UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant ☒
Filed by a Party other than the Registrant ☐
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
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BIOCRYST PHARMACEUTICALS,
INC.
(Name of Registrant as Specified
In Its Charter)
(Name of Person(s) Filing
Proxy Statement, if other than the Registrant)
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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Proposed maximum aggregate value of transaction:
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the
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Date Filed:
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BIOCRYST PHARMACEUTICALS, INC.
4505 Emperor Blvd., Suite 200
Durham, North Carolina 27703
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 25, 2021
To the Stockholders of BioCryst Pharmaceuticals, Inc.:
Notice is hereby given that
the Annual Meeting of Stockholders of BioCryst Pharmaceuticals, Inc., a Delaware corporation (the “Company”), will be held
at our corporate offices at 4505 Emperor Blvd., Suite 200, Durham, NC 27703 on Tuesday, May 25, 2021 at 10:00 a.m., Eastern Daylight
Time (the “Meeting”), for the following purposes:
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1.
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To elect the two directors nominated in this Proxy Statement to serve for a term ending at the 2024 annual
meeting of stockholders and until a successor is duly elected and qualified;
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2.
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To ratify the selection of Ernst & Young LLP as our independent registered public accountants for 2021;
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3.
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To hold an advisory vote regarding executive compensation;
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4.
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To approve an amendment to the Stock Incentive Plan to increase the number of shares available for issuance
under the Stock Incentive Plan by 7,500,000 shares;
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5.
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To approve an amendment to the Employee Stock Purchase Plan to increase the number of shares available for
issuance under the Employee Stock Purchase Plan by 3,500,000 shares; and
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6.
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To transact such other business as may properly come before the Meeting or any adjournment thereof.
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THE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN FAVOR OF PROPOSALS 1, 2, 3, 4, AND 5. The proposals are further described in the accompanying
Proxy Statement.
The Board of Directors has
fixed the close of business on March 30, 2021 as the record date for the determination of stockholders entitled to receive notice of and
to vote at the Meeting or any adjournment thereof. The Meeting may be adjourned from time to time without notice other than announcement
at the Meeting, and any business for which notice of the Meeting is hereby given may be transacted at any such adjournment. A list of
the stockholders entitled to vote at the Meeting will be open to examination by any stockholder, for any purpose germane to the Meeting,
during ordinary business hours, for a period of at least ten days prior to the Meeting at the principal executive offices of the Company
in Durham, North Carolina. In the event that the Company’s principal executive offices are closed during such period due to the
ongoing COVID-19 pandemic, stockholders wishing to examine the list may make arrangements to do so by contacting our Corporate Secretary
at 4505 Emperor Blvd., Suite 200, Durham, North Carolina 27703 or (919) 859-1302.
Due to the COVID-19 pandemic, we are implementing
safety protocols for the Meeting. All attendees will be required to wear masks and follow social distancing protocols. We reserve the
right to implement other safety measures as we deem prudent or as required by any applicable laws or government orders. If we determine
that it is not possible or advisable to hold the Meeting in person at our corporate offices on the meeting date, we may make alternative
arrangements to hold the Meeting at a different date or time, in a different location, and/or by means of remote communication. In the
event we determine it is necessary or appropriate to make alternative arrangements for the Meeting, we will announce the decision to do
so in advance, and details on how to participate will be issued by press release, posted on our website, and filed with the SEC as additional
proxy soliciting material.
Please review carefully the Proxy Card and Proxy
Statement.
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BY ORDER OF THE BOARD OF DIRECTORS
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Alane P. Barnes, Corporate Secretary
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Durham, North Carolina
April 13, 2020
ALL STOCKHOLDERS ARE INVITED
TO ATTEND THE ANNUAL MEETING IN PERSON. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE VOTE PROMPTLY. A PERSON GIVING A PROXY HAS
THE POWER TO REVOKE IT. IF YOU ATTEND THE MEETING, YOUR PROXY WILL NOT BE COUNTED WITH RESPECT TO ANY MATTER UPON WHICH YOU VOTE IN PERSON.
TABLE OF CONTENTS
BIOCRYST PHARMACEUTICALS, INC.
4505 Emperor Blvd., Suite 200
Durham, North Carolina 27703
PROXY STATEMENT
General
This Proxy Statement is furnished
in connection with the solicitation of proxies by the Board of Directors (the “Board” or the “Board of Directors”)
of BioCryst Pharmaceuticals, Inc. (“BioCryst” or the “Company”) for the Annual Meeting of Stockholders of the
Company to be held at our corporate offices at 4505 Emperor Blvd., Suite 200, Durham, NC 27703 on Tuesday, May 25, 2021 at 10:00
a.m., Eastern Daylight Time, and at any adjournment thereof (the “Meeting”), and for the purposes set forth in the accompanying
Notice of Annual Meeting of Stockholders.
In this document, the words
“BioCryst,” “the Company,” “we,” “our,” “ours,” and “us” refer
only to BioCryst Pharmaceuticals, Inc. and not to any other person or entity.
We are taking advantage of
Securities and Exchange Commission (“SEC”) rules that allow us to deliver proxy materials to our stockholders via the Internet.
Under these rules, we are sending our stockholders a one-page notice regarding the Internet availability of proxy materials instead of
a full printed set of proxy materials. Our stockholders will not receive printed copies of the proxy materials unless specifically requested.
Instead, the one-page notice that our stockholders receive will tell them how to access and review on the Internet all of the important
information contained in the proxy materials. This notice also tells our stockholders how to submit their proxy card on the Internet and
how to request to receive a printed copy of our proxy materials. We expect to provide notice and electronic delivery of this Proxy Statement
to such stockholders on or about April 13, 2021.
Due to the COVID-19 pandemic, we are implementing
safety protocols for the Meeting. All attendees will be required to wear masks and follow social distancing protocols. We reserve the
right to implement other safety measures as we deem prudent or as required by any applicable laws or government orders. If we determine
that it is not possible or advisable to hold the Meeting in person at our corporate offices on the meeting date, we may make alternative
arrangements to hold the Meeting at a different date or time, in a different location, and/or by means of remote communication. In the
event we determine it is necessary or appropriate to make alternative arrangements for the Meeting, we will announce the decision to do
so in advance, and details on how to participate will be issued by press release, posted on our website, and filed with the SEC as additional
proxy soliciting material.
Purpose of the Meeting
The matters to be considered at the Meeting are:
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1.
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To elect the two directors nominated in this Proxy Statement to serve for a term ending at the 2024 annual
meeting of stockholders and until a successor is duly elected and qualified;
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2.
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To ratify the selection of Ernst & Young LLP as our independent registered public accountants for 2021;
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3.
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To hold an advisory vote regarding executive compensation;
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4.
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To approve an amendment to the Stock Incentive Plan to increase the number of shares available for issuance
under the Stock Incentive Plan by 7,500,000 shares;
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5.
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To approve an amendment to the Employee Stock Purchase Plan to increase the number of shares available for
issuance under the Employee Stock Purchase Plan by 3,500,000 shares; and
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6.
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To transact such other business as may properly come before the Meeting or any adjournment thereof.
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Revocation and Voting of Proxies
Any proxy given pursuant
to this solicitation may be revoked by the person giving it at any time prior to the voting thereof, by giving written notice to our Corporate
Secretary at our principal executive offices, 4505 Emperor Blvd., Suite 200 Durham, NC 27703 or by voting in person at the Meeting. Attendance
at the Meeting will not, by itself, revoke a proxy. All valid, unrevoked proxies will be voted as directed. In the absence of any contrary
directions, proxies received by the Board will be voted as follows:
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FOR the election of each of the nominees named in this Proxy Statement for director of the Company;
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FOR ratification of the selection of Ernst & Young LLP as the Company’s independent registered public
accountants for 2021;
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FOR approval of the advisory resolution regarding executive compensation;
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FOR approval of the amendment to the Stock Incentive Plan to increase the number of shares available for issuance
under the Stock Incentive Plan by 7,500,000 shares; and
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FOR approval of the amendment to the Employee Stock Purchase Plan to increase the number of shares available
for issuance under the Employee Stock Purchase Plan by 3,500,000 shares.
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With respect to such other
matters as may properly come before the Meeting, votes will be cast in the discretion of the appointed proxies.
Voting and Quorum
Only holders of record (referred
to in this section as the “Stockholders”) of our common stock (the “Common Stock”) as of the close of business
on March 30, 2021 (the “Record Date”) will be entitled to notice of and to vote at the Meeting. At March 30, 2021 there were
177,648,060 shares of Common Stock outstanding. Stockholders are entitled to vote in any one of the following ways:
1.
In Person. Stockholders who choose to attend the Meeting can vote in person at the Meeting by presenting a form
of photo identification acceptable to the Company and casting a ballot.
2.
By Internet. Stockholders can vote on the Internet by following the instructions provided in the one-page notice
regarding the Internet availability of proxy materials.
3.
By Mail. Stockholders can vote by mail after requesting a paper copy of the proxy materials, including a proxy
card, by following the instructions provided in the one-page notice regarding the Internet availability of proxy materials.
4.
By Telephone: Stockholders can vote over the telephone using the toll-free telephone number obtained by accessing the website
set forth in the instructions provided in the one-page notice regarding the Internet availability of proxy materials.
Each share of Common Stock
is entitled to one vote on all matters on which Stockholders may vote. There is no cumulative voting in the election of directors. The
presence, in person or by proxy, of a majority of the outstanding shares of Common Stock is necessary to constitute a quorum at the Meeting.
Shares of Common Stock represented by a properly executed and returned proxy will be treated as present at the Meeting for purposes of
determining the presence of a quorum without regard to whether the proxy is marked as casting a vote for or against, or withholding authority
or abstaining with respect to a particular matter. In addition, shares of Common Stock represented by “broker non-votes” generally
will be treated as present for purposes of determining the presence of a quorum. Broker non-votes are shares of Common Stock
held in record name by brokers, banks or other nominees as to which a proxy is received and (i) instructions have not been received
from the beneficial owners or persons entitled to vote, (ii) the broker or nominee does not have discretionary power and (iii) the
record holder had indicated that it does not have authority to vote such shares on that matter. Under current stock exchange rules, brokers
who do not have instructions from their customers may not use their discretion in voting their customers’ shares on certain specific
matters that are not considered to be “routine” matters. The proposals in this Proxy Statement regarding the election of directors,
the advisory vote concerning executive compensation, the amendment to the Stock Incentive Plan, and the amendment to the Employee Stock
Purchase Plan are not considered to be routine matters.
Attending the Meeting
Stockholders as of the Record Date are invited to
attend the Meeting. Stockholders must present a form of photo identification acceptable to the Company, such as a valid driver’s
license or passport, to be admitted to the Meeting. Registered holders may vote upon presentation of such identification. Beneficial owners
must obtain a proxy from their broker, bank or other holder of record and present it to the inspector of election with their ballot. Each
stockholder may appoint only one proxy holder or representative to attend the Meeting on his or her behalf. In addition, due
to the COVID-19 pandemic, we are implementing safety protocols for the Meeting. All attendees will be required to wear masks and follow
social distancing protocols. We reserve the right to implement other safety measures as we deem prudent or as required by any applicable
laws or government orders.
The Meeting will begin promptly at 10:00 a.m. Eastern
Daylight Time. Please allow ample time for the check-in procedures. Media may attend the Meeting by invitation only.
Required Votes, Abstentions, and Broker Non-Votes
Directors will be elected
by a plurality of the votes cast. This means that the nominees with the most votes will be elected. Votes may be
cast for or withheld from the nominee, but a withheld vote or a broker non-vote will not affect the outcome of the election of directors
at the Meeting.
The affirmative vote of the
holders of a majority of the shares of Common Stock represented in person or by proxy at the Annual Meeting and voting on the proposal
is required for approval of (i) the ratification of our selection of Ernst & Young LLP as our independent registered
public accountants for 2021, (ii) the advisory resolution regarding executive compensation, (iii) the amendment to the Stock Incentive
Plan, and (iv) the amendment to the Employee Stock Purchase Plan. Abstentions and broker non-votes will have no effect upon
these proposals.
Proxy Solicitation
We are making this proxy
solicitation both through the mail and Internet, although proxies may be solicited by personal interview, telephone, facsimile, letter,
e-mail or otherwise. Certain of our directors, officers and other employees, without additional compensation, may participate in the solicitation
of proxies. We will pay the cost of this solicitation, including the reasonable charges and expenses of brokerage firms and others who
forward solicitation materials to beneficial owners of the Common Stock. We have retained Georgeson LLC, 1290 Avenue of the Americas,
9th Floor, New York, NY 10104 to act as proxy solicitor in conjunction with the Meeting. We have agreed to pay that firm approximately
$12,500 plus reasonable out-of-pocket expenses for their services.
ITEMS TO BE VOTED UPON
Our Board of Directors currently consists of nine
directors, three of whom have terms expiring at the Meeting. Two of these directors have been nominated by the Board for reelection. The
third director with a term expiring at the Meeting, Helen M. Thackray, M.D., joined the Company as its Chief Research & Development
Officer in March 2021 and is not standing for reelection. By resolution of the Board in accordance with the Company’s bylaws, the
size of the Board will be reduced from nine to eight directors upon the expiration of Dr. Thackray’s term.
The two director nominees named in this Proxy Statement
have been nominated for election to the Board to serve for a term ending at the 2024 annual meeting of stockholders, and until their successors
shall have been duly elected and qualified. Proxies cannot be voted for more than two nominees. Unless otherwise specified in the accompanying
proxy card, the shares voted by proxy will be voted FOR the election of the two persons listed for terms expiring in 2024. The Board expects
that both nominees will be available for election, but if either of the nominees is not available or is unwilling to accept election,
it is expected that the proxies will vote for a substitute nominee to be designated by the Board or, if no such designation is made, that
the proxies will vote for a lesser number of nominees. The Board has no reason to believe that the persons named will be unable to serve
or will decline to serve if elected.
NOMINEES FOR DIRECTOR WITH TERMS EXPIRING AT
THE ANNUAL MEETING OF STOCKHOLDERS IN 2024
Name
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Age(1)
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Position(s) with the Company
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Served as
Director Since
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Nancy J. Hutson, Ph.D.
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71
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Director
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2012
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Robert A. Ingram
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78
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Director, Chairman of the Board
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2015
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The following persons shall continue to serve as directors for the
terms indicated:
DIRECTORS WITH TERMS EXPIRING AT THE ANNUAL
MEETING OF STOCKHOLDERS IN 2022
Name
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Age(1)
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Position(s) with the Company
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Served as
Director Since
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Stephen J. Aselage
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69
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Director
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2019
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Kenneth B. Lee, Jr.
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73
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Director
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2011
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Alan G. Levin
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59
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Director
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2020
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DIRECTORS WITH TERMS EXPIRING AT THE ANNUAL
MEETING OF STOCKHOLDERS IN 2023
Name
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Age(1)
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Position(s) with the Company
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Served as
Director Since
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George B. Abercrombie
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66
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Director
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2011
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Theresa M. Heggie
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60
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Director
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2018
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Jon P. Stonehouse
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60
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Director, President, Chief Executive Officer
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2007
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________
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(1)
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Age as of March 30, 2021.
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Below you can find information,
including biographical information, about our current directors, nominees for director, and directors whose terms continue after the Meeting,
as well as a discussion of the specific experiences, qualifications, attributes, and skills considered by the Board in concluding that
such individuals should serve as directors.
Nancy J. Hutson, Ph.D.
was initially appointed to the Board in January 2012. Dr. Hutson brings over 30 years of experience as a seasoned professional and
leader within the pharmaceutical industry. She retired from Pfizer, Inc. in 2006 after spending 25 years in several research and leadership
positions, most recently serving as Senior Vice President of Global Research & Development (R&D) as well as Director of Pfizer’s
pharmaceutical R&D site, Groton/New London Laboratories. Dr. Hutson received a Bachelor of Arts degree from Illinois Wesleyan University
and a Ph.D. in physiology from Vanderbilt University. Dr. Hutson currently serves on the Board of Directors for Endo International plc,
a publicly traded pharmaceutical company, and PhaseBio Pharmaceuticals, Inc. and Clearside Biomedical, Inc., both publicly traded biopharmaceutical
companies. She also previously served on the Board of Directors of Inspire Pharmaceuticals, Inc. and Cubist Pharmaceuticals, Inc. Dr.
Hutson’s extensive experience in research and development in the pharmaceutical industry provides valuable insight to the Board.
Robert A. Ingram was
initially appointed to the Board in August 2015 and was elected Chairman of the Board in May 2017. Mr. Ingram joined Hatteras Venture
Partners, a venture capital firm formed to invest primarily in early stage companies with a focus on biopharmaceuticals, medical devices,
diagnostics, healthcare IT, and related opportunities in human medicine, as a General Partner in January 2007. He began his career in
the pharmaceutical industry as a professional sales representative and rose through a series of roles with increasing responsibility to
ultimately become CEO and Chairman of Glaxo Wellcome, a pharmaceutical company. He co-led the merger and integration that formed GlaxoSmithKline
(GSK) in December 2000. He subsequently served as the Chief Operating Officer and President of Pharmaceutical Operations at GSK from January
2001 to January 2003. He served as Vice Chairman Pharmaceuticals of GSK, acting as a special advisor to GSK's corporate executive team,
until January 1, 2010. Mr. Ingram is currently the Chairman of the Board of Black Diamond Therapeutics, Inc. He recently resigned as Chairman
of the Board of Novan, Inc., a publicly traded late-stage pharmaceutical company focused on dermatology, and Viamet Pharmaceuticals Inc.,
a private company focused on anti-infective research. Mr. Ingram also serves as a member of the board of directors of HBM Healthcare Investments,
Ltd., a Switzerland-based venture capital company. He has previously served on the boards of directors of the publicly traded companies
Cree, Inc., Regeneron Pharmaceuticals, Inc., and Malin Corporation plc. Mr. Ingram graduated from Eastern Illinois University with a B.S.
degree in Business Administration. In addition to his professional responsibilities, Mr. Ingram formed and chaired the CEO Roundtable
on Cancer at the request of former President George H. W. Bush, and he is a member of numerous other civic and professional organizations.
Mr. Ingram is a member of the boards for the James B. Hunt Jr. Institute for Educational Leadership and Policy, CEO Roundtable on Cancer,
and North Carolina GlaxoSmithKline Foundation. Mr. Ingram’s extensive experience in the pharmaceutical industry as both an executive
and director and his private investment expertise contribute valuable insight and expertise to the Board.
Stephen J. Aselage was
initially appointed to the Board in January 2019. Until January 2019, Mr. Aselage served as Chief Executive Officer of Travere Therapeutics,
Inc. (then Retrophin Inc.), a publicly traded biopharmaceutical company specializing in identifying, developing and delivering life-changing
therapies to people living with rare disease, which he joined in 2012. He has more than 40 years of experience in the biopharmaceutical
industry, including substantial rare disease, commercial and business development experience. From 2005 to 2012, Mr. Aselage served as
Executive Vice President and Chief Business Officer of BioMarin Pharmaceutical Inc., a biotechnology company. Prior to BioMarin, Mr. Aselage
held positions of increasing responsibility at a number of companies, including Bristol Laboratories, Genentech and Sangstat. He currently
continues to serve on the board of Travere Therapeutics, Inc. and serves as chairman of the board of Acer Therapeutics Inc., a publicly
traded pharmaceutical company. Mr. Aselage holds a Bachelor of Science in biology from the University of Notre Dame and serves on the
advisory council of the University of Notre Dame Department of Science. Mr. Aselage’s extensive experience as an executive in the
industry and his experience with rare disease therapies contribute valuable insight and experience to the Board.
Kenneth B. Lee, Jr.
was initially appointed to the Board in June 2011. Mr. Lee has over 40 years of experience counseling management teams, boards of directors
and investors of technology-based companies worldwide. He is currently a General Partner with Hatteras Venture Partners, LLC, a venture
capital fund focusing on life science companies, which he joined in 2003. Previously he was President of A.M. Pappas & Associates,
LLC, following 29 years with Ernst & Young LLP, where he was most recently Managing Director of the firm’s health sciences corporate
finance group, and at one time served as the National Director of the Life Sciences Practice. Mr. Lee received a Bachelor of Arts degree
from Lenoir-Rhyne College and an MBA from the University of North Carolina at Chapel Hill. Mr. Lee currently serves on the board of directors
of Eyenovia, Inc., a publicly traded ophthalmic biopharmaceutical company, and Aerami Therapeutics (formerly Dance Biopharm Holdings, Inc), a privately held pharmaceutical company. He has previously served on the boards of the public
companies Abgenix, Inc., Aralez, Inc., CV Therapeutics, Inspire Pharmaceuticals, Maxygen, Inc., and OSI Pharmaceuticals and previously
served on the Boards of the private companies Clinipace, Clinverse and A.M. Pappas & Associates. Mr. Lee’s experience advising
biotechnology companies regarding financial and partnering strategies, his extensive background in finance and his experience serving
on the boards of both public and private biotech companies contribute valuable insight and experience to the Board.
Alan G. Levin was
initially appointed to the Board in February 2020. Mr. Levin served as Chief Financial Officer of Endo Health Solutions Inc., a global
specialty healthcare company, from June 2009 until September 2013. Prior to joining Endo, Mr. Levin worked with Texas Pacific Group, a
leading private equity firm, and one of their start-up investments. Before that, he was Chief Financial Officer of Pfizer, Inc. where
he worked for 20 years in a variety of executive positions of increasing responsibility, including Treasurer and Senior Vice President
of Finance & Strategic Management for the company’s research and development organization. He has been a member of the board
of directors of Diffusion Pharmaceuticals Inc., a publicly traded development stage oncology company, since 2015, and was a member of
the board of directors of Aceto Corporation, a former publicly traded seller and distributor of generic drugs, pharmaceutical ingredients,
and performance chemicals, from 2013 to 2019. In addition, Mr. Levin is a member of the advisory board of Auven Therapeutics, a private
equity fund, and a member of the board of directors of the Critical Path Institute, a non-profit collaboration between the FDA and the
pharmaceutical industry, focused on accelerating development of and streamlining regulatory requirements for innovative medicines. He
earned a bachelor’s degree from Princeton University and a master’s degree in accounting from New York University’s
Stern School of Business. Mr. Levin is a certified public accountant. Mr. Levin’s extensive experience in strategic planning, capital
markets, financial reporting, tax planning, and business development contribute valuable insight and experience to the Board.
George B. Abercrombie
was initially appointed to the Board in October 2011. Mr. Abercrombie has over 30 years of experience as a business leader in the pharmaceutical
industry. Mr. Abercrombie held the position of Senior Vice President and Chief Commercial Officer at Innoviva, Inc., a publicly traded
bio-pharmaceutical asset management company, from 2014 to 2018. He served from 2001 to 2009 as the President and Chief Executive Officer
of Hoffmann-La Roche Inc., a pharmaceutical company, where he was responsible for leading operations in both the U.S. and Canada. During
his tenure, Mr. Abercrombie also served as a member of the Roche Pharmaceutical Executive Committee, which was responsible for developing
and implementing global strategy for the Pharmaceuticals Division. In 1993, Mr. Abercrombie joined Glaxo Wellcome Inc. as Vice President
and General Manager of the Glaxo Pharmaceuticals Division, and was later promoted to Senior Vice President, U.S. Commercial Operations.
Prior to joining Glaxo, he spent over ten years at Merck & Co., Inc., where he gained experience in sales and marketing, executive
sales management and business development. Mr. Abercrombie began his career as a pharmacist after receiving a bachelor’s degree
in pharmacy from the University of North Carolina at Chapel Hill, and later earned an MBA from Harvard University. He formerly served
on the Boards of Directors of Brickell Biotech, Inc., Inspire Pharmaceuticals, Inc., Ziopharm Oncology, Inc., Tranzyme Pharma, Aptus Health,
Inc. and DemeRX. Additionally, he is an Adjunct Professor at Duke University’s Fuqua School of Business, a board member of the North
Carolina GlaxoSmithKline Foundation, an inaugural member of the Duke University Psychiatry and Behavioral Sciences Advisory Board, and
a member of the North Carolina Board of Science, Technology and Innovation. Mr. Abercrombie’s executive experience in the pharmaceutical
industry and management positions with major pharmaceutical companies provide an excellent background for service on the Board.
Theresa M.
Heggie was initially appointed to the Board in December 2018. Ms. Heggie currently serves as Chief Executive Officer of
Freeline Therapeutics Holdings plc, a publicly traded gene therapy company. She previously served as Senior Vice President,
Head of Europe, Middle East, Africa & Canada for Alnylam Pharmaceuticals, Inc., a global commercial-stage
biopharmaceutical company, from May 2017 to May 2020. From May 2016 to April 2017, she served as a non-executive director of
Swedish Orphan Biovitrum AB, an international specialty biopharmaceutical company dedicated to rare diseases. From June 2013
to March 2016, Ms. Heggie served as Chief Strategy and Marketing Officer for Bupa, an international healthcare group. Prior
to June 2013, Ms. Heggie served in senior commercial and operating roles at Shire plc, a global specialty biopharmaceutical
company, including Senior Vice President, Global Commercial Operations for the rare disease business. Prior to that, Ms.
Heggie had responsibility over EMEA rare disease and served as Chief Executive Officer of Jerini AG, a pharmaceutical
company, following Shire’s acquisition of the company, and its lead asset, Firazyr®, for the treatment
of hereditary angioedema. Prior to joining Shire, Ms. Heggie spent more than 20 years in a broad range of increasingly senior
commercial positions at Janssen Pharmaceuticals and Baxter Healthcare. Ms. Heggie is currently a member of the board of
directors of Freeline and a member of the supervisory board of ProQR Therapeutics NV, a publicly traded biotechnology company
based in the Netherlands. Ms. Heggie holds a Bachelor of Science degree from Cornell University. Ms. Heggie’s extensive
commercial experience in the industry, especially her rare disease commercial experience, provide valuable knowledge and
insight to the Board.
Jon P. Stonehouse
joined BioCryst in January 2007 as Chief Executive Officer and Director. He was also named President in July 2007. Prior to joining the
Company, he served as Senior Vice President of Corporate Development for Merck KGaA, a pharmaceutical company, since July 2002. His responsibilities
included corporate mergers and acquisitions, global licensing and business development, corporate strategy and alliance management. Prior
to joining Merck KGaA, Mr. Stonehouse held a variety of roles at Astra Merck/AstraZeneca. Mr. Stonehouse began his career in the pharmaceutical
industry as a sales representative and held increasing sales leadership positions at Merck & Co., Inc. In 2008 and 2011, respectively,
Mr. Stonehouse joined the Advisory Boards of Precision Biosciences, Inc., a private biotechnology company, and Genscript, a private bioservices
company. Also in December 2014, he joined the Board of Directors of Bellicum Pharmaceuticals, Inc., a publicly traded clinical stage biopharmaceutical
company focused on novel cellular immunotherapies. Mr. Stonehouse earned his BS in Microbiology at the University of Minnesota. As Chief
Executive Officer and President of BioCryst, Mr. Stonehouse brings to the Board an intimate knowledge of our business, and his executive
experience in a variety of capacities at major pharmaceutical companies provides industry-specific operational experience that is beneficial
to the Board.
Biographical information about Dr. Thackray, whose
term as a director will expire at the Meeting, is below.
Helen M. Thackray, M.D. was initially appointed
to the Board in September 2019, and her term as a director will expire at the Meeting. Dr. Thackray joined BioCryst in March 2021 as our
Chief Research & Development Officer. She previously served as Chief Medical Officer and Senior Vice President of clinical development
at GlycoMimetics, Inc., a publicly traded biotechnology company focused on serious oncology, immunology, and inflammatory conditions,
from 2006 to 2021 and led its orphan product, fast track, and breakthrough therapy programs at all stages of development in rare diseases.
Prior to joining GlycoMimetics, Dr. Thackray was Vice President of Clinical Development at Biosynexus and served for over a decade on
the research ethics review board of the National Center for Healthcare Statistics, part of the Centers for Disease Control and Prevention.
Most recently she has served on the ICH E11A Expert Working Group for the development of a harmonized regulatory guideline for pediatric
extrapolation in drug development. She is a board-certified pediatrician, serving on the faculty of the Children’s National Medical
Center and George Washington University School of Medicine and Health Sciences since 2000. Dr. Thackray has authored more than 60 peer-reviewed
articles and presentations. Dr. Thackray holds a Bachelor of Science degree in biological sciences from Stanford University and an M.D.
from the George Washington University School of Medicine and Health Sciences. She completed her pediatric residency and chief residency
at Children’s National Medical Center, trained in medical genetics at the National Human Genome Research Institute at the National
Institutes of Health, and is a Fellow of the American Academy of Pediatrics. Dr. Thackray’s medical background and substantial rare
disease treatment development experiences contribute valuable insight and expertise to the Board.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS
OF THE COMPANY RECOMMENDS A VOTE FOR EACH OF THE NOMINEES FOR DIRECTOR NAMED ABOVE.
2.
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RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS FOR 2021
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The Audit Committee of the
Board has appointed Ernst & Young LLP as our independent registered public accountants for the fiscal year ending December 31,
2021. Services provided to the Company by Ernst & Young LLP in fiscal 2020 and 2019 are described below.
The Company is asking its
stockholders to ratify the selection of Ernst & Young LLP as its independent registered public accountants for 2021. Although
ratification is not required by the Company’s bylaws or otherwise, the Board is submitting the selection of Ernst & Young
LLP to its stockholders for ratification as a matter of good corporate practice.
A representative of Ernst &
Young LLP will be present at the Meeting and will have an opportunity to make a statement and/or to respond to appropriate questions from
our stockholders.
Audit Fees
In connection with the audit
of the 2020 consolidated financial statements, the Company entered into an engagement agreement with Ernst & Young LLP, which
set forth the terms by which Ernst & Young LLP agreed to perform audit services for the Company.
Set forth below is information
relating to the aggregate fees paid to Ernst & Young LLP for professional services rendered for the fiscal years ended December 31,
2020 and 2019, respectively.
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2020
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2019
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(1) Audit Fees
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$
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876,880
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$
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678,200
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(2) Audit-related fees
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—
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—
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(3) Tax fees
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—
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—
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(4) All other fees
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—
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—
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Audit Fees
Audit fees represent the
aggregate fees billed for professional services rendered by our independent registered public accounting firm for the audit of our annual
financial statements and internal controls over financial reporting, review of financial statements included in our quarterly reports
on Form 10-Q and services that are normally provided in connection with statutory and regulatory filings or engagements, including the
issuance of consents in connection with registration statement filings with the SEC and comfort letters in connection with securities
offerings. For 2020 and 2019, fees associated with registration statement filings and securities offerings were $156,600 and $128,600,
respectively.
Audit Committee Pre-Approval
It is the policy of the Audit
Committee, as set forth in the Audit Committee Charter, to pre-approve, consistent with the requirements of the federal securities laws,
all auditing services and non-audit services provided to the Company by its independent registered public accounting firm, other than
such non-audit services as are prohibited by law to be performed by the independent registered public accounting firm and other than as
provided in the de minimis exception set forth in applicable provisions of the federal securities laws. The Audit Committee may delegate
to one or more of its designated members the authority to grant the required pre-approvals, provided that the decisions of any member(s)
to whom such authority is delegated to pre-approve an activity shall be presented to the full Audit Committee at each of its scheduled
meetings.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS
VOTE FOR RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
FOR 2021.
In the event that the Company’s
stockholders do not ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accountants for
2021, the appointment will be reconsidered by the Audit Committee and the Board. Even if the selection is ratified, the Audit Committee
in its discretion may select a different registered public accounting firm at any time during the year if it determines that such a change
would be in the best interests of the Company and its stockholders.
3.
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ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION
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The Dodd-Frank Wall Street
Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) enables our stockholders to vote to approve, on an advisory
or non-binding basis, an advisory resolution on the compensation of our Named Executive Officers, as defined herein, as disclosed in this
Proxy Statement in accordance with rules promulgated by the SEC.
The Company asks that you indicate your support for
our executive compensation policies and practices as described in “Compensation Discussion and Analysis” and the accompanying
tables and related disclosures in this Proxy Statement. This vote is not intended to address any specific item of compensation, but rather
the overall compensation of our Named Executive Officers and the policies and practices described in this Proxy Statement. Your vote is
advisory and so will not be binding on the Compensation Committee or the Board of Directors. However, the Compensation Committee and the
Board of Directors will review the voting results and take them into consideration when structuring future executive compensation arrangements.
The affirmative vote of the holders of a majority of the shares of Common Stock represented in person or by proxy at the Meeting and voting
on the proposal will be required for approval.
We believe that the experience,
abilities and commitment of our Named Executive Officers are unique in the biotechnology industry, and we recognize the need to fairly
compensate and retain a senior management team that has produced excellent operating results over the past several years. Accordingly,
the Compensation Committee makes compensation decisions for our executive officers after consideration of the following primary objectives:
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to have a substantial portion of each officer’s compensation contingent upon the Company’s performance as well as upon his
or her own level of performance and contribution toward the Company’s performance and long-term strategic goals;
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to reward executives for actions that create short-term and long-term sustainable stockholder value, with a strong focus on Company results;
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to align the interests of our executives with the Company’s corporate strategies, business objectives, and the long-term interests
of our stockholders; and
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to attract, incentivize, and retain our executive talent.
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Further, our executive compensation
program is based on market best practices to ensure that it is appropriately risk-based and competitive with similar companies in our
industry. We do not believe that our executive compensation program encourages our management to take excessive risks.
