ANTARES PHARMA, INC.
100 Princeton South, Suite 300
Ewing, New Jersey 08628
April 27, 2020
Dear Stockholder:
You are cordially invited to attend the 2020 Annual Meeting of Stockholders of Antares Pharma, Inc. (the “Company”), to be held at 10:00 a.m., Eastern Time, on Thursday, June 11, 2020 virtually via the Internet at www.virtualshareholdermeeting.com/ATRS2020
(the “Annual Meeting”). For the first time, our annual meeting will be a “virtual meeting” of stockholders, which will be conducted exclusively via the Internet through a virtual web conference. There will not be a physical meeting location, and
stockholders will not be able to attend the annual meeting in person. Instructions on how to participate in the Annual Meeting and demonstrate proof of stock ownership are posted at www.virtualshareholdermeeting.com/ATRS2020. This means
that you can attend the annual meeting online, vote your shares electronically and submit questions during the online meeting by visiting the above-mentioned website. We believe that hosting a “virtual meeting” will enable greater stockholder
attendance and participation from any location around the world. In addition, in response to continued public health concerns related to COVID-19 and group gatherings, we also believe holding a “virtual meeting” will help ensure the health and
well-being of our stockholders and other meeting participants.
The notice of the 2020 Annual Meeting of Stockholders and the proxy statement that appear on the following pages describe the matters scheduled to come before the meeting. In addition, certain members of our Board of
Directors and management team, as well as representatives of KPMG LLP, our independent registered public accounting firm, will be available to answer appropriate questions.
We are pleased to take advantage of the Securities and Exchange Commission rules that allow us to furnish proxy materials, including the notice of the 2020 Annual Meeting of Stockholders, proxy statement, our 2019
Annual Report on Form 10-K and the electronic proxy card for the meeting to our stockholders via the Internet by sending them a Notice of Internet Availability of Proxy Materials (the “Notice”) that explains how to access our proxy materials and
how to vote online. Taking advantage of these rules should allow us to lower the cost of delivering annual meeting materials to our stockholders and reduce the environmental impact of printing and mailing these materials. If you received the Notice
and would like us to send you a printed copy of our proxy materials, please follow the instructions included in the Notice.
Your vote is important. I hope you will join us for the 2020 Annual Meeting. Whether or not you plan to attend the meeting, I hope that you will vote as soon as possible by
submitting your proxy. You may vote your proxy three different ways: by mail, via the internet, or by telephone. You may also be entitled to vote in person at the virtual meeting. Please refer to detailed instructions included in the proxy
statement or in the Notice.
On behalf of our Board of Directors and our employees, thank you for your continued support of and interest in Antares Pharma, Inc.
ANTARES PHARMA, INC.
100 Princeton South, Suite 300
Ewing, New Jersey 08628
NOTICE IS HEREBY GIVEN of the 2020 Annual Meeting of Stockholders of Antares Pharma, Inc., a Delaware corporation.
The items of business listed above are more fully described in the proxy statement accompanying this notice of the 2020 Annual Meeting of Stockholders. The accompanying proxy statement or the Notice of Internet
Availability of Proxy Materials are being mailed or made available on the internet to stockholders on or about April 27, 2020.
Your vote is important. Whether or not you plan to attend the meeting, we urge you to vote as soon as possible by submitting your proxy. You may vote your proxy three different
ways: by mail, via the internet, or by telephone. You may also be entitled to vote in person (via the virtual meeting) at the meeting. Please refer to detailed instructions included in the accompanying proxy statement or in the Notice of Internet
Availability of Proxy Materials.
Important notice regarding the availability of proxy materials for the 2020 Annual Meeting of Stockholders to be held on June 11, 2020:
This proxy statement and our 2019 Annual Report on Form 10-K are available directly at:
https://materials.proxyvote.com/036642
PROXY STATEMENT OF
ANTARES PHARMA, INC.
100 Princeton South, Suite 300
Ewing, New Jersey 08628
Annual Meeting of Stockholders to be held
June 11, 2020
This proxy statement is furnished in connection with the solicitation of proxies by the Board of Directors of Antares Pharma, Inc. (referred to in this proxy statement as Antares, Antares Pharma,
we, our, us or the Company), to be used at our 2020 Annual Meeting of Stockholders (the “Annual Meeting”) to be held on Thursday, June 11, 2020. This proxy statement or the Notice of Internet Availability of Proxy Materials (the “Notice”) is being
mailed or made available on the internet to stockholders on or about April 27, 2020.
In accordance with rules and regulations adopted by the U.S. Securities and Exchange Commission (the “SEC”), we have elected to provide our
stockholders access to our proxy materials, including the notice of the Annual Meeting, this proxy statement, our 2019 Annual Report on Form 10-K and the electronic proxy card for the meeting over the Internet by sending them the Notice that
explains how to access our proxy materials and how to vote online. The proxy materials will be posted on the internet at www.proxyvote.com no later than the day we begin mailing the Notice. If you receive the Notice, you will not receive a paper or e-mail
copy of the proxy materials unless you request one in the manner set forth in the Notice.
The Notice contains important information, including:
These rules give us the opportunity to serve you more efficiently by making the proxy materials available quickly online and reducing costs associated with printing and postage.
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 e-mail will remain in effect until the stockholder terminates such election. To terminate such election and sign up for electronic delivery, please follow the instructions provided with your proxy materials and on your proxy card
or voting instruction card to vote using the Internet and, when prompted, indicate that you agree to receive or access stockholder communications electronically in future years.
You can view the proxy materials for the Annual Meeting on the Internet at www.proxyvote.com. Please have your 12-digit control number available. Your
12-digit control number can be found on your Notice. If you received a paper copy of your proxy materials, your 12-digit control number can be found on your proxy card or voting instruction card.
This proxy statement and our 2019 Annual Report on Form 10-K are available indirectly in the Investor Relations section of our website at www.antarespharma.com. You may
access this material by choosing the “For Investors” tab at the top of the page, and then selecting “SEC Filings” from the items listed in the “For Investors” section. The information on our website is not part of this proxy statement. References
to our website in this proxy statement are intended to serve as inactive textual references only.
Only holders of record of shares of the Company’s common stock, par value $0.01 per share (“common stock”), at the close of business on April 17, 2020, the record date, are entitled to vote at
the Annual Meeting. As of that date, there were 165,560,401 shares of common stock outstanding. Each stockholder entitled to vote shall have the right to cast one vote for each share of common stock outstanding in such stockholder’s name.
Shares cannot be voted at the Annual Meeting unless the holder of record is present in person (all references to “present” or “in person” in this proxy statement relate to virtual presence at the
Annual Meeting) or by proxy.
If you hold your shares in your own name as a stockholder of record, you can vote your common stock by any of the following methods:
If you are a beneficial stockholder whose shares are held in the name of a bank, broker or other holder of record (commonly referred to as shares held in “street name”), you will receive
instructions from the holder of record on how to vote your shares. You must follow the instructions of your broker or other nominee in order for your shares to be voted. If you plan to vote your shares at the Annual Meeting, you must obtain a
“legal proxy” from the broker or other nominee holding your shares that confirms your beneficial ownership of the shares and gives you the right to vote your shares electronically during the meeting.
If you vote by phone or via the Internet, please have your Notice or proxy card available. The control number appearing on your Notice or proxy card is necessary to process your vote. A phone or
Internet vote authorizes the named proxies in the same manner as if you marked, signed and returned a proxy card by mail.
You may revoke your proxy and change your vote at any time before the final vote at the Annual Meeting. If you are a stockholder of record, you may do this by submitting a new proxy with a later
date, submitting a written notice of such revocation to our Corporate Secretary at the address set forth on the first page of this proxy statement; by voting by telephone or by using the Internet; or by virtually attending the Annual Meeting and
voting in person. Virtually attending the Meeting alone will not revoke your proxy unless you specifically request your proxy to be revoked. If you hold shares through a bank or brokerage firm, you will need to request a proxy from the bank or
broker and bring it with you to vote electronically at the meeting. Unless so revoked, the shares represented by such proxy will be voted electronically at the Annual Meeting and at any adjournment thereof in the manner specified.
The Company currently has no other class of stock outstanding and entitled to be voted at the Annual Meeting. A majority of the shares entitled to vote, present in person or represented by proxy,
shall constitute a quorum. If a broker that is a record holder of common stock does not return a signed proxy, the shares of common stock represented by such proxy will not be considered present at the Annual Meeting and will not be counted toward
establishing a quorum. If a broker that is a record holder of common stock does return a signed proxy, but is not authorized to vote on one or more matters (with respect to each such matter, a “broker non-vote”), the shares of common stock
represented by such proxy will be considered present at the Annual Meeting for purposes of determining the presence of a quorum at the Annual Meeting for all proposals being presented at the Annual Meeting. A broker that is a member of the New York
Stock Exchange is prohibited, unless the stockholder provides the broker with written instructions, from giving a proxy on non-routine matters. Consequently, your brokerage firm or other nominee will have discretionary authority to vote your shares
with respect to routine matters but may not vote your shares with respect to non-routine matters.
The routine matters included in this proxy statement are:
The non-routine matters included in this proxy statement are:
Assuming a quorum is present:
For each of these proposals, abstentions, withheld votes and broker non-votes will have no effect on the outcome of the vote.
The shares of common stock represented by each properly executed proxy will be voted at the Annual Meeting in accordance with each stockholder’s directions. If no choice has been specified and
the enclosed proxy card is properly executed and returned, the shares represented by that proxy will be voted “FOR” the nominees for election as directors named under the caption “Election of Directors,” “FOR” the approval, on an advisory basis, of
the executive compensation for our named executive officers as disclosed in the Compensation Discussion and Analysis, the accompanying compensation tables and the related narrative disclosure in this proxy statement, and “FOR” the ratification of
the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2020. If any other matters are properly presented at the Annual Meeting for action, the proxy holders will vote the proxies
(which confer discretionary authority to vote on such matters) in accordance with their judgment.
ELECTION OF DIRECTORS
Our Bylaws provide that the number of directors that constitute the Board of Directors shall be fixed from time to time by the Board of Directors, and our Certificate of Incorporation, as amended
(the “Certificate”), provides that directors shall be divided into three classes of as nearly equal size as possible. The members of each class are elected to serve a three-year term and until his or her successor is duly elected and qualified, and
the terms of each class are staggered. Following the recommendation for nomination by our Governance and Nominating Committee, the Board of Directors has nominated Leonard S. Jacob, M.D., Ph.D. and Peter S. Greenleaf for election as Class I
directors. Marvin Samson is a current Class I director, who will retire from the Board of Directors at the Annual Meeting and is not seeking reelection.
The accompanying proxy will be voted in favor of the election of the following nominees for director, unless the stockholder giving the proxy indicates to the contrary on the proxy. The nominees
have agreed to stand for election at the Annual Meeting and to serve if elected. If any nominee is not available as a candidate for director at the time of the Annual Meeting, the proxies will be voted for another nominee designated by the Board of
Directors to fill such vacancy, unless the stockholder giving the proxy indicates to the contrary on the proxy.
The following table provides class information about our two director nominees and our five other directors who will serve as directors after the Annual Meeting.
Nominees for Class I Directors for a term continuing until the 2023 Annual Meeting of Stockholders
Leonard S. Jacob, M.D., Ph.D.
