2015 vesting 1/3 on 7/23/2015 and each anniversary, an
exercise price of $20.63 and an expiration date of
7/23/2021.
|
(12)
|
Represents
an option to purchase up to 15,000 shares that were issued on
2/11/2015 vesting 1/3 on 8/14/2015 and each anniversary, an
exercise price of $20.63 and an expiration date of
8/14/2021.
|
(13)
|
Represents
an option to purchase up to 97,800 shares that were issued on
2/11/2015 vesting 1/3 on 12/31/2015 and each anniversary, an
exercise price of $15.53 and an expiration date of
12/31/2021.
|
(14)
|
Represents
an option to purchase up to 8,000 shares that were issued on
2/11/2015 vesting 1/3 on 12/31/2015 and each anniversary, an
exercise price of $15.53 and an expiration date of
12/31/2021.
|
(15)
|
Represents
an option to purchase up to 30,000 shares that were issued on
4/6/2015, with full vesting of 30%, 30% and 40% at each year
anniversary of the grant date for 3 years, an exercise price of
$35.53 and an expiration date of 4/6/2025.
|
(16)
|
Represents
an option to purchase up to 40,000 shares that were issued on
4/11/2016, with full vesting of 30%, 30% and 40% at each year
anniversary of February 6, 2016 for 3 years, an exercise price of
$20 and an expiration date of 4/11/2026.
|
(17)
|
Represents
an option to purchase up to 30,000 shares that were issued on
1/21/2017, with an exercise price of $12.55 and an expiration date
of 1/20/2027, which were all vested and became exercisable on
1/21/2017.
|
(18)
|
Represents
an option to purchase up to 120,000 shares that were issued on
3/3/2017 with a monthly vesting schedule over a 48-month period, an
exercise price of $12.4 and an expiration date of
3/3/2027.
|
(19)
|
Represents
an option to purchase up to 4,000 shares that were issued on
12/9/2014, with full vesting at the one year anniversary of the
grant date, an exercise price of $12.94 and an expiration date of
12/9/2024.
|
(20)
|
Represents
an option to purchase up to 3,000 shares issued on 11/7/2014 with
full vesting at the one year anniversary of the grant date, an
exercise price of $15.62 and an expiration date of
11/7/2024.
|
(21)
|
Represents
an option to purchase up to 8,761 shares issued on 2/9/2016 with
full vesting on 11/8/2016, an exercise price of $20 and an
expiration date of 2/9/2023.
|
(22)
|
Represents
an option to purchase up to 11,895 shares issued on 12/28/2016 with
full vesting on 6/2/2017, an exercise price of $13.35 and an
expiration date of 12/28/2026.
|
(23)
|
Represents
an option to purchase up to 14,648 shares issued on 4/28/2017 with
full vesting on 4/28/2018, an exercise price of $10.8 and an
expiration date of 4/28/2027.
|
(24)
|
Represents
an option to purchase up to 5,000 shares that were issued on
1/3/2014, with full vesting at the one year anniversary of the
grant date, an exercise price of $5 and an expiration date of
1/3/2024.
|
(25)
|
Represents
an option to purchase up to 2,000 shares that were issued on
11/7/2014, with full vesting at the one year anniversary of the
grant date, an exercise price of $15.62 and an expiration date of
11/7/2024.
|
(26)
|
Represents
an option to purchase up to 5,000 shares that were issued on
1/3/2015, with full vesting at the one year anniversary of the
grant date, an exercise price of $13.79 and an expiration date of
1/3/2025.
|
(27)
|
Represents
an option to purchase up to 5,946 shares that were issued on
2/9/2016, with full vesting on November 8, 2016, an exercise price
of $20 and an expiration date of 2/9/2023.
|
(28)
|
Represents
an option to purchase up to 6,992 shares issued on 12/28/2016 with
full vesting on June 2, 2017, an exercise price of $13.35 and an
expiration date of 12/28/2026.
|
(29)
|
Represents
an option to purchase up to 8,611 shares issued on 4/28/2017 with
full vesting on 4/28/2018, an exercise price of $10.8 and an
expiration date of 4/28/2027.
|
(30)
|
Represents
an option to purchase up to 4,000 shares that were issued on
11/7/2014, with full vesting at the one year anniversary of the
grant date, an exercise price of $15.62 and an expiration date of
11/7/2024.
|
(31)
|
Represents
an option to purchase up to 5,056 shares that were issued on
2/9/2016, with full vesting on November 8, 2016, an exercise price
of $20 and an expiration date of 2/9/2023.
|
(32)
|
Represents
an option to purchase up to 2,060 shares that were issued on
3/25/2016, with full vesting on November 6, 2016, an exercise price
of $20 and an expiration date of 3/25/2023.
|
(33)
|
Represents
an option to purchase up to 9,789 shares issued on 12/28/2016 with
full vesting on June 2, 2017, an exercise price of $13.35 and an
expiration date of 12/28/2026.
|
(34)
|
Represents
an option to purchase up to 12,056 shares issued on 4/28/2017 with
full vesting on 4/28/2018, an exercise price of $10.8 and an
expiration date of 4/28/2027.