The Board of
Directors encourages you to carefully review the information regarding our executive compensation program contained in this
Proxy Statement, including the Compensation Discussion and Analysis beginning on page 26, as well as the Summary Compensation
Table and other related compensation tables and narrative discussion, appearing on pages 35 through 42, which provide
detailed information on the compensation of our Named Executive Officers.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS
RECOMMENDS THAT YOU VOTE FOR THE FOLLOWING RESOLUTION:
“RESOLVED, that
the stockholders approve, on an advisory basis, the compensation of the Company’s Named Executive Officers, as disclosed in this
Proxy Statement, including the Compensation Discussion and Analysis, the Summary Compensation Table and the related compensation tables,
notes and narrative discussion.”
4.
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Approval of AN amendment to the Stock
Incentive Plan to increase the number of shares available for issuance under the Stock Incentive Plan by 7,500,000
SHARES
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We are asking our stockholders to approve an amendment
to the BioCryst Pharmaceuticals, Inc. Stock Incentive Plan (as amended, the “Stock Incentive Plan”) to increase the number
of shares available for issuance under the Stock Incentive Plan by 7,500,000 (the “Plan Amendment”). We believe that the Plan
Amendment is necessary for the Stock Incentive Plan to support the Company’s continued growth in 2021.
As of April 1, 2021, the total number of shares available
under the Stock Incentive Plan, without giving effect to the Plan Amendment, is 28,891,274. This amount consists of 25,442,402 shares
reserved for awards already granted and 3,448,872 shares currently available for future issuance under the Stock Incentive Plan. The shares
currently available for future issuance under the Stock Incentive Plan represent less than one-half of our projected needs for the next
year, which provides limited availability and flexibility for our equity usage as part of our global, broad-based equity program. The
proposed increase would bring the total number of shares available under the Stock Incentive Plan to 10,948,872 as of April 1, 2021, which
we currently expect to be sufficient under the Stock Incentive Plan through the 2022 annual meeting of stockholders (subject to a number
of factors, including changes in stock price and the pace of the Company’s growth).
On April 1, 2021, our Board approved the Plan Amendment,
subject to stockholder approval at this Meeting. The Stock Incentive Plan, as amended by the Plan Amendment, is attached as Annex
A to this Proxy Statement. In addition to the Plan Amendment, the Stock Incentive Plan, as amended and restated on April 1, 2021,
includes certain other amendments that are not subject to stockholder approval.
Equity Usage and Needs
As further explained below, the increase in shares
reserved for issuance under the Stock Incentive Plan pursuant to the Plan Amendment is necessary to allow the Company to provide customary
levels of equity incentives to employees, including without limitation the long-term equity incentive awards that the Compensation Committee
has historically granted to all employees on an annual basis.
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Our continued growth necessitates additional shares. The Company added approximately 125 employees
to its workforce in 2020, increasing its net employee headcount at December 31, 2020 by approximately 74% compared to December 31, 2019,
as it prepared for the commercial launch of ORLADEYO™ (berotralstat) in the United States and transitioned from primarily a research
and development company to a commercial stage-company. The Company expects continued employee growth in 2021 with the anticipated launches
of ORLADEYO in Japan, the European Union, and the United Kingdom and the continued development of our other product candidates.
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Strategic use of a broad-based equity program is core to our compensation philosophy. The Compensation
Committee has historically granted long-term equity incentive awards to all employees on an annual basis to, among other things, align
our employees’ interests with those of our stockholders. We believe that employees with a stake in the future success of our business
are highly motivated to achieve long-term growth and are well-aligned with the interests of our other stockholders to increase stockholder
value.
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Equity is essential to talent acquisition and retention. Our Board believes that the increase
in the share reserve is necessary to assure that a sufficient reserve of Common Stock is available for issuance to make competitive grants
through 2022. We rely significantly on equity incentives in order to attract, incentivize, and retain employees, consultants, and non-employee
directors, and we believe that such equity incentives are necessary for us to remain competitive in the marketplace for executive talent
and for other key individuals.
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Without the approval of the Plan Amendment, we will
not be able to continue providing competitive equity incentives to existing employees or to attract new employees in our competitive market.
This could ultimately result in the loss of critical talent and inhibit our ability to meet our future growth objectives. If approved
by stockholders, we intend to use the additional shares under the Plan Amendment to recruit, incentivize, and retain employees.
Potential Dilution and Burn Rate
When considering the number
of shares to add to the Stock Incentive Plan, the Compensation Committee reviewed, among other things, the potential dilution to current
stockholders as measured by burn rate and overhang, and projected future share usage. We recognize the dilutive impact of our equity compensation
programs on our stockholders and continuously aim to balance this concern with the competition for talent, competitive compensation practices,
and the need to attract and retain talent.
Overhang
On a fully diluted basis, the approximately 28,891,274
shares currently available for issuance under the Stock Incentive Plan (without taking into account the Plan Amendment) represent an overhang
of approximately 14% based on the number of outstanding shares of Common Stock and shares underlying outstanding awards as of April 1,
2021, and 15% of the awards outstanding are underwater. If the Plan Amendment is approved, the additional 7,500,000 shares would increase
the overhang to 17%. We calculate overhang as the total of (a) shares available for future grants under the Stock Incentive Plan plus
(b) shares underlying any outstanding awards divided by (c) the total number of shares outstanding plus shares available for issuance
under the Stock Incentive Plan plus shares underlying any outstanding awards.
Burn Rate
Our three-year average unadjusted burn rate is approximately
5.2%. As of April 1, 2021, there were approximately 3,448,872 shares available for future grants under the Stock Incentive Plan. Depending
on assumptions, if these amendments are approved, it is expected that there will be sufficient shares available under the Stock Incentive
Plan to satisfy our equity needs through our 2022 annual meeting of stockholders.
Plan Features that Protect Stockholder Interests
The Stock Incentive Plan
provides the following provisions that are favorable to our stockholders and protect stockholder interests:
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Independent Plan Administration. The Compensation Committee, comprised solely of non-employee,
independent directors, administers the Stock Incentive Plan.
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No “Evergreen” Provision. The Stock Incentive Plan does not include an “evergreen”
feature pursuant to which the reserve of shares authorized for issuance would automatically be replenished periodically.
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Limitation on Awards to Individuals. The Stock Incentive Plan limits the number of shares of
Common Stock subject to awards that an individual may receive during each calendar year to 1,500,000 shares.
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ü
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Minimum One-Year Vesting Requirement. All awards granted under the Stock Incentive Plan are
subject to a minimum one-year vesting period, provided that this limitation shall not apply to up to five percent of the total number
of shares available for issuance under the Stock Incentive Plan.
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No Discounted Options or Stock Appreciation Rights. Options and stock appreciation rights may
not be granted with exercise prices below fair market value.
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No Dividends on Unvested Awards. The Stock Incentive Plan prohibits the payment of dividends
on unvested awards.
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Clawback. Awards issued under the Stock Incentive Plan are subject to any clawback policy of
the Company as in effect from time-to-time, including the clawback policy described under “Compensation Discussion and Analysis⸻Clawback
Policy.”
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No Liberal Share Reuse. Shares subject to an award will not be available for
reuse if such shares are delivered or withheld to satisfy any tax withholding obligation, or not issued upon the settlement of
an award or exercise of a stock option.
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No Gross Ups. The Stock Incentive Plan does not provide for any tax gross-ups.
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No Repricings. No option or stock appreciation right may be repriced, regranted through cancellation,
including cancellation in exchange for cash or other awards, or otherwise amended to reduce its option price or exercise price (other
than with respect to adjustments made in connection with a transaction or other change in the Company’s capitalization as permitted
under the Stock Incentive Plan) without the approval of the stockholders of the Company.
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Double-Trigger on Change of Control. The Stock Incentive Plan includes a double-trigger provision
for the vesting of any options, restricted stock, or RSUs upon a change of control; however, if awards are not assumed by the acquirer
or successor in connection with such change of control, outstanding awards under the Stock Incentive Plan will be fully vested.
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No Transferability. Awards generally may not be transferred, except by will or the laws of descent
and distribution, unless approved by the Compensation Committee.
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Summary of the Stock Incentive Plan
The principal provisions
of the Stock Incentive Plan, including (unless otherwise noted) the terms of the Plan Amendment, are summarized below. This summary is
not complete and is qualified in its entirety by the terms of the Stock Incentive Plan attached as Annex A to this Proxy
Statement.
Equity Incentive Programs
The Stock Incentive Plan consists of three separate
equity incentive programs:
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the Discretionary Option Grant Program;
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the Stock Issuance Program; and
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the Automatic Option Grant Program for non-employee Board members.
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The principal features of
each program are described below. The Compensation Committee or, in the absence of the Compensation Committee, another properly constituted
committee of the Board, or the Board itself, has the authority to administer the Discretionary Option Grant Program and the Stock Issuance
Program with respect to option grants and stock issuances made to our executive officers and non-employee Board members, and also has
the authority to make grants under these programs to all other eligible individuals. The Compensation Committee may by resolution authorize
one or more officers of the Company to perform any or all things that the Committee is authorized and empowered to do or perform under
the Plan, and for all purposes under the Plan, such officer or officers shall be treated as the Committee.
The term “plan administrator,”
as used in this summary, means, as applicable, the Compensation Committee, another properly constituted committee of the Board, the Board,
or one or more officers of the Company, to the extent that any of them is acting within the scope of its administrative jurisdiction under
the Stock Incentive Plan. However, neither the Compensation Committee nor any secondary committee will exercise any administrative discretion
under the Automatic Option Grant Program. All grants under that program will be made in strict compliance with the express provisions
of the program.
Share Reserve
As of April 1, 2021, an aggregate of 40,590,000 shares
of Common Stock have been reserved for issuance over the term of the Stock Incentive Plan, without giving effect to the share increase
proposed under the terms of this proposal. The total number of shares available under the Stock Incentive Plan as of April 1, 2021, without
giving effect to the share increase proposed under the terms of this proposal, is 28,891,274. This amount consists of 25,442,402 shares
reserved for awards already granted and 3,448,872 shares of Common Stock currently available for future issuance under the Stock Incentive
Plan. Approval of the Plan Amendment will increase the number of shares available for issuance under the Stock Incentive Plan by 7,500,000
shares.
The shares of Common Stock
issuable under the Stock Incentive Plan may be drawn from shares of our authorized but unissued Common Stock or from shares of Common
Stock reacquired by us, including shares repurchased on the open market.
No individual may receive
options or other awards under the Stock Incentive Plan exceeding 1,500,000 shares in the aggregate in any calendar year.
In the event any change is
made to the outstanding shares of Common Stock by reason of any recapitalization, stock dividend, stock split, combination of shares,
exchange of shares or other change in corporate structure effected without our receipt of consideration, appropriate adjustments will
be made to the securities issuable (in the aggregate and per participant) under the Stock Incentive Plan and the securities in effect
under each outstanding option and stock issuance and, where applicable, the option exercise price per share.
Eligibility
Officers and employees, non-employee
Board members and independent consultants in our service or the service of our parents or subsidiaries, whether now existing or subsequently
established, are eligible to participate in the Discretionary Option Grant Program and the Stock Issuance Program. Non-employee members
of the Board are also eligible to participate in the Automatic Option Grant Program.
As of April 1, 2021, eight executive officers, approximately
258 other employees, and seven non-employee Board members were eligible to participate in the Discretionary Option Grant Program and the
Stock Issuance Program. Our seven non-employee Board members were also eligible to participate in the Automatic Option Grant Program.
Valuation
The “fair market value” per share of Common
Stock on any relevant date under the Stock Incentive Plan will be deemed to be equal to the closing selling price per share on that date
on the Nasdaq Global Select Market. On April 1, 2021, the closing selling price of our Common Stock per share was $9.95.
Discretionary Option Grant Program
Terms of Options
The Plan Administrator has
complete discretion under the Discretionary Option Grant Program to determine which eligible individuals are to receive option grants,
the time or times when those grants are to be made, the number of shares subject to each grant, the status of any granted option as either
an incentive stock option or a non-statutory option under the federal tax laws, the vesting schedule, if any, for the option grant and
the maximum term for which any granted option is to remain outstanding.
Each granted option will
have an exercise price per share no less than the fair market value of the option shares on the grant date. No granted option will have
a term in excess of ten years, and the option will generally become exercisable in one or more installments over a specified period of
service measured from the grant date. However, one or more options may be structured so that they will be immediately exercisable for
any or all of the option shares; the shares acquired under those options will be unvested and subject to repurchase by us, at the exercise
price paid per share, if the optionee ceases service with us prior to vesting in those shares.
Upon cessation of service,
the optionee will have a limited period of time in which to exercise any outstanding option to the extent exercisable for vested shares.
The Plan Administrator will have complete discretion to extend the period following the optionee’s cessation of service during which
his or her outstanding options may be exercised and/or to accelerate the exercisability or vesting of such options in whole or in part.
Such discretion may be exercised at any time while the options remain outstanding, whether before or after the optionee’s actual
cessation of service.
Upon the optionee’s
cessation of service as a result of death after at least five years of service, all of the optionee’s outstanding options will accelerate
and become exercisable in full.
In no event may options (or
stock appreciation rights) granted under the Stock Incentive Plan be directly or indirectly repriced without the approval of our stockholders.
Stock Appreciation Rights
The Plan Administrator is
authorized to issue tandem stock appreciation rights in connection with option grants made under the Discretionary Option Grant Program.
The grant price of a stock appreciation right may not be less than the fair market value of our Common Stock on the date of the grant.
Tandem stock appreciation
rights under the Discretionary Option Grant Program provide the holder with the right to surrender an option for an appreciation distribution
from the Company. The amount of this distribution will be equal to the excess of:
(i)
the fair market value of the vested shares of Common Stock subject to the surrendered option, over
(ii) the
aggregate exercise price payable for such shares.
An appreciation distribution
may, at the discretion of the Plan Administrator, be made in cash or in shares of Common Stock, or a combination thereof.
Stock Issuance Program
Shares may be issued under
the Stock Issuance Program through direct and immediate issuance or with vesting upon the completion of a designated service period, the
attainment of pre-established performance goals, or a specific period of time after issuance. To the extent a participant ceases service
without completing the designated service period or performance goals, we have the right to repurchase the shares at the price paid, if
any. However, the Plan Administrator has the discretionary authority at any time to accelerate the vesting of any and all unvested shares
outstanding under the program. Share recipients will have full stockholder rights with respect to their shares, including the right to
vote the shares and to receive regular cash dividends. Share recipients do not have rights with respect to unvested shares; however, the
Plan Administrator may grant dividend equivalents entitling the holder of such unvested shares to regular cash dividends payable on such
shares. Dividends and dividend equivalents are subject to the same vesting schedule and payable at the same time as the shares to which
such dividends and dividend equivalents relate.
Shares of Common Stock may
also be issued under the program pursuant to RSUs that entitle the recipient to receive shares of Common Stock (or cash in lieu thereof)
in the future following the satisfaction of vesting conditions imposed by the Plan Administrator. Outstanding RSUs under the program will
automatically terminate, and no shares of Common Stock will be issued in satisfaction of those awards, if the vesting conditions established
for the awards are not satisfied. RSU holders do not have stockholder rights with respect to the awards; however, the Plan Administrator
may grant dividend equivalents entitling the holder of RSUs to regular cash dividends payable on the underlying shares. Dividend equivalents
are subject to the same vesting schedule and payable at the same time as the shares underlying the RSU to which such dividend equivalents
relate.
The Plan Administrator has
complete discretion under the program to determine which eligible individuals are to receive stock issuances or RSUs, the time or times
when those issuances or awards are to be made, the number of shares subject to each issuance or award, the extent to which an RSU will
have an accompanying dividend equivalent, and the vesting schedule to be in effect for the stock issuance or RSU.
Automatic Option Grant Program
Terms of Options
Under the Automatic Option
Grant Program, eligible non-employee Board members, including Board members who are our former employees, will receive a series of option
grants over their period of Board service. Each non-employee Board member will, at the time of his or her initial election or appointment
to the Board or upon continuing to serve as a Board member after ceasing to be employed by us, receive an option grant for up to 80,000
shares of Common Stock. The amount of the initial grant is determined by multiplying:
(i) a
fraction, the numerator of which is the number of months remaining between the date the Board member first became a non-employee Board
member and the date of the next Annual Meeting and the denominator of which is 12, by
(ii)
80,000 shares of Common Stock.
In addition, each year on
the date of the Company’s annual meeting of stockholders, each individual who is to continue to serve as a non-employee Board member
will automatically be granted an additional option to purchase 40,000 shares of Common Stock. There is no limit on the number of these
40,000-share option grants any one eligible non-employee Board member may receive over his or her period of continued Board service.
Each automatic grant will have an exercise price per
share equal to the fair market value per share of Common Stock on the grant date and will have a term of ten years. Each initial automatic
option grant will vest, subject to the terms of the Stock Incentive Plan, in 36 equal monthly installments over a three-year period measured
from the grant date. Each annual automatic option grant shall vest and become exercisable on the 12-month anniversary of the grant date.
With respect to both the initial automatic option grant and the annual automatic option grant, vesting will cease and options will not
become exercisable for any additional option shares following the optionee’s cessation of Board service for any reason. Following
an optionee’s cessation of Board service for any reason, each option vested at the time of cessation of Board service will remain
exercisable by the optionee (or after the optionee’s death, by his or her estate or heirs) for the remainder of the ten-year term
of that option.
Stock Appreciation Rights
The terms of the Automatic
Option Grant Program provide that options will have one of two different stock appreciation rights, depending on the date on which the
option is granted. In either case, the grant price of the stock appreciation right may not be less than the fair market value of our Common
Stock on the date of the grant.
Each option granted under
the Automatic Option Grant Program contains a tandem stock appreciation right that gives the holder the right to surrender the option
for an appreciation distribution, to be paid by us to the holder in shares of Common Stock. The amount of the distribution will be equal
to the excess of:
(i) the
fair market value of the vested shares of Common Stock subject to the surrendered option, over
(ii)
the aggregate exercise price payable for such shares.
General Provisions
Acceleration
In the event that we are
acquired by merger or asset sale or otherwise undergo a change in control, including a change effected through the successful completion
of a tender offer for more than 50% of our outstanding voting stock or a change in the majority of the Board effected through one or more
contested elections for Board membership, except as set forth in the terms of the grant, the vesting of each outstanding option under
the Automatic Option Grant Program, and the vesting of each RSU under the Stock Issuance Program, in each case granted prior to April
3, 2017 shall automatically accelerate in full. However, all other grants under the Stock Incentive Plan made on or after April 3, 2017
are subject to “double trigger” vesting if the grants are assumed, in which case accelerated vesting will apply only if the
grantee’s service is terminated by us without “cause” or the grantee due to a “constructive termination”
within 90 days preceding or two years following the change in control. If the grants are not assumed in connection with the change in
control, they will fully vest upon the change in control.
Payment of Withholding Taxes for Options
The Plan Administrator may
provide one or more participants in the Discretionary Option Grant Program and Stock Issuance Program with the right to have us withhold
a portion of the shares otherwise issuable to such participants in satisfaction of applicable withholding taxes that attach upon the exercise
of options or the vesting of stock issuances or RSUs. Alternatively, the Plan Administrator may allow participants to deliver previously
acquired shares of Common Stock in payment of such withholding tax liability.
Amendment and Termination
The Board may amend or modify
the Stock Incentive Plan at any time, subject to any required stockholder approval pursuant to applicable laws and regulations (including
applicable Nasdaq Global Select Market rules). Unless sooner terminated by the Board, the Stock Incentive Plan will terminate on the earliest
of:
(i) ten years
following the date the Stock Incentive Plan is approved by the Board, which will be April 1, 2031 (but any options, stock issuances or
other awards outstanding on such date shall remain in effect in accordance with their terms);
(ii)
the date on which all shares available for issuance under the Stock Incentive Plan have been issued as fully vested shares; or
(iii)
the termination of all outstanding options and stock issuances in connection with certain changes in control or ownership of the
Company.
New Plan Benefits
With the exception of grants to non-employee members
of the Board under the Automatic Option Grant Program, future awards under the Stock Incentive Plan are indeterminable as all such future
grants are determined by the Plan Administrator in its discretion, and no arrangements have been made at this time with respect to the
shares reserved for issuance under the Stock Incentive Plan. The following tabulation reflects the awards to be granted to the non-employee
members of the Board under the Automatic Option Grant Program:
Name and Position
|
|
Dollar Value
($)
|
|
Number
of
Units
|
Jon P. Stonehouse
|
|
|
⸻
|
|
|
|
⸻
|
|
President, Chief Executive Officer
|
|
|
|
|
|
|
|
|
Thomas R. Staab, II
|
|
|
⸻
|
|
|
|
⸻
|
|
Former Senior Vice President and Chief Financial Officer
|
|
|
|
|
|
|
|
|
Anthony J. Doyle
|
|
|
⸻
|
|
|
|
⸻
|
|
Chief Financial Officer
|
|
|
|
|
|
|
|
|
Yarlagadda S. Babu, Ph.D.
|
|
|
⸻
|
|
|
|
⸻
|
|
Chief Discovery Officer
|
|
|
|
|
|
|
|
|
William P. Sheridan, MBBS
|
|
|
⸻
|
|
|
|
⸻
|
|
Chief Medical Officer
|
|
|
|
|
|
|
|
|
Megan T. Sniecinski
|
|
|
⸻
|
|
|
|
⸻
|
|
Chief Business Officer
|
|
|
|
|
|
|
|
|
Executive Officer Group
|
|
|
⸻
|
|
|
|
⸻
|
|
Non-Employee Director Group
|
|
|
(1
|
)
|
|
|
520,000
|
(1)
|
Non-Executive Officer Employee Group
|
|
|
⸻
|
|
|
|
⸻
|
|
|
(1)
|
Represents stock options to be granted to our non-employee directors pursuant to the Automatic Option Grant
Program immediately following the Meeting and immediately following each subsequent annual meeting of stockholders within each non-employee
director’s applicable three-year term, assuming Dr. Hutson and Mr. Ingram are re-elected at the Meeting. Additional stock option
grants under the Automatic Option Grant Program are expected in future years; however, the number of such stock options will vary based
on the number of existing or newly-elected directors eligible to receive a grant each year, as described above under “Automatic
Option Grant Program⸻Terms of Options.”
|
Equity Compensation Plan Information
As of April 1, 2021, an aggregate of 40,590,000 shares
of Common Stock have been reserved for issuance over the term of the Stock Incentive Plan, without giving effect to the share increase
proposed under the terms of this proposal. The total number of shares available under the Stock Incentive Plan as of April 1, 2021, without
giving effect to the share increase proposed under the terms of this proposal is 28,891,274. This amount consists of 25,442,402 shares
reserved for awards already granted and 3,448,872 shares of Common Stock available for future issuance under the Stock Incentive Plan.
Information regarding the
securities authorized for issuance under our equity compensation plans is presented as of December 31, 2020, which does not give effect
to the increases of 7,500,000 shares of Common Stock under the Stock Incentive Plan or 3,500,000 shares of Common Stock under the Employee
Stock Purchase Plan described in Proposal 5.
Plan Category
|
|
(a)
Number of
Securities to be
Issued Upon
Exercise of
Outstanding
Options, Warrants
and Rights
|
|
(b)
Weighted-Average
Exercise Price of
Outstanding
Options, Warrants
and Rights($)
|
|
(c)
Number of
Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
(Excluding
Securities
Reflected in Column
(a))
|
Equity compensation plans approved by security holders
|
|
|
24,884,781
|
(1)
|
|
|
6.52
|
|
|
|
7,465,636
|
(2)
|
Equity compensation plans not approved by security
holders
|
|
|
4,170,793
|
(3)
|
|
|
3.88
|
|
|
|
229,207
|
(4)
|
Total
|
|
|
29,055,574
|
|
|
|
6.14
|
|
|
|
7,694,843
|
|
|
(1)
|
Represents stock option awards and RSUs granted under the Stock Incentive Plan. The number of shares that
may be issued pursuant to the Employee Stock Purchase Plan during a given period and the purchase price of such shares cannot be determined
in advance of such purchases.
|
|
(2)
|
Consists of 4,592,872 shares available for future issuance under the Stock Incentive Plan and 2,872,764 shares
available for future issuance under the Employee Stock Purchase Plan.
|
|
(3)
|
Represents stock option awards granted under the Inducement Equity Incentive Plan. For a narrative description
of the terms of the Inducement Equity Incentive Plan, see Note 8 to the Company’s audited consolidated financial statements for
the year ended December 31, 2020, which is included in the Company’s Annual Report on Form 10-K filed with the SEC on March 1, 2021.
|
|
(4)
|
Represents shares available for issuance under the Inducement Equity Incentive Plan. For a narrative description
of the terms of the Inducement Equity Incentive Plan, see Note 8 to the Company’s audited consolidated financial statements for
the year ended December 31, 2020, which is included in the Company’s Annual Report on Form 10-K filed with the SEC on March 1, 2021.
|
Federal Income Tax Consequences
Option Grants
Options granted under the
Stock Incentive Plan may be either incentive stock options which satisfy the requirements of Section 422 of the Internal Revenue Code
(the “Code”) or non-statutory options which are not intended to meet such requirements. The federal income tax treatment for
the two types of options differs as follows:
Incentive Stock Options.
No taxable income is recognized by the optionee at the time of the option grant, and no taxable income is generally recognized at the
time the option is exercised. The optionee will, however, recognize taxable income in the year in which the purchased shares are sold
or otherwise transferred. For federal tax purposes, dispositions are divided into two categories: (i) qualifying and (ii) disqualifying.
A qualifying disposition occurs if the sale or other disposition is made after the optionee has held the shares for more than two years
after the option grant date and more than one year after the exercise date. If either of these two holding periods is not satisfied, then
a disqualifying disposition will result. If the optionee makes a qualifying disposition, the taxable income recognized by the optionee
will be treated as a long-term capital gain and we will not be entitled to an income tax deduction. If the optionee makes a disqualifying
disposition of the purchased shares, then for the taxable year in which such disposition occurs, the optionee will recognize ordinary
income, and we will be entitled to an income tax deduction, in an amount generally equal to the excess of (i) the fair market value of
such shares on the option exercise date over (ii) the exercise price paid for the shares.
Non-Statutory Options.
No taxable income is recognized by an optionee upon the grant of a non-statutory option. The optionee will in general recognize ordinary
income in the year in which the option is exercised, in an amount equal to the excess of the fair market value of the purchased shares
on the exercise date over the exercise price paid for the shares.
Subject to limitations imposed
by Section 162(m) of the Code, we will generally be entitled to an income tax deduction equal to the amount of ordinary income recognized
by the optionee with respect to the exercised non-statutory option. Any such deduction will in general be allowed for the taxable year
of the Company in which such ordinary income is recognized by the optionee.
Stock Appreciation Rights
No taxable income is recognized
upon receipt of a stock appreciation right. The holder will recognize ordinary income in the year in which the stock appreciation right
is exercised, in an amount equal to the appreciation distribution. Subject to limitations imposed by Section 162(m) of the Code, we will
generally be entitled to an income tax deduction equal to the appreciation distribution in the taxable year in which the ordinary income
is recognized by the optionee.
Stock Issuances
Generally, the issuance of
unvested stock will not result in taxable income to the employee. Instead, upon vesting, the fair market value of such shares, less cash
or other consideration paid (if any), will be included in the participant’s ordinary income as compensation. Any cash dividends
or other distributions paid with respect to the stock prior to vesting will also be included in the holder’s ordinary income as
compensation when paid. The participant may however, elect under Section 83(b) of the Code, to include in his or her ordinary income at
the time the stock is issued the fair market value of such shares less any amount paid. Any cash dividends paid thereafter will be treated
as dividend income.
Subject to limitations imposed
by Section 162(m) of the Code, we will generally be entitled to an income tax deduction equal to the amount of ordinary income recognized
by the participant with respect to the stock issuance. The deduction will in general be allowed for the taxable year of the Company in
which such ordinary income is recognized by the participant.
Restricted Stock Units (RSUs)
No taxable income is recognized
by a participant upon grant of an RSU. The participant will recognize ordinary income, in the year in which the RSU vests and the underlying
stock is issued to the participant, in an amount equal to the fair market value of the shares on the date of issuance. Any cash or other
property paid with respect to such shares on the vesting date will also be includible in the participant’s ordinary income as compensation
at the time of payment. A participant may not make an 83(b) election with respect to an RSU. Subject to limitations imposed by Section
162(m) of the Code, we will generally be entitled to an income tax deduction to the extent the participant recognizes ordinary income
with respect to an RSU. The deduction will in general be allowed for the taxable year of the Company in which such ordinary income is
recognized by the participant.
Deductibility of Executive Compensation
Section 162(m) of the Code
imposes an annual deduction limit of $1 million on compensation paid by the Company to “covered employees” in any taxable
year. This rule may limit the deductibility of awards granted pursuant to the Plan. We believe that our stock options granted prior to
November 3, 2017 should qualify as “performance-based compensation” exempt from the $1 million limit, but that exception is
no longer available for options and other awards granted after that date.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS
DEEMS THE AMENDMENT TO THE STOCK INCENTIVE PLAN TO INCREASE THE NUMBER OF SHARES AVAILABLE FOR ISSUANCE UNDER THE STOCK INCENTIVE PLAN
BY 7,500,000 SHARES TO BE IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT
TO THE STOCK INCENTIVE PLAN.
5.
|
Approval of an amendment to the EMPLOYEE
STOCK PURCHASE Plan to increase the number of shares available for issuance under the EMPLOYEE STOCK PURCHASE Plan by 3,500,000
shares
|
In May 1995, the Company’s
stockholders approved the Company’s Employee Stock Purchase Plan (as amended, the “ESPP”). As initially adopted, a total
of 200,000 shares of Common Stock were reserved for issuance under the ESPP. On May 15, 2002, the Company’s stockholders approved
an amendment to the ESPP to (i) increase the number of shares available under the ESPP by 200,000 and (ii) eliminate the January
2005 termination date of the ESPP. On May 21, 2008, the Company’s stockholders approved an amendment to the ESPP to increase
the number of shares available under the ESPP by 200,000. On May 13, 2010, the Company’s stockholders approved an amendment
to the ESPP to increase the number of shares available under the ESPP by 225,000. On May 23, 2012, the Company’s stockholders
approved an amendment to the ESPP to increase the number of shares available under the ESPP by 150,000. On May 2, 2014, the Company’s
stockholders approved an amendment to the ESPP to increase the number of shares available under the ESPP by 500,000. On May 12, 2020,
the Company’s stockholders approved an amendment to the ESPP to increase the number of shares available under the ESPP by 3,000,000.
As a result of these amendments, a total of 4,475,000 shares of Common Stock have previously been reserved for issuance under the ESPP.
As of March 30, 2021, 1,795,446 shares had been issued, leaving a total of 2,679,554 shares available for future purchase under the
ESPP.
Proposal
On April 1, 2021, the Board adopted, subject to stockholder
approval, an amendment to the ESPP to add 3,500,000 shares of Common Stock to the number of shares authorized for issuance under the ESPP,
bringing the total number of shares of Common Stock subject to the ESPP to 7,975,000 (the “ESPP Amendment”). When added to
the remaining shares available for issuance under the ESPP as of April 1, 2021, the increase will result in a total of 6,179,554 shares
being available for future employee purchases under the ESPP, subject to adjustment in the event of a change in capital structure of the
Company (as discussed below).
The ESPP, as amended by the
ESPP Amendment, is attached as Annex B to this proxy statement. The principal provisions of the ESPP are summarized below.
This summary is not complete and is qualified in its entirety by the terms of the ESPP.
The Board of Directors believes
that the approval of the ESPP Amendment is in the best interests of the Company and its stockholders, as the availability of an adequate
number of shares for issuance under the ESPP and the ability of eligible employees to acquire a proprietary interest in the Company is
an important factor in attracting, incentivizing, and retaining qualified personnel essential to the success of the Company.
Summary of the Employee
Stock Purchase Plan
The following summary of
the ESPP does not contain all of the terms and conditions of the ESPP, and is qualified in its entirety by the specific language of the
ESPP, as amended by the ESPP Amendment.
General
Purposes. The
ESPP is intended to qualify under Section 423 of the Internal Revenue Code of 1986, as amended (the “Code”). The purpose
of the ESPP is to allow eligible employees of the Company to subscribe for and purchase shares of the Company’s Common Stock directly
from the Company at a discounted price through payroll deductions to encourage greater employee ownership in the Company and as an incentive
for continued employment.
Administration. The
ESPP is administered by the Compensation Committee of the Board of Directors of the Company (as used in this Proposal 5, the “Committee”).
Subject to the specific provisions of the ESPP, all questions of interpretation or application of the ESPP are determined by the Committee
and its decisions are final, conclusive and binding upon all participants. The Company pays all administrative expenses of the ESPP.
Amendment and Discontinuance. Following
the end of any Purchase Period (as defined below), the Board may alter, amend, suspend or discontinue the ESPP. However, the Board may
not take the following actions with respect to the ESPP without receiving the prior approval of the stockholders, except for permissible
adjustments in the event of certain changes in the Company’s capitalization: (i) materially increase the number of shares of
Common Stock issuable under the ESPP or the maximum number of shares purchasable per participant on any one purchase date; (ii) alter
the purchase price formula so as to reduce the purchase price payable for the shares purchasable under the ESPP; or (iii) materially
increase the benefits accruing to participants under the ESPP or materially modify the requirements for eligibility to participate in
the ESPP. Unless earlier terminated by the Board, shares of Common Stock will be offered for purchase under the ESPP until the earlier
of (i) the date on which the maximum number of shares of Common Stock available for issuance under the ESPP shall have been purchased
or (ii) the date on which all purchase rights are exercised in connection with an Acquisition (as defined below). Notwithstanding
the date of termination determined by the preceding sentence, the Board of Directors may act to terminate the ESPP at the end of any Purchase
Period under the ESPP.