Dr. Jacob has served as the Chairman of the Board of Directors since October 2008. Dr. Jacob joined the Board of Directors in January 2007 and is the Chairman of our Governance and Nominating
Committee and is a member of our Compensation Committee. In 2006, Dr. Jacob was named Chairman of the Board of Bradley Pharmaceuticals which was subsequently acquired by Nycomed. He founded InKine Pharmaceutical Company Inc. in 1997 and served as
Chairman and CEO from its founding until the company was acquired by Salix Pharmaceuticals in 2005. In 1989, Dr. Jacob co-founded Maganin Pharmaceuticals and served as its Chief Operating Officer until 1996. From 1980 to 1989, Dr. Jacob served in a
variety of executive roles including Worldwide Vice President of SmithKline & French Labs (now Glaxo-SmithKline) and as a member of their Corporate Management Committee. He earned a Ph.D. in pharmacology from Temple University School of
Medicine and an M.D. from the Medical College of Pennsylvania (Drexel University College of Medicine). Dr. Jacob serves as Chairman of Life Science Advisors, a consulting group to the health care industry. He also serves on the Board of Directors
of QuiqMeds, a private digital drug dispensing company, the Board of Overseers for Temple University School of Medicine, and the Board of Trustees of the University of the Sciences in Philadelphia.
Dr. Jacob’s experience on, and knowledge concerning, public company directorships and his extensive executive experience provides valuable insights into our corporate governance. Moreover, his
lengthy experience in operating and financial management enables him to provide useful insights on executive management considerations. His background as a practicing physician allows him to provide the Board of Directors with a physician’s insight
on matters facing the Company.
Peter S. Greenleaf
Mr. Greenleaf joined the Board of Directors in December 2018. Since April 2019, Mr. Greenleaf has been the Chief Executive Officer of Aurinia Pharmaceuticals, Inc. and a member of its board of
directors. Mr. Greenleaf served as the Chief Executive Officer of Cerecor, Inc. from March 2018 until April 2019 and remains a member of its board of directors serving since May 2017. From March 2014 to February 2018, Mr. Greenleaf served as CEO
and Chairman of Sucampo Pharmaceuticals, Inc. (NASDAQ: SCMP). Sucampo was focused on the development and commercialization of medicines to meet major unmet medical needs of patients worldwide and was sold in February 2018 to Mallincrodt PLC. From
June 2013 to March 2014, Mr. Greenleaf served as Chief Executive Officer and a
member of the board of directors of Histogenics Corporation, a regenerative medicine company. From 2006 to 2013, Mr. Greenleaf was employed by Medlmmune LLC, the global biologics arm of AstraZeneca, where he most
recently served as President. From January 2010 to June 2013, Mr. Greenleaf also served as President of Medlmmune Ventures, a wholly owned venture capital fund within the AstraZeneca Group. Prior to serving as President of Medlmmune, Mr. Greenleaf
was Senior Vice President, Commercial Operations of the company, responsible for its commercial, corporate development and strategy functions. Mr. Greenleaf has also held senior commercial roles at Centocor, Inc. (now Jansen Biotechnology, Johnson
& Johnson) from 1998 to 2006, and at Boehringer Mannheim (now Roche Holdings) from 1996 to 1998. Mr. Greenleaf currently chairs the Maryland Venture Fund Authority, whose vision is to oversee implementation of Invest Maryland, a public-private
partnership to spur venture capital investment in the state. He also currently serves as Chairman of the board of directors of Biodelivery Sciences International, Inc. (NASDAQ: BDSI). Mr. Greenleaf earned a M.B.A. degree from St. Joseph's
University and a B.S. degree from Western Connecticut State University.
Mr. Greenleaf’s significant executive management, leadership, corporate development and commercial operations experience in the biopharmaceutical industry enables him to provide valuable insight
to our Board of Directors.
Class II Directors whose term continues until the 2021 Annual Meeting of Stockholders
Anton G. Gueth
Mr. Gueth joined the Board of Directors in 2003 and serves as Chairman of our Compensation Committee and as a member of our Audit Committee and our Governance and Nominating Committee. Since
2003, Mr. Gueth has served as President of Gueth Consulting LLC, which focuses on business development and alliance management in the pharmaceutical industry. He was previously a Managing Director of Burrill Securities, a merchant bank specialized
in the health care field, and since October 2014 has been serving as Managing Director of EVOLUTION Life Science Partners, an advisory firm specialized on investment banking activities in the health care sector. Mr. Gueth also serves as a director
of iQone Healthcare, a privately held specialty pharmaceutical company based in Geneva, Switzerland since June 2015 and joined the Board of Elevar Therapeutics (previously LSK Biopharma), a Salt Lake City based pharmaceutical company in August
2018. Further, since October 2019 he joined the Board of the Berlin, Germany based MotionCaptureGroup. Previous board responsibilities include the Board of Navidea Biopharmaceuticals, Inc. for the period June 2015 to March 2016 and the Board of
Spectrum Pharmaceuticals, Inc. for the period July 2012 to June 2013. Mr. Gueth’s career includes nearly 19 years with Eli Lilly and Company (“Lilly”), most recently as director of Alliance Management. He also served as General Manager of Lilly’s
African and Middle Eastern operations; Vice President of Financial Planning and Treasury of PCS Health Systems; Managing Director of Lilly’s Saudi Arabia, Gulf and Yemen operations, as well as other sales, marketing and financial positions. Mr.
Gueth earned a Master’s Degree in agricultural economics from the Justus Liebig University in Giessen, Germany, as well as a Master’s Degree in public affairs from Indiana University. He is a director of the American Liver Foundation, Northern
California Chapter.
Mr. Gueth’s extensive financial experience provides valuable insights to both the Audit Committee and the Board of Directors. In addition, his experience as a consultant specializing in the
health care field enables him to share with the Board of Directors considerable knowledge regarding health care and pharmaceutical industry trends in business development and alliance management with regards to Antares Pharma’s partners.
Robert P. Roche, Jr.
Mr. Roche joined the Board of Directors in July 2013 and is a member of our Audit Committee. He served as a member of our Governance and Nominating Committee until February 2015. He is the
founding member of Robert Roche Associates LLC, a consulting firm providing guidance to the pharmaceutical and health care industries. He created this firm upon his retirement from Cephalon Inc. in 2010. He joined Cephalon in 1995 as the Vice
President of Sales and Marketing and was named Executive Vice President, Worldwide Pharmaceutical Operations of Cephalon in 2005. Before joining Cephalon, Mr. Roche served as Director and Vice President, Worldwide Strategic Product Development, for
SmithKline Beecham’s central nervous system and gastrointestinal products business. He also was managing director of SmithKline’s pharmaceutical operations in the Philippines. Prior to that, he held senior marketing positions in Canada and Spain
and had product planning responsibilities for SmithKline in Latin America. Mr. Roche began his pharmaceutical career in 1982 with SmithKline & French as a U.S. pharmaceutical sales representative. He formerly served as a Director of LifeCell
Inc. until its acquisition in 2008, EKR Therapeutics until its acquisition in 2012, Civitas Therapeutics, Inc. until its acquisition in 2014, and NuPathe Inc. until its acquisition in 2014, Aratana Therapeutics until its acquisition in July 2019,
and Paragon Biosciences until its acquisition in May 2019. He also serves on the Board of Directors of Bryn Mawr Hospital. He is a graduate of Colgate University and earned an MBA from The Wharton School at the University of Pennsylvania.
Mr. Roche’s experience in multiple global pharmaceutical companies and his success in commercial operations and product launches enables him to assist the Board of Directors in addressing many
important issues, including the launch of new products.
Class III Directors whose term continues until the 2022 Annual Meeting of Stockholders
Robert F. Apple
Mr. Apple joined the Board of Directors in March 2016 and serves as the Company’s President and Chief Executive Officer since January 2016. Mr. Apple joined the Company in 2006 as Senior Vice
President, Chief Financial Officer and Corporate Secretary and in 2009 was promoted to the position of Executive Vice President, Chief Financial Officer and President of the Parenteral Products Division. In September 2014, Mr. Apple was promoted to
the position of Executive Vice President, Chief Operating Officer of the Company. Prior to joining the Company, Mr. Apple served as Chief Operating and Financial Officer at InKine Pharmaceutical Company, Inc. from 2003 to 2005, and Chief Financial
Officer from 1997 to 2002. From 1995 to 1997, Mr. Apple was employed by Genaera Corporation, Inc., a biotechnology company, where he held the position of Corporate Controller. From 1994 until 1995, Mr. Apple was employed by Liberty Technologies,
Inc. as Corporate Controller. Prior to 1994, Mr. Apple held various positions of increasing responsibility at Arthur Andersen & Company LLP. He holds a B.A. degree in accounting from Temple University.
Mr. Apple’s knowledge of our Company, by virtue of his services as President and Chief Executive Officer, enables him to provide valuable insight into our operations and personnel. His long
career in the life sciences industry and at the Company enables him to assist the Board of Directors in addressing many important issues. Moreover, his executive experience at previous pharmaceutical companies enables him to contribute meaningfully
to the Board of Directors in considering a variety of operational and financial matters.
Thomas J. Garrity
Mr. Garrity joined the Board of Directors in 2003 and serves as Chairman of our Audit Committee and as a member of our Governance and Nominating Committee. Since 2002, he has been a private
investor. He was Executive Vice President and Chief Financial Officer for PCS Health Systems, a provider of managed pharmaceutical care, from 1994 to 2000. Prior to that, Mr. Garrity held various positions at Eli Lilly and Company, including
Director of Public Policy Planning and Development; Director of Corporate Financial Planning; and other international, marketing and financial positions. Mr. Garrity holds a B.S. degree from the Massachusetts Institute of Technology in aerospace
engineering and an MBA in finance from the University of Chicago.
Mr. Garrity’s executive experience in the pharmaceutical arena and additional extensive experience in leadership positions in pharmaceutical companies enable him to assist the Board of Directors
in assessing government regulatory considerations and other matters facing the pharmaceutical industry and the companies operating therein. In addition, his experience as a financial executive enables him to provide knowledgeable perspectives on
financial matters.
Karen L. Smith, M.D., Ph.D
Dr. Karen Smith joined the Board of Directors in March 2019. From May 2019 until January 2020, Dr. Smith served as the President and Chief Executive Officer of Medeor Therapeutics. From June 2018
until May 2019, Dr. Smith served as CEO of Eliminate Cancer, Inc., an oncology R&D and venture organization. From 2015 to 2018, Dr. Smith served as Executive Vice President, Global Head R&D, and Chief Medical Officer of Jazz
Pharmaceuticals, Inc. Prior to joining Jazz Pharmaceuticals, from 2011 to 2015, Dr. Smith was Senior Vice President, Global Medical Affairs and Global Dermatology Head for Allergan, Inc. From 2007 until 2010, Dr. Smith was Vice President, External
Medical Relations and then Vice President, Global Development at AstraZeneca, LP. Dr. Smith is currently a member of the board of directors of Sangamo Therpeutics, Inc. and Acceleron Pharma, Inc., and previously served as a member of the board of
directors of Forward Pharma A/S and Sucampo Pharmaceuticals, Inc. Dr. Smith earned a B.App.Sc. and a B.Sc. (Honors) from the Curtin University of Technology, an M.D. from the University of Warwick, a Ph.D. in oncology molecular genetics from the
University of Western Australia, an M.B.A. from the University of New England (Australia) and a L.L.M. in medical law from the University of Salford.
Dr. Smith’s extensive experience in research and development, clinical trials, pipeline and product development in the biopharmaceutical industry and additional extensive experience in executive
management positions in pharmaceutical companies enables her to provide valuable insight and leadership to our Board of Directors.
Vote Required; Recommendation of the Board of Directors
The affirmative vote of a plurality of votes of the shares of our common stock present in person (virtually) or represented by proxy at the Annual Meeting and entitled to vote is required to
elect the two nominees. That means the nominee will be elected if he receives more affirmative votes than any other nominee. The Board of Directors unanimously recommends that you vote FOR the election of Leonard S. Jacob, MD, Ph.D. and Peter S. Greenleaf.