|
(35)
|
Represents
an option to purchase up to 25,000 shares that were issued on
8/4/2015, with full vesting of 30%, 30% and 40% at each year
anniversary of the grant date for 3 years, an exercise price of
$26.53 and an expiration date of 8/4/2025.
|
(36)
|
Represents
a right to obtain restricted stock up to 25,000 shares that were
issued on 8/4/2015, with full vesting of 30%, 30% and 40% at each
year anniversary of the grant date for 3 years.
|
(37)
|
Represents
an option to purchase up to 10,000 shares that were issued on
4/8/2016, with full vesting of 30%, 30% and 40% at each year
anniversary of the grant date for 3 years, an exercise price of
$18.61 and an expiration date of 4/8/2026.
|
(38)
|
Represents
an option to purchase up to 26,500 shares that were issued on
3/3/2017 with a monthly vesting schedule over a 48-month period, an
exercise price of $12.4 and an expiration date of
3/3/2027.
|
(39)
|
Represents
an option to purchase up to 5,300 shares that were issued on
7/8/2016, with full vesting at the one year anniversary of the
grant date, an exercise price of $16 and an expiration date of
7/8/2026.
|
(40)
|
Represents
an option to purchase up to 12,056 shares issued on 4/28/2017 with
full vesting on 4/28/2018, an exercise price of $10.8 and an
expiration date of 4/28/2027.
|
(41)
|
Represents
an option to purchase up to 3,620 shares that were issued on
11/11/2016, with full vesting on June 2, 2017, an exercise price of
$14.7 and an expiration date of 11/11/2026.
|
(42)
|
Represents
an option to purchase up to 4,926 shares issued on 4/28/2017 with
full vesting on 4/28/2018, an exercise price of $10.8 and an
expiration date of 4/28/2027.
|
(43)
|
Represents
an option to purchase up to 26,500 shares that were issued on
6/22/2017 with a monthly vesting schedule over a 48-month period,
an exercise price of $8.3 and an expiration date of
6/22/2027.
|
(44)
|
Pursuant
to the long-term incentive plan, Mr. Bizuo (Tony) Liu has a right
to obtain restricted stock up to 120,000 shares that were issued
from 3/27/2017 with a monthly vesting schedule over a 48-month
period till 2/27/2021. As of 12/31/2017, there is 95,000 shares of
restricted stock to be vested. In addition, Mr. Bizuo (Tony) Liu is
also eligible for a stock price sensitive restricted stock awards
when the Company’s common stock’s 20-day volume
weighted average price (VWAP) is over $30 per share at closing
between 2/27/2017 and 2/27/2021. This restricted stock rewards is
in linear 1% incremental, earned and upon award trigger in
accordance with the common stock price target. The eligible common
stock shares could vary from 60,000 shares to 240,000 shares when
the Company’s VWAP during the period varies from $30 to $60
per share. The stock price sensitive restricted stock awards will
be delivered on 2/27/2021.
|
(45)
|
Pursuant
to the long-term incentive plan, Mr. Andrew Chan has a right to
obtain restricted stock up to 23,000 shares that were issued from
3/27/2017 with a monthly vesting schedule over a 48-month period
till 2/27/2021. As of 12/31/2017, there is 18,210 shares of
restricted stock to be vested. In addition, Mr. Andrew Chan is also
eligible for a stock price sensitive restricted stock awards when
the Company’s common stock’s 20-day volume weighted
average price (VWAP) is over $30 per share at closing between
2/27/2017 and 2/27/2021. This restricted stock rewards is in linear
1% incremental, earned and upon award trigger in accordance with
the common stock price target. The eligible common stock shares
could vary from 12,000 shares to 48,000 shares when the
Company’s VWAP during the period varies from $30 to $60 per
share. The stock price sensitive restricted stock awards will be
delivered on 2/27/2021.
|
(46)
|
Pursuant
to the long-term incentive plan, Mr. Yihong Yao has a right to
obtain restricted stock up to 26,500 shares that were issued from
3/27/2017 with a monthly vesting schedule over a 48-month period
till 2/27/2021. As of 12/31/2017, there is 20,980 shares of
restricted stock to be vested. In addition, Mr. Yihong Yao is also
eligible for a stock price sensitive restricted stock awards when
the Company’s common stock’s 20-day volume weighted
average price (VWAP) is over $30 per share at closing between
2/27/2017 and 2/27/2021. This restricted stock rewards is in linear
1% incremental, earned and upon award trigger in accordance with
the common stock price target. The eligible common stock shares
could vary from 13,500 shares to 54,000 shares when the
Company’s VWAP during the period varies from $30 to $60 per
share. The stock price sensitive restricted stock awards will be
delivered on 2/27/2021.