Eligibility and Participation
Employees (including officers
and employee directors) who are employed by the Company or any participating subsidiary on a basis which requires such employee to work
more than 20 hours per week for more than five months per calendar year at the commencement of each six-month purchase period (a “Purchase
Period”), are eligible to participate in the ESPP, subject to certain limitations imposed by the Code and certain other limitations
set forth in the ESPP. No purchase rights will be granted to any employee who, immediately after the grant of such right, would own (or
otherwise hold options or other rights to purchase) stock possessing five percent or more of the total voting power or value of all classes
of stock of the Company or any parent or subsidiary corporation.
As of April 1, 2021, approximately
235 employees were eligible to participate in the ESPP, and approximately 164 employees were participating. Participants participate in
the ESPP by electing payroll deductions on or prior to the commencement of a Purchase Period that accumulate to purchase shares of Common
Stock. The actual benefits, if any, to participants in the ESPP are not determinable prior to the purchase of shares thereunder as the
value, if any, of such shares to their holders is represented by the difference between the market price of a share of our Common Stock
on the date of purchase and the purchase price of the shares, as described below.
Purchase Periods and Payroll
Deductions
Purchase Periods run from
the first business day of February to the last business day of July and from the first business day in August to the last business day
of the next succeeding January. Eligible employees may elect to participate in the ESPP on or prior to the start date of any Purchase
Period. An eligible employee electing to participate may authorize payroll deductions in integral multiples of 1% of the base salary paid
to such participant during the Purchase Period up to a maximum of 15% of base salary. The participant may decrease his or her rate of
payroll deduction one time during any Purchase Period, but cannot increase the rate of deduction during the Purchase Period. Any elections
to increase the rate of deduction will take effect at the beginning of the next Purchase Period. A participant may, at any time prior
to the last day of the Purchase Period, terminate his or her right to purchase shares of Common Stock at the end of the Purchase Period,
and no further payroll deductions will be collected from the participant during that Purchase Period. Payroll deductions accumulated in
the terminating participant’s account shall, at the participant’s election, be immediately refunded to the participant or
held for the purchase of shares on the last day of the next Purchase Period. Terminating participants who fail to make an election with
respect to accumulated payroll deductions shall be refunded such deductions as soon as possible.
Payroll deductions are credited
to accounts established in each participant’s name on the books of the Company. No interest accrues on payroll deductions credited
to such accounts during the Purchase Period. On the last business day of each Purchase Period, the amount in each participant’s
account is used to purchase whole shares of Common Stock of the Company on such purchase date. Any amount remaining in the participant’s
account will be carried over to the next Purchase Period, except for amounts not applied to the purchase of Common Stock because the limitations
on the number of shares purchasable per participant is exceeded, which amounts will be promptly refunded to the participant after the
purchase date. A participant will not acquire any stockholder rights with respect to purchase rights under the ESPP until shares of Common
Stock are actually purchased for such participant at the end of each Purchase Period. During a participant’s lifetime, rights to
purchase shares of Common Stock pursuant to the ESPP shall be exercisable only by the participant.
Purchase Price and Amount
of Common Stock Purchased
The purchase price per share
for which shares of Common Stock will be sold at the end of a Purchase Period under the ESPP is the lesser of (i) 85% of the “fair
market value” per share of the Common Stock on the start date of the Purchase Period or (ii) 85% of the “fair market
value” per share of Common Stock on the purchase date. For purposes of the ESPP, the “fair market value” per share on
any relevant date will be the closing selling price per share of Common Stock on the date in question, as such price is reported on the
Nasdaq Global Select Market if, at the time, the Common Stock is traded on the Nasdaq Global Select Market, or the closing selling price
per share of the Common Stock on the date in question on the stock exchange determined by the Committee to be the primary market for the
Common Stock, as such price is officially quoted on the composite tape of transactions on such exchange, if at the time the Common Stock
is listed on any stock exchange. In either case, if there is no closing selling price for the Common Stock on the date in question, then
the “fair market value” shall be the closing selling price on the immediately preceding date for which such quotation exists.
The maximum number of shares
which a participant may purchase on any purchase date may not exceed 3,000 shares of Common Stock (subject to adjustment in the event
of a change in the capital structure of the Company as discussed below). In addition, a participant may not purchase more than $25,000
worth of Common Stock (determined on the basis of the fair market value of the Common Stock on the start date of the Purchase Period)
each calendar year.
Mergers, Acquisitions
and Other Corporate Transactions
In the event of certain acquisitions
of the Company by merger or asset purchase (an “Acquisition”), all payroll deductions for the Purchase Period in which such
Acquisition occurs will be automatically applied to the purchase of Common Stock immediately prior to the effective date of the Acquisition,
subject to the limitations on purchase during any Purchase Period. The purchase price of such shares will be 85% of the lesser of (i) the
“fair market value” of the Common Stock on the start date of the Purchase Period or (ii) the “fair market value”
of the Common Stock immediately prior to the Acquisition. The Company will provide at least ten days’ notice prior to any Acquisition
to each participant, and each participant will have the right to terminate participation in the ESPP prior to the effective date of the
Acquisition should a participant not wish to have shares purchased in connection with the Acquisition.
In the event of any stock
split, common stock dividend, recapitalization, combination of shares, exchange of shares or other change affecting the outstanding Common
Stock as a class without receipt of consideration by the Company, the number of shares of Common Stock issuable under the ESPP and any
outstanding purchase rights (and the price per share in effect under any such purchase right) is subject to adjustment in order to prevent
the dilution or enlargement of benefits under the ESPP and such purchase rights.
Termination of Employment
or Loss of Eligibility
If a participant’s
employment terminates for any reason, including death or disability, or the participant otherwise loses his or her status as an eligible
employee, then all payroll deductions for the Purchase Period in which employment terminates or eligibility is lost are automatically
refunded to the participant or the participant’s estate or personal representative, as applicable.
Federal Income Tax Information
The following information
is a general summary of some of the current federal income tax consequences of the ESPP to participants and to the Company. Tax laws may
change, and actual tax consequences will depend on a participant’s individual circumstances as well as state and local tax laws.
Participants are advised to seek personal tax advice when they participate in the ESPP. The ESPP is intended to qualify as an “employee
stock purchase plan” under Section 423 of the Code.
Tax Treatment of Participants. Under
plans which qualify as “employee stock purchase plans,” no taxable income is recognized by the participant either upon receipt
of the purchase right at the beginning of the Purchase Period or upon the actual purchase of shares on each purchase date. All tax consequences
with respect to such purchases are deferred until the participant disposes of the shares. A disposition of shares generally includes any
transfer of legal title, whether by sale, exchange or gift, but does not include a transfer to a participant’s spouse or a transfer
to joint ownership if the participant remains one of the joint owners, or a transfer into the participant’s brokerage account.
The participant’s federal
income tax liability upon disposition will depend on whether the participant makes a qualifying or disqualifying disposition of the purchased
shares. A qualifying disposition will occur if the sale or other disposition of those shares is made after the participant has held the
shares for (i) more than two years after the start date of the Purchase Period and (ii) more than one year after the actual purchase date.
A disqualifying disposition is any sale or other disposition which is made prior to the satisfaction of either of these two minimum holding
period requirements; provided, however, that if a participant dies while owning the shares, the transfer of the shares upon death will
generally be considered a qualifying disposition.
With respect
to a qualifying disposition, a participant will recognize ordinary income in the year of such disposition equal to the lesser
of (i) the amount by which the fair market value of the shares on the date of the qualifying disposition exceeds the purchase
price or (ii) 15% of the fair market value of the shares on the start date of the Purchase Period in which those shares were
purchased. Any additional gain recognized upon the qualifying disposition will be a long-term capital gain. If the fair market
value of the shares on the date of the qualifying disposition is less than the purchase price the participant paid for the shares,
there will be no ordinary income, and any loss recognized will be a long-term capital loss.
In the case of a disqualifying
disposition, a participant will recognize ordinary income in the year of such disposition equal to the excess of (i) the fair market
value of the shares on the purchase date over (ii) the purchase price paid for the shares. Any additional gain (or loss) recognized
upon the disqualifying disposition will be capital gain (or loss), which will be long-term if the shares are held for more than one year
from the date of purchase.
Tax Treatment of the
Company. When a participant recognizes ordinary income upon making a disqualifying disposition, the Company will generally
be entitled to a tax deduction in the amount of the ordinary income recognized by the participant. In other cases, no deduction is allowed
the Company.
Recommendation of the
Board of Directors
THE BOARD OF DIRECTORS
DEEMS THE APPROVAL OF THE AMENDMENT TO THE EMPLOYEE STOCK PURCHASE PLAN TO INCREASE THE NUMBER OF SHARES AVAILABLE FOR ISSUANCE
UNDER THE EMPLOYEE STOCK PURCHASE PLAN BY 3,500,000 SHARES TO BE IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND
RECOMMENDS A VOTE FOR APPROVAL OF THE INCREASE IN THE NUMBER OF SHARES AVAILABLE FOR ISSUANCE UNDER THE
EMPLOYEE STOCK PURCHASE PLAN.
CORPORATE GOVERNANCE
Code of Business Conduct
We have a code of business
conduct that applies to all our employees as well as to each member of the Board. The code of business conduct is available
on our website at www.biocryst.com under the Corporate Governance section. The Company intends to post on its website
any amendments to, or waivers from, its code of business conduct. To date, there have not been any waivers by us under the code of business
conduct.
Board of Directors
The Company is governed by a Board of Directors, which
currently consists of nine directors as determined by resolution of the Board in accordance with the Company’s Certificate of Incorporation.
The Board has determined that seven of the nine current members of the Board (Messrs. Abercrombie, Aselage, Lee, Levin, and Ingram, Ms.
Heggie, and Dr. Hutson) are independent as defined by the Nasdaq Global Select Market, or Nasdaq. Prior to the commencement
of her employment as the Company’s Chief Research & Development Officer in March 2021, Dr. Thackray was also independent under
Nasdaq rules. Following the expiration of the term of Dr. Thackray’s directorship at the Meeting, the size of the Board will be
reduced to eight directors. There are no family relationships among any of our directors or our executive officers.
The Board has established
the Audit, Compensation, and Corporate Governance and Nominating committees to assist in the oversight of the Company. The Board
has adopted charters for each of these committees, which are posted on the Company’s website at www.biocryst.com.
The Company also makes available at its website its code of business conduct. Printed copies of these charters or the code of
business conduct may be obtained, without charge, by contacting the Corporate Secretary, BioCryst Pharmaceuticals, Inc., 4505
Emperor Blvd., Suite 200, Durham, North Carolina 27703.
Board Leadership Structure
Mr. Ingram currently serves
as the Chairman of the Board. The Chairman of the Board presides over the Board meetings and any executive session of the non-management
directors. An executive session is held at every regularly scheduled Board meeting.
The Company’s CEO is
responsible for setting the Company's strategic direction and for the day-to-day leadership and performance of the Company. The
Company’s independent Chairman provides input to the CEO. The Company believes that separating the roles of Chairman and CEO
is the most appropriate leadership structure for the Company at this time, based on the current circumstances and direction of the Company
and the membership of the Board, including the vast experience of our current Chairman of the Board in the pharmaceutical industry.
This leadership structure permits the CEO to focus his attention on managing our business and allows the Chairman to function as an important
liaison between management and the Board, enhancing the ability of the Board to provide oversight of the Company's management and affairs.
Risk Oversight
The Company does not view
risk in isolation, but considers risk as part of its regular consideration of business strategy and business decisions. The
Board oversees the Company’s risk management function, directly and through its committees. BioCryst approaches risk
management by integrating its strategic planning, operational decision making and risk oversight and communicating risks and opportunities
to the Board. The Board commits substantial time and effort every year to discussing and agreeing upon the Company’s
strategic plan, and it reconsiders key elements of the strategic plan as significant events and opportunities arise during the year. As
part of the review of the strategic plan, as well as in evaluating events and opportunities that occur during the year, the Board and
management also consider the risks relating to the strategic plan.
While the Board has primary
responsibility for oversight of the Company’s risk management, the Board’s standing committees support the Board by regularly
addressing various risks in their respective areas of oversight. Specifically, the Audit Committee assists the Board in fulfilling
its oversight responsibilities with respect to risk management in the areas of financial reporting, internal controls and compliance with
public reporting requirements. The Compensation Committee assists the Board in fulfilling its risk management oversight responsibilities
with respect to risks arising from compensation policies and programs. The Corporate Governance and Nominating Committee assists
the Board in fulfilling its risk management oversight responsibilities with respect to risks related to corporate governance matters. The
Audit Committee is also responsible for reviewing, discussing and advising the Board with respect to our corporate compliance program
and code of business conduct. For additional information related to the Compensation Committee’s role in evaluating risks related
to our executive compensation program, see “Compensation Discussion and Analysis” below.
Committees of the Board
Audit Committee
The Company has an Audit
Committee, currently consisting of Mr. Lee, as its Chairman, Mr. Abercrombie, and Mr. Levin, which is responsible for the review of internal
accounting controls, financial reporting and related matters. The Audit Committee also recommends to the Board the independent accountants
selected to be the Company’s auditors and reviews the audit plan, financial statements and audit results. The Board has adopted
an Audit Committee Charter, available on the Company’s website, that meets all applicable rules of Nasdaq and the SEC. The Audit
Committee members are “independent” directors as defined by Nasdaq and the SEC, meet the heightened independence standards
applicable to Audit Committee members under Nasdaq and SEC rules, and meet Nasdaq’s financial literacy requirements for audit committee
members. The Board has determined that each of Mr. Lee and Mr. Levin qualifies as an “audit committee financial expert,” as
such term is defined by the SEC. The Audit Committee met four times during 2020.
Compensation Committee
The Company has a Compensation
Committee, currently consisting of Dr. Hutson, as its Chairwoman, Mr. Aselage, and Mr. Ingram. The Compensation Committee is responsible
for the annual review of officer compensation and other incentive programs. The Board has adopted a Compensation Committee Charter, available
on the Company’s website, that meets all applicable rules of Nasdaq and the SEC. The Compensation Committee members are “independent”
directors as defined by Nasdaq, meet the heightened independence standards applicable to Compensation Committee members under Nasdaq rules,
and are “non-employee” directors as defined by SEC rules. The Compensation Committee met six times during 2020. More information
describing the Compensation Committee’s processes and procedures for considering and determining executive compensation, including
the role of consultants in determining or recommending the amount or form of director and executive compensation, is included under the
heading “Compensation Discussion and Analysis” below.
Compensation Committee Interlocks and Insider
Participation
The directors who served
as members of the Compensation Committee during 2020 are Dr. Hutson, Mr. Aselage, and Mr. Ingram. None of these directors have ever served
as an officer or employee of the Company, and none of these directors had any relationship with the Company during 2020 that would be
required to be disclosed pursuant to Item 404 of Regulation S-K. No interlocking relationships exist between our current Board of Directors
or Compensation Committee and the board of directors or compensation committee of any other company.
Corporate Governance and Nominating Committee
The Company has a Corporate
Governance and Nominating Committee consisting of Mr. Abercrombie, as its Chairman, Dr. Hutson, and Mr. Ingram. The Corporate Governance
and Nominating Committee selects persons for election or re-election as directors and provides oversight of the corporate governance affairs
and policies of the Board of Directors and the Company. The Board has adopted a Corporate Governance and Nominating Committee Charter,
available on the Company’s website, that meets all applicable rules of Nasdaq and the SEC. The Corporate Governance and Nominating
Committee members are “independent” directors as defined by Nasdaq. The Corporate Governance and Nominating Committee met
four times during 2020.
Other Committees
The Company also has a Commercialization
Committee, a Science Committee and a Finance Committee, each of which convenes from time to time, as needed, to assist the Company and
the Board on strategic decision-making regarding product development and commercialization and significant scientific and financial matters. Information
about these committees, including committee composition and copies of the committee charters, is available on the Company’s website.
Selection of Board Nominees
The Corporate Governance
and Nominating Committee (referred to in this section as the “Committee”) will consider candidates for Board membership
suggested by its members and other Board members, as well as management and stockholders. The Committee has established a procedure
for submission of suggestions by stockholders and will consider candidates recommended in writing, including biographical information
and personal references. All submissions by stockholders should be sent directly to the Chairman of the Board, Robert A. Ingram,
at 4505 Emperor Blvd., Suite 200, Durham, North Carolina 27703. The Chairman will provide copies of all submissions to the Committee
for its consideration.
The Committee reviews all
submissions and evaluates them based on predetermined selection criteria to identify prospective nominees. In reviewing candidates to
become prospective nominees, the Committee makes an initial determination as to whether to conduct a full evaluation of the candidate
based on the information provided to the Committee with the recommendation of the candidate, as well as the Committee’s own knowledge
of the candidate, which may be supplemented by inquiries to the person making the recommendation or to others. The preliminary determination
is based primarily on the need for additional Board members to fill vacancies or expand the size of the Board and the likelihood that
the candidate can satisfy the director selection criteria described below. If the Committee determines, in consultation with the Chairman
of the Board and other Board members as appropriate, that additional consideration is warranted, it may request additional information
about the candidate’s background and experience. The Committee then evaluates the candidate as a prospective nominee considering
our director selection criteria, including:
|
·
|
the ability of the prospective nominee to represent the interests of the stockholders of the Company;
|
|
·
|
the prospective nominee’s standards of integrity, commitment, and independence of thought and judgment;
|
|
·
|
the prospective nominee’s ability to dedicate sufficient time, energy, and attention to the diligent
performance of his or her duties, including the prospective nominee’s service on other public company boards; and
|
|
·
|
the extent to which the prospective nominee contributes to the range of talent, skill, and expertise appropriate
for the Board.
|
In evaluating prospective
nominees for Board membership, consideration is given to obtaining a diversity of experience and perspective within the Board. In considering
diversity, we look at the entirety of the Board. Although we do not seek constituent or representational directors, the Committee does
consider the diversity of the Board whenever we are looking for a new director, including diversity of backgrounds, experience, perspective,
race, gender, and ethnicity. The Committee and the Board evaluate the Board’s diversity on a periodic basis as part of their review
of the Board as a whole. For example, our Board conducts annual self-evaluations, which the Committee oversees, designed to solicit directors’
views on a variety of topics, including whether directors as a whole have the appropriate mix of characteristics, business experience,
background and tenure.
The Committee also considers
such other relevant factors as it deems appropriate, including the current composition of the Board, the relevance of the current expertise
of the Board, stockholder communications, the balance of management and independent directors, the need for Audit Committee expertise
and the evaluations of other prospective nominees. In connection with this evaluation, the Committee determines whether to interview the
prospective nominee, and if warranted, one or more members of the Committee, and others as appropriate, interview prospective nominees
in person or by telephone. After completing this evaluation and interview, the Committee selects the director nominees for the next annual
meeting of stockholders. The Committee recommended the nomination of two of the incumbent directors whose terms are expiring at the Annual
Meeting for reelection to the Board of Directors.
Annual Performance Evaluations
The Board has a policy requiring
an annual evaluation of the performance of the Board and the committees thereof, including individual assessments of each director’s
performance and qualifications. The Board engages third-party evaluators to oversee the individual director assessments from time to time
at the discretion of the Corporate Governance and Nominating Committee.
Stockholder or Other Interested Party Communications
Stockholders or other parties
interested in communicating directly with the Board, or specified individual directors, may do so by writing to the Corporate Secretary,
4505 Emperor Blvd., Suite 200, Durham, North Carolina 27703. The Secretary will review all such correspondence and will regularly
forward to the Board copies of all such correspondence that, in the opinion of the Secretary, relates to the functions of the Board or
its committees or that the Secretary otherwise determines requires their attention. Directors may at any time review a log of all correspondence
received by the Company that is addressed to members of the Board and request copies of such correspondence. Concerns relating to accounting,
internal controls or auditing matters will immediately be brought to the attention of the Chairman of the Audit Committee and handled
in accordance with procedures established by the Audit Committee with respect to such matters.
Stock Ownership Guidelines
We have adopted stock ownership
guidelines for our directors to help ensure that they each maintain an equity stake in the Company and, by doing so, appropriately link
their interests with those of stockholders. The guideline for non-employee directors is for each director to hold 10,000 shares
of BioCryst stock. Non-employee directors are expected to achieve this ownership level within three years of joining the Board.
Director Attendance
During 2020, the Board held
five meetings. Each member of the Board attended at least 75% of the meetings of the Board and committees of the Board of which he or
she is a member. We encourage all members of the Board to attend our annual meetings of stockholders. Our President and Chief Executive
Officer, Jon P. Stonehouse, Messrs. Ingram, Lee, and Levin, and Ms. Heggie were each in attendance at the 2020 Annual Meeting of Stockholders.
Certain Relationships and Related Transactions
Since January 1, 2020, other
than as set forth below, there were no relationships or related transactions requiring disclosure between the Company and any of its directors,
executive officers or five percent stockholders. The Audit Committee Charter requires all related party transactions to be pre-approved
by the Audit Committee.
On June 1, 2020, we issued
pre-funded warrants to purchase 3,511,111 shares of our Common Stock to entities affiliated with Baker Bros. Advisors LP in an SEC registered
public offering at the public offering price of $4.49 per warrant. The pre-funded warrants are exercisable in accordance with the terms
in the warrant agreement and have an exercise price of $0.01 per share, which is subject to adjustment in the event of certain stock dividends
and distributions, stock splits, stock combinations, reclassifications or similar events affecting the Company's Common Stock and also
upon any distributions of assets to the Company's stockholders. In the event of certain corporate transactions, the holders of the pre-funded
warrants will be entitled to receive, upon exercise of the pre-funded warrants, the kind and amount of securities, cash or other property
that the holders would have received had they exercised the pre-funded warrants immediately prior to such transaction. The pre-funded
warrants do not contain voting rights or any of the other rights or privileges as a holder of the Company’s Common Stock. This transaction
was approved by the Board.
Anti-Hedging Policy
We have adopted a policy
that prohibits employees (including officers) or directors, or any of their family members, from engaging in any type of short sale or
purchasing any financial instrument (including prepaid variable forward contracts, equity swaps, collars, and exchange-traded funds),
or otherwise engaging in any transaction that, in either case, hedges or offsets, or is designed to hedge or offset, any decrease in the
market value of our equity securities. Such persons may engage in other derivative transactions only if it is determined, to the satisfaction
of our Insider Trading Compliance Officer (currently, our Chief Legal Officer and Corporate Secretary), that such transactions are consistent
with applicable rules, laws, and our Insider Trading Policy.
EXECUTIVE OFFICERS
Our executive officers are listed below, followed
by information, including biographical information, about our executive officers (other than Mr. Stonehouse and Dr. Thackray, whose
biographical information appears above under “Election of Directors”).
Name
|
Age(1)
|
|
Position(s)
|
Jon P. Stonehouse
|
60
|
|
President, Chief Executive Officer, and Director
|
Anthony J. Doyle
|
41
|
|
Chief Financial Officer
|
Yarlagadda S. Babu, Ph.D.
|
68
|
|
Chief Discovery Officer
|
Alane P. Barnes
|
55
|
|
Chief Legal Officer and Corporate Secretary
|
Charles K. Gayer
|
50
|
|
Chief Commercial Officer
|
William P. Sheridan, MBBS
|
66
|
|
Chief Medical Officer
|
Megan T. Sniecinski
|
40
|
|
Chief Business Officer
|
Helen M. Thackray, M.D.
|
52
|
|
Chief Research and Development Officer and Director
|
___________
|
(1)
|
Age as of March 30, 2021.
|
Anthony J. Doyle joined
BioCryst in April 2020 as its Chief Financial Officer. Prior to joining BioCryst, Mr. Doyle served as Chief Financial Officer of Worldwide
Clinical Trials Holdings, Inc., a full-service global contract research organization, since 2014. From 2012 to 2014, Mr. Doyle was Chief
Financial Officer of World Book, a Berkshire Hathaway company. From 2004 to 2012, Mr. Doyle held a series of roles of increasing responsibility
at General Electric, moving through financial planning and analysis, controller, audit, tax, and commercial finance rotations in the GE
Financial Management and Corporate Audit Staff finance and leadership training programs. He then led risk and pricing for GE Healthcare’s
U.S. diagnostic imaging business and served as global program manager for GE Healthcare Solutions, a hospital and healthcare outcomes-based
consulting company. Mr. Doyle received his Bachelor’s degree from Dublin City University (Ireland) and his DESEM from Reims Management
School (France). Mr. Doyle also has a Graduate Certificate in Corporate Treasury from Dublin City University.
Yarlagadda S. Babu, Ph.D.
joined BioCryst in 1988 and was BioCryst’s first full-time employee. Dr. Babu has served as the Company’s Vice President
— Drug Discovery since 1992. In October of 2013, Dr. Babu’s title was changed to Senior Vice President of Drug Discovery,
and in December 2020, Dr. Babu became our Chief Discovery Officer. Prior to joining BioCryst, he served five years on the biochemistry
faculty at the University of Alabama at Birmingham (“UAB”). Dr. Babu obtained his Ph.D. from the Indian Institute of Science,
Bangalore and spent three years in the Laboratory of Molecular Biophysics at the University of Oxford, U.K. before joining UAB. He has
over 70 publications in peer-reviewed journals, and a number of issued and pending patents to his credit.
Alane P. Barnes joined
BioCryst in September 2006 as its General Counsel. She was named Corporate Secretary in 2007, was named Vice President, General Counsel
& Corporate Secretary in 2011, and has served as our Chief Legal Officer and Corporate Secretary since 2018. She was named as an executive
officer in 2013. Ms. Barnes is responsible for all legal affairs of the Company including SEC compliance, corporate governance, IP strategy
and management, licensing transactions, government contract negotiations and management and dispute resolution. She graduated magna cum
laude from Cumberland School of Law in 1997 and is a member of Curia Honoris, scholar of merit. Ms. Barnes received her B.S. in Natural
Science with a concentration in biology and chemistry from UAB. Prior to joining the Company, Ms. Barnes worked for the UAB Research Foundation
where she managed intellectual property, negotiated license transactions and facilitated the emergence of new companies based on university
technology. Prior to employment at the UAB Research Foundation, Ms. Barnes practiced corporate law with a prominent law firm in Birmingham,
Alabama. Ms. Barnes is currently a Board member of the Research Triangle Area Association of Corporate Counsel and regularly speaks at
national conferences regarding the pharmaceutical business and at women’s success conferences. She is a 2010 graduate of MOMENTUM,
an organization geared toward building leadership in women.
Charles K. Gayer joined
BioCryst in August 2015 as its Vice President of Global Strategic Marketing and was promoted to Chief Commercial Officer in January 2020.
Prior to joining BioCryst, Mr. Gayer held several U.S. and global commercial leadership roles in competitive rare disease categories at
Talecris Biotherapeutics, Inc., a biopharmaceutical company that was acquired in 2011 by Grifols, S.A., a multinational pharmaceutical
and chemical manufacturer. At Talecris, he led U.S. alpha-1 antitrypsin deficiency marketing and later European sales and marketing. At
Grifols, he led the U.S. marketing team for the combined immune globulin portfolio of the two companies. Prior to joining Talecris, he
spent six years at GlaxsoSmithKline in a range of professional marketing, consumer marketing and sales roles. Mr. Gayer began his career
as a strategic consultant for biopharmaceutical companies and also spent three years as a business analyst at rare disease pioneer Genzyme
Corporation. Mr. Gayer received his B.A. in Politics from Princeton University and his M.B.A. from the Fuqua School of Business at Duke
University.
William P. Sheridan, MBBS,
joined BioCryst in July 2008 as its Chief Medical Officer. Dr. Sheridan spent 15 years in drug development at Amgen Pharmaceuticals,
Inc., most recently as Vice President of North American Medical Affairs from March 2007 to November 2007, prior to joining the Company.
Dr. Sheridan organized and led Amgen’s U.S. Medical Affairs function, making significant contributions to the successful launch
of many compounds, including Aranesp®, Enbrel®, Kineret®, Neulasta® and Sensipar®. In addition to his most recent
position at Amgen, Dr. Sheridan served at the Vice President level in International Medical Affairs, from March 2005 to February 2007;
Global Health Economics, from January 2004 to January 2005; and Outcomes Research, U.S. Medical Affairs and Product Development, from
January 2002 to December 2003. Prior to joining Amgen, Dr. Sheridan practiced medicine at the Royal Melbourne Hospital in Victoria, Australia
as Head of the Bone Marrow Transplant Service. He earned his MB BS degree (M.D. equivalent) at the University of Melbourne in Victoria.
He is a board-certified fellow of the Royal Australasian College of Physicians, with a sub-specialty in hematology and medical oncology.
After leaving Amgen in November 2007 and prior to joining the Company, Dr. Sheridan served as an independent consultant for pharmaceutical
companies, including BioCryst.
Megan T. Sniecinski
joined BioCryst in July 2019 as Chief Business Officer. Before joining BioCryst, Ms. Sniecinski served as Senior Vice President of Business
Operations and Program Management at PTC Therapeutics, Inc., a global biopharmaceutical company, from 2017 to 2019, and as Vice President,
Business Operations at PTC from 2014 to 2017. Prior to joining PTC, Ms. Sniecinski held various positions at Merck & Co., Inc., a
global health care company, from 2002 to 2014, most recently as Chief of Staff to the President and Director of Business Development and
Strategic Partnerships with Merck Vaccines. Ms. Sniecinski holds a B.S. in Chemical Engineering from the University of Virginia and an
Executive M.B.A. from the Wharton School at the University of Pennsylvania.
COMPENSATION DISCUSSION
AND ANALYSIS
Philosophy and Overview of Compensation
The Compensation Committee (referred to in this section
as the “Committee”) of the Board of Directors has the responsibility for establishing, implementing and monitoring adherence with the Company’s
compensation philosophy. Our goal is to provide a compensation package that attracts, incentivizes, and retains employees and is designed
to align employees’ interests with the Company’s corporate strategies and business objectives and the interests of the stockholders.
We refer to the individuals who served as our Chief Executive Officer, or CEO, and Chief Financial Officer, or CFO, during 2020, along
with our next three most highly compensated executive officers during 2020, as our “Named Executive Officers.” The compensation
of our Named Executive Officers is discussed in this Compensation Discussion and Analysis and included in the Summary Compensation Table.
Our Named Executive Officers for 2020 are:
|
·
|
Jon P. Stonehouse, the Company’s President and Chief Executive Officer;
|
|
·
|
Thomas R. Staab, II, the Company’s Former Senior Vice President and Chief Financial Officer (Mr. Staab
departed from the Company in February 2020);
|
|
·
|
Anthony J. Doyle, the Company’s Chief Financial Officer (Mr. Doyle joined the Company in April 2020);
|
|
·
|
Yarlagadda S. Babu, Ph.D., the Company’s Chief Discovery Officer;
|
|
·
|
William P. Sheridan, MBBS, the Company’s Chief Medical Officer; and
|
|
·
|
Megan T. Sniecinski, the Company’s Chief Business Officer.
|
Our executive compensation program is based on
market best practices and is designed to ensure that it is appropriately risk-based and competitive with similar companies in our industry.
The Committee’s primary objectives for our executive compensation program are as follows:
|
·
|
to have a substantial portion of each officer’s compensation contingent upon the Company’s performance as well as upon his
or her own level of performance and contribution toward the Company’s performance and long-term strategic goals;
|
|
·
|
to reward executives for actions that create short-term and long-term sustainable stockholder value, with a strong focus on Company results;
|
|
·
|
to align the interests of our executives with the Company’s corporate strategies, business objectives, and the long-term interests
of our stockholders; and
|
|
·
|
to attract, incentivize, and retain our executive talent.
|
Role of the Compensation Committee and Executive Officers
The Committee has the authority
to determine the Company’s compensation philosophy, assess overall corporate performance for the year and its impact on the bonus
pool, options pool and base salary adjustment pool, and to establish compensation for the Company’s executive officers. The Company
does not conduct annual individual performance reviews; rather, compensation decisions for each individual employee, including the CEO
and the other Named Executive Officers, have been determined by the Committee based on its assessment of the performance of the Company.
Management recommended this approach as a mechanism to align the incentives of every employee with those of the Company’s stockholders
and to reinforce the highly focused corporate strategy of the Company. The CEO makes recommendations to the Committee with respect to
employee compensation. Neither the CEO nor any other Named Executive Officer participates in the Committee’s final determination
of compensation for officers or directors.
Role of Compensation Consultants
It is the practice of the
Company to use a compensation consultant to perform an annual competitive compensation analysis of the Company’s overall compensation
practices. Since 2015, the Committee has engaged Radford, which is part of the Rewards Solutions practice at Aon plc (“Radford”),
as the Company’s compensation consultant to conduct the overall analysis of the Company’s compensation practices and those
of comparable companies in the biotechnology industry.
Under the direction of the
Committee, Radford annually conducts an analysis of overall compensation practices, including benchmark comparisons of base salary, annual
incentive targets and stock option grant levels against a “peer group” of comparable companies discussed in more detail below.
The results of this analysis are reviewed by the Committee in connection with its annual compensation decisions, including base salary
determinations, annual incentive targets and long-term equity grant levels.