In accordance with the General Corporation Law of the State of Delaware and our Certificate and Bylaws, our business and affairs are managed under the direction of the Board of Directors. We
provide information to the directors about our business through, among other things, operating, financial and other reports, as well as other documents presented at meetings of the Board of Directors and Committees of the Board of Directors.
Corporate Governanc
e Guidelines and Code of Business Conduct and Ethics
We are committed to exercising good corporate governance practices. In furtherance of this commitment, our Board of Directors has adopted Corporate Governance
Guidelines that address the practices of the Board of Directors and specify criteria to assist the Board of Directors in determining Director independence. These criteria supplement the listing standards of the NASDAQ and the regulations of the
SEC. The Corporate Governance Guidelines also address the following key corporate governance subjects, among others: director qualification standards; director responsibilities; director access to management and, as necessary and appropriate,
independent advisors; director orientation and continuing education; management succession; and an annual performance evaluation of the Board of Directors.
Our Code of Business Conduct and Ethics sets forth rules of conduct that apply to all of our directors, officers and employees, and addresses these important topics, among others: conflicts of
interest; confidentiality of information; fair dealing; protection and proper use of our assets; compliance with laws, rules and regulations (including insider trading laws); and encouraging the reporting of any illegal or unethical behavior.
We believe that our strong corporate governance policies and practices, including the substantial percentage of independent directors on our board of directors and the robust duties of our Chairman of the Board,
empower our independent directors to effectively oversee our management—including the performance of our Chief Executive Officer—and provide an effective and appropriately balanced board governance structure.
The Corporate Governance Guidelines and Code of Business Conduct and Ethics are available on our website at www.antarespharma.com as well as in printed form, free of
charge to any stockholder who requests them, by writing or telephoning the Corporate Secretary of the Company (the “Secretary”) at Antares Pharma, Inc., 100 Princeton South, Suite 300, Ewing, New Jersey 08628 (Telephone Number: 609-359-3020).
With respect to any amendments or waivers of the Corporate Governance Guidelines or Code of Business Conduct and Ethics (to the extent applicable to the members of our Board of Directors and our executive officers) we intend to either post such
amendments or waivers on our website, www.antarespharma.com, or disclose such amendments or waivers pursuant to a Current Report on Form 8-K.
The Board of Directors has determined that Dr. Jacob, Dr. Smith, and Messrs. Garrity, Greenleaf, Gueth, Roche and Samson are “independent” as defined under the listing standards of NASDAQ. The
Board of Directors believes that the NASDAQ independence requirements contained in the listing standards provide the appropriate standard for assessing director independence and uses these requirements in assessing the independence of each of its
members.
Meetings and Committees
of the Board of Directors
The Board of Directors met, either telephonically or in person, five times during 2019. The Board of Directors has an Audit Committee, a Compensation Committee and a Governance and Nominating
Committee. During 2019, all of our current directors attended 100% of the aggregate number of meetings of the Board of Directors and at least 75% of the meetings of the Committees on which they served. Our directors are invited, but are not
required, to attend our Annual Meetings. Last year, all of our directors then serving attended the 2019 Annual Meeting of Stockholders. The Board of Directors, Audit Committee, Compensation Committee, and Governance and Nominating Committee also
held numerous informal meetings and calls during 2019.
Committees of the Boar
d of Directors
Our Board of Directors has three standing committees: an Audit Committee, a Compensation Committee and a Governance and Nominating Committee. In addition to the three standing committees, the
Company has an Executive Committee, comprised of the heads of each of the standing committees. The Executive Committee meets informally from time to time to discuss matters that arise.
Audit Committee
Messrs. Garrity, Gueth and Roche serve on the Audit Committee with Mr. Garrity acting as Chairman. The Audit Committee met, either telephonically or in person, eight times during 2019. The Audit
Committee engages our independent registered public accounting firm, reviews the results and scope of the audit and other services provided by our independent registered public accounting
firm, as well as our accounting principles and systems of internal controls, and reports the results of its review to, or holds concurrent meetings with, the full Board of Directors. The Board of Directors has
determined that Mr. Garrity meets the requirements of an “audit committee financial expert,” as that term is defined by the SEC. Additionally, the Board of Directors has determined that each of the members of our Audit Committee is “independent”
within the meaning of the applicable NASDAQ listing standards and otherwise meet the financial statement proficiency requirements of the NASDAQ listing rules.
You can find a copy of our Audit Committee Charter by visiting our website at www.antarespharma.com and following the links to “For Investors,” “Corporate Governance and Committee Charters” and “Audit Committee Charter.”
Compensation Committee
Mr. Gueth, Dr. Jacob and Mr. Samson serve on the Compensation Committee with Mr. Gueth acting as Chairman. The Compensation Committee met, either telephonically or in person, five times during
2019. The Compensation Committee makes recommendations concerning executive salaries and incentive compensation for employees as well as employee benefits. The Compensation Committee administers our Equity Compensation Plan, as amended and restated
(the “Equity Compensation Plan”), except that the Board of Directors as a whole administers the Equity Compensation Plan with respect to awards to members of the Board of Directors. All actions taken by the Compensation Committee for the Equity
Compensation Plan are reported to the Board of Directors. Additionally, the Board of Directors has determined that each of the members of our Compensation Committee is “independent” within the meaning of the applicable NASDAQ listing standards.
You can find a copy of our Compensation Committee Charter by visiting our website at www.antarespharma.com and following the links to “For Investors,” “Corporate
Governance and Committee Charters” and “Compensation Committee Charter.”
Governance and Nominating Committee
Drs. Jacob and Smith and Messrs. Garrity and Gueth serve on the Governance and Nominating Committee, with Dr. Jacob acting as Chairman. The Board of Directors has determined that each of the
members of the Governance and Nominating Committee is “independent” within the meaning of the applicable NASDAQ listing standards.
The Governance and Nominating Committee met, either telephonically or in person, one time during 2019. The purpose of the Governance and Nominating Committee is:
Although no formal diversity policy is in place, in performance of its duties, the Governance and Nominating Committee believes that the backgrounds and qualifications of the Board of Directors,
considered as a group, should provide a significant composite mix of experience, knowledge and abilities that will enable the Board of Directors to fulfill its responsibilities. Therefore, the Governance and Nominating Committee considers diversity
in identifying nominees for directors. In this regard, the Governance and Nominating Committee views diversity in a broad sense, including on the basis of business experience, public service experience, gender and ethnicity.
You can find a copy of our Governance and Nominating Committee Charter by visiting our website at www.antarespharma.com and following the links to “For Investors,” “Corporate Governance and Committee Charters” and “Governance and Nominating Committee Charter.”
In connection with our proxy solicitation relating to our Annual Meeting, the Board of Directors recommends a slate of director nominees for election by our stockholders. In addition, the Board
of Directors fills vacancies on the Board of Directors when necessary or appropriate. The Board of Directors’ recommendations or determinations are made after consideration of the recommendations of, and information supplied by, our Governance and
Nominating Committee as to the suitability of each individual nominee, taking into account the criteria described below and other factors, including the requirements for membership on a Committee of the Board of Directors. The Board of Directors as
a whole should collectively possess a broad range of skills, expertise, industry and other knowledge,
and business and other experience useful to the effective oversight of our business. In accordance with the Company’s Corporate Governance Guidelines, the Board of Directors also seeks members from diverse
backgrounds so that the Board of Directors consists of members with a broad spectrum of experience and expertise and with a reputation for integrity. Directors should have experience in positions with a high degree of responsibility, be leaders in
the companies or institutions with which they are affiliated, and be selected based on contributions that they can make to us. In determining whether to recommend a director for reelection, our Governance and Nominating Committee also considers a
director’s past attendance at meetings and participation in and contributions to the activities of the Board of Directors and Committees of the Board of Directors on which the director served. Our Board of Directors considers recommendations for
nominations from a wide variety of sources, including members of our Board of Directors, business contacts, our legal counsel, community leaders and members of our management.
The Board of Directors will also consider candidates for nomination recommended by a stockholder. The procedures for nominating directors for election, other than by the Board of Directors, are
set forth in the Bylaws and our Corporate Governance Guidelines. Nominations for the election of directors, other than by the Board of Directors, must be made by a stockholder entitled to vote for the election of directors by giving timely written
notice to the Secretary at the Company’s principal office. To be timely, a stockholder’s notice of such nominations shall be delivered to the Secretary not later than the close of business on the 90th day nor earlier than the close of business on
the 120th day prior to the first anniversary of the preceding year’s Annual Meeting; provided, however, that in the event that the date of the Annual Meeting is advanced by more than 30 days before or delayed by more than 60 days after such
anniversary date, notice by the stockholder to be timely must be so delivered not earlier than the close of business on the 120th day prior to such Annual Meeting and not later than the close of business on the later of the 90th day prior to such
Annual Meeting or the 10th day following the day on which public announcement of the date of such meeting is first made. Such stockholder’s notice shall set forth as to each person whom the stockholder proposes to nominate for election or
reelection as a director, all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under
the Exchange Act (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected) and as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the
nomination or proposal is made the name and address of such stockholder, as they appear on the Company’s books, and of such beneficial owner, and the class and number of shares of the Company which are owned beneficially and of record by such
stockholder and such beneficial owner. If a stockholder fails to comply with the above provisions, then the Chairman of the meeting may declare that the nomination was not made in accordance with the procedures prescribed by the Bylaws and the
defective nomination may be disregarded. Subject to compliance with statutory or regulatory requirements, the Board of Directors does not expect that candidates recommended by stockholders will be evaluated in a different manner than other
candidates.
Board of Directors Role in Risk Oversight
The Board of Directors regularly and continually receives information intended to apprise the Board of Directors of the strategic, operational, commercial, financial, legal, and compliance risks
the Company faces. We believe that our Board of Directors provide effective oversight of risk management, which is part of an evolving process through which management continually seeks opportunities to further engrain enterprise risk management
into business processes throughout the organization. The Board of Directors actively encourages management to continue to drive this evolution. While the Board of Directors has responsibility for overall oversight of the Company’s risk management
practices, the Audit, Compensation and Governance and Nominating Committees of the Board of Directors have specific risk management oversight responsibilities. In particular, the Audit Committee is responsible for overseeing our financial reporting
process on behalf of our Board of Directors and focuses on financial risk, including internal controls. In its oversight role, the Audit Committee receives, reviews and discusses regular reports from management concerning risk assessment and risk
management policies and practices and mitigation initiatives, specifically including updates on information security developments, cybersecurity and the steps taken by management to monitor and mitigate risk exposures in these areas. This Audit
Committee approach helps to assure that the risk management processes designed and implemented by the Company are adapted to the Company’s strategy and are functioning as expected.
In addition, our Compensation Committee also works with our full Board of Directors to oversee matters related to human capital management, which includes reviewing workforce trends, executive
succession plans and talent risk and maintaining compensation objectives and corporate policies that appropriately incentivize creating and maintaining a positive workplace and corporate culture. As part of its compensation philosophy, the
Compensation Committee strives to adopt compensation incentives that are consistent with the Company’s long term business strategy and objectives, but do not encourage our officers and employees to take unnecessary or excessive risks in performing
their duties. The Governance and Nominating Committee oversees risk management practices in its domain, including director candidate selection, governance and succession matters.
At its meetings, our full Board of Directors receives reports concerning the management of the relevant risks from each committee, in addition to reports concerning material risks and concerns or
significant updates on such matters from our General Counsel and other executive officers, as necessary.
Director Continuing Education
Our directors are encouraged to attend educational programs provided by various universities, stock exchanges and other regulatory agencies to assist our directors in maintaining or enhancing
their skills and abilities as directors and to update their knowledge and understanding of the pharmaceutical, medical device and biopharma industries and the regulatory environment in which Antares operates and to which it is subject.