|
(47)
|
Pursuant
to the long-term incentive plan, Ms. Xia Meng has a right to obtain
restricted stock up to 26,500 shares that were issued from
6/27/2017 with a monthly vesting schedule over a 48-month period
till 5/27/2021. As of 12/31/2017, there is 22,636 shares of
restricted stock to be vested. In addition, Ms. Xia Meng is also
eligible for a stock price sensitive restricted stock awards when
the Company’s common stock’s 20-day volume weighted
average price (VWAP) is over $30 per share at closing between
6/22/2017 and 6/22/2021. This restricted stock rewards is in linear
1% incremental, earned and upon award trigger in accordance with
the common stock price target. The eligible common stock shares
could vary from 13,500 shares to 54,000 shares when the
Company’s VWAP during the period varies from $30 to $60 per
share. The stock price sensitive restricted stock awards will be
delivered on 6/22/2021.
|
Option Exercises and Stock Vested
during the Year Ended December 31,
2017
Name
|
|
|
|
Number of shares acquired on exercise
|
Value realized on exercise ($)
|
Number of shares acquired on vesting
|
Value realized on vesting ($)
|
|
|
|
|
|
Bizuo
(Tony) Liu, Chief Executive Officer and Chief Financial
Office
|
-
|
-
|
25,000
|
238,750
|
|
|
|
|
|
Andrew
Chan, Senior Vice President, Corporate Business Development,
Company Secretary
|
-
|
-
|
4,790
|
45,745
|
|
|
|
|
|
Yihong
Yao, Chief Scientific Officer
|
-
|
-
|
13,020
|
117,216
|
|
|
|
|
|
Xia
Meng, Former Chief Operating Officer
|
-
|
-
|
3,864
|
37,094
|
Note:
Stock awards in above table includes all the entitled restricted
stock rewards under long-term incentive plan and doesn’t
consider the withheld restricted stock for individual income tax
payment purpose.
Compensation Committee Interlocks and Insider
Participation
None of
the members of the Compensation Committee is or has been an
executive officer of the Company, nor did they have any
relationships requiring disclosure by the Company under Item 404 of
Regulation S-K. None of the Company’s executive officers
served as a director or a member of a compensation committee (or
other committee serving an equivalent function) of any other
entity, an executive officer of any other entity, an executive
officer of which served as a director of the Company or member of
the Compensation Committee during 2017.
Executive Employment Agreements
At the
closing of the merger with CBMG BVI, the Company entered into an
executive employment agreement with Andrew Chan, dated February 6,
2013 (the “
Employment Agreement
”).
As of August 30, 2013, the Employment Agreement was amended to
revise Mr. Chan’s salary to $200,000. Mr. Chan was also
eligible to participate in the Company’s Amended and Restated
2011 Incentive Stock Option Plan (the “
Plan
”) and receive an
option grant thereunder for the purchase of common stock of the
Company at the discretion of the board of directors of the Company.
The term of the Employment Agreement was three years.
In
connection with Tony Liu’s appointment as Chief Financial
Officer in January 2014, the Company entered into an employment
agreement with Mr. Liu on substantially the same terms as Mr.
Chan’s Employment Agreement, except that, Mr. Liu will
receive an annual base salary of $210,000.
On May
24, 2015, the Board approved the appointment of Richard L. Wang as
the Company’s Chief Operating Officer. In
connection with Mr. Wang’s appointment, the Company entered
into an agreement with Mr. Wang, pursuant to which Mr. Wang will
receive an annual base salary of $210,000. The term of the
agreement is effective as of May 18, 2015 for a period of three
years, with a probation period from May 18, 2015 to November 18,
2015. Additionally, on May 18, 2015 the Company issued
to Mr. Wang 20,000 restricted common stock and 30,000 options to
purchase common stock with full vesting of 30%, 30% and 40% at each
year anniversary of the grant date for 3 years. The
strike price related to above option was $29.54 and its expiration
date is May 18, 2025. Mr. Wang resigned on February 27,
2017.
On May
24, 2015, the Board approved the appointment of Yihong Yao as the
Company’s Chief Scientific Officer. In connection
with Mr. Yao’s appointment, the Company entered into an
agreement with Mr. Yao, pursuant to which Mr. Yao will receive an
annual base salary of $250,000. The term of the agreement is
effective as of August 4, 2015 for a period of three years, with a
six-month probation period. Additionally, on August 4,
2015 the Company issued to Mr. Yao 25,000 restricted common stock
and 25,000 options to purchase common stock with full vesting of
30%, 30% and 40% at each year anniversary of the grant date for 3
years. The strike price related to above option was
$26.53 and its expiration date is August 4,
2025.
In
February 2016, the Board elected Bizuo (Tony) Liu to serve as Chief
Executive Officer of the Company. In connection with Mr.
Liu’s election, the Company entered into an employment
agreement (the “Agreement”) with Mr. Liu on April 11,
2016, the terms of which are effective retroactive to February 7,
2016. Pursuant to the Agreement, Mr. Liu will receive an annual
base salary of $240,000 and, commencing with the end of the
calendar year during his first year of employment, shall be
eligible for an annual cash bonus. Such annual salary
and bonus eligibility will be reviewed annually by the Board and
its compensation committee and may be changed in the sole direction
of the Board and/or its compensation committee. In
addition, Mr. Liu will be granted 120, 000 options under the
Company’s 2014 Equity Incentive Plan.