Peer Group and the Use of Market Data
While the Company does not
establish compensation levels based solely on benchmarking, pay practices at other companies are an important factor that the Committee
considers in assessing the reasonableness of compensation and ensuring that our compensation practices are competitive in the marketplace.
In order to evaluate the level of compensation for our Named Executive Officers, the Committee, using information provided by Radford,
establishes a peer group of publicly traded, national, and regional companies in the biopharmaceutical and biotechnology industries (the
“Peer Group”) that generally:
|
·
|
are similar to the Company in terms of one or more of the following: size (i.e., employee headcount, revenue,
market capitalization, etc.), stage of development for primary products, cash runway, and research and development investment;
|
|
·
|
have named executive officer positions that are comparable to the Company’s in terms of breadth, complexity,
and scope of responsibilities; and
|
|
·
|
compete with the Company for employee talent.
|
Each Peer Group company participates
in a Radford survey of executive total compensation for various corporate positions, which survey is widely used among biotechnology companies.
Radford analyzes both survey data and compensation information reported in the public filings of the Peer Group companies for the comparative
analysis and adjusts the data to reflect the age of the reported information. The 2019 Peer Group, which the Committee approved in September
2019 and used when making determinations for our 2020 base salary and Annual Incentive Plan (“AIP”) target adjustments, consisted
of the following 23 peer companies, which had market capitalization ranging from approximately $100 million to $1.0 billion and under
300 employees:
·
Achillion Pharmaceuticals
|
·
ChemoCentryx
|
·
Epizyme
|
·
Karyopharm Therapeutics
|
·
Agenus
|
·
Chimerix
|
·
Esperion Therapeutics
|
·
MacroGenics
|
·
Aimmune Therapeutics
|
·
Concert Pharmaceuticals
|
·
ImmunoGen
|
·
Omeros
|
·
Ardelyx
|
·
Cytokinetics
|
·
Inovio Pharmaceuticals
|
·
Progenics Pharmaceuticals
|
·
Atara Biotherapeutics
|
·
Dicerna Pharmaceuticals
|
·
Intra-Cellular Therapies
|
·
Rigel Pharmaceuticals
|
·
Cara Therapeutics
|
·
Dynavax Technologies
|
·
KalVista Pharmaceuticals
|
|
In September 2020, the Committee approved the 2020
Peer Group. The 2020 Peer Group, which the Committee used when making determinations for our December 2020 long-term equity incentive
awards and 2021 base salary and AIP target adjustments, consisted of the following 22 peer companies, which had market capitalization
ranging from approximately $250 million to $2.5 billion and 50-400 employees, reflecting our growth from 2019:
·
Agenus
|
·
Cytokinetics
|
·
ImmunoGen
|
·
Omeros
|
·
Ardelyx
|
·
Dicerna Pharmaceuticals
|
·
Intra-Cellular Therapies
|
·
Rhythm Pharmaceuticals
|
·
Atara Biotherapeutics
|
·
Dynavax Technologies
|
·
KalVista Pharmaceuticals
|
·
Rigel Pharmaceuticals
|
·
Cara Therapeutics
|
·
Epizyme
|
·
Karyopharm Therapeutics
|
·
Tricida
|
·
Chimerix
|
·
Esperion Therapeutics
|
·
MacroGenics
|
·
Zogenix
|
·
Concert Pharmaceuticals
|
·
G1 Therapeutics
|
|
|
Role of the 2020 Advisory Vote on Executive
Compensation
At our annual meeting in
May 2020, our stockholders approved our “say-on-pay” proposal with more than 95% of the votes cast (exclusive of abstentions
and broker non-votes) approving our executive compensation policies as described in our 2020 Proxy Statement filed with the SEC on March
31, 2020. The Committee believes that this vote reflected stockholder agreement with the Committee’s overall compensation philosophy
and actions, and therefore, the Committee continued to apply similar principles in determining the amounts and types of executive compensation
for fiscal 2020, with specific compensation decisions to be made each year in consideration of these principles and the Company’s
results and performance. In order to align employee incentives to stockholder interests, the performance of each employee, including that
of the CEO and other Named Executive Officers, is evaluated based on the Committee’s assessment of the overall performance of the
Company. The Committee will continue to consider the outcome of stockholder say-on-pay votes in making future executive compensation decisions.
Elements of Executive Compensation
The Company’s 2020 compensation program
for executive officers was primarily comprised of the following elements:
|
·
|
annual incentive compensation;
|
|
·
|
long-term equity incentive awards; and
|
|
·
|
other employee benefits.
|
Base Salary
The Company provides our
employees with base salary to compensate them for services rendered during the fiscal year. In determining the base salary amount for
each Named Executive Officer, the Committee primarily considers:
|
·
|
industry experience, knowledge, and qualifications;
|
|
·
|
salary levels in effect for comparable positions within the Company’s industry obtained from the Radford
Biotechnology Survey; and
|
|
·
|
individual performance of the executive and the general performance of the Company.
|
The Company’s compensation
practice is to generally target the competitive 50th percentile for base salary, annual incentive compensation and long-term equity grants.
Base salary levels for our Named Executive Officers may fluctuate from the 50th percentile based on each Named Executive Officer’s
particular experience, performance and value to the Company. For example, high-performing, experienced Named Executive Officers may be
paid at or above the 75th percentile, while newer Named Executive Officers may be paid at a lower percentile. Base salary amounts are
typically reviewed annually as part of the Company’s performance review process as well as upon a promotion or other change in responsibility.
To assist the Committee in determining appropriate base salary increases, the Company’s compensation consultant provided competitive
base salary levels by analyzing the competitive data described in more detail above.
In setting 2020 salaries, consistent with its philosophy
for 2019 salaries and given the small number of employees of the Company and the highly focused strategy of the Company, the Committee
did not conduct individual performance reviews but instead assessed all employees based primarily on overall corporate performance while
also giving consideration to individual contributions to corporate performance. The Committee also considered the market competitiveness
of the Company’s executive officer base salaries compared to the 2019 Peer Group based on the analysis prepared by Radford. This
resulted in all of the Named Executive Officers (other than Mr. Staab, who departed from the Company in February 2020; Mr. Doyle, who
joined the Company in April 2020; and Ms. Sniecinski, who joined the Company in July 2019) receiving an approximate 3% increase in base
salary. On November 7, 2019, Mr. Staab and the Company entered into a Separation Agreement in connection with Mr. Staab’s departure
from the Company. See “Employment Agreements of Other Named Executive Officers.” As a result, Mr. Staab did not receive a
2020 base salary increase. Further, in consideration of his prior experience and the 2019 Peer Group analysis prepared by Radford, effective
upon his joining the Company in April 2020, the Committee established a starting base salary for Mr. Doyle of $480,000, slightly exceeding
the 75th percentile compared to the 2019 Peer Group, and approved a $50,000 signing bonus for Mr. Doyle. Ms. Sniecinski joined the Company
in July 2019 and, as a result of her partial year service to the Company, received a 1% increase in base salary.
The results of the 2020 base
salary increases for the Named Executive Officers were as follows:
Name
|
Approximate Percentage Increase
|
2020 Base Salary
|
Jon P. Stonehouse
|
3%
|
$566,500
|
Thomas R. Staab, II
|
0%
|
$462,678
|
Anthony J. Doyle
|
n/a
|
$480,000
|
Yarlagadda S. Babu
|
3%
|
$445,578
|
William P. Sheridan
|
3%
|
$515,146
|
Megan T. Sniecinski
|
1%
|
$456,750
|
In setting 2021 salaries, consistent with its philosophy
for 2020 salaries and given the small number of employees of the Company and the highly focused strategy of the Company, the Committee
did not conduct individual performance reviews but instead continued to assess all employees based primarily on overall corporate performance
while also giving consideration to individual contributions to corporate performance. The Committee also considered the market competitiveness
of the Company’s current executive officer base salaries compared to the 2020 Peer Group based on the analysis prepared by Radford.
This resulted in all of the Named Executive Officers (other than Mr. Staab, who departed from the Company in February 2020, and Mr. Doyle,
who joined the Company in April 2020) receiving an approximate 3% increase in base salary. Mr. Doyle joined the Company in April 2020
and, as a result of his partial year service to the Company, received a 2% increase in base salary. See “Employment Agreements of
Other Named Executive Officers.”
The results of the 2021 base
salary increases for the Named Executive Officers were as follows:
Name
|
Approximate Percentage Increase
|
2021 Base Salary
|
Jon P. Stonehouse
|
3%
|
$583,495
|
Thomas R. Staab, II
|
n/a
|
n/a
|
Anthony J. Doyle
|
2%
|
$490,800
|
Yarlagadda S. Babu
|
3%
|
$458,945
|
William P. Sheridan
|
3%
|
$530,600
|
Megan T. Sniecinski
|
3%
|
$470,453
|
Annual Incentive Plan Compensation
It is the Committee’s objective to have the
entirety of each officer’s annual incentive program compensation contingent upon the Company’s performance based on the achievement
of pre-established corporate performance objectives. Annual incentive payments are made pursuant to the AIP. In determining the 2020 AIP
payouts for each of the Named Executive Officers, the Committee considered overall corporate performance against established corporate
objectives for 2020, individual contributions to corporate performance, and Peer Group market data provided by Radford.
The AIP provides for an incentive
target (expressed as a percentage of annual base salary) for all employees of the Company and is stratified by organization level of responsibility.
For 2020, the Committee conducted an overall evaluation of Company performance in light of Company performance objectives.
The target percentages for
all employees, including each Named Executive Officer, were set based on the benchmark data described below. Based on performance, the
actual payout can range from zero to any amount relative to the target percentage of annual base salary and varies by level in the Company.
The overall amount of the AIP pool each performance year is determined by the Committee and based on its assessment of Company performance
against the current year corporate objectives multiplied by the sum of all participants at target performance. The AIP allows the Committee
to use its discretion in setting the size of the AIP pool. The Committee may decide that the pool is as low as zero for a year of poor
Company performance and may establish a pool that exceeds target for a year of exceptional Company performance.
The Committee annually reviews with Radford the Peer
Group data for non-equity incentive compensation and considers other factors intended to align the AIP with the Committee’s pay-for-performance
philosophy. The Committee maintained the existing targets for the Named Executive Officers in the 2020 plan year, with the exception of
Mr. Staab, who departed from the Company in February 2020 and was not eligible to receive an award under the AIP for 2020. The 2020 AIP
targets for the Named Executive Officers were as follows:
Name
|
2020 AIP Target
(percentage
of base salary)
|
Jon P. Stonehouse
|
75%
|
Anthony J. Doyle
|
40%
|
Yarlagadda S. Babu
|
40%
|
William P. Sheridan
|
40%
|
Megan T. Sniecinski
|
40%
|
Thomas R. Staab, II
|
n/a
|
At the time these targets were set, the Committee
believed that payout at the target performance level was challenging but achievable and that payout above target represented a “stretch”
performance goal, but was nevertheless achievable. In order to further tie individual compensation to Company performance, payout to individuals
under the AIP is based on Company performance and awards under the AIP are typically settled in cash. All awards are reviewed and approved
by the Committee.
The pre-established corporate objectives for 2020
Company performance were:
Objective
|
Description
|
% of Target
|
1
|
Receiving FDA approval for ORLADEYO™ (berotralstat)
for prophylaxis hereditary angioedema (“HAE”).
|
25
|
2
|
Preparing for a successful U.S. commercial launch of ORLADEYO
by the end of 2020.
|
25
|
3
|
Advancing our Factor D program.
|
30
|
4
|
Expanding the Company’s HAE prophylactic commercial
opportunity in other key territories.
|
10
|
5
|
Advancing the Company’s oral rare disease pipeline.
|
10
|
|
|
100%
|
In assessing the Company’s performance against
the pre-established 2020 objectives in December 2020, the Committee assessed the completion of the corporate objectives as described in
the table below. In assessing 2020 Company performance in light of the 2020 objectives, the Committee in its discretion attributed the
values set forth in the table below to the achievement of each of the Company objectives. In consideration of these results, the Committee
awarded payouts under the AIP at 125% of target for each recipient.
Objective
|
Committee
Determination
|
Rationale
|
%
of Target
|
1
|
Met
|
The Company received FDA approval for
ORLADEYO on December 3, 2020.
|
25
|
2
|
Exceeded
|
The Company’s sales force and promotional
campaign launched on the first day after the Company’s receipt of FDA approval for ORLADEYO, and the first shipment was available
within 13 days of approval.
|
40
|
3
|
Exceeded
|
Proof-of-concept data for BCX9930 paroxysmal
nocturnal hemoglobinuria (“PNH”) was available in the second quarter of 2020, and further progress, including discussions
with regulators, was made to accelerate the development of our Factor D program.
|
40
|
4
|
Met
|
The Company made significant progress
in the filing and review process for approvals of ORLADEYO in Japan and the European Union.
|
10
|
5
|
Met
|
The Company has made
progress in advancing its oral rare disease pipeline, including successful completion of the phase 1 healthy volunteer trial
of BCX9250 for fibrodysplasia ossificans progressiva (“FOP”).
|
10
|
|
|
125%
|
Long-Term Equity Incentive Awards
All of the Company’s
employees, including the Named Executive Officers, are eligible to participate in the Company’s periodic awards of stock options
and other stock grants under the Company’s Stock Incentive Plan. These awards are designed to:
|
·
|
create a greater sense of employee ownership;
|
|
·
|
enhance the link between creation of stockholder value and long-term employee compensation;
|
|
·
|
provide an opportunity for increased equity ownership by employees, which increases the alignment of the financial
interests of our employees and our stockholders; and
|
|
·
|
maintain competitive levels of total compensation.
|
The Committee has historically
granted equity awards to all employees, including the executive officers, on an annual basis. The overall grant pool is established on
an annual basis based, in part, on the Committee’s assessment of competitive stock option grant levels by organization level and
the number of employees at each level using competitive data provided by Radford based on its analysis of the Company’s current
Peer Group. In determining the amount of each grant, the Committee also considers the Company performance, assessed on an annual basis.
Equity Awards Granted in 2020
In setting the levels of long-term equity incentive
awards in December 2020, the Committee assessed the Company’s performance against the corporate performance objectives for 2020,
as described above under the caption “Annual Incentive Plan Compensation,” and in reviewing the analysis provided by Radford
regarding the Company’s 2020 Peer Group equity compensation practices and the number of shares of Common Stock available for grant
under the Company’s Stock Incentive Plan, the Committee determined to grant long-term equity incentive awards at a level representing
approximately the 50th percentile of comparative companies based on the 2020 Peer Group data provided by Radford, with certain additional
long-term equity incentive awards to be granted to selected individuals in light of the particular individual contributions made by such
individuals to 2020 Company performance. The Committee further determined that, after evaluating current trends and reviewing the intended
purpose of this program, the long-term equity incentive awards for 2020 performance should consist 100% of stock options and no restricted
stock units. Exercising its discretion in consideration of the foregoing factors, in December 2020, the Committee awarded options to the
Named Executive Officers (other than Mr. Staab, who departed from the Company in February 2020) as set forth in the table below.
Name
|
Options (#)
|
Jon P. Stonehouse
|
870,000
|
Anthony J. Doyle
|
332,500
|
Yarlagadda S. Babu
|
280,000
|
William P. Sheridan
|
335,000
|
Megan T. Sniecinski
|
225,000
|
The stock options granted
in December 2020 to the Named Executive Officers vest 25% annually on each of the first four anniversaries of the date of the grant, until
fully vested on the fourth anniversary, and expire ten years after the date of the grant. This provides a reasonable timeframe during
which the executive officers and other employees who receive grants can benefit from the appreciation of the Company’s shares. The
exercise price of options granted under the Stock Incentive Plan cannot be less than 100% of the fair market value of the underlying stock
on the date of grant.
In connection with his appointment as the Company’s
new Chief Financial Officer in April 2020, the Committee awarded to Mr. Doyle options to purchase 600,000 shares of Common Stock, 200,000
of which will vest on the first anniversary of the date of the grant or on the date of Mr. Doyle’s termination if he is terminated
as a result of a reduction in force prior to such date, and the remainder of which will vest in three equal annual installments on the
second, third, and fourth anniversaries of the date of the grant. These awards were granted to Mr. Doyle on April 30, 2020 pursuant to
the Company’s Inducement Equity Incentive Plan and Stock Incentive Plan and were in addition to the stock options he received in
December 2020.
Vesting of Prior Year Performance-Based Equity Awards
As set forth below, certain long-term, performance-based
equity grants awarded in prior years vested in 2020 upon achievement of specified performance goals.
On February 18, 2020, the Company announced that the
U.S. Food and Drug Administration (“FDA”) had accepted and filed the Company’s new drug application for the approval
of ORLADEYO for the prevention of HAE attacks. As a result, one of the vesting criteria associated with the performance-based stock options
awarded (a) to Mr. Stonehouse on January 1, 2015 and (b) to Mr. Staab, Dr. Babu, and Dr. Sheridan on December 22, 2014 was satisfied.
Therefore, 35% of the performance-based stock options vested as follows:
Name
|
Vesting Date
|
Options Vested (#)
|
Exercise Price ($)
|
Expiration Date
|
Jon P. Stonehouse
|
2/14/2020
|
47,495
|
12.16
|
1/1/2025
|
Thomas R. Staab, II
|
2/14/2020
|
31,500
|
11.13
|
12/22/2024
|
Yarlagadda S. Babu
|
2/14/2020
|
31,500
|
11.13
|
12/22/2024
|
William P. Sheridan
|
2/14/2020
|
39,550
|
11.13
|
12/22/2024
|
On February 21, 2020, the Company received payment
for 20,000 doses of RAPIVAB® (peramivir injection) delivered to the U.S. Department of Health and Human Services under the Company’s
procurement contract. As a result, one of the vesting criteria associated with the performance-based stock options awarded (a) to Mr.
Stonehouse on January 1, 2015 and (b) to Mr. Staab, Dr. Babu, and Dr. Sheridan on December 22, 2014 was satisfied. Therefore, 20% of the
performance-based stock options vested as follows:
Name
|
Vesting Date
|
Options Vested (#)
|
Exercise Price ($)
|
Expiration Date
|
Jon P. Stonehouse
|
2/21/2020
|
27,140
|
12.16
|
1/1/2025
|
Thomas R. Staab, II
|
2/21/2020
|
18,000
|
11.13
|
12/22/2024
|
Yarlagadda S. Babu
|
2/21/2020
|
18,000
|
11.13
|
12/22/2024
|
William P. Sheridan
|
2/21/2020
|
22,600
|
11.13
|
12/22/2024
|
On May 13, 2020, the Board determined that the initial
data from part 3 of the BCX9930 phase 1 clinical trial represented successful results from a proof-of-concept study of BCX9930. As a result,
one of the vesting criteria associated with the performance-based stock options awarded to Mr. Stonehouse on December 17, 2019 was satisfied.
Therefore, 50% of such performance-based stock options vested upon satisfaction of the minimum one-year vesting period under the Stock
Incentive Plan as follows:
Name
|
Vesting Date
|
Options Vested (#)
|
Exercise Price ($)
|
Expiration Date
|
Jon P. Stonehouse
|
12/18/2020
|
157,250
|
3.23
|
12/17/2029
|
On December 3, 2020, the FDA approved ORLADEYO for
prophylaxis to prevent HAE attacks in adults and pediatric patients 12 years and older. As a result, one of the vesting criteria associated
with the performance-based stock options awarded to Mr. Stonehouse, Dr. Babu, and Dr. Sheridan on August 8, 2013 was satisfied. Therefore,
25% of such performance-based stock options vested as set forth in the table below. The FDA approval also resulted in one of the vesting
criteria associated with the performance-based stock options awarded to Mr. Stonehouse on December 17, 2019 being satisfied. Therefore,
50% of such performance-based stock options vested upon satisfaction of the minimum one-year vesting period under the Stock Incentive
Plan as set forth below.
Name
|
Vesting Date
|
Options Vested (#)
|
Exercise Price ($)
|
Expiration Date
|
Jon P. Stonehouse
|
12/3/2020
|
25,000
|
5.45
|
8/8/2023
|
12/18/2020
|
157,250
|
3.23
|
12/17/2029
|
Yarlagadda S. Babu
|
12/3/2020
|
17,000
|
5.45
|
8/8/2023
|
William P. Sheridan
|
12/3/2020
|
17,000
|
5.45
|
8/8/2023
|
Clawback Policy
In January 2013, our Board
implemented a “clawback” policy. The policy provides that in the event of material noncompliance with financial reporting
under the securities laws, we may recover (in whole or in part) any performance-based incentive payments and equity-based performance
awards received by any of our named executive officers in the three years prior to a material financial restatement, if the Board determines
that such executive officer was personally involved in misconduct with respect to material noncompliance that led to the restatement and
that such incentive payment or equity-based performance award would have been lower had it been calculated based on the restated results.
Other Elements of Compensation
In order to attract and retain
key talent and pay market levels of compensation, we offer broad-based retirement, health and welfare employee benefits to our eligible
employees, including our Named Executive Officers, subject to the terms and conditions of each benefit program. Our Named Executive Officers
are eligible to participate in these benefits on the same basis as other full-time employees.
Medical Insurance.
The Company makes available to eligible employees and their dependents group health, dental and vision insurance coverage.
Life and Disability
Insurance. The Company makes available disability and life insurance at coverage levels based upon the employee’s level
of compensation. In addition, as part of Mr. Stonehouse’s employment agreement, he is entitled to have either a $1 million life
insurance policy payable to his beneficiary upon death, or, if there is no policy in place, we are required to pay his beneficiary $1
million upon his death. An insurance policy was in place at December 31, 2020.
Defined Contribution
Plan. The Company offers a retirement plan designed to meet the requirements under Section 401(k) of the Internal Revenue Code.
The 401(k) plan permits eligible employees to defer up to 100% of their annual eligible compensation, subject to certain limitations imposed
by the Internal Revenue Code. Employee elective deferrals are immediately vested and non-forfeitable. The Company makes matching contributions
equal to the first 5% of the employee elective deferrals, which vest over a period not to exceed six years.
Stock Purchase Plan.
The Company sponsors a broad-based employee stock purchase plan (the “ESPP”), designed to meet the requirements under
Section 423 of the Internal Revenue Code. The ESPP permits employees to purchase Company stock at a discount through payroll deductions.
ESPP participants are granted a purchase right to acquire shares of Common Stock at a price that is 85% of the stock price on either the
first day of the stock purchase period or the last day of the stock purchase period, whichever is lower. The purchase dates occur on the
last business days of January and July of each year. To pay for the shares, each participant may authorize periodic payroll deductions
from 1% to 15% of the employee’s cash compensation, subject to certain limitations imposed by the Internal Revenue Code. In addition,
no employee may purchase more than 3,000 shares in each purchase period and/or $25,000 in each calendar year. All payroll deductions collected
from the participant during the purchase period are automatically applied to the purchase of Common Stock on the dates indicated above
provided the participant remains an eligible employee and has not withdrawn from the ESPP prior to the purchase date. See Proposal 5 of
this Proxy Statement for additional discussion of the ESPP and the proposed amendment to increase the number of shares available for issuance
under the ESPP.
Other. With
the exception of the commuting expense reimbursements described below and the relocation expenses described below under the caption “Executive
Relocation Policy,” the Company makes available certain other fringe benefits to executive officers that are the same as are made
available to its other employees, such as tuition reimbursement and payment of professional dues. The aggregate amount of these other
fringe benefits was less than $10,000 for each Named Executive Officer during 2020.
Executive Relocation
Policy. In November 2007, the Board approved the Committee’s recommended adoption of an Executive Relocation Policy (the
“Relocation Policy”) for certain new employees of the Company, including executive officers. The Relocation Policy provides
for a house hunting trip, temporary living and trips home for up to 90 days, home selling support or direct reimbursement for some selling
expenses, moving costs and temporary storage of goods, customary closing expenses on the new home, a miscellaneous allowance of one month’s
salary, not to exceed $5,000, and gross up of all taxable expenses. The Relocation Policy requires 100% repayment of benefits if the employee
leaves or is terminated for cause within 12 months from the hire date. In 2020, the Company paid relocation expenses and “gross
up” payments to Ms. Sniecinski in the amounts of $23,033 and $18,542, respectively.
Employment Agreement of CEO
Mr. Stonehouse entered into
a one-year employment agreement with the Company on January 5, 2007 that automatically renews for successive annual terms. Under the terms
of that agreement, Mr. Stonehouse’s minimum annual compensation was $400,000 with the potential to earn a cash bonus of up to $300,000
based on the Company’s achievement of performance-related goals. Mr. Stonehouse’s current base salary and annual incentive
compensation levels are described above under the headings “Elements of Executive Compensation—Base Salary and —Annual
Incentive Plan Compensation.” In addition, Mr. Stonehouse is entitled to receive reasonable vacation, sick leave, medical benefits,
$1 million of life insurance during the term of his employment, participation in profit sharing or retirement plans, payment of fees for
his participation in the advisory council at Duke University, and reimbursement for reasonable attorneys’ fees incurred in connection
with the negotiation of his employment agreement. His agreement also provided for stock option and restricted stock awards. The termination
and change in control provisions of Mr. Stonehouse’s agreement are set forth under the heading “Potential Payments Upon Termination
or Change in Control.”
Employment Agreements of Other Named Executive Officers
Under Mr. Staab’s agreement, effective May 2011,
he was entitled to a base salary of $370,000 and eligible for an annual cash bonus of up to 30% of his base salary. In November 2019,
we announced that Mr. Staab would step down from the Company effective February 29, 2020. In connection with his departure, Mr. Staab
and the Company entered into a Separation Agreement dated November 7, 2019 (the “Separation Agreement”) providing for severance
pay in the amount of $647,750, which amount we agreed to pay in installments to be completed no later than March 15, 2021. In addition,
the Separation Agreement provided that the Company would reimburse Mr. Staab for COBRA premiums that Mr. Staab actually paid to continue
his coverage under the Company’s group health/dental plan for up to 18 months following his effective termination date, which amount
is expected to total $56,974. Furthermore, on November 7, 2019, Mr. Staab and the Company entered into a Consulting Agreement, effective
as of February 29, 2020, providing that Mr. Staab would serve as a consultant to the Company for a period of up to four months following
his departure to assist with the transition and with certain ongoing matters as requested by the Company from time to time. For his service
to the Company as a consultant, Mr. Staab received a consulting fee of $5,000 per month and an hourly rate of $295 per hour for services
in excess of 17 hours per month.
In April 2020, we entered into an employment agreement
with Mr. Doyle, pursuant to which he was entitled to an initial base salary of $480,000, a $50,000 signing bonus payable no later than
six months after the effective date of his employment agreement, and a bonus based on a target amount equal to at least 40% of his base
compensation. We have also entered into employment agreements with each of our other Named Executive Officers, which provided for initial
base salaries and target bonus percentages; however, such salaries and target bonus percentages have changed over time. Current base salary
and annual incentive compensation levels for each of our Named Executive Officers are described above under the headings “Elements
of Executive Compensation—Base Salary and —Annual Incentive Plan Compensation.” In addition, each employment agreement
provides for certain benefits upon a termination or change in control, as described below under “Potential Payments Upon Termination
or Change in Control.” We believe that the benefits provided to our Named Executive Officers, including Mr. Stonehouse, upon a termination
or change in control are necessary to secure the employment of talented individuals to serve as our executives and to ensure each Named
Executive Officer remains focused upon potential transactions, as applicable, that are beneficial to our stockholders without concern
for any potential negative impact to their outstanding awards or employment.
Stock Options
The stock option provisions
for the other Named Executive Officers are the same as all other employees. In the event of termination of service other than on account
of death or disability, each executive has three months to exercise any options exercisable prior to the termination in service. In the
event of permanent disability, the executive will be able to exercise all outstanding options vested at the time of such disability in
their entirety within the earlier of 12 months or the expiration of the option. In the event of death, the executor of his or her estate
will be able to exercise all of the outstanding options in their entirety within the earlier of 12 months or the expiration of the option.
If the executive has completed five years of service, all outstanding options vest in their entirety at death, but with less than five
years of service, only the portion of the option that was exercisable at the time of death will be exercisable during the 12-month period.
As with all employees, if the executive is no longer an employee of the Company, but prior to the last date of employment continues service
with the Company in another capacity, such as service as a consultant or service as a member of the Board of Directors, his or her outstanding
options will continue to vest and be exercisable until three months after separation from such service or expiration of the option. Upon
termination, each Named Executive Officer is entitled to receive amounts earned during the term of employment. These items are: accrued
vacation pay, vested amounts payable under the Company’s 401(k) plan, and the ability to exercise any outstanding vested stock options
for a period of three months following the final date of employment.
In addition, upon death or
disability, the executive, or beneficiary in the event of death, will receive benefits under the Company’s disability benefit program
or payments under a life insurance policy, as applicable.
With respect to stock options
granted prior to April 3, 2017, the standard stock option terms for all optionees, including the Named Executive Officers, provides for
full acceleration of vesting upon a change in control not approved by stockholders, such as: (i) acquisition of over 50% of the combined
voting power of the Company, and (ii) change in composition of the Board over a period of 24 consecutive months or less such that a majority
of the Board members ceases as a result of one or more contested elections. In the event of an acquisition such as: (i) a merger or consolidation,
(ii) the sale, transfer or other disposition of all or substantially all of the assets of the Company in liquidation or dissolution of
the Company, or (iii) any reverse merger in which the Company is the surviving entity but in which securities possessing more than 50%
of the total combined voting power of the Company’s outstanding securities are transferred to a person or persons different from
the persons holding those securities immediately prior to such merger, then the unvested options of the optionees granted prior to April
3, 2017 are accelerated unless the options are assumed by the acquiring company. However, options granted on or after April 3, 2017 are
subject to “double trigger” vesting if the options are assumed after a change in control, in which case accelerated vesting
will apply only if the optionee’s service is terminated by us without “cause” or by the optionee due to a “constructive
termination” within 90 days preceding or two years following the change in control. If the options are not assumed in connection
with the change in control, they will fully vest upon the change in control. These provisions are superseded by the provisions of the
employment agreements of the Named Executive Officers, if applicable, as described under the heading “Potential Payments Upon Termination
or Change in Control.”
Policy Regarding Tax Deductibility of Compensation
Section 162(m) of the Internal
Revenue Code limits our ability to deduct compensation paid to certain of our current and former Named Executive Officers (the covered
employees) for tax purposes to $1 million annually. This limitation does not apply to “performance-based compensation” (such
as stock options) granted prior to November 3, 2017, provided certain conditions are satisfied. However, the performance-based exception
does not apply to awards granted on or after November 3, 2017. As part of its role, the Committee reviews and considers the deductibility
of compensation with respect to Section 162(m) of the Internal Revenue Code. The application of Section 162(m) is complex and may change
with time (with potentially retroactive effect). While the Committee considers the deductibility of awards as one factor in determining
executive compensation, the Committee also looks at many other factors in making its decisions and retains the flexibility to grant awards
it determines to be consistent with the Company’s overall compensation philosophy, even if the award is not deductible by the Company
for tax purposes.
Policy with Respect to Equity Compensation
Awards
The Company grants all equity
incentive awards based on the fair market value as of the date of grant. The exercise price for stock option grants and similar awards
is determined by reference to the last quoted price per share on the Nasdaq Global Select Market at the close of business on the date
of grant.
Risk Assessment of Compensation Programs
Management of the Company,
together with the Company’s compensation consultant and outside counsel and Compensation Committee, has examined the Company’s
compensation program and discussed whether any elements of the program created risks that were reasonably likely to have a material adverse
effect on the Company. Following this analysis, management concluded that the elements of the Company’s compensation program did
not create risks that are reasonably likely to have a material adverse effect on the Company. In its analysis, management considered a
number of factors, including primarily: (1) the total value of the payments made under the Company’s compensation program for the
prior year and (2) that any corporate actions that would potentially lead to achievement of corporate performance objectives would require
approval by the Company’s Board of Directors, which provides a check on the ability of any individual to take risks that could have
a material adverse effect on the Company in an effort to achieve a certain performance objective.
Compensation
Committee Report
The Compensation Committee
reviewed the Compensation Discussion and Analysis and discussed its contents with Company management. Based on such review and discussions,
the Committee recommended that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference
into the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020.
Nancy J. Hutson, Ph.D., Chair of the Committee
Stephen J. Aselage
Robert A. Ingram
EXECUTIVE COMPENSATION
2020 Summary Compensation Table
The following table sets
forth the total compensation awarded, paid to or earned by the individuals who served as our CEO and CFO during 2020, along with the next
three most highly compensated executive officers during 2020.
Name and Principal Position
|
|
Year
|
|
Salary ($)
|
|
Bonus ($)
|
|
Option
Awards ($)(1)
|
|
Non-Equity Incentive
Plan Compensation ($)(2)
|
|
All Other
Compensation ($)(3)
|
|
Total ($)
|
Jon P. Stonehouse
President, Chief Executive Officer and Director
|
|
2020
|
|
566,500
|
|
-
|
|
|
4,916,022
|
|
|
531,094
|
|
21,325
|
(4)
|
|
6,034,941
|
2019
|
550,000
|
-
|
|
|
1,368,767
|
|
350,625
|
14,905
|
|
2,284,297
|
2018
|
550,000
|
-
|
|
|
3,277,800
|
|
325,188
|
14,655
|
|
4,167,643
|
Thomas R. Staab II (5)
Former Senior Vice President and Chief Financial Officer
|
|
2020
|
|
77,113
|
|
-
|
|
|
-
|
|
|
-
|
|
615,677
|
(6)
|
|
692,790
|
2019
|
462,679
|
-
|
|
|
276,365
|
|
157,311
|
|
14,000
|
|
910,354
|
2018
|
449,203
|
-
|
|
|
1,141,160
|
|
193,157
|
|
13,750
|
|
1,797,270
|
Anthony J. Doyle (7)
Chief Financial Officer
|
|
2020
|
|
345,455
|
|
50,000
|
(8)
|
|
3,468,225
|
(9)
|
|
240,000
|
|
14,250
|
|
|
4,117,930
|
Yarlagadda S. Babu, Ph.D.