Board of Directors Leadership Structure
The Chairman of the Board of Directors is an independent director. The Company and the Board of Directors believe that the oversight function of the Board of Directors is enhanced when an
independent director, serving as Chairman, is in a position to set the agenda for, and preside over, meetings of the Board of Directors. In addition, the Chairman of the Board of Directors regularly meets with the Chairpersons of our standing
committees to discuss relevant issues within the Company which are then addressed by the specific committee or the Board of Directors as appropriate. We also believe that our leadership structure enhances the active participation of our independent
directors.
Executive sessions of non-management directors are held after each regularly scheduled board meeting. During 2019, the non-management directors held four executive sessions. “Non-management
directors” include all directors who are not our officers, and all non-management directors have been determined by the Board of Directors to be independent. Currently, Mr. Apple is the only officer serving on our Board of Directors.
Board and Management Succession Planning
Our Board of Directors periodically reviews a management succession plan that includes, among other things, an assessment of the experience, performance and skills for possible successors to our
Chairman of the Board of Directors, Committee Chairpersons, directors, CEO and other senior executives.
Communicating with
our Board of Directors
You may communicate in writing with any or all of our directors via U.S. mail. Mail should be addressed to Antares Pharma, Inc., c/o Secretary, 100 Princeton South, Suite 300, Ewing, New Jersey
08628. Our Secretary will review and summarize all communications received for the purpose of expediting director review of matters communicated and will forward correspondence directly to the directors as appropriate.
Compensation of Directors
The Company’s non-employee directors are compensated in accordance with a fee schedule that is approved by the Compensation Committee. The Compensation Committee reviews and recommends to the
Board of Directors appropriate director compensation programs for service as directors, committee chair, and committee members. In order to determine the Board of Directors compensation framework, the Compensation Committee reviewed comparative
market composite data about director compensation practices of pharmaceutical, medical device and biopharma companies similar to Antares derived from a public company peer group developed by Pearl Meyer & Partners, LLC, or Pearl Meyer, our
independent compensation consultant.
During 2019, Pearl Meyer conducted a comprehensive review of non-employee director compensation levels and structure among the Company’s compensation peer group. Consistent with the Company’s
compensation philosophy, non-employee director compensation is positioned competitively against companies of similar size, complexity and growth trajectory. In general, cash compensation for our non-employee directors is within the competitive
range (+/-15%) of the peer group median and equity compensation is targeted between the 50th and 75th percentiles. Based on the recommendation from Pearl Meyer and the peer group data, annual non-employee director equity
compensation for 2019 shifted from solely stock options to 50% restricted stock units and 50% stock options and was increased from $110,000 to $140,000. The value of the equity compensation for the Board Chairman did not change. In addition, the
annual retainer for members of the Governance and Nominating Committee (other than the Chairperson) was increased to $10,000 per member.
Each director, other than the Board Chairman, receives compensation in accordance with the following:
Members of our Committees, other than the Chairpersons, receive the following additional compensation:
The Chairpersons of our Committees receive the following additional compensation:
Our Board Chairman’s compensation for his role as Chairman is as follows:
No additional payments are earned for each Board of Directors meeting or a meeting of a Committee of the Board of Directors. New directors receive a one-time stock option grant to purchase 20,000
shares of our common stock.
Additionally, we reimburse all non-employee directors for their reasonable out-of-pocket travel expenses incurred in attending meetings of our Board of Directors or any Committees of the Board of
Directors.
Our non-employee directors are also covered by Antares’ directors and officer insurance, and each of our directors and executive officers is a party to an indemnification agreement with us. The
indemnification agreements require us to hold harmless and to indemnify each indemnitee to the fullest extent authorized or permitted by the Delaware General Corporation Law, our Certificate and our Bylaws, subject to specified limitations. The
indemnification agreements also provide for the advancement of reasonable litigation expenses to an indemnitee, subject to the requirement that the indemnitee reimburse Antares for such expenses if it is ultimately determined that the indemnitee is
not entitled to such indemnification.
Annually, the directors can elect to take restricted stock or options in lieu of the cash compensation. The number of restricted shares of common stock issued would be based on the market value
of the stock and the number of shares of common stock subject to options granted would be determined based on a valuation using a Black-Scholes model.
The following table provides information regarding director compensation in 2019, which reflects the standard compensation described above. The table does not include compensation for
reimbursement of travel expenses related to attending Board of Directors meetings and meetings of a Committee of the Board of Directors.
Director Compensation – 2019
Compensation Committee Interlocks
and Insider Participation
During 2019, Mr. Gueth, Dr. Jacob and Mr. Samson served on the Compensation Committee. None of the members of the Compensation Committee has been an officer or employee of the Company. None of
our executive officers serve on the board of directors or compensation committee of a company that has an executive officer that serves on our Board of Directors or the Compensation Committee.
ADVISORY VOTE ON EXECUTIVE COMPENSATION
Pursuant to the proxy rules under the Exchange Act and as required by Section 951 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Company is presenting its stockholders with
a non-binding, advisory vote to approve the named executive officer compensation as described in this proxy statement (sometimes referred to as “Say on Pay”).
Accordingly, the following resolution is being presented by the Board of Directors at the Annual Meeting:
“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and
Analysis, compensation tables and narrative discussion, is hereby APPROVED.”
This vote is non-binding. The Board of Directors and the Compensation Committee, which is composed of independent directors, expect to take into account the outcome of the vote when considering
future executive compensation decisions to the extent they can determine the cause or causes of any significant negative voting results.
During fiscal year 2019, we continued our evolution as a pharmaceutical technology company and made significant progress on our strategic goals and objectives and achieved several important
milestones. Most notably, we achieved the following:
Consistent with its pay for performance philosophy, the Compensation Committee considered the impact of our corporate performance during 2019 in determining named executive officer compensation
for 2019, as well as each named executive officer’s individual performance, macroeconomic conditions generally, and data from peer group companies. In addition, the Compensation Committee considered the significant support from our stockholders
with respect to the compensation of our named executive officers from the prior year, with approximately 89% of stockholder votes cast in favor of our Say on Pay resolution approved at our June 2019 Annual Meeting of Stockholders.
As described in detail in the Compensation Discussion and Analysis section of this proxy statement, our executive compensation programs are designed to motivate our executives to achieve our
primary goals of developing and commercializing novel injectable therapeutic products using our advanced device delivery systems for improved safety and efficacy, reduced side effects, and enhanced patient comfort and adherence and providing our
stockholders with a long-term, positive return on their investment. Further, the Company’s compensation philosophy is to pay for performance, support the Company’s business strategies, and offer competitive compensation arrangements. In the
Compensation Discussion and Analysis, we have provided stockholders with a description of our compensation programs, including the philosophy and strategy underpinning the programs, the individual elements of the compensation programs, and how our
compensation plans are administered.
We believe that our executive compensation program rewards sustained and long-term performance given our focus on delivering the majority of an executive’s total compensation through performance-
and time-based annual equity awards. In addition to our long-term incentive program, our annual cash incentives directly tie executive compensation to achievement of our strategic objectives and are based on quantifiable metrics; the performance
against which are reviewed annually by our Compensation Committee. However, we are mindful not to rely on highly leveraged incentives that would result in risky short-term behavior. Stockholders are encouraged to read the Compensation Discussion
and Analysis, the accompanying compensation tables and the related narrative disclosure in this proxy statement.
The Compensation Committee has and will continue to take action to structure our executive compensation practices in a manner that is performance-based with a view towards maximizing long-term
stockholder value. The Board of Directors believes that the executive compensation as disclosed in the Compensation Discussion and Analysis, tabular disclosures, and other narrative executive
compensation disclosures in this proxy statement aligns with our peer group pay practices and coincides with our compensation philosophy.
Vote Required; Recommendation of the Board of Directors
The affirmative vote of a majority of the votes cast by stockholders present, in person (virtually) or by proxy, and entitled to vote at the Annual Meeting, is required to approve the advisory
resolution on executive compensation.
The Board of Directors unanimously recommends that you vote FOR the
approval, on a non-binding advisory basis, of the following resolution:
“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the
Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.”
RATIFICATION OF SELECTION
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
At the Annual Meeting, a vote will be taken on a proposal to ratify the appointment of KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2020. KPMG
LLP has audited our financial statements since 1995.
Representatives of KPMG LLP are expected to be present at the Annual Meeting to make a statement, if they so desire, and to respond to appropriate questions.
Neither our Bylaws nor any other governing documents or law requires stockholder ratification of the appointment of KPMG LLP as our independent registered public accounting firm. However, the
Audit Committee is submitting the appointment of KPMG LLP to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the appointment, the Audit Committee will reconsider whether or not to retain
KPMG LLP. Even if the appointment is ratified, the Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if they determine that such a change would be
in the best interest of our stockholders.
Audit Fees
The aggregate amount of fees billed to the Company by KPMG LLP for professional services rendered in connection with the audit of the Company’s annual financial statements and review of the
financials included in the Company’s SEC filings, and for services in connection with comfort letters, consents and procedures related to documents filed with the SEC, as necessary, totaled $556,750 and $669,350 for 2019 and 2018, respectively.
Audit-Related Fees
There were no fees billed to the Company by KPMG LLP during 2019 or 2018 for audit-related services.
Tax Fees
There were no fees billed to the Company by KPMG LLP during 2019 or 2018 for tax compliance, tax advice or tax planning services.
All Other Fees
There were no other fees billed to the Company by KPMG LLP in 2019 and 2018.
Pre-Approval Policies and Procedures
The Audit Committee has adopted a policy regarding pre-approval of non-audit services performed by the independent registered public accounting firm. The Audit Committee’s pre-approval policy
prohibits engaging the independent auditor to perform the following services:
The policy requires pre-approval of the Audit Committee for all audit services, audit-related services, tax services and other services performed by the independent registered public accounting
firm and pre-approves these services, subject to an annual aggregate dollar limit for each category. Any proposed services exceeding these limits require specific pre-approval by the Audit Committee. Services not listed in one of these categories
also require specific pre-approval from the Audit Committee.
The policy permits the Audit Committee to delegate pre-approval authority to one or more members of the Audit Committee, provided that the member or members report(s) to the entire Audit
Committee pre-approval actions taken since the last Audit Committee meeting. The policy expressly prohibits delegation of pre-approval authority to management. In 2019, 100% of all services provided by our principal accounting firm were
pre-approved by the Audit Committee or one or more of its members.
Vote Required; Recommendation of the Board of Directors
The affirmative vote of a majority of the votes cast by stockholders present, in person (virtually) or by proxy, and entitled to vote at the Annual Meeting, is required to ratify the selection of
the appointment of KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2020.
The Board of Directors unanimously recommends a vote FOR the ratification of the appointment of KPMG LLP as our independent registered public accountants for the year
ending December 31, 2020.
EXECUTIVE OFFICERS OF THE COMPANY
The following individuals served as our executive officers during the year ended December 31, 2019:
Robert F. Apple serves as our President and Chief Executive Officer and as a director. Please see Mr. Apple’s biographical information set forth in the
Election of Directors section in this proxy statement.