The
term of the Agreement is effective as of February 7, 2016 for a
period of one year (the “
Initial Term
”) which will
be renewed automatically for another one year term (the
“First Renewal Term”) unless the Company provides Mr.
Liu with 90 days’ notice of non-renewal prior to the
expiration of the Initial Term. After the First Renewal
Term, the Agreement shall be renewed automatically for another one
year term unless the Company provides Mr. Liu with 90 days’
notice of non-renewal prior to the expiration of the First Renewal
Term, provided that in no event shall the Agreement remain in
effect past February 6, 2019.
The
agreement could not be terminated by either party during the
Initial Term except upon Mr. Liu’s death, disability or for
cause. "Cause," as defined in the agreement, includes, but is not
limited to: (1) conviction for or pleading of felony, (2)
misappropriation of company assets, (3) willful violation of
company policy or a directive of the Board and (4) failure to
perform duties. The Company may terminate for cause with a 3-day
advance written notice. Upon termination by the Company for cause,
the Company will have no obligation to provide Mr. Liu with any
form of severance or any other benefits, except as may be required
by COBRA. If Mr. Liu’s employment is terminated by the
Company for reasons other than his death, disability or for cause
after February 6, 2017, the Company will pay Mr. Liu severance in
the amount equal to his base salary and, subject to Mr. Liu’s
election to receive COBRA, his COBRA premiums during the twelve
month period commencing with continuation coverage following the
month in which the date of termination occurs.
On
January 20, 2017, the Compensation Committee met and deliberated a
new retention plan with long-term incentives as recommended by the
CEO for eight key management executives. Besides Mr. Tony Liu, Mr.
Yihong Yao and Mr. Andrew Chan, the retention plan also
included five management executives in the LTIP. On January 21,
2017, the Board ratified the Compensation Committee’s
recommendation to implement the retention plan, pursuant to which
the Company will enter into a new four-year employment agreement
with each of the eight key management executives. It was
approved that the new agreement terms would include customary
change of control provisions and a four-year long-term incentive
award under the 2014 Incentive Plan, comprised of:
1.Stock
Price Sensitive Performance RSU awards (“
Performance RSUs
”) to be
vested and delivered in 2021; and
2.Time
Sensitive RSUs and Stock Options, which vest monthly vesting over
48 months.
At the
January 20, 2017 meeting and as ratified by the Board on January
21, 2017, the Compensation Committee determined that Mr. Tony Liu
would receive an annual base salary of $300,000 and would be
granted 240,000 shares of Performance RSUs and 120,000 shares in
each of the Time Sensitive RSUs and Stock Options.
On the
recommendation of the CEO, and as approved by the Compensation
Committee, it was determined that Mr. Yihong Yao would receive an
annual base salary of $262,500 and will be granted 27,000 shares of
Performance RSUs and 26,500 shares in each of the Time Sensitive
RSUs and Stock Options and Mr. Andrew Chan would receive an
annual base salary of $240,000 and will be granted 24,000 shares of
Performance RSUs and 23,000 shares in each of the Time Sensitive
RSUs and Stock Options.
On
March 3, 2017, the Company amended and restated its existing
employment agreements (each, a “
2017 Employment
Agreement
”) with each of Tony Liu, Andrew Chan and
Yihong Yao. In addition to the compensation terms ratified by the
Board or Compensation Committee and discussed above, the 2017
Employment Agreements amended certain terms of each officer’s
prior employment agreement, including but not limited to the
duration of such officer’s employment, and the conditions of
such officer’s termination, non-competition and
non-solicitation provisions. Each 2017 Employment Agreement has a
term of four years starting from the agreement date
(“
Initial Employment
Term
”). At the end of the Initial Employment Term and
on each succeeding anniversary of the 2017 agreement date, and
subject to earlier termination set forth under the agreement, the
term of each 2017 Employment Agreement will be automatically
extended by an additional twelve months (each, a “Renewed
Term”), unless either party provides the other party with
notice of non-renewal prior to the end of the Initial Employment
Term or any Renewal Term, as applicable.
In
addition to termination upon non-renewal, each officer may
terminate the agreement for good reason. Good reason, as defined in
each 2017 Employment Agreement, includes a material deduction in
base salary and relocation of an executive’s principal office
by more than 50 miles. In addition, pursuant to Mr. Liu and Mr.
Chan’s 2017 Employment Agreements, good reason includes a
material adverse change in title, duties or responsibilities. Each
officer is required to provide 30 days’ written notice in
advance in the event of his voluntary termination. In addition, the
Company may terminate the agreement for cause. Cause, as defined in
each 2017 Employment Agreement, includes: (i) material and
intentional breach of the agreement, (ii) willful and continued
failure to substantially perform duties, (iii) intentional
misconduct, (iv) conviction or indictment for felonies, (v)
intentional or knowing violation of antifraud provisions of
securities laws, (vii) current use or abuse of illegal substance
that affects performance, and (viii) knowing and material
violations of the Company’s code of ethics.