Chief Discovery Officer
|
|
2020
|
|
445,578
|
|
-
|
|
|
1,582,168
|
|
|
222,789
|
|
14,250
|
|
|
2,264,785
|
2019
|
432,600
|
-
|
|
|
489,623
|
|
147,084
|
14,000
|
|
1,083,307
|
2018
|
420,000
|
-
|
|
|
1,141,160
|
|
180,600
|
13,750
|
|
1,755,510
|
William P. Sheridan, MBBS
Chief Medical Officer
|
|
2020
|
|
515,146
|
|
-
|
|
|
1,892,951
|
|
|
257,573
|
|
14,250
|
|
|
2,679,920
|
2019
|
500,142
|
-
|
|
|
382,994
|
|
170,048
|
14,000
|
|
1,067,183
|
2018
|
485,574
|
-
|
|
|
1,626,760
|
|
208,797
|
28,088
|
|
2,349,219
|
Megan T. Sniecinski (10)
Chief Business Officer
|
|
2020
|
|
456,750
|
|
-
|
|
|
1,271,385
|
|
|
228,375
|
|
55,825
|
(11)
|
|
2,012,335
|
2019
|
225,000
|
-
|
|
|
1,773,364
|
|
153,000
|
25,590
|
|
2,176,954
|
|
(1)
|
These amounts reflect the aggregate grant date fair value for the fiscal years ended
December 31, 2020, December 31, 2019, and December 31, 2018, computed in accordance with FASB ASC Topic 718, of awards pursuant to the
Stock Incentive Plan or Inducement Equity Incentive Plan, as applicable. Assumptions used in the calculation of these amounts are included
in Note 8 to the Company’s audited consolidated financial statements for the year ended December 31, 2020, and Note 7 to the Company’s
audited consolidated financial statements for the years ended December 31, 2019 and December 31, 2018, which are included in the Company’s
Annual Reports on Form 10-K filed with the SEC on March 1, 2021, March 13, 2020, and March 14, 2019, respectively.
|
|
(2)
|
Represents payments earned under the AIP. Values shown reflect the full calculated
payout of the incentive awards under the AIP.
|
|
(3)
|
Except as otherwise noted, the amounts shown reflect the Company contribution for the
executive to the 401(k) plan.
|
|
(4)
|
Consists of Company contributions to the 401(k) plan and life insurance premiums described
above under the caption “Other Elements of Compensation⸻Life and Disability Insurance.” For 2020, such amounts were
$14,250 and $7,075, respectively.
|
|
(5)
|
Mr. Staab departed from the Company in February 2020.
|
|
(6)
|
Consists of Company contributions to the 401(k) plan, severance pay and COBRA premiums
under a Separation Agreement entered into between the Company and Mr. Staab in connection with his departure from the Company, and consulting
fees under a Consulting Agreement with Mr. Staab. For 2020, such amounts were $12,463, $539,792, $33,908, and $29,514, respectively. See
“Employment Agreements of Other Named Executive Officers” for additional detail regarding these arrangements with Mr. Staab.
|
|
(7)
|
Mr. Doyle joined the Company on April 2, 2020.
|
|
(8)
|
Upon joining the Company in April 2020, Mr. Doyle was entitled to receive a $50,000
signing bonus, payable on or before the sixth month anniversary of the effective date of his employment agreement.
|
|
(9)
|
Includes 500,000 stock options awarded pursuant to the Inducement Equity Incentive Plan
and 100,000 stock options awarded pursuant to the Stock Incentive Plan in connection with the commencement of Mr. Doyle’s employment
in April 2020.
|
|
(10)
|
Ms. Sniecinski joined the Company on July 1, 2019.
|
|
(11)
|
Consists of Company contributions to the 401(k) plan, relocation expense reimbursements
and tax “gross-up” payments related to such relocation expenses, each as described above under the caption “Other Elements
of Compensation - Executive Relocation Policy.” For 2020, such amounts were $14,250, $23,003, and $18,542, respectively.
|
Grants of Plan-Based Awards in 2020
The following table provides
information about plan-based awards granted during 2020 to our Named Executive Officers.
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payments Under
Non-Equity Incentive Plan Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
|
Grant Date
|
|
|
|
Compensation Committee Action
|
|
|
|
Threshold ($)
|
|
|
|
Target ($)(1)
|
|
|
|
Maximum ($)
|
|
|
|
All Other Option Awards: Number of Securities
Underlying Options (#)(2)
|
|
|
|
Exercise or Base Price of Option Awards
($/Sh)(3)
|
|
|
|
Grant Date Fair Value of Stock and Option
Awards ($)(4)
|
|
Jon P. Stonehouse
|
|
|
12/15/20
|
|
|
|
12/14/20
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
870,000
|
|
|
|
8.31
|
|
|
|
4,916,022
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
424,875
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Thomas R. Staab II
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Anthony J. Doyle
|
|
|
4/30/20
|
|
|
|
3/29/20
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
600,000
|
(5)
|
|
|
4.91
|
|
|
|
1,589,400
|
|
|
|
|
12/15/20
|
|
|
|
12/14/20
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
332,500
|
|
|
|
8.31
|
|
|
|
1,878,825
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
192,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Yarlagadda S. Babu, Ph.D.
|
|
|
12/15/20
|
|
|
|
12/14/20
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
280,000
|
|
|
|
8.31
|
|
|
|
1,582,168
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
178,231
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
William P. Sheridan, MBBS
|
|
|
12/15/20
|
|
|
|
12/14/20
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
335,000
|
|
|
|
8.31
|
|
|
|
1,892,591
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
206,058
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Megan T. Sniecinski
|
|
|
12/15/20
|
|
|
|
12/14/20
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
225,000
|
|
|
|
8.31
|
|
|
|
1,271,385
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
182,700
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
(1)
|
Represents possible payouts under our AIP. The amount shown in the “Target” column represents
the incentive payment that will be earned if performance is assessed at target. There is no specific “threshold” amount payable
for minimal performance under the AIP or “maximum” amount payable for performance in excess of target under the AIP. Payout
could be zero if corporate objectives are not met. In addition, the Committee has discretion to establish a payout that exceeds the applicable
target percentage of annual base salary if warranted by Company performance.
|
|
(2)
|
Except as otherwise indicated, options vest 25% each year until fully vested after four years and have a term
of ten years.
|
|
(3)
|
The exercise price is the closing market price of our Common Stock on the grant date.
|
|
(4)
|
See note 1 to the Summary Compensation Table above for more information about the assumptions used to determine
these amounts.
|
|
(5)
|
Includes options to purchase 500,000 shares of Common Stock granted under the Inducement Equity Incentive
Plan and options to purchase 100,000 shares of Common Stock granted under the Stock Incentive Plan. The options vest 1/3 on the first
anniversary of the grant date or on the date of Mr. Doyle’s termination if he is terminated as a result of a reduction in force
prior to such date, with the remainder vesting in three equal installments on the second, third and fourth anniversaries of the grant
date.
|
Outstanding Equity Awards at December 31, 2020
The following table summarizes
the equity awards we have made to our Named Executive Officers which were outstanding as of December 31, 2020.
|
|
Option Awards
|
Name
|
|
Number of
Securities
underlying
Unexercised
Options (#)
Exercisable
|
|
Number of
Securities
underlying
Unexercised
Options (#)
Unexercisable
|
|
|
Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned Options (#)
|
|
Option
Exercise
Price ($)
|
|
|
Option
Expiration
Date
|
Jon P. Stonehouse
|
|
|
1
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4.15
|
|
|
|
3/1/2021
|
|
|
|
184,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4.73
|
|
|
|
3/1/2022
|
|
|
|
297,573
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1.42
|
|
|
|
1/1/2023
|
|
|
|
100,000
|
(1)
|
|
|
-
|
|
|
|
-
|
|
|
|
5.45
|
|
|
|
8/8/2023
|
|
|
|
84,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10.80
|
|
|
|
1/20/2024
|
|
|
|
115,345
|
(2)
|
|
|
-
|
|
|
|
20,355
|
(2)
|
|
|
12.16
|
|
|
|
1/1/2025
|
|
|
|
162,950
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10.82
|
|
|
|
12/29/2025
|
|
|
|
337,050
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3.22
|
|
|
|
5/23/2026
|
|
|
|
375,000
|
|
|
|
125,000
|
(3)
|
|
|
-
|
|
|
|
5.51
|
|
|
|
2/27/2027
|
|
|
|
225,000
|
|
|
|
75,000
|
(3)
|
|
|
-
|
|
|
|
5.04
|
|
|
|
12/20/2027
|
|
|
|
337,500
|
|
|
|
337,500
|
(3)
|
|
|
-
|
|
|
|
7.06
|
|
|
|
12/20/2028
|
|
|
|
78,625
|
|
|
|
235,875
|
(3)
|
|
|
-
|
|
|
|
3.23
|
|
|
|
12/17/2029
|
|
|
|
314,500
|
(4)
|
|
|
-
|
|
|
|
-
|
|
|
|
3.23
|
|
|
|
12/17/2029
|
|
|
|
-
|
|
|
|
870,000
|
(3)
|
|
|
-
|
|
|
|
8.31
|
|
|
|
12/15/2030
|
Thomas R. Staab II
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
Anthony J. Doyle
|
|
|
-
|
|
|
|
600,000
|
(5)
|
|
|
-
|
|
|
|
3.91
|
|
|
|
4/30/2030
|
|
|
|
-
|
|
|
|
332,500
|
(3)
|
|
|
-
|
|
|
|
8.31
|
|
|
|
12/15/2030
|
Yarlagadda S. Babu, Ph.D.
|
|
|
50,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4.15
|
|
|
|
3/1/2021
|
|
|
|
62,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4.73
|
|
|
|
3/1/2022
|
|
|
|
50,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1.42
|
|
|
|
1/1/2023
|
|
|
|
50,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1.42
|
|
|
|
1/1/2023
|
|
|
|
68,000
|
(1)
|
|
|
-
|
|
|
|
-
|
|
|
|
5.45
|
|
|
|
8/8/2023
|
|
|
|
35,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10.80
|
|
|
|
1/20/2024
|
|
|
|
76,500
|
(2)
|
|
|
-
|
|
|
|
13,500
|
(2)
|
|
|
11.13
|
|
|
|
12/22/2024
|
|
|
|
42,400
|
|
|
|
-
|
|
|
|
-
|
|
|
|
12.16
|
|
|
|
1/1/2025
|
|
|
|
62,573
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10.82
|
|
|
|
12/29/2025
|
|
|
|
129,427
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3.22
|
|
|
|
5/23/2026
|
|
|
|
131,250
|
|
|
|
43,750
|
(3)
|
|
|
-
|
|
|
|
5.51
|
|
|
|
2/27/2027
|
|
|
|
75,000
|
|
|
|
25,000
|
(3)
|
|
|
-
|
|
|
|
5.04
|
|
|
|
12/20/2027
|
|
|
|
117,500
|
|
|
|
117,500
|
(3)
|
|
|
-
|
|
|
|
7.06
|
|
|
|
12/20/2028
|
|
|
|
56,250
|
|
|
|
168,750
|
(3)
|
|
|
-
|
|
|
|
3.23
|
|
|
|
12/17/2029
|
|
|
|
-
|
|
|
|
280,000
|
(3)
|
|
|
-
|
|
|
|
8.31
|
|
|
|
12/18/2030
|
William P. Sheridan, MBBS
|
|
|
41,250
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4.15
|
|
|
|
3/1/2021
|
|
|
|
46,573
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4.73
|
|
|
|
3/1/2022
|
|
|
|
100,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5.59
|
|
|
|
3/9/2022
|
|
|
|
34,000
|
(1)
|
|
|
-
|
|
|
|
-
|
|
|
|
5.45
|
|
|
|
8/8/2023
|
|
|
|
35,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10.80
|
|
|
|
1/20/2024
|
|
|
|
96,050
|
(2)
|
|
|
-
|
|
|
|
16,950
|
(2)
|
|
|
11.13
|
|
|
|
12/22/2024
|
|
|
|
52,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
12.16
|
|
|
|
1/1/2025
|
|
|
|
71,698
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10.82
|
|
|
|
12/29/2025
|
|
|
|
148,302
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3.22
|
|
|
|
5/23/2026
|
|
|
|
131,250
|
|
|
|
43,750
|
(3)
|
|
|
-
|
|
|
|
5.51
|
|
|
|
2/27/2027
|
|
|
|
75,000
|
|
|
|
25,000
|
(3)
|
|
|
-
|
|
|
|
5.04
|
|
|
|
12/20/2027
|
|
|
|
167,500
|
|
|
|
167,500
|
(3)
|
|
|
-
|
|
|
|
7.06
|
|
|
|
12/20/2028
|
|
|
|
44,000
|
|
|
|
132,000
|
(3)
|
|
|
-
|
|
|
|
3.23
|
|
|
|
12/17/2029
|
|
|
|
-
|
|
|
|
335,000
|
(3)
|
|
|
-
|
|
|
|
8.31
|
|
|
|
12/15/2030
|
Megan T. Sniecinski
|
|
|
150,000
|
(6)
|
|
|
350,000
|
(6)
|
|
|
-
|
|
|
|
3.71
|
|
|
|
7/1/2029
|
|
|
|
60,000
|
|
|
|
180,000
|
(3)
|
|
|
-
|
|
|
|
3.23
|
|
|
|
12/17/2029
|
|
|
|
-
|
|
|
|
225,000
|
(3)
|
|
|
-
|
|
|
|
8.31
|
|
|
|
12/15/2030
|
|
(1)
|
Special performance stock options that vested upon successful completion of specific performance objectives
described under the caption “Special Performance Awards” in the Company’s 2014 Proxy Statement filed on March 21, 2014.
|
|
(2)
|
Special performance stock options that vest(ed) upon successful completion of specific performance objectives
described under the caption “2014 Special Performance Award” in the Company’s 2015 Proxy Statement filed on April 10,
2015.
|
|
(3)
|
Options vest at a rate of 25% per year until fully vested after four years. The term of each option is ten
years.
|
|
(4)
|
Performance-based stock options that vested upon the achievement of specific development milestones described
under the caption “Long-Term Equity Incentive Awards” in the Company’s 2020 Proxy Statement filed on March 31, 2020.
|
|
(5)
|
Options granted under the Inducement Equity Incentive Plan and the Stock Incentive Plan that vest 1/3 on the
first anniversary of the grant date or on the date of Mr. Doyle’s termination if he is terminated as a result of a reduction in
force prior to such date, with the remainder vesting in three equal installments on the second, third, and fourth anniversaries of the
grant date.
|
|
(6)
|
Options granted under the Inducement Equity Incentive Plan that vested 30% on the first anniversary of the
grant date with the remainder vesting in three equal installments on the second, third and fourth anniversaries of the grant date.
|
2020 Option Exercises and Stock Vested
The following table provides
information on stock option exercises during 2020 by our Named Executive Officers. There were no stock awards or restricted stock units
held by our Named Executive Officers that vested during 2020.
|
|
Option Awards
|
Name
|
|
Number of
Shares Acquired
on Exercise (#)
|
|
Value
Realized on
Exercise
($)(1)
|
Jon P. Stonehouse
|
|
|
134,278
|
|
|
|
559,288
|
|
Thomas R. Staab II
|
|
|
190,376
|
|
|
|
295,971
|
|
Anthony J. Doyle
|
|
|
-
|
|
|
|
-
|
|
Yarlagadda S. Babu, Ph.D.
|
|
|
-
|
|
|
|
-
|
|
William P. Sheridan, MBBS
|
|
|
-
|
|
|
|
-
|
|
Megan T. Sniecinski
|
|
|
-
|
|
|
|
-
|
|
____________
|
(1)
|
Value is calculated by multiplying (a) the number of shares acquired upon exercise by (b) the difference between the market price of our
Common Stock at the time of exercise and the applicable exercise price.
|
Potential Payments upon Termination or Change
in Control
The following table sets forth potential payments
payable to our Named Executive Officers (other than Mr. Staab, who departed from the Company in February 2020) upon termination of employment.
The amounts include compensation payable upon voluntary or involuntary termination, termination following a change in control, and in
the event of disability or death. None of the Named Executive Officers are entitled to any payments upon termination with cause. The effect
of an employee’s termination of employment on annual incentive awards under the AIP is subject to determination by the Compensation
Committee in its sole discretion. Absent a contrary determination by the Compensation Committee or provisions to the contrary in an employment
agreement, all awards are forfeited if an employee terminates employment with the Company before the annual incentive awards are paid.
The Compensation Committee may in its discretion revise, amend or add to the benefits if it deems it advisable. The amounts shown assume
the options are valued at their last intrinsic value in fiscal 2020 and that termination is effective December 31, 2020, and thus include
amounts earned through such time and are estimates of the amounts which would be paid out to the executives upon their termination. The
actual amounts to be paid out can only be determined at the time of such executive’s separation from the Company. The amounts shown
in the table do not include: accrued vacation, vested amounts payable under the Company’s 401(k) plan, any accrued but unpaid bonus
or base salary, or potential compensation recognized upon exercise of vested options as disclosed in the Outstanding Equity Awards table
above.
A description of the relevant
provisions of the employment agreements of Messrs. Stonehouse and Doyle, Drs. Sheridan and Babu, and Ms. Sniecinski is set forth below
the table. A description of the benefits that executive officers are entitled to upon death or disability
under the terms of the Company’s equity grants is included in “Compensation Discussion and Analysis.”
Name
|
|
Benefit
|
|
Termination
Without
Cause($)
|
|
Constructive
Termination
($)
|
|
Disability
($)
|
|
Death
(1)($)
|
|
Change in
Control
with no
Change in
Employment
Status ($)
|
|
Change in
Control and
Termination
(2)($)
|
Jon P. Stonehouse
|
|
Base salary
|
|
|
1,133,000
|
|
|
|
1,133,000
|
|
|
|
1,133,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,133,000
|
|
|
|
Target bonus(3)
|
|
|
849,750
|
|
|
|
849,750
|
|
|
|
849,750
|
|
|
|
-
|
|
|
|
-
|
|
|
|
849,750
|
|
|
|
Health care premiums(4)
|
|
|
7,559
|
|
|
|
7,559
|
|
|
|
7,559
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7,559
|
|
|
|
Equity vesting acceleration(5)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,550,268
|
|
|
|
242,500
|
|
|
|
1,550,268
|
|
|
|
Total
|
|
|
1,990,309
|
|
|
|
1,990,309
|
|
|
|
1,990,309
|
|
|
|
1,550,268
|
|
|
|
242,500
|
|
|
|
3,540,577
|
|
Anthony J. Doyle
|
|
Base salary
|
|
|
480,000
|
|
|
|
480,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
480,000
|
|
|
|
Target bonus(3)
|
|
|
192,000
|
|
|
|
192,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
192,000
|
|
|
|
Health care premiums(4)
|
|
|
8,283
|
|
|
|
8,283
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
8,283
|
|
|
|
Equity vesting acceleration(5)
|
|
|
708,000
|
(6)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,124,000
|
|
|
|
Total
|
|
|
1,388,283
|
|
|
|
680,283
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,804,283
|
|
Yarlagadda S. Babu, Ph.D.
|
|
Base Salary
|
|
|
445,578
|
|
|
|
445,578
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
445,578
|
|
|
|
Health care premiums(4)
|
|
|
8,283
|
|
|
|
8,283
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
8,283
|
|
|
|
Equity vesting
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
acceleration(5)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
903,075
|
|
|
|
84,875
|
|
|
|
903,075
|
|
|
|
Total
|
|
|
453,861
|
|
|
|
453,861
|
|
|
|
-
|
|
|
|
903,075
|
|
|
|
84,875
|
|
|
|
1,356,936
|
|
William P. Sheridan, MBBS
|
|
Base salary
|
|
|
515,146
|
|
|
|
515,416
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
515,416
|
|
|
|
Health care premiums(4)
|
|
|
7,428
|
|
|
|
7,428
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7,428
|
|
|
|
Equity vesting acceleration(5)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
767,490
|
|
|
|
84,875
|
|
|
|
767,490
|
|
|
|
Total
|
|
|
522,574
|
|
|
|
522,574
|
|
|
|
-
|
|
|
|
767,490
|
|
|
|
84,875
|
|
|
|
1,290,064
|
|
Megan T. Sniecinski
|
|
Base salary
|
|
|
456,750
|
|
|
|
456,750
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
456,750
|
|
|
|
Target bonus(3)
|
|
|
182,700
|
|
|
|
182,700
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
182,700
|
|
|
|
Health care premiums(4)
|
|
|
7,428
|
|
|
|
7,428
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7,428
|
|
|
|
Equity vesting acceleration(5)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,068,600
|
|
|
|
Total
|
|
|
646,878
|
|
|
|
646,878
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,715,478
|
|
____________
|
(1)
|
Pursuant to the terms of the Company’s Stock Incentive Plan, acceleration of unvested options occurs
only in the event of death after five years of service.
|
|
(2)
|
Benefits for Mr. Stonehouse are triggered if his employment is terminated without Cause or as a result of
Disability or Constructive Termination following a Change of Control. Benefits for Mr. Doyle, Drs. Sheridan and Babu, and Ms. Sniecinski
are triggered if their employment is terminated without Cause or if they are Constructively Terminated within six months following a Change
of Control. The employment agreement for Mr. Stonehouse provides that if any benefit would be subject to excise tax imposed by section
4999 of the Internal Revenue Code or any interest or penalties with respect to such excise tax, the employee shall be entitled to the
greater of the employee's net after tax benefit of the entire payment assuming the payment is subject to section 4999 (which payment would
be subject to the excise tax) and the employee's net after tax benefit of the payments after the payments are reduced just to the point
that there is no section 4999 excise tax. The Company will not pay the excise tax if the payments are subject to section 4999.
|
|
(3)
|
Represents AIP awards at the target percentage for each individual (except with respect to Mr. Stonehouse,
who, as described below, receives twice the AIP award at the target percentage in the event of termination without Cause, Constructive
Termination, or Disability).
|
|
(4)
|
Represents twelve months of premiums under COBRA.
|
|
(5)
|
Based on the closing price of the Company’s stock as of December 31, 2020.
|
|
(6)
|
Represents the portion of the stock options awarded to Mr. Doyle in connection with his appointment as the
Company’s Chief Financial Officer in April 2020 that vests on the first anniversary of the grant date or on the date of Mr. Doyle’s
termination if he is terminated as a result of a reduction in force prior to such date.
|
Mr. Stonehouse
Pursuant to the terms of his employment letter agreement,
in the event of termination by the Company without Cause, upon non-renewal of the term of the agreement by the Company, as a result of
a Constructive Termination, or by the Company as a result of a Disability, Mr. Stonehouse is entitled to severance equal to the product
of (x) two, and (y) the sum of (i) his annual base salary in effect immediately prior to the effective date of the termination, and (ii)
his target bonus in effect for the fiscal year of termination, to be paid in equal installments over the regularly scheduled payroll periods
of the Company for the two years following the effective date of termination. The Company will also pay the monthly premium for health
insurance coverage under COBRA until the earlier of 12 months following the effective date of termination or the date upon which COBRA
continuation coverage ceases. If there is a Change of Control, all equity awards granted to Mr. Stonehouse prior to April 3, 2017 vest
in full, and if his employment is terminated without Cause or as a result of Disability or Constructive Termination following the Change
of Control, he shall receive the benefits described above. The receipt of such benefits is subject to his signing and not revoking a release
of any and all claims against the Company, its officers, directors and employees, resigning from the Board, and returning to the Company
all of its property and confidential information. To the extent required, the payments described in this paragraph may be delayed for
the minimum period and in the minimum manner necessary to avoid the imposition of the tax required by Section 409A of the Internal Revenue
Code.
For purposes of Mr. Stonehouse’s
letter agreement:
|
·
|
“Cause” is defined as: determination by the Board that his employment be terminated for
any of the following reasons: (i) a violation of a federal or state law or regulation that materially and adversely impacts the business
of the Company, (ii) conviction or plea of no contest to a felony under the laws of the United States or any state, (iii) a breach of
the terms of any confidentiality, invention assignment or proprietary information agreement with the Company or with a former employer
that materially and adversely impacts the Company, (iv) fraud or misappropriation of property belonging to the Company or its affiliates,
or (v) willful misconduct or gross negligence in connection with the performance of his duties; provided, however, that no act or failure
to act shall be considered “willful” unless it is done, or omitted to be done in bad faith or without reasonable belief that
his action or omission was in the best interests of the Company.
|
|
·
|
“Constructive Termination” is defined as resignation of employment within 30 days of the
occurrence of any of: (i) a reduction in his responsibilities or any change in his status or title with regard to his employment; (ii)
a reduction in his base salary, unless such reduction occurs prior to a Change of Control (as defined below) and is made in connection
with a fiscal downturn of the Company pursuant to which the base salaries of all executive officers of the Company are reduced by a comparable
percentage; or (iii) a relocation of his principal office to a location more than 50 miles from the location of his then-current principal
office.
|
|
·
|
“Change of Control” is defined as (i) a merger or consolidation in which the Company is
not the surviving entity, except for a transaction the principal purpose of which is to change the State of the Company’s incorporation,
(ii) the sale, transfer or other disposition of all or substantially all of the assets of the Company in liquidation or dissolution of
the Company, (iii) any reverse merger in which the Company is the surviving entity but in which securities possessing more than 50% of
the total combined voting power of the Company’s outstanding securities are transferred to a person or persons different from the
persons holding those securities immediately prior to such merger, or (iv) any person or related group of persons (other than the Company
or a person that directly or indirectly controls, is controlled by, or is under common control with, the Company) directly or indirectly
acquires beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more than 50% of the total
combined voting power of the Company’s outstanding securities pursuant to a tender or exchange offer made directly to the Company’s
stockholders.
|
|
·
|
“Disability” means the inability to perform his duties under the agreement by reason of
physical or mental incapacity for 90 days, whether consecutive or not, during any consecutive 12-month period.
|
Mr. Doyle
Pursuant to the terms of his employment letter agreement,
in the event of termination by the Company without Cause, or Constructive Termination, Mr. Doyle is entitled to (i) continuation of base
salary for one year beyond the effective termination date, payable in accordance with the Company’s regular payroll practices, (ii)
payment of one times his annual target bonus under the AIP in effect for the fiscal year in which his termination date occurs, payable
in equal installments over the regularly scheduled payroll periods of the Company for the one year following the effective date of termination;
and (iii) if he elects to continue health insurance coverage under COBRA, the monthly premium for such coverage until the earlier of 12
months following the effective date of termination or the date upon which he commences employment with another entity. In the event his
employment is terminated without Cause or he is Constructively Terminated within six months of the Change of Control, he is entitled to
the benefits described above. The receipt of such benefits is conditioned on him signing and not revoking a release of any and all claims,
in a form prescribed by the Company and returning to the Company all of its property and confidential information. To the extent required,
the payments described in this paragraph may be delayed for the minimum period and in the minimum manner necessary to avoid the imposition
of the tax required by Section 409A of the Internal Revenue Code.
Dr. Babu
Pursuant to the terms of his employment
letter agreement, in the event of termination by the Company without Cause, or if he resigns as a result of a material
adverse change in the Company’s business within six months after the term of his agreement expires, Dr. Babu is
entitled to (i) continuation of base salary for one year beyond the effective termination date, payable in accordance with
the Company’s regular payroll practices, and (ii) if he elects to continue health insurance coverage under COBRA, the
monthly premium for such coverage until the earlier of 12 months following the effective date of termination or the date upon
which he commences employment with another entity. In the event of a Change of Control, all equity awards granted to Dr. Babu
prior to April 3, 2017 shall vest in full, and if his employment is terminated without Cause or he is Constructively
Terminated within six months of the Change of Control, he is entitled to the benefits described above. The receipt of such
benefits is conditioned on his signing and not revoking a release of any and all claims, in a form prescribed by the Company
and returning to the Company all of its property and confidential information. To the extent required, the payments described
in this paragraph may be delayed for the minimum period and in the minimum manner necessary to avoid the imposition of the
tax required by Section 409A of the Internal Revenue Code.
Dr. Sheridan
Pursuant to the terms of his employment letter agreement,
in the event of termination by the Company without Cause, or if he resigns as a result of a material adverse change in the Company’s
business within six months after the term of his agreement expires, Dr. Sheridan is entitled to (i) continuation of base salary for one
year beyond the effective termination date, payable in accordance with the Company’s regular payroll practices, (ii) relocation
assistance to move Dr. Sheridan’s personal belongings back to his California residence and (iii) if he elects to continue health
insurance coverage under COBRA, the monthly premium for such coverage until the earlier of 12 months following the effective date of termination
or the date upon which he commences employment with another entity. In the event of a Change of Control, all equity awards granted to
Dr. Sheridan prior to April 3, 2017 shall vest in full, and if his employment is terminated without Cause or he is Constructively Terminated
within six months of the Change of Control, he is entitled to the benefits described above. The receipt of such benefits is conditioned
on his signing and not revoking a release of any and all claims, in a form prescribed by the Company and returning to the Company all
of its property and confidential information. To the extent required, the payments described in this paragraph may be delayed for the
minimum period and in the minimum manner necessary to avoid the imposition of the tax required by Section 409A of the Internal Revenue
Code.
Ms. Sniecinski
Pursuant to the terms of her employment letter agreement,
in the event of termination by the Company without Cause, or Constructive Termination, Ms. Sniecinski is entitled to (i) continuation
of base salary for one year beyond the effective termination date, payable in accordance with the Company’s regular payroll practices,
(ii) payment of one times her annual target bonus under the AIP in effect for the fiscal year in which her termination date occurs, payable
in equal installments over the regularly scheduled payroll periods of the Company for the one year following the effective date of termination;
and (iii) if she elects to continue health insurance coverage under COBRA, the monthly premium for such coverage until the earlier of
12 months following the effective date of termination or the date upon which she commences employment with another entity. In the event
her employment is terminated without Cause or she is Constructively Terminated within six months of the Change of Control, she is entitled
to the benefits described above. The receipt of such benefits is conditioned on her signing and not revoking a release of any and all
claims, in a form prescribed by the Company and returning to the Company all of its property and confidential information. To the extent
required, the payments described in this paragraph may be delayed for the minimum period and in the minimum manner necessary to avoid
the imposition of the tax required by Section 409A of the Internal Revenue Code.
For purposes of the agreements of Drs. Babu and Sheridan:
|
·
|
“Cause” means a determination by the Board that his or her employment be terminated for
any of the following reasons: (i) failure or refusal to comply in any material respect with lawful policies, standards or regulations
of Company; (ii) a violation of a federal or state law or regulation applicable to the business of the Company; (iii) conviction or plea
of no contest to a felony under the laws of the United States or any State; (iv) fraud or misappropriation of property belonging to the
Company or its affiliates; (v) a breach in any material respect of the terms of any confidentiality, invention assignment or proprietary
information agreement with the Company or with a former employer, (vi) failure to satisfactorily perform his or her duties after having
received written notice of such failure and at least 30 days to cure such failure, or (vii) misconduct or gross negligence in connection
with the performance of his or her duties.
|
|
·
|
“Constructive Termination” means a resignation of employment within 30 days of the occurrence
of any of the following events which occurs within six months following a Change of Control: (i) a material reduction in his or her responsibilities;
(ii) a material reduction in his or her base salary, unless such reduction is comparable in percentage to, and is part of, a reduction
in the base salary of all executive officers of the Company; or (iii) a relocation of his or her principal office to a location more than
50 miles from the location of his or her principal office immediately preceding a Change of Control.
|
|
·
|
“Change of Control” means (i) a merger or consolidation in which the Company is not the
surviving entity, except for a transaction the principal purpose of which is to change the State of the Company’s incorporation;
(ii) the sale, transfer or other disposition of all or substantially all of the assets of the Company in liquidation or dissolution of
the Company; (iii) any reverse merger in which the Company is the surviving entity but in which securities possessing more than 50% of
the total combined voting power of the Company’s outstanding securities are transferred to a person or persons different from the
persons holding those securities immediately prior to such merger; (iv) any person or related group of persons (other than the Company
or a person that directly or indirectly controls, is controlled by, or is under common control with, the Company) directly or indirectly
acquires beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more than 50% of the total
combined voting power of the Company’s outstanding securities pursuant to a tender or exchange offer made directly to the Company’s
stockholders; or (v) a change in the composition of the Board over a period of 24 consecutive months or less such that a majority of the
Board members (rounded up to the next whole number) ceases, by reason of one or more contested elections for Board membership, to be comprised
of individuals who either (A) have been Board members continuously since the beginning of such period or (B) have been elected or nominated
for election as Board members during such period by at least two-thirds of the Board members described in clause (A) who were still in
office at the time such election or nomination was approved by the Board.
|
|
·
|
“Disability” means the inability to perform his or her duties under the agreement by reason
of physical or mental incapacity for 90 days, whether consecutive or not, during any consecutive 12-month period.
|
For purposes of the agreements of Mr. Doyle and Ms.