Fred M. Powell became our Executive Vice President and Chief Financial Officer in September 2017. Mr. Powell joined the Company in October 2016 as our
Senior Vice President and Chief Financial Officer. Prior to joining Antares, from December 2012 until October 2016, Mr. Powell served as Vice President and Chief Financial Officer for Celator Pharmaceuticals Inc., a publicly traded, clinical stage,
oncology-focused biopharmaceutical company. Prior to joining Celator, from 2011 until 2012, Mr. Powell was the Chief Financial Officer of OraPharma, Inc. From 2005 until 2011, Mr. Powell was Chief Financial Officer of BMP Sunstone Corporation, a
publicly traded specialty pharmaceutical company. From 2002 until 2004, Mr. Powell served as the Chief Financial Officer of Eximias Pharmaceutical Corporation, a privately-held biopharmaceutical company. From 1999 to 2002, Mr. Powell served as the
Senior Vice President, Finance and Administration, of InnaPhase Corporation, a technology solutions provider for life sciences companies. From 1993 to 1999, Mr. Powell held various positions at Premier Research Worldwide, a publicly-traded company
specializing in providing clinical and diagnostic services to the pharmaceutical and biotech industries, including Director of Finance and Administration, from 1993 to 1996, and Chief Financial Officer, from 1996 to 1999. Since June 2017, Mr.
Powell has served as a member of the Advisory Board for Penn State Scranton and Treasurer of the Youth Orchestra of Bucks County. Prior to 1989, Mr. Powell held various positions of increasing responsibility at KPMG LLP. Mr. Powell holds a B.S. in
Accounting from Pennsylvania State University.
Peter J. Graham became our Executive Vice President, General Counsel, Chief Compliance Officer, Human Resources and Corporate Secretary in September
2017. Mr. Graham joined the Company in July 2015 as our Senior Vice President, General Counsel, Chief Compliance Officer, Human Resources & Corporate Secretary. Prior to joining the Company, from 2010 until 2015, Mr. Graham served as Executive
Vice President, General Counsel, Chief Compliance Officer and Global Human Resources of Delcath Systems, Inc., a publicly traded specialty pharmaceutical and medical device company focused on cancers of the liver. Prior to Delcath, between 2008 and
2010, Mr. Graham was Vice President, General Counsel and a member of the Executive Committee of ACIST Medical Systems, Inc., a wholly owned subsidiary of Bracco, SpA., a global company specializing in diagnostic and therapeutic medical devices for
cardiology and radiology. From 1997 until its sale in 2008, Mr. Graham spent 11 years at E-Z-EM, Inc., a publicly listed global medical device and pharmaceutical company specializing in CT and MR imaging solutions. During his tenure at E-Z-EM,
Mr. Graham held various senior level management positions serving as its Senior Vice President, Chief Legal Officer, Global Human Resources and Secretary from 2005 until 2008 and Senior Vice President, General Counsel and Secretary from 2003 until
2005. From 1997 until its initial public offering in 2004, Mr. Graham also served as General Counsel and Corporate Secretary for AngioDynamics, Inc., (then a wholly owned subsidiary of E-Z-EM), a leading provider of innovative medical devices used
by interventional radiologists, cardiologists, surgeons, and other physicians. Mr. Graham was a member of the Board of Directors of AngioDynamics from 2006 to 2007. Mr. Graham earned his J.D. at Yeshiva University’s Benjamin N. Cardozo School of
Law in 1995, and his B.A. in Political Science at the University of Wisconsin-Madison.
James. P. Tursi, M.D. joined the Company in August 2018 as our Executive Vice President, Head of Research
and Development, Chief Medical Officer and resigned effective April 17, 2020. Prior to joining Antares, Dr. Tursi was the Chief Medical Officer of Aralez Pharmaceuticals Inc. and served in this role with the
company’s predecessor, POZEN Inc., from 2015 until 2018. Prior to Aralez, Dr. Tursi served as Chief Medical Officer of Innocoll AG
where he was responsible for managing all clinical research and development, medical affairs and safety activities for product candidates and medical devices which utilized a proprietary collagen-based technology. Prior to joining Innocoll, Dr.
Tursi served as Chief Medical Officer at Auxilium Pharmaceuticals Inc. from 2011 to 2015, and Vice President of Clinical Research & Development from 2009 to 2011. Dr. Tursi was responsible for oversight
of clinical and nonclinical development programs, clinical operations, medical affairs and global safety activities focused on urology. Prior to Auxilium, he served as Director of Medical Affairs for GlaxoSmithKline Biologicals from 2006 to 2009
and directed all medical affairs responsibilities for the cervical cancer vaccine in North America. Dr. Tursi entered the pharmaceutical industry in 2004 as a Medical Director for Procter & Gamble Pharmaceuticals until 2006. Dr. Tursi was a
board certified physician and previously practiced medicine and surgery for over
10 years. He received his doctor of medicine degree from the Medical College of Pennsylvania and completed his residency training at the Johns Hopkins Hospital. Dr. Tursi serves as a member of the
board of directors of Agile Therapeutics.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain Relationships and Related Party Transactions
None.
Review, Approval or Ratification of Transactions with Related Parties
We engage in a process whereby we identify and review all relationships and transactions in which the Company and its directors and executive officers or their immediate family members are
participants to determine whether such persons have a direct or indirect material interest. As required under SEC rules, transactions that are determined to be directly or indirectly material to the Company or a related party would be disclosed in
our proxy statement; however, during our fiscal year ended December 31, 2019, we did not have any related party transactions. The process for the review of all potential related party transactions is documented in our written corporate policies. In
addition, the Audit Committee reviews and approves or ratifies any related party transaction that is required to be disclosed.
Compensation Discussion and Analysis
Overview
The following discussion provides an overview and analysis of our Compensation Committee’s philosophy and objectives in designing compensation programs as well as the compensation determinations
and the rationale for those determinations relating to our Chief Executive Officer, Chief Financial Officer and the other executive officers who served as executive officers during the year, to whom we refer to collectively as our “named executive
officers.” Our named executive officers for 2019 were Messrs. Robert F. Apple, Fred M. Powell, Peter J. Graham and James P. Tursi, M.D. Dr. Tursi resigned as Executive Vice President, Research and Development, Chief Medical Officer, effective April
17, 2020.
Executive Summary
During fiscal year 2019, we continued our evolution as a pharmaceutical technology company and made significant progress on our strategic goals and objectives and achieved several important
milestones. Most notably, we achieved the following:
Executive Compensation Philosophy
The Company’s compensation philosophy is to pay for performance, support the Company’s business strategies, and offer competitive compensation arrangements to attract and retain key individuals.
Consistent with this philosophy, the Compensation Committee considered the impact of our corporate performance during 2019 in determining named executive officer compensation for 2019, as well as each named executive officer’s individual
performance, macroeconomic conditions generally, and data from peer group companies.
Our executive compensation decisions are based on the following fundamental philosophies and objectives of our Compensation Committee:
Executive Compensation Program. Our Compensation Committee uses formal policies and processes to evaluate and assess the compensation of our named executive officers. These
policies and processes are reflected in compensation decisions for 2019 and 2020, and signify our Compensation Committee’s commitment to align executive compensation with the business objectives and performance of the Company. We reward our named
executive officers in a manner that supports a philosophy of pay-for-performance while maintaining an overall level of compensation that is competitive with the compensation paid to similarly situated named executive officers in our peer group and
the life sciences industry. Our Compensation Committee used or will use the following compensation components, processes and programs to review, assess and establish executive compensation.
Compensation Components. The three primary components of executive compensation are base salary, annual incentive cash awards and long-term equity incentive awards. These
components are administered with the goal of providing total compensation that is competitive in the marketplace, while recognizing meaningful differences in individual performance and offering the opportunity to earn superior rewards when merited
by individual and Company performance. To that end, target named executive officer total compensation pay mix for fiscal 2019 is as follows:
Base Salary. We pay our executive officers a base salary, which our Compensation Committee reviews and determines annually. Base salaries are used to compensate our
executive officers for performing the core responsibilities of their positions and to provide them with a level of security with respect to a portion of their total compensation. Base salaries are set in part based on the executive’s unique skills,
experience and expected contribution to the Company, as well as individual performance, including the impact of such performance on our business results, and the length of the executive’s service at the Company. Decisions regarding base salary
increases take into account, the executive’s current base salary, third-party benchmark and survey data, and the salary compensation paid to executive officers within the Company, as well as the Company’s overall performance and its success in
achieving its operational and strategic goals and objectives, and the executive officer’s contribution to Company performance.
Annual Incentive Cash Awards. Annual incentive compensation is intended to establish a direct correlation between annual cash awards and the performance of the Company. The
Company’s Annual Incentive Plan, or “AIP,” is an annual incentive cash bonus plan designed to align the interests of participants with the interests of the Company and its stockholders. The AIP is designed to strengthen the link between a
participant’s pay and his or her overall performance and the Company’s performance, focus participants on critical individual and corporate objectives, offer a competitive cash incentive, and encourage and reward performance and competencies
critical to the Company’s success.
Long-Term Incentive Compensation. In addition to using base salaries and annual incentive cash bonuses, which our Compensation Committee views as short-term compensation,
to reward our executive officers for meeting Company and individual performance objectives, the majority of our executive compensation is in the form of long-term equity compensation. Long-term incentive compensation is an area of emphasis in the
Company’s strategy to compensate its named executive officers, as this will align a significant portion of each executive’s total compensation with the long-term performance of the Company and the interests of the Company’s stockholders. To that
end, our Long-Term Incentive Plan, or “LTIP” is an annual equity-based incentive plan that provides a balanced suite of equity vehicles – performance stock units, restricted stock units and stock options. While the restricted stock units and stock
options vest based on time, the performance stock units vest based on the achievement of a combination of relative total shareholder return performance, revenue growth and business/product development milestones. The LTIP is designed to engage
Company leaders to focus on the long-term performance of the Company, offer participants competitive, market-based long-term incentive award opportunities, and strengthens the link between a participant’s compensation and his or her overall
performance and the Company’s overall performance. We believe the LTIP will further assist us in achieving an appropriate balance between our long- and short-term performance as well as between the achievement of annual operating objectives and
long-term delivery of stockholder return by providing compensation commensurate with overall delivery of Company performance.
Our Compensation Committee and senior management are focused on providing an appropriate mix of short-term and long-term incentives, and we are mindful not to rely on highly leveraged incentives
that would result in risky short-term behavior. Our compensation program provides long-term incentives to ensure that our named executive officers continue in employment with us and directly tie executive compensation to achievement of our
strategic objectives and generation of stockholder value. Based upon the strong level of achievement of the foregoing corporate objectives, the Compensation Committee took the following actions with respect to 2019 compensation for our named
executive officers:
Effect of the 2019 Advisory Vote on Named Executive Officer Compensation
At the June 2019 Annual Meeting of Stockholders, we held a non-binding stockholder advisory vote on the compensation of our named executive officers, commonly referred to as a Say on Pay vote. We
had significant support from our stockholders with respect to the compensation of our named executive officers, with approximately 89% of stockholder votes cast in favor of our Say on Pay resolution. As we evaluated our named executive officer
compensation program during 2019, our Compensation Committee considered the strong support our stockholders expressed for our named executive officer compensation practices which emphasizes short and long-term incentive compensation that rewards
our most senior executives when they deliver value for our stockholders.
Determination of Competitive Compensation for 2019
In late 2018, we engaged Pearl Meyer to assist the Compensation Committee in determining whether the peer group was still appropriate and conducting an executive compensation analysis. Taking
into account several key factors at the time of adoption, including revenue ($54 – $265 million), market capitalization ($256 million – $2.0 billion), the fact that the comparator company has a commercialized product in the area of drug delivery
methods and technologies within specialty pharmaceuticals and the number of employees (90 – 1,644). The 13 comparator companies below comprise the peer group for 2019. Peer group remain unchanged for 2020 compensation decisions.
To conduct the analysis for 2019, Pearl Meyer reviewed the executive pay packages provided for similar roles among the comparator group set forth in the table above. The purpose of the assessment
was to provide a market comparison for the Company’s executive compensation program and to serve as the basis for our Compensation Committee’s discussion regarding current pay competitiveness and potential actions for 2019.