Pursuant
to the 2017 Employment Agreements, upon the officer’s
voluntary termination without good reason, termination by the
Company for cause or non-renewal, such officer will not be entitled
to a base salary or any right to participate in benefit plans after
such termination. If the employment is terminated by the officer
for good reason or by the Company without cause, the officer will
be entitled to certain amount of cash salary, bonus as well as
health insurance coverage for 12 months after such termination,
subject to certain conditions and forfeiture.
Each
2017 Employment Agreement includes a non-solicitation and a
non-competition provision that will apply during each
officer’s employment and for a period of two years following
termination.
On June
22, 2017, the Board approved the appointment of Dr. Xia Meng as the
Company’s Chief Operating Officer. In connection
with Ms. Meng’s appointment, the Company entered into an
agreement with Ms. Meng, pursuant to which Ms. Meng will receive an
annual base salary of approximately $175,487. The term of the
agreement is effective as of June 22, 2017 for a period of four
years. Additionally, on June 22, 2017 Ms. Meng was
granted 27,000 shares of Performance RSUs and 26,500 shares in each
of the Time Sensitive RSUs and Stock Options. The strike
price related to above option was $8.30 and its expiration date is
June 22, 2027. Except for her change in title, Mr. Xia’s
employment agreement remains in effect following her transition
from COO to Head of Early Diagnosis and Intervention on February 6,
2018.
On
January 28, 2018, the Compensation Committee approved and
determined that Mr. Tony Liu would receive an annual base salary of
$350,000. On the recommendation of the CEO, and as approved by the
Compensation Committee on January 28, 2018, it was determined that
Mr. Yihong Yao would receive an annual base salary of $270,000
and Mr. Andrew Chan would be promoted to Chief Legal Officer,
Secretary & SVP-Corporate Development and receive an annual
base salary of $280,000.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The
following table lists ownership of our common stock as of March 9,
2018, unless indicated otherwise. The information includes
beneficial ownership by (i) holders of more than 5% of parent
Common Stock, (ii) each of our directors and executive officers and
(iii) all of our directors and executive officers as a group.
Except as noted below, to our knowledge, each person named in the
table has sole voting and investment power with respect to all
shares of the Company’s Common Stock beneficially owned by
them. Except as otherwise indicated below, the address for each
listed beneficial owner is c/o Cellular Biomedicine Group, Inc.,
19925 Stevens Creek Blvd., Suite 100, Cupertino, California,
95014.
Name and Address of Beneficial Owner
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Named Executive Officers and Directors
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Wen
Tao (Steve) Liu (1)
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382,187
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2.1
%
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Director
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Bizuo
(Tony) Liu (2)
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678,992
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3.7
%
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Director,
Chief Executive Officer and Chief Financial Officer
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Andrew
Chan (3)
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268,286
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1.5
%
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Senior
Vice President, Corporate Business Development and Company
Secretary
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Yihong
Yao
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55,924
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*
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Chief
Scientific Officer (4)
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Bosun
S. Hau (5)
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1,689
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*
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Independent
Director
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Terry
A. Belmont (6)
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42,304
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*
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Independent
Director, Chairman of the Board
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Nadir
Patel (7)
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33,549
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*
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Independent
Director
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Chun
Kwok Alan Au (8)
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32,961
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*
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Independent
Director
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Hansheng
Zhou (9)
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17,356
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*
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Independent
Director
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Gang
Ji (10)
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8,546
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*
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Independent
Director
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All Officers and Directors as a Group
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1,521,794
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8.3
%
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5% or more Stockholders
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Dangdai
International Group Co Ltd. (11)
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2,270,000
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12.3
%
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Sailing
Capital Overseas Investments Ltd. (12)
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1,719,324
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9.3
%
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MapleBrook
Limited (13)
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1,077,253
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5.9
%
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Mission
Right Limited (14)
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1,036,040
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5.6
%
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* Less
than 1%
(1)
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Total shares owned by Wen Tao (Steve) Liu includes (i) 213,076
shares of common stock; (ii)146,667 options issued under 2011 Plan
vested as of March 9, 2018; (iii) 22,444 options issued under 2014
Plan vested as of March 9, 2018.
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(2)
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Total shares owned by Bizuo (Tony) Liu includes (i) 158,892 shares
of common stock; (ii) 35,300 options issued under 2011 Plan vested
as of March 9, 2018; (iii)255,000 options issued under 2013 Plan
vested as of March 9, 2018; (iv) 224,800 options issued under 2014
Plan vested/to be vested within 60 days as of March 9, 2018; (v)
5,000 shares of common stock to be vested within 60 days as of
March 9, 2018.
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(3)
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Total shares owned by Andrew Chan includes (i) 159,838 shares of
common stock; (ii) 53,880 options issued under 2011 Plan vested as
of March 9, 2018; (iii) 37,904 options issued under 2013 Plan
vested as of March 9, 2018; (iv) 15,706 options issued under 2014
Plan vested/to be vested within 60 days as of March 9, 2018; (v)
958 shares of common stock to be vested within 60 days as of March
9, 2018.