Sniecinski, “Cause,” “Constructive Termination,” and “Disability” have the same
meanings described above with respect to the agreements of Drs. Babu and Sheridan. “Change of Control” means (i) the
sale, transfer, or other disposition of all or substantially all of the assets of the Company in liquidation or dissolution of the Company;
(ii) the consummation of a merger or consolidation of the Company with any other corporation or other entity, other than (I) a merger
or consolidation (A) which results in the voting securities of the Company outstanding immediately prior to such merger or consolidation
continuing to represent 50% or more of the combined voting power of the surviving entity or the ultimate parent thereof outstanding immediately
after such merger or consolidation and (B) immediately following which the individuals who comprise the Board immediately prior thereto
constitute 50% or more of the board of directors of the surviving entity or, if the Company or the surviving entity is then a subsidiary,
the ultimate parent thereof, or (II) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction)
in which no person is or becomes the beneficial owner (within the meaning of Rule 13d-3 of the Exchange Act), directly or indirectly,
of securities of the Company (not including in the securities beneficially owned by such person any securities acquired directly from
the Company or its affiliates) representing more than 50% of the combined voting power of the Company’s then outstanding securities;
(iii) any person or related group of persons (other than the Company or a person that directly or indirectly controls, is controlled by,
or is under common control with the Company) directly or indirectly acquires beneficial ownership (within the meaning of Rule 13d-3 of
the Exchange Act) of securities possessing more than 50% of the total combined voting power of the Company’s outstanding securities
pursuant to a tender or exchange offer made directly to the Company’s stockholders; or (iv) a change in the composition of the Board
over a period of 12 consecutive months such that a majority of the Board members (rounded up to the next whole number) ceases to be comprised
of individuals who either (A) have been Board members continuously since the beginning of such period or (B) have been elected or nominated
for election as Board members during such period by at least two-thirds of the Board members described in clause (A) who were still in
office at the time such election or nomination was approved by the Board.
Mr. Staab
On November 7, 2019, Mr.
Staab and the Company entered into a Separation Agreement in connection with Mr. Staab’s departure from the Company. See “Employment
Agreements of Other Named Executive Officers” above for additional information on the terms of Mr. Staab’s separation from
the Company.
CEO Pay Ratio
The following is a reasonable
estimate, prepared under applicable SEC rules, of the ratio of the annual total compensation of our CEO to the median of the annual total
compensation of our other employees. We determined our median employee based on 2020 annual base salary and 2020 AIP awards for each of
our 229 employees (excluding the CEO) as of December 31, 2020. The annual total compensation of our median employee (other than the CEO)
for 2020, calculated in accordance with Item 402(c)(2)(x) under Regulation S-K, was $306,172. As disclosed in the Summary Compensation
Table included in this Proxy Statement, our CEO’s annual total compensation for 2020 was $6,034,941. Based on the foregoing, the
ratio of the 2020 annual total compensation of our CEO to the median of the annual total compensation of all other employees was 20 to
1. Given the different methodologies that various public companies use to determine an estimate of their pay ratio, the estimated ratio
reported above should not be used as a basis for comparison between companies.
2020 DIRECTOR COMPENSATION
The following table provides information related
to the compensation of our non-employee directors during fiscal 2020.
Name
|
|
Fees Earned
($)
|
|
Option
Award
($)(1)(2)
|
|
Total ($)
|
George B. Abercrombie
|
|
|
70,625
|
|
|
|
146,560
|
|
|
|
217,185
|
|
Stephen J. Aselage
|
|
|
74,375
|
(3)
|
|
|
146,560
|
|
|
|
220,935
|
|
Theresa M. Heggie
|
|
|
60,625
|
(3)
|
|
|
146,560
|
|
|
|
207,185
|
|
Nancy J. Hutson, Ph.D.
|
|
|
75,000
|
(3)
|
|
|
146,560
|
|
|
|
221,560
|
|
Robert A. Ingram
|
|
|
95,000
|
(3)
|
|
|
146,560
|
|
|
|
241,560
|
|
Kenneth B. Lee, Jr.
|
|
|
75,000
|
|
|
|
146,560
|
|
|
|
221,560
|
|
Alan G. Levin
|
|
|
47,917
|
|
|
|
174,259
|
(4)
|
|
|
222,176
|
|
Helen M. Thackray, M.D (5)
|
|
|
55,000
|
(3)
|
|
|
146,560
|
|
|
|
201,560
|
|
____________
|
(1)
|
Options are granted to new directors automatically in accordance with our Stock Incentive
Plan at the time they become a director. Prior to March 2020, new directors received an option to purchase 60,000 shares issued on a prorated
basis from the date of appointment until the next scheduled annual meeting, which options vest on the 12-month anniversary of the grant
date. Any new directors joining the Board after March 2020 will receive an option to purchase 80,000 shares issued on a prorated basis
from the date of appointment until the next scheduled annual meeting, which options will vest, subject to the terms of the Stock Incentive
Plan, in 36 equal monthly installments over a three-year period measured from the grant date.
|
Each non-employee director receives
an automatic annual grant of an option to purchase 40,000 shares after each annual meeting, which options vest on the 12-month anniversary
of the grant date. As of December 31, 2020, each director had options outstanding to purchase the following number of shares: Mr. Abercrombie:
232,667; Mr. Aselage: 95,000; Ms. Heggie: 100,000; Dr. Hutson 228,333; Mr. Ingram: 178,750; Mr. Lee: 220,000; Mr Levin: 55,000; and Dr.
Thackray: 80,000.
|
(2)
|
The amounts in this column reflect the aggregate grant date fair value computed in accordance with FASB ASC
Topic 718 of awards pursuant to the Stock Incentive Plan granted in 2020. Assumptions used in the calculation of these amounts are included
in Note 8 to the Company’s audited consolidated financial statements for the year ended December 31, 2020, which are included in
the Company’s Annual Report on Form 10-K filed with the SEC on March 1, 2021.
|
|
(3)
|
As of our 2019 annual meeting of stockholders, Mr. Aselage and Ms. Heggie each elected to receive 50% of their
respective retainers in the form of shares of our Common Stock in lieu of cash, and Dr. Hutson and Mr. Ingram each elected to receive
100% of their respective retainers in the form of shares of our Common Stock in lieu of cash. As of our 2020 annual meeting
of stockholders, Mr. Aselage elected to receive 100% of his retainer in the form of shares of our Common Stock in lieu of cash, and Dr.
Hutson elected to receive 50% of her retainer in the form of shares of our Common Stock in lieu of cash. Ms. Heggie’s and Mr. Ingram’s
elections remained unchanged. Accordingly, in 2020, the Company issued the following number of shares of Common Stock in lieu of cash
retainers: to Mr. Aselage, 6,897 shares in lieu of $31,667 of cash; to Ms. Heggie, 4,559 shares in lieu of $20,000 of cash; to Dr. Hutson,
6,782 shares in lieu of $28,333 of cash; and to Mr. Ingram, 17,104 shares in lieu of $75,000 of cash.
|
|
(4)
|
Mr. Levin joined the Board effective February 27, 2020 and received an automatic option grant under the Stock
Incentive Plan for 15,000 shares of Common Stock.
|
|
(5)
|
Dr. Thackray joined the Company as its Chief Research & Development Officer on March 22, 2021 and, as
a result, is no longer a non-employee director of the Company.
|
Narrative to Director Compensation Table
Directors who are employees of the Company do not
receive any additional compensation for their services as a director. Non-employee directors receive an annual retainer fee consisting
of four equal installment payments paid in arrears on a quarterly basis. Annual retainers are also paid to members of Board committees.
Directors are also reimbursed for expenses incurred in attending Board or committee meetings and while representing the Company in conducting
certain business. The annual retainer fee is $40,000 ($75,000 for the Chairman), consisting of four quarterly payments of $10,000 each
($18,750 each for the Chairman). Fees are not paid for attending committee meetings. Members of the Audit Committee other than the Chair
are paid an annual retainer of $10,000, members of the Compensation Committee, Commercialization Committee, Finance Committee and Science
Committee (other than the Chairs) are paid an annual retainer of $7,500, and members of the Corporate Governance and Nominating Committee
(other than the Chair) are paid an annual retainer of $5,000. The Chair of the Audit Committee is paid an annual retainer of $20,000,
the Chairs of the Compensation Committee, Commercialization Committee, Finance Committee and Science Committee are each paid an annual
retainer of $15,000, and the Chair of the Corporate Governance and Nominating Committee is paid an annual retainer of $10,000. The annual
retainers for committee members and committee Chairs are paid in arrears in four equal installments on a quarterly basis.
Directors are given the opportunity
to elect to receive, in lieu of cash retainers, a number of shares of our Common Stock equivalent in value to the Board retainer earned
by such director. Directors can elect to receive either 50% or 100% of their Board retainer (excluding any committee retainers) in the
form of Common Stock. These shares are distributed four times a year, in line with the quarterly retainer payments. The number of shares
to be distributed is determined using the closing price of our Common Stock on the last business day of the applicable three-month period.
Elections to receive Company shares in lieu of cash for future years shall be made as of the date of each annual meeting of the Company’s
stockholders, effective until the subsequent annual meeting.
AUDIT COMMITTEE REPORT
The Audit Committee of the
Board of Directors has furnished the following report, in accordance with rules established by the Securities and Exchange Commission
(“SEC”), for inclusion in this Proxy Statement.
In fulfilling its oversight
responsibilities, the Audit Committee reviewed and discussed with management the audited consolidated financial statements in the Company’s
Annual Report on Form 10-K for the year ended December 31, 2020, including a discussion of the quality, not just the acceptability,
of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements.
In addition, the Audit Committee reviewed and discussed with the Company’s management the internal audit plan for the year ended
December 31, 2020. Furthermore, the Audit Committee reviewed and discussed with the Company’s management and Ernst and
Young LLP the evaluation of the Company’s design and functioning of its internal controls over financial reporting, including the
required Section 404 testing undertaken by Company management and Ernst and Young LLP with respect to the Company’s internal controls
over financial reporting. The Audit Committee reviewed with Ernst & Young LLP, who are responsible for expressing
an opinion on the conformity of those audited financial statements with generally accepted accounting principles, their judgments as to
the quality, not just the acceptability, of the Company’s accounting principles and such other matters as are required to be discussed
with the Audit Committee under generally accepted auditing standards. In addition, the Audit Committee has discussed with Ernst &
Young LLP the matters required to be discussed by applicable requirements of the Public Company Accounting Oversight Board and the SEC.
The Audit Committee has received the written disclosures and the letter from Ernst & Young LLP required by applicable requirements
of the Public Company Accounting Oversight Board regarding Ernst & Young LLP’s communications with the Audit Committee
concerning independence, and has discussed with Ernst & Young LLP their independence. The Audit Committee also considered the
compatibility of non-audit services with Ernst & Young LLP’s independence.
The Audit Committee discussed
with Ernst & Young LLP the overall scope and plans for their audit. The Audit Committee regularly meets with Ernst &
Young LLP, with and without management present, to discuss the results of their examination, their evaluation of the Company’s internal
controls, and the overall quality of the Company’s financial reporting.
In reliance on the reviews
and discussions referred to above, the Audit Committee recommended to the Board that the audited consolidated financial statements be
included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 for filing with the SEC. The
Audit Committee and the Board approved the selection of Ernst & Young LLP as the Company’s independent registered public
accounting firm for 2020 and has approved the retention of Ernst & Young LLP as the principal accounting firm to be used by the
Company throughout the fiscal year ending December 31, 2021.
The Audit Committee currently consists of Mr. Lee,
as Chairman, Mr. Abercrombie, and Mr. Levin.
Kenneth B. Lee, Jr., Chair of the Committee
George B. Abercrombie
Alan G. Levin
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets
forth information regarding beneficial ownership of the Company’s Common Stock as of March 30, 2021, by (i) each director,
(ii) each of the Named Executive Officers, (iii) all directors and executive officers of the Company as a group and (iv) each
person known to the Company to be the beneficial owner of more than five percent of our Common Stock. Unless otherwise noted below, the
address for each person listed in the table is the principal executive offices of the Company.
Name and Address of Beneficial Owner
|
|
Amount and Nature
of Beneficial Ownership(1)
|
|
Percent
of Class(2)
|
5% Stockholders
|
|
|
|
|
|
|
|
|
Baker Bros. Advisors LP and related persons
860 Washington Street, 3rd Floor
New York, NY 10014
|
|
|
18,256,794
|
(3)
|
|
|
10.3
|
%
|
BlackRock, Inc.
55 East 52nd Street
New York, NY 10055
|
|
|
16,259,745
|
(4)
|
|
|
9.2
|
%
|
The Vanguard Group
100 Vanguard Blvd.
Malvern, PA 19355
|
|
|
11,599,334
|
(5)
|
|
|
6.5
|
%
|
State Street Corporation
One Lincoln Street
Boston, MA 02111
|
|
|
11,056,979
|
(6)
|
|
|
6.2
|
%
|
Sarissa Capital Management LP and Alexander J. Denner, Ph.D.
660 Steamboat Road
Greenwich, CT 06830
|
|
|
8,844,000
|
(7)
|
|
|
5.0
|
%
|
Directors and Named Executive Officers
|
|
|
|
|
|
|
|
|
George B. Abercrombie
|
|
|
242,667
|
(8)
|
|
|
*
|
|
Stephen J. Aselage
|
|
|
126,496
|
(9)
|
|
|
*
|
|
Theresa M. Heggie
|
|
|
113,849
|
(10)
|
|
|
*
|
|
Nancy J. Hutson, Ph.D.
|
|
|
293,089
|
(11)
|
|
|
*
|
|
Robert A. Ingram
|
|
|
253,763
|
(12)
|
|
|
*
|
|
Kenneth B. Lee, Jr.
|
|
|
235,252
|
(13)
|
|
|
*
|
|
Alan G. Levin
|
|
|
55,000
|
(14)
|
|
|
*
|
|
Helen M. Thackray, M.D.
|
|
|
80,000
|
(15)
|
|
|
*
|
|
Jon P. Stonehouse
|
|
|
3,520,630
|
(16)
|
|
|
2.0
|
%
|
Thomas R. Staab II
|
|
|
26,000
|
(17)
|
|
|
*
|
|
Anthony J. Doyle
|
|
|
254,000
|
(18)
|
|
|
*
|
|
Yarlagadda S. Babu, Ph.D.
|
|
|
1,182,806
|
(19)
|
|
|
*
|
|
William P. Sheridan, MBBS
|
|
|
1,056,598
|
(20)
|
|
|
*
|
|
Megan T. Sniecinski
|
|
|
254,558
|
(21)
|
|
|
*
|
|
All executive officers and directors as a group (15 persons)
|
|
|
8,841,696
|
(22)
|
|
|
4.8
|
%
|
____________
(*) Less than one
percent.
|
(1)
|
Gives effect to the shares of Common Stock each indicated stockholder has the right
to acquire as of March 30, 2021 or within 60 days from that date though the exercise of options and other rights beneficially held by
such stockholder on that date.
|
|
(2)
|
Ownership percentage is reported based on 177,648,060 shares of Common Stock issued
and outstanding on March 30, 2021, plus, as to the holder thereof only and no other person, the number of shares (if any) that the person
has the right to acquire as of March 30, 2021 or within 60 days from that date through the exercise of options and other rights.
|
|
(3)
|
From Schedule 13G/A filed with the SEC on February 16, 2021. Includes the aggregate
number of shares of Common Stock beneficially owned along with shares of Common Stock that may be immediately acquired as follows: 1,505,548
shares held by 667, L.P. (“667”), 16,544,587 shares held by Baker Brothers Life Sciences, L.P. (“Life Sciences”
and together with 667, the “Funds”), 77,913 shares directly held by each of Julian C. Baker and Felix J. Baker, 35,833 shares
held by Dr. Stephen R. Biggar, an employee of Baker Bros. Advisors LP (“Advisors”) and former director of the Company, and
15,000 shares underlying stock options held by Dr. Biggar. The shares held by the Funds include a total of 5,390,150 shares issuable upon
exercise of pre-funded warrants held by such entities. By virtue of their power to control the investment decisions of the Funds, each
of Advisors, Baker Bros. Advisors (GP) LLC, Julian C. Baker and Felix J. Baker may be deemed to be beneficial owners of shares owned by
the Funds and may be deemed to have sole power to vote or direct the vote of and sole power to dispose or direct the disposition of such
securities. Dr. Biggar previously served on the BioCryst board as a representative of the Funds. The policy of the Funds and Advisors
does not permit employees to receive compensation for serving as a director of the Company. Therefore, Dr. Biggar has no pecuniary interest
in any stock options or shares of Common Stock directly held by him. The Funds are instead entitled to the pecuniary interest in any stock
options and shares of Common Stock received as director compensation.
|
|
(4)
|
From Schedule 13G/A filed with the SEC on January 29, 2021 indicating that 16,259,745
shares are held by BlackRock, Inc. and certain subsidiaries. No such subsidiary has the right to receive, or the power to direct the receipt
of, dividends from, or the proceeds from the sale of, more than five percent of our Common Stock. BlackRock, Inc. may be deemed to have
sole power to vote or to direct the vote of 15,779,719 shares of Common Stock and sole power to dispose or to direct the disposition of
16,259,745 shares of Common Stock.
|
|
(5)
|
From Schedule 13G/A filed with the SEC on February 10, 2021 indicating that 11,599,334
shares of Common Stock are held by The Vanguard Group and certain subsidiaries. No such subsidiary has the right to receive, or the power
to direct the receipt of, dividends from, or the proceeds from the sale of, more than five percent of our Common Stock. The Vanguard Group
may be deemed to have sole power to dispose or to direct the disposition of 11,106,569 shares of Common Stock, shared power to vote or
to direct the vote of 354,760 shares of Common Stock, and shared power to dispose or to direct the disposition of 492,765 shares of Common
Stock.
|
|
(6)
|
From Schedule 13G filed with the SEC on February 5, 2021 indicating that 11,056,979
shares of Common Stock are held by State Street Corporation and certain subsidiaries. No such subsidiary has the right to receive, or
the power to direct the receipt of, dividends from, or the proceeds from the sale of, more than five percent of our Common Stock. State
Street Corporation may be deemed to have shared power to vote or to direct the vote of 10,292,691 shares of our Common Stock and shared
power to dispose or to direct the disposition of 11,056,979 shares of our Common Stock.
|
|
(7)
|
From Schedule 13G filed with the SEC on January 25, 2021 indicating that 8,844,000 shares
of Common Stock are held by Sarissa Capital Management LP (“Sarissa Capital”). Sarissa Capital has sole power to vote or to
direct the vote of, and sole power to dispose or to direct the disposition of, 8,844,000 shares of Common Stock. By virtue of his position
as the Chief Investment Officer of Sarissa Capital, Alexander J. Denner, Ph.D., may be deemed to have the shared power to vote or to direct
the vote, and shared power to dispose or to direct the disposition of, such shares.
|
|
(8)
|
Includes 232,667 shares issuable to Mr. Abercrombie upon exercise of stock options that
are exercisable as of March 30, 2021 or within 60 days from that date.
|
|
(9)
|
Includes 95,000 shares issuable to Mr. Aselage upon exercise of stock options that are
exercisable as of March 30, 2021 or within 60 days from that date.
|
|
(10)
|
Includes 100,000 shares issuable Ms. Heggie upon exercise of stock options that are
exercisable as of March 30, 2021 or within 60 days from that date.
|
|
(11)
|
Includes 228,333 shares issuable to Dr. Hutson upon exercise of stock options that are
exercisable as of March 30, 2021 or within 60 days from that date.
|
|
(12)
|
Includes 178,750 shares issuable to Mr. Ingram upon exercise of stock options that are
exercisable as of March 30, 2021 or within 60 days from that date.
|
|
(13)
|
Includes 220,000 shares issuable to Mr. Lee upon exercise of stock options that are
exercisable as of March 30, 2021 or within 60 days from that date.
|
|
(14)
|
Includes 55,000 shares issuable to Mr. Levin upon exercise of stock options that are
exercisable as of March 30, 2021 or within 60 days from that date.
|
|
(15)
|
Includes 80,000 shares issuable to Dr. Thackray upon exercise of stock options that
are exercisable as of March 30, 2021 or within 60 days from that date.
|
|
(16)
|
Includes 2,736,544 shares issuable to Mr. Stonehouse upon exercise of stock options
that are exercisable as of March 30, 2021 or within 60 days from that date.
|
|
(17)
|
Based on information provided by Mr. Staab. Mr. Staab resigned as the Company’s
Senior Vice President and Chief Financial Officer in February 2020.
|
|
(18)
|
Includes 200,000 shares issuable to Mr. Doyle upon exercise of stock options that are
exercisable as of March 30, 2021 or within 60 days from that date.
|
|
(19)
|
Includes 999,650 shares issuable to Dr. Babu upon exercise of stock options that are
exercisable as of March 30, 2021 or within 60 days from that date.
|
|
(20)
|
Includes 1,045,123 shares issuable to Dr. Sheridan upon exercise of stock options that
are exercisable as of March 30, 2021 or within 60 days from that date.
|
|
(21)
|
Includes 210,000 shares issuable to Ms. Sniecinski upon exercise of stock options that
are exercisable as of March 30, 2021 or within 60 days from that date.
|
|
(22)
|
Includes 7,313,579 shares issuable to all of our executive officers and directors upon
exercise of stock options that are exercisable as of March 30, 2021 or within 60 days from that date.
|
DELINQUENT SECTION 16(a)
REPORTS
Exchange Act Section 16(a)
requires our officers, directors, and beneficial owners of more than ten percent of our Common Stock to report their beneficial ownership
of our Common Stock and any changes in that ownership to the SEC within specified timeframes. Based on a review of the copies of such
reports filed with the SEC during the year ended December 31, 2020, we believe that such reports were timely filed with the SEC, except
for a Form 4 filed on March 3, 2020 on behalf of Alan G. Levin to report a February 27, 2020 automatic non-employee director grant under
the Company’s Amended and Restated Stock Incentive Plan.
STOCKHOLDER PROPOSALS
Proposals of stockholders
intended to be presented at our 2022 Annual Meeting of Stockholders (the “2022 Annual Meeting”) must be received by the Company
by December 14, 2021 to be considered for inclusion in our Proxy Statement relating to such meeting. Proposals for inclusion in the Proxy
Statement must comply with the Securities Exchange Act of 1934, as amended, including Rule 14a-8.
A stockholder must notify
the Company of any proposal (including director nominations) that the stockholder intends to present, other than by inclusion in our proxy
materials, at our 2022 Annual Meeting. To be timely, the notice must be delivered to the Company’s Corporate Secretary at the Company’s
principal executive offices no earlier than January 25, 2022 and no later than February 24, 2022. In order for the proposal to be eligible
for consideration at the 2022 Annual Meeting, the notice must include the information required by the Company’s bylaws, including,
with respect to director nominations, specific information regarding both the stockholder making the nomination and the director nominee.
NO INCORPORATION BY REFERENCE
In the Company’s filings
with the SEC, information is sometimes “incorporated by reference.” This means that the Company is referring you to information
that has previously been filed with the SEC and that the information should be considered part of a particular filing. As provided in
regulations promulgated by the SEC, the “Audit Committee Report” and the “Compensation Committee Report” contained
in this Proxy Statement specifically are not incorporated by reference into any other filings with the SEC. In addition, this Proxy Statement
includes the Company’s website address. This website address is intended to provide inactive, textual references only. The information
on the Company’s website is not part of this Proxy Statement.
OTHER MATTERS
Management does not intend
to present to the Meeting any matters other than those previously mentioned herein and does not presently know of any matters that will
be presented by other parties. If other matters should properly come before the Meeting, it is intended that the holders of the proxies
will act in respect thereto and in accordance with their best judgment.
GENERAL INFORMATION
Some banks, brokers and other
nominee record holders may be participating in the practice of “householding” Proxy Statements and annual reports. This means
that only one copy of the one-page notice regarding the Internet availability of proxy materials may have been sent to multiple stockholders
in your household. You may have a separate copy of this document sent to you by contacting the Corporate Secretary, BioCryst Pharmaceuticals,
Inc., 4505 Emperor Blvd., Suite 200, Durham, North Carolina 27703, (919) 859-1302. If you prefer to receive separate copies
of the one-page notice regarding the Internet availability of proxy materials in the future, or if you are receiving multiple copies and
would like to receive only one copy for your household, you should contact your bank, broker or other nominee holder, or you may contact
us at the above address.
Stockholders may obtain
a copy of the Notice of Annual Meeting, Proxy Statement, Form of Proxy, and our Annual Report on Form 10-K by writing to the Corporate
Secretary at the address stated above or by visiting www.proxyvote.com.
|
BY ORDER OF THE BOARD OF DIRECTORS
|
|
|
|
Alane P. Barnes, Chief Legal Officer and Corporate Secretary
|
Durham, North Carolina
April 13, 2021
ANNEX A
BIOCRYST PHARMACEUTICALS, INC.
STOCK INCENTIVE PLAN
(AS AMENDED AND RESTATED AS OF APRIL 1, 2021)
Article
One
GENERAL PROVISIONS
I.
PURPOSES OF THE PLAN
A.
This Stock Incentive Plan (the “Plan”), formerly the “BioCryst Pharmaceuticals, Inc. 1991 Stock Option Plan,”
is intended to promote the interests of BioCryst Pharmaceuticals, Inc., a Delaware corporation (the “Company”), by providing
a method whereby (i) employees (including officers and directors) of the Company (or its parent or subsidiary corporations), (ii) non-employee
members of the board of directors of the Company (the “Board”) (or of any parent or subsidiary corporations) and (iii) consultants
and other independent contractors who provide valuable services to the Company (or any parent or subsidiary corporations) may be offered
the opportunity to acquire a proprietary interest, or otherwise increase their proprietary interest, in the Company as an incentive for
them to remain in the service of the Company (or any parent or subsidiary corporations).
B.
For purposes of the Plan, the following provisions shall be applicable in determining the parent and subsidiary corporations of the Company:
(i) Any
corporation (other than the Company) in an unbroken chain of corporations ending with the Company shall be considered to be a parent
corporation of the Company, provided each such corporation in the unbroken chain (other than the Company) owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other
corporations in such chain.
(ii) Each
corporation (other than the Company) in an unbroken chain of corporations beginning with the Company shall be considered to be a subsidiary
of the Company, provided each such corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination,
stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations
in such chain.
C.
The Plan, as amended and restated, was approved and adopted by the Board effective on April 1, 2021 in order to increase by 7,500,000
the number of shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”), subject to approval
by the Company’s stockholders at the Company’s Annual Meeting of Stockholders on May 25, 2021, and to make certain other changes.
II.
STRUCTURE OF THE PLAN
A.
The Plan shall be divided into three separate equity programs:
(i) the
Discretionary Option Grant Program specified in Article Two, pursuant to which eligible persons may, at the discretion of the Plan Administrator,
be granted options to purchase shares of Common Stock,
(ii) the
Stock Issuance Program specified in Article Three, pursuant to which eligible persons may, at the discretion of the Plan Administrator,
be issued shares of Common Stock directly or through the issuance of restricted stock units (“RSUs”) that provide for the
issuance of shares of Common Stock if the applicable vesting criteria are satisfied, and
(iii)
the Automatic Option Grant Program specified in Article Four, pursuant to which non-employee members of the Board will automatically receive
option grants to purchase shares of Common Stock.
B.
Unless the context clearly indicates otherwise, the provisions of Articles One and Five of the Plan shall apply to all equity programs
under the Plan and shall accordingly govern the interests of all individuals under the Plan.
III.
ADMINISTRATION OF THE PLAN
A.
The Plan shall be administered by the Committee who shall be the Compensation Committee of the Board or, in the absence of a Compensation
Committee, a properly constituted committee or the Board itself (the administrator is referred to herein as the “Committee”
or the “Plan Administrator”). Any power of the Committee may also be exercised by the Board, except to the extent that the
grant or exercise of such authority would cause any Award or transaction to become subject to (or lose an exemption under) the short-swing
profit recovery provisions of Section 16 of the Securities Exchange Act of 1934, as amended (the “1934 Act”), or cause an
Award designated as a Performance Award not to qualify for treatment as performance-based compensation under Section 162(m) of the Code.
To the extent that any permitted action taken by the Board conflicts with action taken by the Committee, the Board action shall control.
The Compensation Committee may by resolution authorize one or more officers of the Company to perform any or all things that the Committee
is authorized and empowered to do or perform under the Plan, and for all purposes under this Plan, such officer or officers shall be treated
as the Committee; provided, however, that the resolution so authorizing such officer or officers shall specify the total number of Awards
(if any) such officer or officers may award pursuant to such delegated authority, and any such Award shall be subject to the form of award
agreement theretofore approved by the Compensation Committee. No such officer shall designate himself or herself as a recipient of any
Awards granted under authority delegated to such officer. In addition, the Compensation Committee may delegate any or all aspects of the
day-to-day administration of the Plan to one or more officers or employees of the Company or any subsidiary or affiliate, and/or to one
or more agents.
B.
Subject to the express provisions of this Plan, the Committee shall be authorized and empowered to do all things that it determines to
be necessary or appropriate in connection with the administration of this Plan, including, without limitation: (i) to prescribe, amend
and rescind rules and regulations relating to this Plan and to define terms not otherwise defined herein; (ii) to determine which persons
are grantees, to which of such grantees, if any, awards shall be granted hereunder and the timing of any such awards; (iii) to grant awards
to grantees and determine the terms and conditions thereof, including the number of shares of Common Stock subject to awards and the exercise
or purchase price of such shares and the circumstances under which awards become exercisable or vested or are forfeited or expire, which
terms may but need not be conditioned upon the passage of time, continued employment, the satisfaction of performance criteria, the occurrence
of certain events (including events which constitute a Change in Control to the extent permitted hereunder), or other factors; (iv) to
establish and verify the extent of satisfaction of any performance goals or other conditions applicable to the grant, issuance, exercisability,
vesting and/or ability to retain any award; (v) to prescribe and amend the terms of the agreements or other documents evidencing awards
made under this Plan (which need not be identical) and the terms of or form of any document or notice required to be delivered to the
Company by grantees under this Plan; (vi) to determine the extent to which adjustments are required pursuant to Article One; (vii) to
interpret and construe this Plan, any rules and regulations under this Plan and the terms and conditions of any award granted hereunder,
and to make exceptions to any such provisions for the benefit of the Company; (viii) to approve corrections in the documentation or administration
of any award; and (ix) to make all other determinations deemed necessary or advisable for the administration of this Plan.
C. All
decisions, determinations and interpretations by the Committee regarding the Plan, any rules and regulations under the Plan and the terms
and conditions of or operation of any Award granted hereunder, shall be final and binding on all grantees, beneficiaries, heirs, assigns
or other persons holding or claiming rights under the Plan or any Award. The Committee shall consider such factors as it deems relevant,
in its sole and absolute discretion, to making such decisions, determinations and interpretations including, without limitation, the recommendations
or advice of any officer or other employee of the Company and such attorneys, consultants and accountants as it may select.
D. The
Compensation Committee may delegate all or a portion of their duties hereunder to one or more individuals or committees. Any reference
to the Compensation Committee or the Plan Administrator shall refer to such individual(s) or committee(s) to the extent of such delegation.
E. Administration
of the Automatic Option Grant Program shall be self-executing in accordance with the express terms and conditions of Article Four, and
no Plan Administrator shall exercise any discretionary functions under that program.
IV.
ELIGIBILITY
A.
The persons eligible to participate in the Discretionary Option Grant and Stock Issuance Programs shall be limited to the following:
(i) officers
and other employees of the Company (or its parent or subsidiary corporations);
(ii) individuals
who are consultants or independent advisors and who provide valuable services to the Company (or its parent or subsidiary corporations);
and
(iii) non-employee
members of the Board (or of the board of directors of parent or subsidiary corporations).
B.
Only Board members who are not employees of the Company (or any parent or subsidiary) shall be eligible to receive automatic option grants
pursuant to the Automatic Option Grant Program specified in Article Four.
C.
The Plan Administrator shall, within the scope of its administrative jurisdiction under the Plan, have full power and authority to determine
(i) whether to grant options in accordance with the Discretionary Option Grant Program or to effect stock issuances in accordance with
the Stock Issuance Program, (ii) which eligible persons are to receive option grants under the Discretionary Option Grant Program, the
time or times when such option grants are to be made, the number of shares to be covered by each such grant, the status of the granted
option as either an incentive stock option (“Incentive Option”) which satisfies the requirements of Section 422 of the Internal
Revenue Code of 1986, as amended (the “Code”) or a non-statutory option not intended to meet such requirements, the time or
times when each such option is to become exercisable, the vesting schedule (if any) applicable to the option shares and the maximum term
for which such option is to remain outstanding, and (iii) which eligible persons are to receive stock issuances under the Stock Issuance
Program, the time or times when such issuances are to be made, the number of shares to be issued to each grantee, the vesting schedule
(if any) applicable to the shares and the consideration for such shares.
V.
STOCK SUBJECT TO THE PLAN
A.
Shares of the Company’s Common Stock shall be available for issuance under the Plan and shall be drawn from either the Company’s
authorized but unissued shares of Common Stock or from reacquired shares of Common Stock, including shares repurchased by the Company
on the open market. The maximum number of shares of Common Stock which may be issued over the term of the Plan, as amended and restated,
shall not exceed 48,090,000 shares, subject to adjustment from time to time in accordance with the provisions of this Section V. The total
number of shares available under the Plan, as amended and restated, as of April 1, 2021 is 36,391,274. This amount consists of 25,442,402
shares reserved for awards already issued, 3,448,872 shares of Common Stock available for future issuance under the Plan, and the increase
of 7,500,000 shares of Common Stock authorized by the Board (subject to approval by the Company’s stockholders at the Annual Meeting
of Stockholders on May 25, 2021).