The market comparisons in the Pearl Meyer report are based on the pay levels and compensation practices reported in the proxy disclosures of our peer group and survey data for size appropriate
companies in the life sciences industry as a whole. Our Compensation Committee referred to the report by Pearl Meyer from February 2019 as a basis for setting and adjusting 2019 cash compensation and equity compensation levels within the context of
year-end 2018 performance and market compensation levels.
Based on our compensation objectives and philosophy with reference to the February 2019 study conducted by Pearl Meyer, the Compensation Committee determined that overall compensation for our
executive officers generally is aligned with market practice. The report indicated that the pay mix for our named executive officers emphasizes long-term equity compensation more than its peers and ties a greater percentage of equity compensation
directly to Company performance. The Compensation Committee believes that tying executive compensation to Company performance is an important tool to increasing long-term stockholder value, as evident by our strong emphasis on long-term,
performance-based compensation and helps align our named executive officer with stockholders.
The Compensation Committee generally targets the 50th percentile for the named executive officers’ cash-based compensation, which is comprised of base salary plus target bonus, but has from time
to time made, and will continue to make, determinations that represent a departure from the general guideline of targeting the 50th percentile. Long-term incentive compensation is targeted at between the market 50th and 75th percentile. Equity
grants are targeted at between the 50th and 75th percentile in order to provide meaningful equity grants to executives and to tie a greater percentage of executive compensation to Company performance as compared to our peers.
In addition, because a significant portion of our compensation is performance-based, if performance targets are achieved (or not achieved), actual cash and equity compensation paid to our named
executive officers may vary considerably from that paid to executives in our peer group. In determining 2019 compensation, the Compensation Committee also considered the level of experience of the executive management team, the critical role the
executive management team plays in achieving the Company’s strategic goals, individual performance and the individual’s experience.
The charts below represent the mix of target total direct compensation awarded to our Chief Executive Officer and other named executive officers in 2019. Consistent with our pay for performance
philosophy, a majority of the target total direct compensation is variable, as it is based on performance. The Company’s Chief Executive Officer is eligible to participate in the same executive programs as the named executive officers; however, a
larger proportion of his target total direct compensation is at risk. The charts below reflect target compensation for Messrs. Apple, Graham, Powell and Dr. Tursi. As indicated below, approximately 83% of the target total direct compensation
awarded to the Chief Executive Officer and 68% awarded to the other named executive officers in 2019 was based on elements that may vary from year to year depending on performance.
We believe our approach to goal setting, weighting of targets, and evaluation of performance results assists in mitigating excessive risk-taking by our named executive officers that could harm our
value or reward poor judgment by our named executive officers. We believe that several features of our programs reflect sound risk management practices. Specifically:
All of the foregoing features establish a balanced compensation program that is designed to mitigate risk and properly account for the time horizon of risk based on our strategic business
objectives. For a more detailed discussion of these features, refer to the discussion below under “Annual Incentive Awards” and “Long-Term Incentives – Equity Compensation.”
Each named executive officer has an employment agreement with us that includes base salary and annual and long-term incentives. Further details regarding the terms of the employment agreements
are described below.
Looking Forward to 2020
2020 Executive Compensation Benchmarking
In late 2019, we reengaged Pearl Meyer to assist the Compensation Committee in evaluating the peer group and conducting an executive compensation analysis that was completed in early 2020. The
purpose of the peer group analysis was to ensure that the Company is using the appropriate comparator group and third-party data sources for our annual assessment of executive compensation. For 2020, the Compensation Committee determined that the
peer group should not change from what was adopted in 2019. The subsequent market compensation analysis serves as the basis for our Compensation Committee’s assessment regarding current competitiveness across all compensation elements and potential
actions for 2020. As a result of the executive compensation analysis completed in early 2020, base salaries and target annual incentive awards for our named executive officers were increased in 2020, as described below.
Role of our Named Executive Officers in Determining Executive Compensation.
The Compensation Committee has established an annual performance review program for our named executive officers pursuant to which annual corporate and individual performance goals are determined
and communicated in writing to each executive at the beginning of each calendar year. For named executive officers other than the Chief Executive Officer, individual goals are proposed by the Chief Executive Officer. Individual goals for the Chief
Executive are approved by the Compensation Committee. The Chief Executive Officer also submits corporate performance goals which are reviewed and approved by the Compensation Committee at the beginning of each year. Each named executive officer’s
evaluation begins with a written self-assessment which is submitted to the Chief Executive Officer. The Chief Executive Officer then prepares an evaluation based on the named executive officer’s self-assessment and the Chief Executive Officer’s own
evaluation. This process leads to a recommendation by the Chief Executive Officer for annual executive salary increases and bonuses, if any, which is then reviewed and approved by the Compensation Committee. In the case of the Chief Executive
Officer, his individual performance evaluation is conducted by the Chairman of the Board of Directors and Compensation Committee, which determines his compensation changes and awards. In connection with 2019 compensation, the Chief Executive
Officer provided recommendations to the Compensation Committee to assist it in determining compensation levels. While the Compensation Committee utilized this information, and valued the Chief Executive Officer’s observations with regard to other
named executive officers, the ultimate decisions regarding named executive officer compensation were made by the Compensation Committee. The Chief Executive Officer did not make recommendations as to his own compensation.
Base Salaries
In February 2019, in connection with the Compensation Committee’s evaluation of Company and named executive officer performance during 2018, and in February 2020, in connection with the
Compensation Committee’s evaluation of Company and named executive officer performance during 2019, the Compensation Committee approved modest base salary increases as set forth in the table below. For those named executive officers who were
eligible for base salary increases, the base salaries were increased by approximately 3.1% on average with respect to increases in February 2019 and 4.0% on average with respect to increases in February 2020. The current named executive officer
base salary was increased to better align to median market practice, as indicated by the peer group compensation reports from Pearl Meyer and other third party compensation studies.
Annual Incentive Awards
The Company maintains the AIP. The performance goals vary year by year, as approved by the Compensation Committee.
Our principal objective in providing annual incentive compensation is to provide pay for performance. While we target our opportunities for annual incentive compensation to be comparable to the
median level of our peer group of companies, this guideline is based on target award levels, and actual payouts to the named executive officers can vary significantly based on actual performance.
We set target award levels for our executives based on a percentage of their base salary, as reflected in each named executive officer’s employment agreement or as otherwise determined by the
Compensation Committee. For Mr. Apple, the target annual incentive award was 65% of base salary, and for Messrs. Powell and Graham and Dr. Tursi, their target annual incentive awards were 45% of base salary. The Compensation Committee reviewed the
performance goals for the named executive officers at its February 2019 meeting and finalized and approved the goals shortly thereafter. In setting the goals for 2019, the Compensation Committee determined the weight any particular Company
performance goal carried within the applicable category. In February 2020, based upon a review of peer group and market data, the Compensation Committee increased the target annual incentive award under the AIP to 70% of base salary for Mr. Apple
and to 50% of base salary for Messrs. Powell and Graham and Dr. Tursi.
For the Chief Executive Officer and all other named executive officers, the achievement of the foregoing Company performance goals account for 80% of their annual incentive compensation while
individual performance goals account for 20% of the 2019 annual incentive award. Payout is capped at 150% of target for Company performance goals and 100% of target for individual performance goals.
The following table sets forth the Company performance goals, the relative weighting of each goal and the year-end results.
At its February 2020 meeting, the Compensation Committee assessed whether and to what extent the applicable performance goals were achieved for 2019. As discussed above, the Compensation
Committee determined that the Company performance goals were over-achieved at a level of 121.1% as a result of the significant accomplishments during 2019. The individual performance goals for Messrs. Apple, Powell and Graham included overseeing
the executive staff expansion including hiring of the new head of corporate development, overseeing, coordinating and completing a restructuring and amendment to the Hercules Capital loan to add an additional $15 million in debt to help ensure
adequate cash to support our operations, overseeing, coordinating and implementing the vertical integration plan including the negotiation and execution of a lease for a new 75,000 square foot facility for laboratory, manufacturing and warehousing
space in Minnetonka, Minnesota and commencing construction, and the assessment and development of a plan to support the organization’s growth. The individual performance goals for Dr. Tursi included two of the same goals as described above for
Messrs. Apple, Powell and Graham, specifically the goal related to executive staff expansion and organizational growth, as well as two other goals, which include a goal related to the completion of a clinical study design and submission of a
protocol to support one of the Company’s development programs and a goal related to Board approval of a new product concept and development program. The Compensation Committee determined that Messrs. Apple, Powell and Graham and Dr. Tursi achieved
90% of the targeted level of performance with respect to his respective individual goals and awarded each of them a payout of 90% of this portion of the AIP.
Accordingly, the Compensation Committee awarded the following annual incentive awards for 2019 performance:
Long-Term Incentives – Equity Compensation
We maintain the Equity Compensation Plan, which is a broad based omnibus equity compensation program that permits the Compensation Committee to award various types of equity based awards. The
Compensation Committee approves all equity grants to employees, including our named executive officers. The Compensation Committee may make off-cycle grants for newly hired or newly promoted officers, and otherwise makes other grants only in
special circumstances. We do not backdate grants of stock options or common stock, nor do we time grants to coincide with the release of material non-public information about us. We believe that our grant practices are appropriate and minimize
questions regarding “timing” of grants in anticipation of material events, since grants become effective in accordance with standard grant procedures.
The Company utilizes “double trigger” vesting. Accordingly, unless the Compensation Committee determines otherwise with respect to a particular grant, to the extent a change of control of the
Company occurs and the Company is not the surviving corporation (or survives only as a subsidiary of another corporation) and if the awards are assumed by, or replaced with awards with comparable terms by, the surviving corporation (or parent or
subsidiary of the surviving corporation), the awards will vest or become fully exercisable, as applicable on the date that the grantee is terminated by the Company without cause if such termination is upon or within 12 months following the change
in control.
Similar to 2018, the total value of the annual long-term incentive plan award to each senior officer, including each named executive officer, is targeted at between the 50th and 75th percentile
of the value of annual awards granted by other companies in the Company’s peer group, as described in the table below. The Compensation Committee determined that the range between the 50th and 75th percentile of target value of the annual awards
granted was appropriate given the aggressive performance hurdles for the
performance stock unit program, the level of experience of the senior officers and the role the senior officers play in furthering the Company’s strategic corporate goals.
Pursuant to the Company’s long-term incentive program for senior officers, upon the recommendation of the Compensation Committee, certain of its senior officers, including its named executive
officers, receive the long-term incentive award value under the 2019 long-term incentive program in the form of performance stock units, restricted stock units and stock option grants to purchase the Company’s common stock. Under the program,
one-third of the value of the annual award for each senior officer was delivered in the form of performance stock units, one-third of the value of the annual award was delivered in shares of restricted stock units and one-third of the value of the
annual award was delivered in the form of stock options, in each case granted under the Equity Compensation Plan. The number of performance stock units that may ultimately be earned can vary based on the level of achievement attained over the
performance period while the restricted stock unit and stock option awards represent a set number of units or options that vest over time based on continued employment by the named executive officer. The number of units or shares for each award
type was determined using the Black-Scholes model for options.
We believe that the performance-based restricted stock unit portion of the annual award is strongly aligned with stockholder interests because the performance goals established represent
challenging milestones that should help create significant value to the Company if achieved. We believe that stock options provide a strong incentive to increase stockholder value, because the value of the options is entirely dependent on the
increase in the market price of our common stock following the date of grant. We believe the restricted stock unit awards provide an appropriate level of balance to the performance-oriented equity components of our long-term program. Additionally,
restricted stock units use fewer shares than options, thereby benefitting stockholders because the dilutive effect is minimized.
The table below shows the aggregate target value of equity awards for each of the named executive officers participating in the 2019 long-term incentive program, the actual aggregate value of
equity awards granted, as well as the value for each award type. In the tables that follow, the number of units or shares determined using the valuation tools described above are set forth.