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(4)
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Total shares owned by Yihong Yao includes (i) 26,092 shares of
common stock; (ii) 28,728 options issued under 2014 Plan vested/to
be vested within 60 days as of March 9, 2018; (iii) 1,104 shares of
common stock to be vested within 60 days as of March 9,
2018.
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(5)
|
Total shares owned by Bosun S. Hau includes (i) 1,404 shares of
common stock; (ii) 285 options issued under 2014 Plan to be vested
within 60 days as of March 9, 2018.
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(6)
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Total shares owned by Terry A. Belmont includes (i) 7,000 options
issued under 2013 Plan vested as of March 9, 2018; (ii) 35,304
options issued under 2014 Plan vested/to be vested within 60 days
as of March 9, 2018.
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(7)
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Total shares owned by Nadir Patel includes (i) 12,000 options
issued under 2013 Plan vested as of March 9, 2018; (ii) 21,549
options issued under 2014 Plan vested/to be vested within 60 days
as of March 9, 2018.
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(8)
|
Total shares owned by Chun Kwok Alan Au includes (i) 4,000 options
issued under 2013 Plan vested as of March 9, 2018; (ii) 28,961
options issued under 2014 Plan vested/to be vested within 60 days
as of March 9, 2018.
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(9)
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Total shares owned by Hansheng Zhou includes 17,356 options issued
under 2014 Plan vested/to be vested within 60 days as of March 9,
2018.
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(10)
|
Total shares owned by Gang Ji includes 8,546 options issued under
2014 Plan vested/to be vested within 60 days as of March 9,
2018.
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(11)
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Represents 2,270,000 shares held by Dangdai International Group
Co., Limited. Wuhan Dangdai Technology & Industries Group Inc.
has voting and dispositive power over the shares of Dangdai
International Group Co., Limited in Hong Kong. Wuhan Dangdai
Technology & Industries Group Inc. is controlled by Hansheng
Zhou, Xiaodong Zhang, Luming Ai, Xuehai Wang, Lei Yu, Xiaoling Du
and Haichun Chen. Such individuals share voting and dispositive
power over the shares held by Dangdai International Group Co.,
Limited.
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(12)
|
Total shares owned by Sailing Capital Overseas Investments Ltd.
include 1,404,494 shares owned by Wealth Map Holdings Limited,
308,426 shares owned by Earls Mill Limited, 5,000 shares owned by
Rui Zhang and 1,404 shares owned by Bosun S. Hau (currently a Class
III director). Sailing Capital Overseas Investments Fund, L.P. is
the sole shareholder of Wealth Map. James Xiao Dong Liu is the sole
director of Earls Mill and the Chairman of Sailing Capital. The
investment committee of Sailing Capital Overseas Investments Fund,
L.P. has decision making power over voting and disposition of the
CBMG securities owned by Wealth Map Holdings Limited. James Xiao
Dong Liu, as the sole director of Earls Mill Limited, has voting
and dispositive power over the CBMG securities owned by Earls Mill
Limited. Bosun Hau and Rui Zhang each has voting and dispositive
power over the CBMG securities owned by such individual
stockholder.
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(13)
|
Represents 1,077,253 shares held by MapleBrook Limited. RTSing
Raffles Limited and RTSing Marina Limited, as the MapleBrook
Limited’s corporate directors, can act jointly to dispose of
and vote on the securities in accordance with the Memorandum of
Association of MapleBrook Limited. Britta Pfister, Patricia Tan and
Chue Chee Chen, individual directors of both RTSing Raffles Limited
and RTSing Marina Limited, have voting and dispositive power over
the shares owned by MapleBrook Limited.
|
(14)
|
Based on information available as of February 7, 2018, 1,036,040
shares are held by Mission Right Limited. Mission Right Limited is
50% owned by Yusen Holdings Limited and 50% by Zeacome Investment
Limited. Chan Boon Ho Peter controls Yusen Holdings. Zeacome
Investment Limited is owned by Perfect Touch Technology Inc., which
is owned by CST Mining Group Limited. CST Mining Group Limited is a
public company listed on the Hong Kong Stock Exchange under the
ticker code “985.” Accordingly, Chan Boon Ho Peter and
CST Mining Group Limited beneficially own the shares held by
Mission Right Limited.
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Change of Control
The
Company knows of no arrangements resulting in a change in control
of the Company. No officer, director, promoter, or affiliate of the
Company has, or proposes to have, any direct or indirect material
interest in any asset proposed to be acquired by the Company
through security holdings, contracts, options, or
otherwise.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As
previously disclosed in the Company’s Current Reports on Form
8-K on April 20 and July 14, 2016, Wuhan Dangdai, through its
wholly owned subsidiary Dangdai International Group Co., invested
$43.1 million in the Company (the “
Financing
”). Dangdai
International Group Co. has been a major shareholder of the Company
since February 2016 in connection with the first closing of the
Financing. Dr. Hansheng Zhou, one of the Company’s directors,
currently serves as Chief Executive Officer and Chairman of Wuhan
Dangdai.