B.
In no event shall the number of shares of Common Stock for which any one individual participating in the Plan may receive options, separately
exercisable stock appreciation rights and direct stock issuances and RSUs exceed 1,500,000 shares of Common Stock in the aggregate in
any calendar year. For purposes of such limitation, however, no stock options granted prior to the date the Common Stock was first registered
under Section 12 of the 1934 Act (the “Section 12(g) Registration Date”) shall be taken into account.
C.
Should an outstanding option under this Plan expire or terminate for any reason prior to exercise in full, the shares subject to the portion
of the option not so exercised shall be available for subsequent option grant or direct stock issuances or RSUs under the Plan. Unvested
shares issued under the Plan and subsequently repurchased by the Company, at the original issue price paid per share, pursuant to the
Company’s repurchase rights under the Plan, or shares underlying terminated RSUs, shall be added back to the number of shares of
Common Stock reserved for issuance under the Plan and shall accordingly be available for reissuance through one or more subsequent option
grants or direct stock issuances or RSUs under the Plan. However, shares subject to an award under the Plan may not again be made available
for issuance under the Plan if such shares are: (i) shares that were subject to a stock-settled stock appreciation right and were not
issued upon the net settlement or net exercise of such stock appreciation right, (ii) shares used to pay the exercise price of an option,
(iii) shares delivered to or withheld by the Company to pay the withholding taxes related an award, or (iv) shares repurchased on the
open market with the proceeds of an option exercise. Shares of Common Stock subject to any option surrendered for an appreciation distribution
under Section IV of Article Two or Section IV of Article Four shall not be available for subsequent issuance under the Plan.
D.
In the event any change is made to the Common Stock issuable under the Plan by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the outstanding Common Stock as a class without receipt of consideration,
then appropriate adjustments shall be made to (i) the maximum number and/or class of securities issuable under the Plan, (ii) the maximum
number and/or class of securities for which any one individual participating in the Plan may be granted stock options, separately exercisable
stock appreciation rights, and direct stock issuances and RSUs under the Plan from and after the Section 12(g) Registration Date, (iii)
the number and/or class of securities and price per share in effect under each outstanding option and stock appreciation right under the
Plan, (iv) the number and/or class of securities in effect under each outstanding direct stock issuance and RSU under the Plan, and (v)
the number and/or class of securities for which automatic option grants are subsequently to be made per non-employee Board member under
the Automatic Option Grant Program. The purpose of such adjustments shall be to preclude the enlargement or dilution of rights and benefits
under the Plan.
E.
The fair market value per share of Common Stock on any relevant date under the Plan shall be determined in accordance with the following
provisions:
(i) If
the Common Stock is not at the time listed or admitted to trading on any national securities exchange but is traded in the over-the-counter
market, the fair market value shall be the mean between the highest bid and lowest asked prices (or, if such information is available,
the closing selling price) per share of Common Stock on the date in question in the over-the-counter market, as such prices are reported
on the Nasdaq National Market, the Nasdaq Global Select Market or any successor system. If there are no reported bid and asked prices
(or closing selling price) for the Common Stock on the date in question, then the mean between the highest bid price and lowest asked
price (or the closing selling price) on the last preceding date for which such quotations exist shall be determinative of fair market
value.
(ii) If
the Common Stock is at the time listed or admitted to trading on any national securities exchange, then the fair market value shall be
the closing selling price per share of Common Stock on the date in question on the securities exchange determined by the Plan Administrator
to be the primary market for the Common Stock, as such price is officially quoted in the composite tape of transactions on such exchange.
If there is no reported sale of Common Stock on the exchange on the date in question, then the fair market value shall be the closing
selling price on the exchange on the last preceding date for which such quotation exists.
(iii) If
the Common Stock is at the time neither listed nor admitted to trading on any securities exchange nor traded in the over-the-counter market,
then the fair market value shall be determined by the Plan Administrator after taking into account such factors as the Plan Administrator
shall deem appropriate.
VI. MINIMUM
VESTING
Notwithstanding any other provision
of this Plan to the contrary, in no event shall any award granted pursuant to this Plan vest prior to the twelve (12)-month anniversary
of the date of grant, other than in connection with the grantee’s death or permanent disability or, to the extent permitted hereunder,
in connection with a Change in Control (provided that this limitation shall not apply with respect to up to five percent (5%) of the shares
of Common Stock available for issuance under this Plan following approval of the Plan at the Company’s Annual Meeting of Stockholders
on May 25, 2021). The minimum vesting period set forth in this Section VI may not be waived or superseded by any provision in an award
or other agreement.
Article
Two
DISCRETIONARY OPTION GRANT PROGRAM
I.
TERMS AND CONDITIONS OF OPTIONS
Options granted pursuant to
this Article Two shall be authorized by action of the Plan Administrator and may, at the Plan Administrator’s discretion, be either
Incentive Options or non-statutory options. Individuals who are not Employees may only be granted non-statutory options under this Article
Two. Each option granted shall be evidenced by one or more instruments in the form approved by the Plan Administrator. Each such instrument
shall, however, comply with the terms and conditions specified below, and each instrument evidencing an Incentive Option shall, in addition,
be subject to the applicable provisions of Section II of this Article Two.
A.
Option Price.
1.
The option price per share shall be fixed by the Plan Administrator. In no event, however, shall the option price per share be less than
one hundred percent (100%) of the fair market value per share of Common Stock on the date of the option grant.
2.
The option price shall become immediately due upon exercise of the option and shall, subject to the provisions of Section IV of this Article
Two and the instrument evidencing the grant, be payable through one of the following methods (or a combination thereof):
(i) full
payment in cash or check drawn to the Company’s order;
(ii) full
payment in shares of Common Stock held by the optionee for the requisite period necessary to avoid a charge to the Company’s earnings
for financial reporting purposes and valued at fair market value on the Exercise Date (as such term is defined below);
(iii) full
payment through a combination of shares of Common Stock held by the optionee for the requisite period necessary to avoid a charge to the
Company’s earnings for financial reporting purposes and valued at fair market value on the Exercise Date and cash or cash equivalent;
(iv) full
payment through a broker-dealer sale and remittance procedure pursuant to which the optionee (I) shall provide irrevocable written instructions
to a designated brokerage firm to effect the immediate sale of the purchased shares and remit to the Company, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate option price payable for the purchased shares plus all applicable
Federal and State income and employment taxes required to be withheld by the Company in connection with such purchase and (II) shall provide
written directives to the Company to deliver the certificates for the purchased shares directly to such brokerage firm in order to complete
the sale transaction; or
(v) such
other method as permitted by the Plan Administrator.
For purposes of this subparagraph
2, the Exercise Date shall be the date on which written notice of the option exercise is delivered to the Company. Except to the extent
the sale and remittance procedure is utilized in connection with the exercise of the option, payment of the option price for the purchased
shares must accompany such notice.
B.
Term and Exercise of Options.
Each option granted under
this Article Two shall be exercisable at such time or times, during such period, and for such number of shares as shall be determined
by the Plan Administrator and set forth in the instrument evidencing the option grant. No such option, however, shall have a maximum term
in excess of ten (10) years from the grant date. During the lifetime of the optionee, the option, together with any stock appreciation
rights pertaining to such option, shall be exercisable only by the optionee and shall not be assignable or transferable by the optionee
except for a transfer of the option by will or by the laws of descent and distribution following the optionee’s death and, for the
avoidance of doubt, may not be transferred to a third party for cash or other value. However, the Plan Administrator shall have the discretion
to provide that a non-statutory option may, in connection with the optionee’s estate plan, be assigned in whole or in part during
the optionee’s lifetime either as (i) as a gift to one or more members of optionee’s immediate family, to a trust in which
optionee and/or one or more such family members hold more than fifty percent (50%) of the beneficial interest or an entity in which more
than fifty percent (50%) of the voting interests are owned by optionee and/or one or more such family members, or (ii) pursuant to a domestic
relations order. The assigned portion shall be exercisable only by the person or persons who acquire a proprietary interest in the option
pursuant to such assignment. The terms applicable to the assigned portion shall be the same as those in effect for this option immediately
prior to such assignment and shall be set forth in such documents issued to the assignee as the Plan Administrator may deem appropriate.
C.
Termination of Service.
1.
Except to the extent otherwise provided pursuant to Section V of this Article Two or pursuant to an applicable award agreement, the following
provisions shall govern the exercise period applicable to any options held by the optionee at the time of cessation of Service or death.
(i) Should
the optionee cease to remain in Service for any reason other than death or permanent disability, then the period for which each outstanding
option held by such optionee is to remain exercisable shall be limited to the three (3)-month period following the date of such cessation
of Service. However, should optionee die during the three (3)-month period following his or her cessation of Service, the personal representative
of the optionee’s estate or the person or persons to whom the option is transferred pursuant to the optionee’s will or in
accordance with the laws of descent and distribution shall have a twelve (12)-month period following the date of the optionee’s
death during which to exercise such option.
(ii) In
the event such Service terminates by reason of permanent disability (as defined in Section 22(e)(3) of the Internal Revenue Code),
then the period for which each outstanding option held by the optionee is to remain exercisable shall be limited to the twelve
(12)-month period following the date of such cessation of Service.
(iii) Should
the optionee, after completing five (5) full years of Service, die while in Service, then the exercisability of each of his or her outstanding
options shall automatically accelerate so that each such option shall become fully exercisable with respect to the total number of shares
of Common Stock at the time subject to such option and may be exercised for all or any portion of such shares. The personal representative
of the optionee’s estate or the person or persons to whom the option is transferred pursuant to the optionee’s will or in
accordance with the laws of descent and distribution shall have a twelve (12)-month period following the date of the optionee’s
death during which to exercise such option.
(iv) In
the event such Service terminates by reason of death prior to the optionee obtaining five (5) full years of Service, then the period for
which each outstanding vested option held by the optionee at the time of death shall be exercisable by the optionee’s estate or
the person or persons to whom the option is transferred pursuant to the optionee’s will shall be limited to the twelve (12)-month
period following the date of the optionee’s death.
(v) Under
no circumstances, however, shall any such option be exercisable after the specified expiration date of the option term.
(vi) Each
such option shall, during such limited exercise period, be exercisable for any or all of the shares for which the option is exercisable
on the date of the optionee’s cessation of Service. Upon the expiration of such limited exercise period or (if earlier) upon the
expiration of the option term, the option shall terminate and cease to be exercisable. However, each outstanding option shall immediately
terminate and cease to remain outstanding, at the time of the optionee’s cessation of Service, with respect to any shares for which
the option is not otherwise at that time exercisable or in which the optionee is not otherwise vested.
(vii) Should
(i) the optionee’s Service be terminated for misconduct (including, but not limited to, any act of dishonesty, willful misconduct,
fraud or embezzlement) or (ii) the optionee make any unauthorized use or disclosure of confidential information or trade secrets of the
Company or its parent or subsidiary corporations, then in any such event all outstanding options held by the optionee under this Article
Two shall terminate immediately and cease to be exercisable.
2.
The Plan Administrator shall have complete discretion, exercisable either at the time the option is granted or at any time while the option
remains outstanding, to permit one or more options held by the optionee under this Article Two to be exercised, during the limited period
of exercisability provided under subparagraph 1 above, not only with respect to the number of shares for which each such option is exercisable
at the time of the optionee’s cessation of Service but also with respect to one or more subsequent installments of purchasable shares
for which the option would otherwise have become exercisable had such cessation of Service not occurred.
3.
For purposes of the foregoing provisions of this Section I.C (and for all other purposes under the Plan):
(i) The
optionee shall be deemed to remain in the Service of the Company for so long as such individual renders services on a periodic
basis to the Company (or any parent or subsidiary corporation) in the capacity of an Employee, a non-employee member of the board of directors
or an independent consultant or advisor, unless the agreement evidencing the applicable option grant specifically states otherwise.
(ii) The
optionee shall be considered to be an Employee for so long as such individual remains in the employ of the Company or one or more
of its parent or subsidiary corporations, subject to the control and direction of the employer entity not only as to the work to be performed
but also as to the manner and method of performance.
D.
Stockholder Rights.
An optionee shall have no
stockholder rights with respect to any shares covered by the option until such individual shall have exercised the option and paid the
option price for the purchased shares. Without limitation, an optionee shall not have any right to receive dividends with respect to an
unexercised option.
E.
No Repricing.
No option or stock appreciation
right may be repriced, regranted through cancellation, including cancellation in exchange for cash or other awards, or otherwise amended
to reduce its option price or exercise price (other than with respect to adjustments made in connection with a transaction or other change
in the Company’s capitalization as permitted under this Plan) without the approval of the stockholders of the Company.
F.
Repurchase Rights.
The shares of Common Stock
acquired upon the exercise of options granted under this Article Two may be subject to repurchase by the Company in accordance with the
following provisions:
1. The
Plan Administrator shall have the discretion to grant options which are exercisable for unvested shares of Common Stock under this Article
Two. Should the optionee cease Service while holding such unvested shares, the Company shall have the right to repurchase any or all those
unvested shares at the option price paid per share. The terms and conditions upon which such repurchase right shall be exercisable (including
the period and procedure for exercise and the appropriate vesting schedule for the purchased shares) shall be established by the Plan
Administrator and set forth in the instrument evidencing such repurchase right.
2. All
of the Company’s outstanding repurchase rights shall automatically terminate, and all shares subject to such terminated rights shall
immediately vest in full, upon the occurrence of any Corporate Transaction under Section III of this Article Two, except to the extent:
(i) any such repurchase right is expressly assigned to the successor corporation (or parent thereof) in connection with the Corporate
Transaction or (ii) such termination is precluded by other limitations imposed by the Plan Administrator at the time the repurchase right
is issued.
3. The
Plan Administrator shall have the discretionary authority, exercisable either before or after the optionee’s cessation of Service,
to cancel the Company’s outstanding repurchase rights with respect to one or more shares purchased or purchasable by the optionee
under this Discretionary Option Grant Program and thereby accelerate the vesting of such shares in whole or in part at any time.
II.
INCENTIVE OPTIONS
The terms and conditions specified
below shall be applicable to all Incentive Options granted under this Article Two. Incentive Options may only be granted to individuals
who are Employees of the Company. Options which are specifically designated as “non-statutory” options when issued under the
Plan shall not be subject to such terms and conditions.
A.
Dollar Limitation. The aggregate fair market value (determined as of the respective date or dates of grant) of the Common
Stock for which one or more options granted to any Employee under this Plan (or any other option plan of the Company or its parent or
subsidiary corporations) may for the first time become exercisable as incentive stock options under the Federal tax laws during any one
calendar year shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the extent the Employee holds two or more such options
which become exercisable for the first time in the same calendar year, the foregoing limitation on the exercisability of such options
as incentive stock options under the Federal tax laws shall be applied on the basis of the order in which such options are granted. Should
the number of shares of Common Stock for which any Incentive Option first becomes exercisable in any calendar year exceed the applicable
One Hundred Thousand Dollar ($100,000) limitation, then that option may nevertheless be exercised in such calendar year for the excess
number of shares as a non-statutory option under the Federal tax laws.
B.
10% Stockholder. If any individual to whom an Incentive Option is granted is the owner of stock (as determined under Section
424(d) of the Internal Revenue Code) possessing 10% or more of the total combined voting power of all classes of stock of the Company
or any one of its parent or subsidiary corporations, then the option price per share shall not be less than one hundred and ten percent
(110%) of the fair market value per share of Common Stock on the grant date, and the option term shall not exceed five (5) years, measured
from the grant date.
C.
Termination of Employment. Any portion of an Incentive Option that remains outstanding (by reason of the optionee remaining
in the Service of the Company, pursuant to the Plan Administrator’s exercise of discretion under Section V of this Article Two,
or otherwise) more than 3 months following the date an optionee ceases to be an Employee of the Company shall thereafter be exercisable
as a non-statutory option under federal tax laws.
Except as modified by the preceding
provisions of this Section II, the provisions of Articles One, Two and Five of the Plan shall apply to all Incentive Options granted hereunder.
III.
CORPORATE TRANSACTIONS/CHANGES IN CONTROL
A.
For purposes of this Section III (and for all other purposes under the Plan), a Corporate Transaction shall be deemed to occur in the
event of:
(1) a
merger or consolidation in which the Company is not the surviving entity, except for a transaction the principal purpose of which is to
change the State of the Company’s incorporation,
(2) the
sale, transfer or other disposition of all or substantially all of the assets of the Company in liquidation or dissolution of the Company,
or
(3) any
reverse merger in which the Company is the surviving entity but in which securities possessing more than fifty percent (50%) of the total
combined voting power of the Company’s outstanding securities are transferred to a person or persons different from the persons
holding those securities immediately prior to such merger.
The exercisability of each option outstanding
under this Article Two that was granted before April 3, 2017 shall automatically accelerate so that each such option shall, immediately
prior to the specified effective date for the Corporate Transaction, become fully exercisable with respect to the total number of shares
of Common Stock at the time subject to such option and may be exercised for all or any portion of such shares.
B. Immediately
after the consummation of the Corporate Transaction, all outstanding options under this Article Two shall fully vest, terminate and cease
to be outstanding, except to the extent continued or assumed (as applicable) by the Company or the successor corporation or its parent
company. The Plan Administrator shall have complete discretion to provide, on such terms and conditions as it sees fit, for a cash payment
to be made to any optionee on account of any option terminated in accordance with this paragraph, in an amount equal to the excess (if
any) of (A) the fair market value of the shares subject to the option as of the date of the Corporate Transaction, over (B) the aggregate
exercise price of the option.
C. Each
outstanding option under this Article Two which is assumed in connection with the Corporate Transaction or is otherwise to continue in
effect shall be appropriately adjusted, immediately after such Corporate Transaction, to apply and pertain to the number and class of
securities which would have been issued to the option holder, in consummation of such Corporate Transaction, had such person exercised
the option immediately prior to such Corporate Transaction. Appropriate adjustments shall also be made to the option price payable per
share, provided the aggregate option price payable for such securities shall remain the same. In addition, the class and number
of securities available for issuance under the Plan following the consummation of the Corporate Transaction shall be appropriately adjusted.
Any such options that are so continued or assumed in connection with a Corporate Transaction shall be treated as follows: if the grantee’s
employment is terminated by the Company without Cause or the grantee resigns due to a Constructive Termination, in either case within
the ninety (90) day period preceding or the two (2) year period following the Corporate Transaction, the exercisability of such option
shall automatically accelerate, and the Company’s outstanding repurchase rights under this Article Two shall immediately terminate;
provided, however, that if the Company, the acquiror or successor refuses to continue (or, as applicable, assume) the option in connection
with the Corporate Transaction, the exercisability of such option under this Article Two shall automatically accelerate, and the Company’s
outstanding repurchase rights under this Article Two shall immediately terminate upon the occurrence of such Corporate Transaction.
D. The
grant of options under this Article Two shall in no way affect the right of the Company to adjust, reclassify, reorganize or otherwise
change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business
or assets.
E. In
the event of a Change in Control: (1) options granted under this Article Two prior to May 23, 2016 shall be subject to the provisions
of the Plan as in effect prior to such date, and (2) options granted on or after May 23, 2016 shall be treated as follows: if the grantee’s
employment is terminated by the Company without Cause or the grantee resigns due to a Constructive Termination, in either case within
the ninety (90) day period preceding or the two (2) year period following the Change in Control, the exercisability of such option shall
automatically accelerate, and the Company’s outstanding repurchase rights under this Article Two shall immediately terminate; provided,
however, that if the acquiror or successor refuses to assume the option in connection with the Change in Control, the exercisability of
such option under this Article Two shall automatically accelerate, and the Company’s outstanding repurchase rights under this Article
Two shall immediately terminate upon the occurrence of such Change in Control. In the event that the acquiror or successor refuses to
assume the option in connection with the Change in Control, the Plan Administrator shall have complete discretion to provide, on such
terms and conditions as it sees fit, for a cash payment to be made to any optionee on account of any option terminated in accordance with
this paragraph, in an amount equal to the excess (if any) of (A) the fair market value of the shares subject to the option as of the date
of the Change in Control, over (B) the aggregate exercise price of the option.
F. For
purposes of this Section III (and for all other purposes under the Plan), a Change in Control shall be deemed to occur in the event:
(1) any
person or related group of persons (other than the Company or a person that directly or indirectly controls, is controlled by, or is under
common control with, the Company) directly or indirectly acquires beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act)
of securities possessing more than fifty percent (50%) of the total combined voting power of the Company’s outstanding securities
pursuant to a tender or exchange offer made directly to the Company’s stockholders; or
(2) there
is a change in the composition of the Board over a period of twenty-four (24) consecutive months or less such that a majority of the Board
members (rounded up to the next whole number) ceases, by reason of one or more contested elections for Board membership, to be comprised
of individuals who either (A) have been Board members continuously since the beginning of such period or (B) have been elected or nominated
for election as Board members during such period by at least two-thirds of the Board members described in clause (A) who were still in
office at the time such election or nomination was approved by the Board.
G.
All options accelerated in connection with the Corporate Transaction or Change in Control (either at the time of the Corporate Transaction
or Change in Control or as otherwise provided in this Section III) shall remain fully exercisable until the expiration or sooner termination
of the option term.
H.
The portion of any Incentive Option accelerated under this Section III in connection with a Corporate Transaction or Change in Control
shall remain exercisable as an incentive stock option under the Federal tax laws only to the extent the dollar limitation of Section II
of this Article Two is not exceeded. To the extent such dollar limitation is exceeded, the accelerated portion of such option shall be
exercisable as a non-statutory option under the Federal tax laws.
I.
For purposes of this Article Two and for purposes of Article Three:
1.
“Cause” means, unless otherwise provided in the applicable award agreement, the Company’s termination of the grantee’s
employment for any of the following reasons: (i) failure or refusal to comply in any material respect with lawful policies, standards
or regulations of the Company; (ii) a violation of a federal or state law or regulation applicable to the business of the Company; (iii)
conviction or plea of no contest to a felony under the laws of the United States or any State; (iv) fraud or misappropriation of property
belonging to the Company or its affiliates; (v) a breach in any material respect of the terms of any confidentiality, invention assignment
or proprietary information agreement with the Company or with a former employer, (vi) failure to satisfactorily perform the grantee’s
duties after having received written notice of such failure and at least thirty (30) days to cure such failure, or (vii) misconduct or
gross negligence in connection with the performance of the grantee’s duties.
2.
“Constructive Termination” means, unless otherwise provided in the applicable award agreement, the grantee’s resignation
of employment with the Company within ninety (90) days of the occurrence of any of the following: (i) a material reduction in the grantee’s
responsibilities; (ii) a material reduction in the grantee’s base salary; or (iii) a relocation of the grantee’s principal
office to a location more than 50 miles from the location of the grantee’s existing principal office.
IV.
STOCK APPRECIATION RIGHTS
A. Provided and
only if the Plan Administrator determines in its discretion to implement the stock appreciation right provisions of this Section IV, one
or more optionees may be granted the right, exercisable upon such terms and conditions as the Plan Administrator may establish, to surrender
all or part of an unexercised option granted under this Article Two in exchange for a distribution from the Company in an amount equal
to the excess of (i) the fair market value (on the option surrender date) of the number of shares in which the optionee is at the time
vested under the surrendered option (or surrendered portion thereof) over (ii) the aggregate option price payable for such vested shares.
The distribution may be made in shares of Common Stock valued at fair market value on the option surrender date, in cash, or partly in
shares and partly in cash, as the Plan Administrator shall determine in its sole discretion.
B. The
shares of Common Stock subject to any option surrendered for an appreciation distribution pursuant to this Section IV shall not be available
for subsequent option grant under the Plan.
C. Stockholder
Rights. A stock appreciation right holder shall have no stockholder rights with respect to any shares covered by the stock appreciation
right until such individual shall have exercised the stock appreciation right and received the acquired shares. Without limitation, a
stock appreciation right holder shall not have any right to receive dividends with respect to a stock appreciation right.
V.
EXTENSION OF EXERCISE PERIOD
The Plan Administrator shall
have full power and authority, exercisable either at the time the option is granted or at any time while the option remains outstanding,
to extend the period of time for which any option granted under this Article Two is to remain exercisable following the optionee’s
cessation of Service or death from the limited period in effect under Section I.C.1 of Article Two to such greater period of time as the
Plan Administrator shall deem appropriate; provided, however, that in no event shall such option be exercisable after the specified
expiration date of the option term.
Article
Three
STOCK ISSUANCE PROGRAM
I.
STOCK ISSUANCE TERMS
Shares of Common Stock may be
issued under the Stock Issuance Program through direct and immediate issuances without any intervening option grants. Each such stock
issuance shall be evidenced by a Stock Issuance Agreement which complies with the terms specified below. Shares of Common Stock may also
be issued under the Stock Issuance Program pursuant to restricted stock units (“RSUs”), which are awards granted to eligible
individuals that entitle them to shares of Common Stock (or cash in lieu thereof) in the future following the satisfaction of vesting
conditions imposed by the Plan Administrator.
A.
Vesting Provisions.
1. The Plan
Administrator may issue shares of Common Stock under the Stock Issuance which are to vest in one or more installments over the grantee's
period of Service or upon attainment of specified performance objectives. Alternatively, the Plan Administrator may issue RSUs under the
Stock Issuance Program which shall entitle the recipient to receive a specified number of shares of Common Stock upon the attainment of
one or more Service and/or performance goals established by the Plan Administrator. Upon the attainment of such Service and/or performance
goals, fully-vested shares of Common Stock shall be issued in satisfaction of those RSUs.
2. Any
new, substituted or additional securities or other property (including money paid other than as a regular cash dividend) issued by reason
of any stock dividend, stock split, recapitalization, combination of shares, exchange of shares or other change affecting the outstanding
Common Stock as a class without the Company’s receipt of consideration, shall be issued or set aside with respect to the shares
of unvested Common Stock granted to a grantee or subject to a grantee’s RSUs, subject to (i) the same vesting requirements applicable
to the grantee's unvested shares of Common Stock or RSUs, and (ii) such escrow arrangements as the Plan Administrator shall deem appropriate.
3. The
grantee shall have full stockholder rights with respect to any shares of Common Stock issued to the grantee under the Stock Issuance Program,
whether or not the grantee's interest in those shares is vested, except that the grantee shall not have dividend rights with respect to
such shares prior to the vesting of such shares. However, the Plan Administrator may provide for a grantee to receive one or more dividend
equivalents with respect to such shares, entitling the grantee to all regular cash dividends payable on such shares of Common Stock, which
amounts shall be (i) subject to the same vesting requirements applicable to the shares of Common Stock granted hereunder, and (ii) payable
upon vesting of the shares to which such dividend equivalents relate.
4. The grantee
shall not have any stockholder rights with respect to any shares of Common Stock subject to an RSU. However, the Plan Administrator may
provide for a grantee to receive one or more dividend equivalents with respect to such shares, entitling the grantee to all regular cash
dividends payable on the shares of Common Stock underlying the RSU, which amounts shall be (i) subject to the same vesting requirements
applicable to the shares of Common Stock underlying the RSU, and (ii) payable upon issuance of the shares to which such dividend equivalents
relate.
5. Should
the grantee cease to remain in Service while holding one or more unvested shares of Common Stock issued under the Stock Issuance Program
or should the performance objectives not be attained with respect to one or more such unvested shares of Common Stock, then those shares
shall be immediately surrendered to the Company for cancellation, and the grantee shall have no further stockholder rights with respect
to those shares. To the extent the surrendered shares were previously issued to the grantee for consideration paid in cash, the Company
shall repay to the grantee the cash consideration paid for the surrendered shares.
6. Except as prohibited
by the last sentence of paragraph 1 above, the Plan Administrator may in its discretion waive the surrender and cancellation of one or
more unvested shares of Common Stock which would otherwise occur upon the cessation of the grantee’s Service or the non-attainment
of the performance objectives applicable to those shares. Such waiver shall result in the immediate vesting of the grantee's interest
in the shares of Common Stock as to which the waiver applies. Such waiver may be effected at any time, whether before or after the grantee's
cessation of Service or the attainment or non-attainment of the applicable performance objectives.
7. Outstanding
RSUs under the Stock Issuance Program shall automatically terminate, and no shares of Common Stock shall actually be issued in satisfaction
of those awards, if the Service and/or performance goals established for such awards are not attained. The Plan Administrator, however,
shall, except as prohibited by the last sentence of paragraph 1 above, have the discretionary authority to issue shares of Common Stock
in satisfaction of one or more outstanding RSUs as to which the designated Service and/or performance goals are not attained. Such authority
may be exercised at any time, whether before or after the grantee's cessation of Service or the attainment or non-attainment of the applicable
performance objectives.
II.
CORPORATE TRANSACTION/CHANGE IN CONTROL
A. All of the
Company’s outstanding repurchase rights under the Stock Issuance Program shall terminate automatically, and all the shares of Common
Stock subject to those terminated rights shall immediately vest in full, in the event of any Corporate Transaction, except to the extent
(i) those repurchase rights are to be assigned to the successor corporation (or parent thereof) in connection with such Corporate Transaction,
or (ii) such accelerated vesting is precluded by other limitations imposed in the Stock Issuance Agreement, unless the Plan Administrator
determines to waive such limitations.
B. Each
award which is assigned in connection with (or is otherwise to continue in effect after) a Corporate Transaction shall be appropriately
adjusted such that it shall apply and pertain to the number and class of securities issued to the grantee in consummation of the Corporate
Transaction with respect to the shares granted to grantee under this Article Three.
C. In the
event of a Change in Control: (1) shares of restricted stock and RSUs granted under this Article Three prior to May 23, 2016 shall be
subject to the provisions of the Plan as in effect prior to such date, and (2) shares of restricted stock and RSUs granted on or after
May 23, 2016 shall be treated as follows: if the grantee’s employment is terminated by the Company without Cause or the grantee
resigns due to a Constructive Termination, in either case within the ninety (90) day period preceding or the two (2) year period following
the Change in Control, the vesting of such restricted stock and RSUs shall automatically accelerate (and all of the shares of Common Stock
subject to such RSUs shall be issued to grantees), and the Company’s outstanding repurchase rights under this Article Three shall
immediately terminate; provided, however, that if the acquiror or successor refuses to assume the shares of restricted stock or RSUs or
substitute an award of equivalent value (as determined by the Committee in its discretion) in connection with the Change in Control, the
vesting of such restricted stock or RSUs under this Article Three shall automatically accelerate (and all of the shares of Common Stock
subject to such RSUs shall be issued to grantees). To the extent any shares of restricted stock or RSUs vest in whole or in part based
on the achievement of performance criteria, the amount that shall vest in accordance with the proviso to clause (2) of the immediately-preceding
sentence shall vest based on the higher of actual performance goal attainment through the date of the Change in Control or a prorated
amount using target performance and based on the time elapsed in the performance period as of the date of the Change in Control.
III.
STOCKHOLDER RIGHTS
A. Individuals
who are granted shares of Common Stock pursuant to this Article Three shall be the owners of such shares for all purposes while holding
such Common Stock, and may exercise full voting rights with respect to those shares at all times while held by the individuals. Individuals
who have been granted RSUs shall have no voting rights with respect to Common Stock underlying RSUs unless and until such Common Stock
is reflected as issued and outstanding shares on the Company’s stock ledger.
B. Individuals
who are granted shares of Common Stock pursuant to this Article Three shall not have dividend rights with respect to such shares prior
to the vesting of such shares. However, the Plan Administrator may provide for a grantee to receive one or more dividend equivalents with
respect to such shares, entitling the grantee to all regular cash dividends payable on such shares of Common Stock, which amounts shall
be (i) subject to the same vesting requirements applicable to the shares of Common Stock granted hereunder, and (ii) payable upon vesting
of the shares to which such dividend equivalents relate.
IV.
SHARE ESCROW / LEGENDS
Unvested shares may, in the
Plan Administrator's discretion, be held in escrow by the Company until the grantee's interest in such shares vests or may be issued directly
to the grantee with restrictive legends on the certificates evidencing those unvested shares.
Article
Four
AUTOMATIC OPTION GRANT PROGRAM
I.
ELIGIBILITY
The individuals eligible to
receive automatic option grants pursuant to the provisions of this Article Four shall be (i) those individuals who, after the effective
date of this amendment and restatement, first become non-employee Board members, whether through appointment by the Board, election by
the Company’s stockholders, or by continuing to serve as a Board member after ceasing to be employed by the Company, and (ii) those
individuals already serving as non-employee Board members on the effective date of this amendment and restatement. As used herein, a “non-employee”
Board member is any Board member who is not employed by the Company on the date in question.
II.
TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS
A.
Grants. Option grants shall be made under this Article Four as follows:
1.
Each individual who first becomes a non-employee Board member on or after the effective date of this amendment and restatement shall automatically
be granted at such time a non-statutory stock option under the terms and conditions of this Article Four, to purchase a number shares
of Common Stock equal to the product of (i) 80,000, and (ii) a fraction, the numerator of which is the number of months (rounded to the
nearest whole number) remaining between the date such Board member first became a non-employee Board member and the Company’s next
scheduled Annual Stockholders Meeting, and the denominator of which is 12.
2.