(1) Dr. Tursi’s long-term incentive awards granted in 2019 will be forfeited as a result of his resignation effective April 17, 2020.
(2) Values in the foregoing table do not align with the values in the Grant of Plan-Based Award table due to rounding and the valuation model used for valuing the performance shares in accordance
with Financial Accounting Standard Board Accounting Standard Codification Topic 718.
Performance Stock Units
Performance stock unit awards were granted in June 2019. The performance stock unit awards are earned and vested and convert into actual shares of our common stock based on our attainment of
certain performance goals measured over the three-year measurement period beginning January 1, 2019 and ending December 31, 2021, subject to continued employment or service with us through the specified periods. The actual number of shares of our
common stock into which the performance stock units may convert will be calculated by multiplying the number of performance stock units by a performance percentage ranging from 0% to 150% based on the attained level of our performance as measured
in terms of the following three performance goals:
The performance goals were chosen by the Compensation Committee because the Compensation Committee believes that achieving certain revenue levels and approval of new products and successful new
business relationships should create increased value
for stockholders and the named executive officers should have a significant portion of their awards dependent upon relative total stockholder return.
Each performance criterion has levels of achievement designated as threshold, target and maximum with 50% of the performance stock units vesting if the threshold level is achieved; 100% of the
performance stock units vesting if the target level is achieved and 150% of the performance stock units vesting if the maximum level is achieved.
The actual number of performance stock units earned and vested will be based on the actual performance level achieved. In the event that the actual performance level achieved does not meet
threshold performance (i.e., less than 50%) for an applicable performance measure, then no performance stock units will be earned and vested for that performance measure. Threshold level performance may be
achieved for one performance measure and not another based on our actual performance during the three-year performance period. In the event actual performance related to the 2021 fiscal year end net revenue goal and the three-year TSR goal is
between performance levels, the number of performance stock units earned will be interpolated on a straight-line basis for pro-rata achievement between performance levels.
The actual number of performance stock units earned and vested will be determined by the Compensation Committee based on the actual performance level achieved with respect to the applicable
performance goals, subject to the items for which performance goals may be adjusted pursuant to the Equity Compensation Plan and factoring in the weighting for each performance measure (as described above).
If a named executive officer’s employment or service with us terminates prior to the completion of the performance period, then the officer’s performance stock unit award will be forfeited,
whether or not the performance goals are met. If a change of control occurs while a grantee is employed by, or providing services to us, the performance stock unit award will vest as if target performance had been achieved as to each performance
goal, such that the target number of shares subject to the award is deemed fully earned and vested as of the date of the change of control.
The table below summarizes the 2019 performance stock unit awards for the executive officers of the Company:
(1) Dr. Tursi’s performance stock unit awards granted in 2019 will be forfeited as a result of his resignation effective April 17, 2020.
Stock Options and Time-Vested Restricted Stock Units
The stock options granted pursuant to the long-term incentive program (i) have a ten-year term, (ii) have an exercise price equal to the closing price of our common stock, as reported on NASDAQ
on the date of grant, and (iii) are otherwise granted on the same standard terms and conditions as other stock options granted pursuant to the Equity Compensation Plan, including the “double trigger” vesting provisions in the event of a change in
control of the Company. In 2019, the Committee determined that a shift from quarterly vesting over three years to annual vesting over three years would better align to market norms. The change applies to stock option grants made in 2019 and beyond.
The restricted stock units granted pursuant to the long-term incentive program vest in annual installments over three years and are subject to “double trigger” vesting provisions in the event of
a change in control of the Company.
The table below summarizes the 2019 restricted stock units and stock options awarded to the executive officers of the Company on June 13, 2019 pursuant to the long-term incentive program:
(1) Dr. Tursi’s restricted stock units and stock options awarded in 2019 will be forfeited as a result of his resignation effective April 17, 2020.
Performance Results on Performance Stock Units granted in 2017
In 2017 the Compensation Committee granted performance-based stock units to certain executive officers under the Equity Compensation Plan, pursuant to which a certain number of stock units could
be earned based on the level of achievement of performance goals over the three-year period commencing on January 1, 2017 and ending on December 31, 2019. Messrs. Apple, Powell and Graham were granted performance-based stock units for the
January 1, 2017 and ending on December 31, 2019 performance period. The goal related to total stockholder return under the 2017 grant was achieved at 137% of target and as a result of straight-line interpolation for pro-rata achievement for
performance between target and maximum performance levels, Messrs. Apple, Powell and Graham earned 154,436 shares, 46,331 and 46,331 shares, respectively for this goal. The goal related to 2019 total net revenue was achieved at threshold and
Messrs. Apple, Powell and Graham earned the threshold number of shares for this goal, which was 56,347 shares, 16,904 shares and 16,904 shares, respectively.
For additional information regarding stock option and restricted stock unit award terms, see the narrative accompanying the Grants of Plan-Based Awards table. The dollar amount shown in the Summary Compensation Table
reflects the aggregate grant date fair value of the option awards. See the footnotes to the Summary Compensation Table for further information.
Perquisites
We do not have programs for providing personal benefit perquisites to named executive officers, such as separate parking or dining facilities.
Broad-Based Programs
Our named executive officers participate in our broad-based group health plan and 401(k) savings plan offered to all full time employees of the Company.
The Company’s 401(k) plan provides a defined company contribution match equal to 50% of each employee’s deferral in the 401(k) plan up to the maximum deferrals permitted under the Internal
Revenue Code. Additionally, the match is contributed with each semi-monthly payroll.
Employees can designate the investment of their 401(k) accounts from among a broad range of mutual funds. We do not allow investment in our common stock through the 401(k) plan. Please see the
table titled “Security Ownership of Directors and Executive Officers” for information regarding stock ownership of our named executive officers.
The Company pays the premiums for group term life and disability insurance coverage for the named executive officers on the same terms that apply to all Company employees.
Compensation Adviser Independence
In connection with the compensation reviews conducted throughout 2019, the Compensation Committee worked directly with Pearl Meyer. Pearl Meyer reported directly to the Compensation Committee and
all work conducted by Pearl Meyer for the Company is on behalf, under the direction and the authority, of the Compensation Committee. Pearl Meyer was engaged principally to provide an executive compensation analysis for 2019. Pearl Meyer also
provided guidance with respect to employee and non-employee director equity compensation. Pearl Meyer has no other direct or indirect business relationships with the Company or any of its affiliates.
After examining whether there was a conflict of interest present between the Company and Pearl Meyer, the Compensation Committee concluded that Pearl Meyer did not have any conflicts of interest
during 2019. In reaching this conclusion, the Compensation Committee considered the six independence factors relating to committee advisers that are specified in SEC
Rule 10C-1.
Stock Ownership Guidelines
While we do not have formal stock ownership guidelines or holding requirements, in the past our named executive officers continued to hold a majority of the shares issued to them upon vesting or
upon attainment of the performance criteria under the performance stock unit awards. Please see the table entitled “Security Ownership of Directors and Executive Officers” for information regarding the holdings of common stock of our current named
executive officers.
Pursuant to the Company’s insider trading policy, the Company prohibits any director, officer or other employee from buying or selling puts or calls of our stock (i.e., entering into a hedging transaction), as well as trading in derivative securities of the Company’s stock or purchasing any other financial instruments (including prepaid variable forward contracts, equity swaps, collars and
exchange funds) that are designed to hedge or offset any decrease in the market value of our securities. The insider trading policy also prohibits any director, officer or other employee from pledging our securities as collateral. None of our
directors or executive officers has hedged our common stock. Additionally, none of our directors or executive officers has any outstanding pledges of our common stock. As of December 31, 2019, four of our directors and named executive officers sold
shares of stock under 10(b)5-1 plans in 2019.
We have not yet adopted a formal clawback policy because we await the issuance of clarifying regulations by the SEC regarding required elements of any such clawback policy. As required by section
954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, we intend to adopt a clawback policy upon issuance by the SEC of final rules regarding clawbacks. The Equity Compensation Plan includes a provision that all grants made under the
Equity Compensation Plan are subject to applicable provisions of our Company’s clawback or recoupment policy approved by the Board of Directors or a duly authorized Committee thereof, as such policy may be in effect from time to time, whether or
not approved before or after the effective date of the Equity Compensation Plan.
Ongoing and Post-Employment Compensation
We are a party to employment agreements with Messrs. Apple, Powell, Graham and Dr. Tursi, which provide for special benefits upon certain types of termination events. The employment agreements
are designed to be part of a competitive compensation package and provide for severance pay and benefits upon an involuntary termination and for increased severance pay and benefits in the event an eligible employee is terminated from employment in
connection with a “change of control” of the Company. The description of these agreements below does not include plans that are available generally to our salaried employees and provide for the same method of allocation of benefits for management
and non-management employees.
Section 162(m) of the Internal Revenue Code imposes a $1 million limit on the amount a public company may deduct for compensation paid to certain of the Company’s highest paid officers. For 2019,
the executive officers to whom the Section 162(m) deduction limit applies include the Company’s Chief Executive Officer and Chief Financial Officer, the next three most highly compensated executive officers, and any such “covered employee” for a
year after 2016. As in prior years, while deductibility of executive compensation for federal income tax purposes is among the factors the Compensation Committee considers when structuring our executive compensation arrangements, it is not the sole
or primary factor considered. We continue to retain the flexibility to authorize compensation that may not be deductible if we believe it is in the best interests of the Company.
Report of the Compensation Committee
The Compensation Committee reviewed and discussed with management the Compensation Discussion and Analysis required by SEC regulations. Based on its review and discussions, the Compensation
Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.
Mr. Gueth (Chair)
Dr. Jacob
Mr. Samson
Members of the Compensation Committee
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information about the relationship
of the annual total compensation of the individual identified as our “median” paid employee and the annual total compensation of Robert F. Apple, our Chief Executive Officer.
For the purposes of determining our pay ratio for the 2019 fiscal year, we estimate the median employee’s annual total compensation was $179,115 and the annual total compensation for our CEO was
$3,514,955. Based on this information, the ratio of the annual total compensation of our CEO to that of the median employee was 20 to 1.
The methodology and material assumptions, adjustments, and estimates used to identify our median employee for this purpose were as follows:
We determined our employee population as of December 31, 2019 including full-time, part-time, temporary, seasonal employees, employed by us and our subsidiaries. All of these individuals were
located in the U.S. and all were included for the purpose of determining our pay ratio.
To identify the median employee, we used total direct compensation as our consistently applied compensation measure. For new employees, who were hired in fiscal 2019 but did not work for the
company for the entire fiscal year, compensation was annualized for the full year and compensation for part-time employees was annualized but not converted into a full-time equivalent. We did not make any cost-of-living adjustments in identifying
the median employee. Using this methodology, we determined our median employee based on total direct compensation, consisting of salary, bonus and commissions, other cash earnings, and grant date fair value of equity awards paid to each employee in
fiscal year 2019.
Once we identified our median employee, the employee’s total compensation for 2019 was determined in accordance with Item 402(c)(2)(x) of Regulation S-K, resulting in the annual total compensation
amount reported above. With respect to our CEO’s annual total compensation, we used the amount reported in the Total Compensation column in the Summary Compensation Table.
We believe the above pay ratio disclosure is a reasonable estimate calculated in a manner consistent with SEC rules and guidance.
Summary Compensation Table
The following table provides information regarding the compensation for 2019, 2018 and 2017 of our named executive officers.
The amounts for 2019 are shown in the following table:
The amounts for 2018 are shown in the following table:
The amounts for 2017 are shown in the following table:
Grants of Plan-Based Awards – 2019
The following table provides details regarding plan-based awards granted to our named executive officers in 2019.