The
Company lent petty cash to Tony (Bizuo) Liu and Ms. Xia Meng, its
current CFO and COO, mainly for business travel purpose. As of
December 31, 2017 there are $7,458 and $1,073 due from Tony (Bizuo)
Liu and Ms. Xia Meng. As of December 31, 2016 there are no
receivables due from officers.
As of
December 31, 2017 and 2016, accrued expenses included director fees
of $25,882 and $3,082 due to independent director Mr. Gang
Ji.
On
December 15, 2017, upon the approval of the Company’s
indepdendent directors, the Company entered into a Share Purchase
Agreement with three of its executive officers, pursuant to which
the Company agreed to sell, and the three executive officers agreed
to purchase an aggregate of 41,667 shares of the Company’s
common stock, par value $0.001 per share at $12.00 per share, for
total net proceeds of approximately $500,000. The transaction
closed on December 22, 2017.
As
previously disclosed in the Company’s Current Reports on Form
8-K on January 31 and February 5, 2018, Sailing Capital Overseas
Investment Ltd. and its affiliates (collectively
“
Sailing
”),
invested $30.6 million in the Company (the “
Sailing Financing
”).
Sailing has been a major shareholder of the Company since February
2018 in connection with the closing of the Sailing Financing. Bosun
Hau was nominated as a Class III director of the Company pursuant
to the Securities Purchase Agreement by and among the Company and
Sailing.
Except
as disclosed herein, there have been no transactions or proposed
transactions in which the amount involved exceeds $120,000 since
January 1, 2016 or are currently being proposed in which any of our
directors, executive officers or beneficial holders of more than 5%
of the outstanding shares of common stock, or any of their
respective relatives, spouses, associates or affiliates, has had or
will have any direct or material indirect interest.
Review, Approval or Ratification of Transactions with Related
Persons
The Company’s Board of Directors reviews issues involving
potential conflicts of interest, and reviews and approves all
related party transactions, including those required to be
disclosed as a “related party” transaction under
applicable federal securities laws. The Board has not adopted any
specific procedures for conducting reviews of potential conflicts
of interest and considers each transaction in light of the specific
facts and circumstances presented. However, to the extent a
potential related party transaction is presented to the Board, the
Company expects that the Board would become fully informed
regarding the potential transaction and the interests of the
related party, and would have the opportunity to deliberate outside
of the presence of the related party. The Company expects that the
Board would only approve a related party transaction that was in
the best interests of, and fair to, the Company, and further would
seek to ensure that any completed related party transaction was on
terms no less favorable to the Company than could be obtained in a
transaction with an unaffiliated third party.
Director Independence
In
determining the independence of our directors, the Board applied
the definition of “independent director” provided under
the listing rules of NASDAQ. Pursuant to these rules, and after
considering all relevant facts and circumstances, the Board
affirmatively determined that Messrs. Terry A. Belmont, Nadir
Patel, Chun Kwok Alan Au, Hansheng Zhou, Gang Ji and Bosun S. Hau,
each of whom are now serving on the Board, are each independent
within the definition of independence under the Nasdaq rules. Wen
Tao (Steve) Liu and Bizuo (Tony) Liu are not independent
directors.
REQUIREMENTS FOR ADVANCE NOTIFICATION OF NOMINATIONS
AND STOCKHOLDER PROPOSALS
Stockholder
proposals for director nominations and for other matters submitted
pursuant to Rule 14a-8 promulgated under the Exchange Act and our
Amended and Restated bylaws for inclusion in our Proxy Statement
and form of proxy for our next Annual Meeting must have been
received by us no later than December 28, 2018 (assuming we have
our next Annual Meeting on April 27, 2019) and
December 18, 2018, respectively, and
must comply with the requirements of the proxy rules promulgated by
the SEC. We presently intend to schedule our next annual meeting in
April 2018, subject to change without further announcement except
as required by proxy rules. Stockholder proposals should be
addressed to our corporate Secretary at 19925 Stevens Creek Blvd.,
Suite 100, Cupertino, California, 95014.
Recommendations
from stockholders which are received after the applicable deadline
likely will not be considered timely for consideration by our
Nominating and Corporate Governance Committee for next year’s
annual meeting.
OTHER MATTERS
The
Board does not intend to bring any other matters before the Annual
Meeting and has no reason to believe any other matters will be
presented. If other matters properly do come before the Annual
Meeting, however, it is the intention of the persons named as proxy
agents in the enclosed proxy card to vote on such matters as
recommended by the Board, of if no recommendation is given, in
their own discretion.
The
Company will send instructions to stockholders entitled to notice
of the Annual Meeting regarding how to access this Proxy Statement
and the Company's Annual Report on Form 10-K for the year ended
December 31, 2017. The Annual Report includes the financial
statements and management’s discussion and analysis of
financial condition and results of operations. The costs of
preparing, assembling, mailing and soliciting the proxies will be
borne by us. Proxies may be solicited, without extra compensation,
by our officers and employees by mail, telephone, facsimile,
personal interviews and other methods of
communication.