Immediately following each Annual Stockholders Meeting of the Company, each individual who is then serving as a non-employee Board member
(except for those individuals first elected to serve as non-employee Board members at such meeting), shall automatically be granted
a non-statutory stock option under this Article Four to acquire 40,000 shares of Common Stock.
B.
Exercise Price. The exercise price per share of each automatic option grant made under this Article Four shall be
equal to one hundred percent (100%) of the fair market value per share of Common Stock on the automatic grant date.
C.
Payment. The exercise price shall be through one of the following methods (or a combination
thereof):
(1) payment
in cash or check made payable to the Company’s order; or
(2) full
payment in shares of Common Stock held for the requisite period necessary to avoid a charge to the Company’s reported earnings and
valued at fair market value on the Exercise Date (as such term is defined below); or
(3) full
payment in a combination of shares of Common Stock held for the requisite period necessary to avoid a charge to the Company’s reported
earnings and valued at fair market value on the Exercise Date and cash or check payable to the Company’s order; or
(4) full
payment through a sale and remittance procedure pursuant to which the non-employee Board member (I) shall provide irrevocable written
instructions to a designated brokerage firm to effect the immediate sale of the purchased shares and remit to the Company, out of the
sale proceeds available on the settlement date, sufficient funds to cover the aggregate exercise price payable for the purchased shares
and shall (II) concurrently provide written directives to the Company to deliver the certificates for the purchased shares directly to
such brokerage firm in order to complete the sale transaction; or
(5) such
other method as permitted by the Plan Administrator.
For purposes of this subparagraph
C, the Exercise Date shall be the date on which written notice of the option exercise is delivered to the Company. Except to the extent
the sale and remittance procedure specified above is utilized for the exercise of the option, payment of the option price for the purchased
shares must accompany the exercise notice.
D.
Option Term. Each automatic grant under this Article Four shall have a term of ten (10) years measured from the automatic
grant date.
E.
Exercisability.
1.
Subject to the proviso in Section VI of Article One, each initial automatic grant made pursuant to Section II.A.1 of this Article Four
shall vest and become exercisable in 36 equal monthly installments over a 3-year period measured from the grant date.
2.
Subject to the proviso in Section VI of Article One, each 40,000 share automatic grant made pursuant to Section II.A.2 of this Article
Four shall vest and become exercisable for the option shares on the twelve (12)-month anniversary of the automatic grant date.
F.
Non-Transferability. During the lifetime of the optionee, each automatic option grant, together with the limited stock appreciation
right pertaining to such option, shall be exercisable only by the optionee, except to the extent such option or the limited stock appreciation
right is assigned or transferred (i) by will or by the laws of descent and distribution following the optionee’s death, or (ii)
during optionee’s lifetime either (A) as a gift in connection with the optionee’s estate plan to one or more members of optionee’s
immediate family, to a trust in which optionee and/or one or more such family members hold more than fifty percent (50%) of the beneficial
interest or to an entity in which more than fifty percent (50%) of the voting interests are owned by optionee and/or one or more such
family members, or (B) pursuant to a domestic relations order. The portion of any option assigned or transferred during optionee’s
lifetime shall be exercisable only by the person or persons who acquire a proprietary interest in the option pursuant to such assignment.
The terms applicable to the assigned portion shall be the same as those in effect for this option immediately prior to such assignment
and shall be set forth in such documents issued to the assignee as the Plan Administrator may deem appropriate.
G.
Cessation of Board Service. Should the optionee cease to serve as a Board member
for any reason while holding one or more automatic option grants under this Article Four, then such optionee shall have the remainder
of the ten (10) year term of each such option in which to exercise each such option for any or all of the shares of Common Stock for which
the option is exercisable at the time of such cessation of Board service. Each such option shall immediately terminate and cease to be
outstanding, at the time of such cessation of Board service, with respect to any shares for which the option is not otherwise at that
time exercisable. Upon the expiration of the ten (10)-year option term, the automatic grant shall terminate and cease to be outstanding
in its entirety. Upon the death of the optionee, whether before or after cessation of Board service, any option held by optionee at the
time of optionee’s death may be exercised, for any or all of the shares of Common Stock for which the option was exercisable at
the time of cessation of Board service by the optionee and which have not been theretofore exercised by the optionee, by the personal
representative of the optionee’s estate or by the person or persons to whom the option is transferred pursuant to the optionee’s
will or in accordance with the laws of descent and distribution. Any such exercise must occur during the remainder of the ten (10) year
term of such option.
H.
Stockholder Rights. The holder of an automatic option grant under this Article Four shall have none of the rights of a stockholder
with respect to any shares subject to such option until such individual shall have exercised the option and paid the exercise price for
the purchased shares. Without limitation, an optionee shall not have any right to receive dividends with respect to an unexercised option.
III.
CORPORATE TRANSACTIONS/CHANGES IN CONTROL
A. In the event of
a Corporate Transaction, (1) the exercisability of each option outstanding under this Article Four granted prior to April 3, 2017 shall
automatically accelerate so that each such option shall, immediately prior to the specified effective date for the Corporate Transaction,
become fully exercisable with respect to the total number of shares of Common Stock at the time subject to such option and may be exercised
for all or any portion of such shares, and (2) each option granted under this Article Four thereafter shall be subject to the same rules
specified in Article Two, Section III.
B. Immediately
after the consummation of the Corporate Transaction, all outstanding options under this Article Four shall terminate and cease to be outstanding,
except to the extent assumed by the successor corporation or its parent company. If so provided by the terms of the Corporate Transaction,
the optionee shall receive a cash payment on account of any option terminated in accordance with this paragraph, in an amount equal to
the excess (if any) of (A) the fair market value of the shares subject to the option as valued pursuant to the Corporate Transaction over
(B) the aggregate exercise price of the option.
C. Each
outstanding option under this Article Four which is assumed in connection with the Corporate Transaction or is otherwise to continue in
effect shall be appropriately adjusted, immediately after such Corporate Transaction, to apply and pertain to the number and class of
securities which would have been issued to the option holder, in consummation of such Corporate Transaction, had such person exercised
the option immediately prior to such Corporate Transaction. Appropriate adjustments shall also be made to the option price payable per
share, provided the aggregate option price payable for such securities shall remain the same. Such option shall be subject to the
same rules specified in Article Two, Section III.
D. In connection
with any Change in Control, (1) the exercisability of each option grant made prior to April 3, 2017 and outstanding at the time under
this Article Four shall automatically accelerate so that each such option shall, immediately prior to the specified effective date for
the Change in Control, become fully exercisable with respect to the total number of shares of Common Stock at the time subject to such
option and may be exercised for all or any portion of such shares, and (2) each option granted under this Article Four thereafter shall
be subject to the same rules specified in Article Two, Section III.
E. The automatic
grant of options under this Article Four shall in no way affect the right of the Company to adjust, reclassify, reorganize or otherwise
change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business
or assets.
IV.
STOCK APPRECIATION RIGHTS
A.
With respect to each option granted under the Automatic Option Grant Program, each optionee shall have the right
to surrender all or part of the option (to the extent not then exercised) in exchange for a distribution from the Company in an amount
equal to the excess of (i) the fair market value (on the option surrender date) of the number of shares in which the optionee is at the
time vested under the surrendered option (or surrendered portion thereof) over (ii) the aggregate option price payable for such vested
shares. The distribution shall be made in shares of Common Stock valued at fair market value on the option surrender date.
B.
The shares of Common Stock subject to any option surrendered for an appreciation distribution pursuant to this
Section IV shall not be available for subsequent option grant under the Plan.
Article
Five
SECTION 162(M) PERFORMANCE GOALS
I.
GENERAL
The Plan Administrator may establish
performance criteria and level of achievement versus such criteria that shall determine the number of shares of Common Stock or RSUs to
be granted, retained, vested, issued or issuable under or in settlement of or the amount payable pursuant to an award hereunder, which
criteria may be based on Qualifying Performance Criteria (as defined below) or other standards of financial performance and/or personal
performance evaluations. In addition, the Plan Administrator may specify that an award or a portion of an award is intended to satisfy
the requirements for “performance-based compensation” under Section 162(m) of the Code, provided that the performance criteria
for such award or portion of an award that is intended by the Plan Administrator to satisfy the requirements for “performance-based
compensation” under Section 162(m) of the Code shall be a measure based on one or more Qualifying Performance Criteria selected
by the Committee and specified at the time the award is granted. The Committee shall certify the extent to which any Qualifying Performance
Criteria have been satisfied, and the amount payable as a result thereof, prior to payment, settlement or vesting of any award that is
intended to satisfy the requirements for “performance-based compensation” under Section 162(m) of the Code. Notwithstanding
satisfaction of any performance goals, the number of shares of Common Stock issued under or the amount paid under an award may, to the
extent specified in the applicable award agreement, be reduced by the Committee on the basis of such further considerations as the Committee
in its sole discretion shall determine. The Committee may not delegate its duties under this Article Five to any other person with respect
to any award that is intended to satisfy the requirements for “performance-based compensation” under Section 162(m) of the
Code.
III.
QUALIFYING PERFORMANCE CRITERIA
For purposes of this Plan, the
term “Qualifying Performance Criteria” shall mean any one or more of the following performance criteria, either individually,
alternatively or in any combination, applied to either the Company as a whole or to a business unit or subsidiary, either individually,
alternatively or in any combination, and measured either quarterly, annually or cumulatively over a period of years, on an absolute basis
or relative to a pre-established target, to previous years’ results or to a designated comparison group, in each case as specified
by the Committee: (i) revenue growth; (ii) earnings before interest, taxes, depreciation and amortization; (iii) earnings before interest,
taxes and amortization; (iv) operating income; (v) pre- or after-tax income; (vi) cash flow; (vii) cash flow per share; (viii) net income;
(ix) earnings per share; (x) return on equity; (xi) return on invested capital; (xii) return on assets; (xiii) economic value added (or
an equivalent metric); (xiv) share price performance; (xv) total shareholder return; (xvi) improvement in or attainment of expense levels;
(xvii) improvement in or attainment of working capital levels; (xviii) debt reduction; (xix) progress for advancing drug discovery and/or
drug development programs; or (xx) implementation, completion or attainment of measurable objectives with respect to research, development,
manufacturing, commercialization, products or projects, or production volume levels. To the extent consistent with Section 162(m) of the
Code, the Committee (A) shall appropriately adjust any evaluation of performance under a Qualifying Performance Criteria to eliminate
the effects of charges for restructurings, discontinued operations, extraordinary items and all items of gain, loss or expense determined
to be extraordinary or unusual in nature or related to the acquisition or disposal of a segment of a business or related to a change in
accounting principle all as determined in accordance with standards established by opinion No. 30 of the Accounting Principles Board (APB
Opinion No. 30) or other applicable or successor accounting provisions, as well as the cumulative effect of accounting changes, in each
case as determined in accordance with generally accepted accounting principles or identified in the Company’s financial statements
or notes to the financial statements, and (B) may appropriately adjust any evaluation of performance under a Qualifying Performance Criteria
to exclude any of the following events that occurs during a performance period: (i) asset write-downs, (ii) litigation, claims, judgments
or settlements, (iii) the effect of changes in tax law or other such laws or provisions affecting reported results, (iv) the adverse effect
of work stoppages or slowdowns, (v) accruals for reorganization and restructuring programs and (vi) accruals of any amounts for payment
under this Plan or any other compensation arrangement maintained by the Company.
Article
Six
MISCELLANEOUS
I.
AMENDMENT OF THE PLAN
The Board shall have complete
and exclusive power and authority to amend or modify the Plan in any or all respects whatsoever. However, no such amendment or modification
shall, without the consent of the holders, adversely affect rights and obligations with respect to options at the time outstanding under
the Plan. In addition, certain amendments may require stockholder approval pursuant to applicable laws or regulations.
II.
TAX WITHHOLDING
A.
The Company’s obligation to deliver shares or cash upon the exercise of stock options or stock appreciation rights or upon the grant
or vesting of direct stock issuances or RSUs under the Plan shall be subject to the satisfaction of all applicable Federal, State and
local income and employment tax withholding requirements.
B.
The Plan Administrator may, in its discretion and upon such terms and conditions as it may deem appropriate, provide any or all
holders of outstanding options or stock issuances under the Plan (other than the automatic option grants under Article Four) with the
election to have the Company withhold, from the shares of Common Stock otherwise issuable upon the exercise or vesting of such awards,
a whole number of such shares with an aggregate fair market value equal to the minimum amount necessary (or, if determined by the Plan
Administrator in its discretion and to the extent adverse accounting treatment does not result, at the maximum applicable individual statutory
tax rates) to satisfy the Federal, State and local income and employment tax withholdings (the “Taxes”) incurred in connection
with the acquisition or vesting of such shares. In lieu of such direct withholding, one or more grantees may also be granted the right
to deliver whole shares of Common Stock to the Company in satisfaction of such Taxes. Any withheld or delivered shares shall be valued
at their fair market value on the applicable determination date for such Taxes.
III.
EFFECTIVE DATE AND TERM OF PLAN
A. The Plan,
as amended and restated, shall be effective on the date specified in the Board of Directors resolution adopting the Plan. Except as provided
below, each option issued and outstanding under the Plan immediately prior to such effective date shall continue to be governed solely
by the terms and conditions of the agreement evidencing such grant, and nothing in this restatement of the Plan shall be deemed to affect
or otherwise modify the rights or obligations of the holders of such options with respect to their acquisition of shares of Common Stock
thereunder. The Plan Administrator shall, however, have full power and authority, under such circumstances as the Plan Administrator may
deem appropriate (but in accordance with Section I of this Article Five), to extend one or more features of this amendment and restatement
to any options outstanding on the effective date.
B. Unless
sooner terminated in accordance with the other provisions of this Plan, the Plan shall terminate upon the earlier of (i) ten years
following the date this amendment and restatement of the Plan is approved by the Board or (ii) the date on which all shares available
for issuance under the Plan shall have been issued or cancelled pursuant to the exercise, surrender or cash-out of the options granted
hereunder. If the date of termination is determined under clause (i) above, then any options or stock issuances outstanding on such date
shall continue to have force and effect in accordance with the provisions of the agreements evidencing those awards.
C. Options
may be granted with respect to a number of shares of Common Stock in excess of the number of shares at the time available for issuance
under the Plan, provided each granted option is not to become exercisable, in whole or in part, at any time prior to stockholder
approval of an amendment authorizing a sufficient increase in the number of shares issuable under the Plan.
IV.
USE OF PROCEEDS
Any cash proceeds received by
the Company from the sale of shares pursuant to options or stock issuances granted under the Plan shall be used for general corporate
purposes.
V.
REGULATORY APPROVALS
A.
The implementation of the Plan, the granting of any option hereunder, and the issuance of stock (i) upon the exercise
or surrender of any option or (ii) under the Stock Issuance Program shall be subject to the procurement by the Company of all approvals
and permits required by regulatory authorities having jurisdiction over the Plan, the options granted under it and the stock issued pursuant
to it.
B.
No shares of Common Stock or other assets shall be issued or delivered under the Plan unless and until there
shall have been compliance with all applicable requirements of Federal and state securities laws, including (to the extent required) the
filing and effectiveness of the Form S-8 registration statement for the shares of Common Stock issuable under the Plan, and all applicable
listing requirements of any stock exchange (or the Nasdaq National Market, the Nasdaq Global Select Market or any successor system, if
applicable) on which Common Stock is then trading.
VI.
NO EMPLOYMENT/SERVICE RIGHTS
Neither the action of the Company
in establishing or restating the Plan, nor any action taken by the Plan Administrator hereunder, nor any provision of the Plan shall be
construed so as to grant any individual the right to remain in the employ or service of the Company (or any parent or subsidiary corporation)
for any period of specific duration, and the Company (or any parent or subsidiary corporation retaining the services of such individual)
may terminate such individual’s employment or service at any time and for any reason, with or without cause.
VII.
MISCELLANEOUS PROVISIONS
A. Except
to the extent otherwise expressly provided in the Plan, the right to acquire Common Stock or other awards under the Plan may not be assigned,
encumbered or otherwise transferred by any grantee.
B. Awards issued
under the Plan shall be subject to any clawback policy of the Company as in effect from time-to-time.
C. The provisions of
the Plan relating to the exercise of options and the issuance and/or vesting of shares shall be governed by the laws of the State of Delaware
without resort to that state’s conflict-of-laws provisions, as such laws are applied to contracts entered into and performed in
such State.
D. The
Plan is intended to be an unfunded plan. Grantees are and shall at all times be general creditors of the Company with respect to their
awards. If the Committee or the Company chooses to set aside funds in a trust or otherwise for the payment of awards under the Plan, such
funds shall at all times be subject to the claims of the creditors of the Company in the event of its bankruptcy or insolvency.
ANNEX B
BIOCRYST PHARMACEUTICALS, INC.
EMPLOYEE STOCK PURCHASE PLAN
(AS AMENDED AND RESTATED AS OF APRIL 1, 2021)
This Employee Stock Purchase
Plan is intended to promote the interests of BioCryst Pharmaceuticals, Inc. by providing eligible employees with the opportunity to acquire
a proprietary interest in the Corporation through participation in a payroll deduction based employee stock purchase plan designed to
qualify under Section 423 of the Code.
Capitalized terms herein shall
have the meanings assigned to such terms in the attached Appendix.
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II.
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ADMINISTRATION OF THE PLAN
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The Plan Administrator shall
have full authority to interpret and construe any provision of the Plan and to adopt such rules and regulations for administering the
Plan as it may deem necessary in order to comply with the requirements of Code Section 423. Decisions of the Plan Administrator shall
be final and binding on all parties having an interest in the Plan.
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III.
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STOCK SUBJECT TO PLAN
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A.
The stock purchasable under the Plan shall be shares of authorized but unissued or reacquired Common Stock, including shares of
Common Stock purchased on the open market. The maximum number of shares of Common Stock which may be issued over the term of the Plan
shall not exceed 7,975,000 shares.
B.
In the event any change is made to the Common Stock by reason of any stock split, stock dividend, recapitalization, combination
of shares, exchange of shares or other change affecting the outstanding Common Stock as a class without the Corporation’s receipt
of consideration, appropriate adjustments shall be made to (i) the maximum number and class of securities issuable under the Plan,
(ii) the maximum number and class of securities purchasable per Participant on any one Purchase Date and (iii) the number and
class of securities and the price per share in effect under each outstanding purchase right in order to prevent the dilution or enlargement
of benefits thereunder.
A.
Shares of Common Stock shall be offered for purchase under the Plan through a series of successive purchase periods until such
time as (i) the maximum number of shares of Common Stock available for issuance under the Plan shall have been purchased or (ii) the
Plan shall have been sooner terminated.
B.
Each purchase period shall have a duration of six (6) months. Purchase periods shall run from the first business day in February
to the last business day in July and from the first business day of August to the last business day of January.
A.
Each individual who is an Eligible Employee on the start date of any purchase period shall be eligible to participate in the Plan
for that purchase period.
B.
To participate in the Plan for a particular purchase period, the Eligible Employee must complete the enrollment forms prescribed
by the Plan Administrator (including a stock purchase agreement and a payroll deduction authorization form) and file such forms with the
Plan Administrator (or its designate) on or before the start date of the purchase period.
A.
The payroll deduction authorized by the Participant for purposes of acquiring shares of Common Stock under the Plan may be any
multiple of one percent (1%) of the Base Salary paid to the Participant during each purchase period, up to a maximum of fifteen percent
(15%). The deduction rate so authorized shall continue in effect for the entire purchase period and for each subsequent purchase period,
except to the extent such rate is changed in accordance with the following guidelines:
(i)
The Participant may, at any time during the purchase period, reduce his or her rate of payroll deduction to become effective as
soon as possible after filing of the appropriate form with the Plan Administrator. The Participant may not, however, effect more than
one (1) such reduction per purchase period.
(ii)
The Participant may, prior to the commencement of any new purchase period, increase the rate of his or her payroll deduction by
filing the appropriate form with the Plan Administrator. The new rate (which may not exceed the fifteen percent (15%) maximum) shall
become effective as of the start date of the new purchase period.
B.
Payroll deductions shall begin on the first payday following the start date of the purchase period and shall (unless sooner terminated
by the Participant) continue through the payday ending with or immediately prior to the last day of the purchase period. The amounts so
collected shall be credited to the Participant’s book account under the Plan, but no interest shall be paid on the balance from
time to time outstanding in such account. The amounts collected from the Participant shall not be held in any segregated account or trust
fund and may be commingled with the general assets of the Corporation and used for general corporate purposes.
C.
Payroll deductions shall automatically cease upon the termination of the Participant’s purchase right in accordance with
the provisions of the Plan.
D.
The Participant’s acquisition of Common Stock under the Plan during any purchase period shall neither limit nor require the
Participant’s acquisition of Common Stock during any subsequent purchase period.
A.
Grant of Purchase Right. A Participant shall be granted a separate purchase right on the start date of each
purchase period in which he or she participates. The purchase right shall grant the Participant the right to purchase shares of Common
Stock on the Purchase Date upon the terms set forth below. The Participant shall execute a stock purchase agreement embodying such terms
and such other provisions (not inconsistent with the Plan) as the Plan Administrator may deem advisable.
Under no circumstances shall
purchase rights be granted under the Plan to any Eligible Employee if such individual would, immediately after the grant, own (within
the meaning of Code Section 424(d)) or hold outstanding options or other rights to purchase, stock possessing five percent (5%) or
more of the total combined voting power or value of all classes of stock of the Corporation or any Corporate Affiliate.
B.
Exercise of the Purchase Right. Each purchase right shall be automatically exercised on the Purchase Date, and
shares of Common Stock shall accordingly be purchased on behalf of each Participant (other than Participants whose payroll deductions
have previously been refunded in accordance with the Termination of Purchase Right provisions below) on such date. The purchase shall
be effected by applying the Participant’s payroll deductions for the purchase period (together with any carryover deductions from
the preceding purchase period) to the purchase of whole shares of Common Stock (subject to the limitation on the maximum number of shares
purchasable per Participant on any one Purchase Date) at the purchase price in effect for that purchase period.
C.
Purchase Price. The purchase price per share of Common Stock on any Purchase Date shall be equal to eighty-five
percent (85%) of the lower of (i) the Fair Market Value per share of Common Stock on the start date of the
purchase period or (ii) the Fair Market Value per share of Common Stock on the Purchase Date.
D.
Number of Purchasable Shares. The number of shares purchasable by a Participant on any Purchase Date shall be
the number of whole shares obtained by dividing the amount collected from the Participant through payroll deductions during the purchase
period ending with such Purchase Date (together with any carryover deductions from the preceding purchase period) by the purchase price
in effect for that Purchase Date. However, the maximum number of shares of Common Stock purchasable per Participant on any one Purchase
Date shall not exceed Three Thousand (3,000) shares, subject to periodic adjustments in the event of certain changes in the Corporation’s
capitalization.
E.
Excess Payroll Deductions. Any payroll deductions not applied to the purchase of shares of Common Stock on any
Purchase Date because they are not sufficient to purchase a whole share of Common Stock shall be held for the purchase of Common Stock
on the next Purchase Date. However, any payroll deductions not applied to the purchase of Common Stock by reason of the limitation on
the maximum number of shares purchasable by the Participant on the Purchase Date shall be promptly refunded.
F.
Termination of Purchase Right. The following provisions shall govern the termination of outstanding purchase
rights:
(i)
A Participant may, at any time prior to the last day of the purchase period, terminate his or her outstanding purchase right by
filing the appropriate form with the Plan Administrator (or its designate), and no further payroll deductions shall be collected from
the Participant with respect to the terminated purchase right. Any payroll deductions collected during the purchase period in which such
termination occurs shall, at the Participant’s election, be immediately refunded or held for the purchase of shares on the next
Purchase Date. If no such election is made at the time such purchase right is terminated, then the payroll deductions collected with respect
to the terminated right shall be refunded as soon as possible.
(ii)
The termination of such purchase right shall be irrevocable, and the Participant may not subsequently rejoin the purchase period
for which the terminated purchase right was granted. In order to resume participation in any subsequent purchase period, such individual
must re-enroll in the Plan (by making a timely filing of the prescribed enrollment forms) on or before the start date of the new purchase
period.
(iii)
Should the Participant cease to remain an Eligible Employee for any reason (including death, disability or change in status) while
his or her purchase right remains outstanding, then that purchase right shall immediately terminate, and all of the Participant’s
payroll deductions for the purchase period in which such cessation of Eligible Employee status occurs shall be immediately refunded.
G.
Corporate Transaction. In the event of a Corporate Transaction during the purchase period, each outstanding
purchase right shall automatically be exercised, immediately prior to the Effective Date of such Corporate Transaction, by applying the
payroll deductions of each Participant for the purchase period to the purchase of whole shares of Common Stock at a purchase price per
share equal to eighty-five percent (85%) of the lower of (i) the Fair Market Value per share of Common Stock
on the start date of the purchase period or (ii) the Fair Market Value per share of Common Stock immediately prior to the effective
date of such Corporate Transaction. However, the applicable share limitations per Participant shall continue to apply to any such purchase.
The Corporation shall use
its best efforts to provide at least ten (10)-days prior written notice of the occurrence of any Corporate Transaction, and Participants
shall, following the receipt of such notice, have the right to terminate their outstanding purchase rights prior to the effective date
of the Corporate Transaction.
H.
Proration of Purchase Rights. Should the total number of shares of Common Stock to be purchased pursuant to
outstanding purchase rights on any particular date exceed the number of shares then available for issuance under the Plan, the Plan Administrator
shall make a pro-rata allocation of the available shares on a uniform and nondiscriminatory basis, and the payroll deductions of each
Participant, to the extent in excess of the aggregate purchase price payable for the Common Stock pro-rated to such individual, shall
be refunded.
I.
Assignability. During the Participant’s lifetime, the purchase right shall be exercisable only by the
Participant and shall not be assignable or transferable by the Participant.
J.
Stockholder Rights. A Participant shall have no stockholder rights with respect to the shares subject to his
or her outstanding purchase right until the shares are purchased on the Participant’s behalf in accordance with the provisions of
the Plan and the Participant has become a holder of record of the purchased shares.
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VIII.
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ACCRUAL LIMITATIONS
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A.
No Participant shall be entitled to accrue rights to acquire Common Stock pursuant to any purchase right outstanding under this
Plan if and to the extent such accrual, when aggregated with (i) rights to purchase Common Stock accrued under any other purchase
right granted under this Plan and (ii) similar rights accrued under other employee stock purchase plans (within the meaning of Code
Section 423) of the Corporation or any Corporate Affiliate, would otherwise permit such Participant to purchase more than Twenty-Five
Thousand Dollars ($25,000) worth of stock of the Corporation or any Corporate Affiliate (determined on the basis of the Fair Market Value
of such stock on the date or dates such rights are granted) for each calendar year such rights are at any time outstanding.
B.
For purposes of applying such accrual limitations, the following provisions shall be in effect:
(i)
The right to acquire Common Stock under each purchase right shall accrue on the Purchase Date in effect for the purchase period
for which such right is granted.
(ii)
No right to acquire Common Stock under any outstanding purchase right shall accrue to the extent the Participant has already accrued
in the same calendar year the right to acquire Common Stock under one (1) or more other purchase rights at a rate equal to Twenty-Five
Thousand Dollars ($25,000) worth of Common Stock (determined on the basis of the Fair Market Value of such stock on the date or dates
of grant) for each calendar year such rights were at any time outstanding.
C.
If by reason of such accrual limitations, any purchase right of a Participant does not accrue for a particular purchase period,
then the payroll deductions which the Participant made during that purchase period with respect to such purchase right shall be promptly
refunded.
D.
In the event there is any conflict between the provisions of this article and one or more provisions of the Plan or any instrument
issued thereunder, the provisions of this article shall be controlling.
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IX.
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EFFECTIVE DATE AND TERM OF THE PLAN
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A.
The Plan was originally adopted by the Board on December 9, 1994 and became effective on the Effective Date subject to approval
by the stockholders of the Corporation and the Corporation having complied with all applicable requirements of the 1933 Act (including
the registration of the shares of Common Stock issuable under the Plan on a Form S-8 registration statement filed with the Securities
and Exchange Commission) and applicable listing requirements of any stock exchange (or the Nasdaq Global Market, if applicable) on which
the Common Stock is listed for trading and all other applicable requirements established by law or regulation.
B.
Unless sooner terminated by the Board, the Plan shall terminate upon the earlier of (i) the date on which
all shares available for issuance under the Plan shall have been sold pursuant to purchase rights exercised under the Plan or (ii) the
date on which all purchase rights are exercised in connection with a Corporate Transaction.
The Board may alter, amend,
suspend or discontinue the Plan following the close of any purchase period. However, the Board may not, without the approval of the Corporation’s
stockholders, (i) materially increase the number of shares of Common Stock issuable under the Plan or the maximum number of shares
purchasable per Participant on any one Purchase Date, except for permissible adjustments in the event of certain changes in the Corporation’s
capitalization, (ii) alter the purchase price formula so as to reduce the purchase price payable for the shares purchasable under
the Plan, or (iii) materially increase the benefits accruing to Participants under the Plan or materially modify the requirements
for eligibility to participate in the Plan.
A.
All costs and expenses incurred in the administration of the Plan shall be paid by the Corporation.
B.
Nothing in the Plan shall confer upon the Participant any right to continue in the employ of the Corporation or any Corporate Affiliate
for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Corporate
Affiliate employing such person) or of the Participant, which rights are hereby expressly reserved by each, to terminate such person’s
employment at any time for any reason, with or without cause.
C.
The provisions of the Plan shall be governed by the laws of the State of Alabama without resort to that State’s conflict-of-laws
rules.
DEFINITIONS
The following definitions shall be in
effect under the Plan:
A.
Base Salary shall mean the regular base salary paid to a Participant by one or more Participating Companies during
such individual’s period of participation in the Plan, plus any pre-tax contributions made by the Participant to any Code Section 401(k)
salary deferral plan or any Code Section 125 cafeteria benefit program now or hereafter established by the Corporation or any Corporate
Affiliate. The following items of compensation shall not be included in Base Salary: (i) all overtime payments,
bonuses, commissions (other than those functioning as base salary equivalents), profit-sharing distributions and other incentive-type
payments and (ii) any and all contributions (other than Code Section 401(k) or Code Section 125 contributions) made on
the Participant’s behalf by the Corporation or any Corporate Affiliate under any employee benefit or welfare plan now or hereafter
established.
B.
Board shall mean the Corporation’s Board of Directors.
C.
Code shall mean the Internal Revenue Code of 1986, as amended.
D.
Common Stock shall mean the Corporation’s common stock.
E.
Corporate Affiliate shall mean any parent or subsidiary corporation of the Corporation (as determined in accordance
with Code Section 424), whether now existing or subsequently established.
F.
Corporate Transaction shall mean either of the following stockholder-approved transactions to which the Corporation
is a party:
(i)
a merger or consolidation in which securities possessing more than fifty percent (50%) of the total combined voting power
of the Corporation’s outstanding securities are transferred to a person or persons different from the persons holding those securities
immediately prior to such transaction, or
(ii)
the sale, transfer or other disposition of all or substantially all of the assets of the Corporation in complete liquidation or
dissolution of the Corporation.
G.
Corporation shall mean BioCryst Pharmaceuticals, Inc., a Delaware corporation, and any corporate successor to
all or substantially all of the assets or voting stock of BioCryst Pharmaceuticals, Inc. which shall by appropriate action adopt the Plan.
H.
Effective Date shall mean February 1, 1995. Any Corporate Affiliate which becomes a Participating Corporation
after such Effective Date shall designate a subsequent Effective Date with respect to its employee-Participants.
I.
Eligible Employee shall mean any person who is engaged, on a regularly-scheduled basis of more than twenty (20) hours
per week for more than five (5) months per calendar year, in the rendition of personal services to any Participating Corporation
as an employee for earnings considered wages under Section 3401 (a) of the Code.
J.
Fair Market Value per share of Common Stock on any relevant date shall be determined in accordance with the
following provisions:
(i)
If the Common Stock is at the time traded on the Nasdaq Global Market, the Fair Market Value shall be the closing selling price
per share of Common Stock on the date in question, as such price is reported on the Nasdaq Global Market or any successor system. If there
is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price
on the last preceding date for which such quotation exists.
(ii)
If the Common Stock is at the time listed on any Stock Exchange, then the Fair Market Value shall be the closing selling price
per share of Common Stock on the date in question on the Stock Exchange determined by the Plan Administrator to be the primary market
for the Common Stock, as such price is officially quoted in the composite tape of transactions on such exchange. If there is no closing
selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last
preceding date for which such quotation exists.
K.
1933 Act shall mean the Securities Act of 1933, as amended.
L.
1934 Act shall mean the Securities Exchange Act of 1934, as amended.
M.
Participant shall mean any Eligible Employee of a Participating Corporation who is actively participating
in the Plan.
N.
Participating Corporation shall mean the Corporation and such Corporate Affiliate or Affiliates as may be authorized
from time to time by the Board to extend the benefits of the Plan to their Eligible Employees. The Participating Corporations in the Plan
as of the Effective Date are listed in attached Schedule A.
O.
Plan shall mean the Corporation’s Employee Stock Purchase Plan, as set forth in this document.
P.
Plan Administrator shall mean the committee of two (2) or more Board members appointed by the Board to
administer the Plan.
Q.
Purchase Date shall mean the last business day of each purchase period.
R.
Stock Exchange shall mean either the Nasdaq Global Market or the New York Stock Exchange.
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