Outstanding Equity Awards at Fiscal Year-End – 2019
The following table provides details regarding outstanding equity awards for the named executive officers at December 31, 2019.
Option Exercises and Stock Vested – 2019
The following table provides information regarding option exercises and stock award vesting for our named executive officers in 2019.
Employment Agreements and Potential Payments upon Termination
Our employment agreements with Messrs. Apple, Powell, Graham and Dr. Tursi that were in effect in 2019 provide for certain severance payments and other benefits if we terminate such named
executive officers’ employment without “cause,” or if the executive officer terminates employment for “good reason,” in each case, without regard to whether the termination occurs in the context of a “change of control.” Certain enhanced severance
benefits are payable if the termination is in connection with a change of control. A general description of the terms of the employment agreements is set forth in the discussion below.
The employment agreements with Messrs. Apple, Powell, Graham and Dr. Tursi entitle the named executive officers to receive a base salary and an annual performance-based bonus, and provide that
they are eligible to participate in any long-term incentive equity incentive programs established by the Company for senior level executives, including the Plan.
Under the employment agreements, Messrs. Apple, Powell, Graham and Dr. Tursi are entitled to severance in the event of a termination by the Company without cause or by the named executive officer
for good reason. As a result of Dr. Tursi’s resignation effective April 17, 2020, Dr. Tursi is not entitled to any severance under his employment agreement.
For Messrs. Apple, Powell, Graham and Dr. Tursi, in the event of such termination of employment within the period beginning 60 days immediately prior to a change of control and ending on the last
day of the 18-month period immediately following a change of control (the “Change of Control Protection Period”), the named executive officers are entitled to severance equal to:
In the event the employment of Messrs. Apple, Powell, Graham or Dr. Tursi is terminated by the Company without cause or by the named executive officer for good reason before or after the Change
of Control Protection Period, the named executive officer is entitled to severance equal to:
employed during such 12 month period (or 15-month period for Mr. Apple) will accelerate, become fully vested and/or exercisable, as the case may be, as of the employment termination date.
In the event that the employment of Messrs. Apple, Powell, Graham or Dr. Tursi is terminated by the Company without cause or by Messrs. Apple, Powell, Graham or Dr. Tursi for good reason and the
named executive officer does not execute or revokes a release and waiver of claims in favor of the Company and its affiliates, the named executive officer will not be entitled to the severance benefits set forth above.
If the employment of Messrs. Apple, Powell, Graham or Dr. Tursi is terminated for any reason, including by the Company for cause, on account of the named executive officers’ death or disability,
or if the named executive officer terminates his employment for any reason other than good reason, then the Company will pay the named executive officer all amounts earned, accrued and owing but not yet paid as of the date of his termination,
including base salary, bonus, accrued and unused vacation and expenses incurred, and any benefits accrued and due under any applicable benefit plans and programs of the Company.
The employment agreements also provide that if the payments and benefits otherwise payable to Messrs. Apple, Powell, Graham and Dr. Tursi under the employment agreements or otherwise in
connection with a change of control would constitute excess parachute payments within the meaning of section 280G of the Internal Revenue Code, then the Company will reduce such payments and benefits to an amount that would avoid any excise taxes
under section 4999 of the Internal Revenue Code, provided that such reduction would provide Messrs. Apple, Powell, Graham or Dr. Tursi with a greater net after-tax benefit than would no reduction.
The employment agreements provide that at all times during the employment of Messrs. Apple, Powell, Graham or Dr. Tursi and thereafter, each named executive officer will maintain the
confidentiality of all confidential information obtained by him as a result of his employment with the Company, including information received by him prior to the effective date of the employment agreement. In addition, during the term of his
employment with the Company and for a specified period of time thereafter, the named executive officer cannot (i) compete against the Company, (ii) solicit in any way the customers of the Company, or (iii) recruit in any way the employees of the
Company. Such specified period is the 12-month period after employment termination for Messrs. Powell, Graham or Dr. Tursi (or the 18-month period if Messrs. Powell’s, Graham’s or Dr. Tursi’s employment is terminated by the Company without cause or
by Messrs. Powell or Graham or Dr. Tursi for good reason during the Change of Control Protection Period) or for Mr. Apple the 15-month period after their termination of employment (or the 24-month period if Mr. Apple’s employment is terminated by
the Company without cause or by Mr. Apple for good reason during the Change of Control Protection Period).
Termination for “good reason” generally means a termination initiated by the named executive officer in response to one or more of the following events: (i) a material decrease in the base salary
of the named executive officer, (ii) a decrease in the target annual bonus below a specified percentage, (iii) a change in the designation of title, unless such change is to a higher title and level of responsibility, that results in a material
diminution of the named executive officer’s authority, duties and responsibilities, (iv) a relocation of the principal business location to a location that is 60 miles or more from Ewing, New Jersey, (v) the Company’s failure to materially comply
with the terms of the employment agreement, (vi) the failure of the Company to require a successor to assume the obligations of the Company to the named executive officer under the named executive officer’s employment agreement or any other
agreement between the named executive officer and the Company, or (vii) the Company’s delivery to the named executive officer of a notice of its intent not to renew the term of the employment agreement, provided that the named executive officer is
willing and able to execute a new contract providing terms and conditions substantially similar to the those in the agreement and to continue providing services to the Company. In order for a termination to be on account of good reason, the named
executive officer must notify the Company of the officer’s intention to terminate for good reason, the Company has an opportunity to cure the action or omission that constitutes the ground for good reason and the named executive officer must
terminate employment for good reason shortly after the end of the Company’s cure period.
Generally, a change of control under the employment agreements means: (1) the acquisition by any person or entity of 50 percent or more of the Company’s then outstanding voting stock or voting
securities; (2) a merger or consolidation as a result of which our stockholders do not own at least 50 percent of the value of our outstanding equity or combined voting power of our voting securities; or (3) a sale of all or substantially all of
our assets occurs.
A named executive officer’s employment may be terminated for “cause,” which generally includes the following: (A) dishonesty, fraud or misrepresentation in connection with employment, (B) theft,
misappropriation or embezzlement of the Company’s funds or resources, (C) conviction of or a plea of guilty or nolo contendere in connection with any felony, crime involving fraud or misrepresentation, or
any other crime, or (D) a breach by the officer of any material term of the employment agreement. In the event of termination for cause, the employment agreements generally require termination of all compensation as of the termination date, except
as to amounts already earned.
The following tables set forth information regarding potential payments upon termination of employment for Messrs. Apple, Powell, Graham and Dr. Tursi, including in connection with a change of
control, estimated as of December 31, 2019, assuming the termination and change of control occurred on December 31, 2019, under the terms of their respective employment agreements.
Apple
Powell
Graham
Tursi
Equity Compensation Plan Information
The following table provides information for our equity compensation plans as of December 31, 2019 (in thousands, except exercise price):
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of April 17, 2020, the name, address (where required) and beneficial ownership of each person (including any “group” as defined in Section 13(d)(3) of the
Exchange Act) known by us to be the beneficial owner of more than 5% of our common stock:
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information concerning beneficial ownership of common stock as of April 17, 2020, with respect to each of our directors, our nominees for directors, each of
our named executive officers, and all of our directors and executive officers as a group. The addresses of those listed below are the same as that of the Company unless otherwise provided.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee reviews our financial reporting process on behalf of the Board of Directors. In 2019, the Audit Committee consisted of Messrs. Garrity (Chair), Gueth and Roche. Management has
the primary responsibility for the consolidated financial statements and the reporting process. Our independent registered public accounting firm is responsible for expressing an opinion on the conformity of our audited consolidated financial
statements to U.S. generally accepted accounting principles and the effectiveness of our internal control over financial reporting, based on criteria established in Internal Control – Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission.
In this context, the Audit Committee reviewed and discussed with management and the independent registered public accounting firm the audited consolidated financial statements for 2019. The Audit
Committee discussed with the independent registered public accounting firm the matters required to be discussed under Public Company Accounting Oversight Board (PCAOB) Auditing Standard 1301, “Communications with Audit Committees.” In addition, the
Audit Committee received from the independent registered public accounting firm the written disclosures required by the PCAOB regarding the independent registered public accounting firm’s communications with the Audit Committee concerning
independence and discussed with them their independence from us and our management. In 2019, our independent registered public accounting firm did not provide tax compliance, tax advice or tax planning services to our Company.
In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in our
Company’s Annual Report on Form 10-K for the year ended December 31, 2019, for filing with the Securities and Exchange Commission.
Mr. Garrity (Chair)
Mr. Gueth
Mr. Roche
Members of the Audit Committee
We will bear the cost of preparing, assembling and mailing the proxy card, proxy statement and/or Notice of Internet Availability of Proxy Materials to our stockholders in connection with this
solicitation. Brokerage houses and other custodians, nominees and fiduciaries may be requested to forward soliciting material to the beneficial owners of stock, in which case they will be reimbursed by us for their expenses in doing so. Proxies are
being solicited primarily by Internet or mail, but our officers and directors may solicit proxies personally by telephone or special letter, but such persons will not receive compensation from us for doing so.
Advance Notice Provisions
Under our Bylaws, no business may be brought before an Annual Meeting of Stockholders unless it is specified in the notice of the meeting or is otherwise brought before the meeting at the
direction of the Board of Directors or by a stockholder of record entitled to vote who has delivered written notice to our Secretary at the address set forth on the first page of this proxy statement, and such notice is received not less than 90
days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting and such notice has complied with the information requirements in our Bylaws. In addition, any stockholder who wishes to submit a Director nomination
to the Board of Directors must deliver written notice of the nomination within this time period and comply with the information requirements in our Bylaws relating to stockholder nominations. See “Corporate Governance – Director Nominations” for
additional information about stockholder nominations. These requirements are separate from and in addition to requirements that a stockholder must meet in order to have a stockholder proposal included in our proxy statement as described below. For
the 2021 Annual Meeting of Stockholders, such notice must be received no earlier than February 11, 2021 and no later than March 13, 2021.
Stockholders interested in submitting a proposal for inclusion in the proxy statement for our 2021 Annual Meeting of Stockholders may do so by following the procedures prescribed in SEC Rule
14a-8. To be eligible for inclusion in our proxy statement for our 2021 Annual Meeting of Stockholders, stockholder proposals must be prepared in accordance with the SEC’s proxy rules and received by our Secretary at 100 Princeton South, Suite 300,
Ewing, New Jersey 08628 no later than December 30, 2020.
Householding of Annual Meeting Materials
Certain banks, brokers, broker-dealers and other similar organizations acting as nominee record holders may be participating in the practice of “householding” proxy statements and annual reports.
This means that only one copy of this proxy statement and the Annual Report on Form 10-K may have been sent to multiple stockholders in your household. If you would prefer to receive separate copies of a proxy statement or Annual Report on Form
10-K for other stockholders in your household, either now or in the future, please contact your bank, broker, broker-dealer or other similar organization serving as your nominee. Upon written or oral request to our Secretary at the address set
forth on the first page of this proxy statement, or via telephone to our Secretary at 609-359-3020, we will promptly provide separate copies of the Annual Report on Form 10-K and/or this proxy statement. Stockholders sharing an address who are
receiving multiple copies of this proxy statement and/or Annual Report on Form 10-K and who wish to receive a single copy of these materials in the future will need to contact their bank, broker, broker-dealer or other similar organization serving
as their nominee to request that only a single copy of each document be mailed to all stockholders at the shared address in the future.
The Board of Directors does not intend to present at the Annual Meeting any matter not referred to above and does not presently know of any matters that may be presented to the stockholders
meeting by others. However, if other matters properly come before the Annual Meeting, it is the intention of the persons named in the enclosed form of proxy to vote the proxy in accordance with their best judgment.