If you
and other residents at your mailing address own shares in street
name, your broker or bank may have sent you a notice that your
household will receive only one copy of proxy materials for each
company in which you hold shares through that broker or bank. This
practice of sending only one copy of proxy materials is known as
householding. If you did not respond that you did not want to
participate in householding, you were deemed to have consented to
the process. If the foregoing procedures apply to you, your broker
has sent one copy of our Proxy Statement to your address. If you
want to receive separate copies of the proxy materials in the
future, or you are receiving multiple copies and would like to
receive only one copy per household, you should contact your
stockbroker, bank or other nominee record holder, or you may
contact us at the address or telephone number below. In any event,
if you did not receive an individual copy of this Proxy Statement,
we will send a copy to you if you address your written request to,
or call, Tony Liu, Chief Executive Officer and Chief Financial
Officer of Cellular Biomedicine Group, Inc., 19925 Stevens Creek
Blvd., Suite 100, Cupertino, California, 95014, telephone number
(408) 973-7884.
Copies
of the documents referred to above that appear on our website are
also available upon request by any stockholder addressed to our
corporate Secretary, Cellular Biomedicine Group, Inc., 19925
Stevens Creek Blvd., Suite 100, Cupertino, California,
95014.
CELLULAR BIOMEDICINE GROUP,
INC.
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF
STOCKHOLDERS – APRIL 27, 2018 AT 10:00 AM
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CONTROL
ID:
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REQUEST
ID:
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The
undersigned hereby appoint(s) Tony Liu with the power of
substitution and resubstitution to vote any and all shares of
capital stock of Cellular Biomedicine Group, Inc. (the "Company")
which the undersigned would be entitled to vote as fully as the
undersigned could do if personally present at the Annual Meeting of
the Company, to be held on April 27, 2018, at 9:00 A.M. Pacific
Daylight Time, and at any adjournments thereof, hereby revoking any
prior proxies to vote said stock, upon the following items more
fully described in the notice of any proxy statement for the Annual
Meeting (receipt of which is hereby acknowledged):
This
proxy, when properly executed, will be voted in the manner directed
herein. If no such direction is made, this proxy will be
voted in accordance with the Board of Directors
recommendations.
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(CONTINUED
AND TO BE SIGNED ON REVERSE SIDE.)
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VOTING
INSTRUCTIONS
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If
you vote by phone, fax or internet, please DO NOT mail your proxy
card.
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MAIL:
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Please mark, sign,
date, and return this Proxy Card promptly using the enclosed
envelope.
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FAX:
|
Complete the
reverse portion of this Proxy Card and Fax to
202-521-3464.
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INTERNET:
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https://www.iproxydirect.com/CBMG
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PHONE:
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1-866-752-VOTE(8683)
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ANNUAL
MEETING OF THE STOCKHOLDERS OF
CELLULAR BIOMEDICINE GROUP, INC.
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PLEASE
COMPLETE, DATE, SIGN AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
PLEASE
MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE:
☒
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PROXY SOLICITED ON
BEHALF OF THE BOARD OF DIRECTORS
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Proposal
1
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FOR
ALL
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AGAINST
ALL
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FOR
ALL
EXCEPT
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Election of Directors
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Wen
Tao (Steve) Liu
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◻
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CONTROL
ID:
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Nadir
Patel
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◻
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REQUEST
ID:
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Bosun
S. Hau
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Proposal
2
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FOR
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AGAINST
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ABSTAIN
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To
ratify the appointment of BDO China Shu Lun Pan Certified Public
Accountants LLP as the Company’s independent registered
public accounting firm for the fiscal year ending December 31,
2018.
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MARK
“X” HERE IF YOU PLAN TO ATTEND THE MEETING:
◻
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THIS PROXY WILL BE VOTED AS SPECIFIED ABOVE; UNLESS OTHERWISE
INDICATED, THIS PROXY WILL BE VOTED FOR EACH OF THE NOMINEES ON
PROPOSAL NUMBER 1 AND FOR APPROVAL ON PROPOSAL NUMBER
2.
In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the
meeting.
Please mark, sign, date and return this Proxy promptly using the
accompanying postage pre-paid envelope. THIS PROXY IS SOLICITED ON
BEHALF OF THE BOARD OF DIRECTORS OF CELLULAR BIOMEDICINE GROUP,
INC.
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MARK HERE FOR
ADDRESS CHANGE ◻ New Address (if
applicable):
____________________________
____________________________
____________________________
IMPORTANT:
Please sign exactly as your
name or names appear on this Proxy. When shares are held jointly,
each holder should sign. When signing as executor, administrator,
attorney, trustee or guardian, please give full title as such. If
the signer is a corporation, please sign full corporate name by
duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized
person.
Dated:
________________________, 2018
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(Print Name of
Stockholder and/or Joint Tenant)
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(Signature of
Stockholder)
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(Second Signature
if held jointly)
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