| ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. |
Directors
Since our initial public offering (the “IPO”)
in 2018, our Board has been divided into three classes, each elected for a three-year term. The classification results in staggered elections,
with a different class of directors standing for election every year. Set forth below is the name, age as of April 20, 2023, and certain
biographical information with respect to each of our current directors, by class.
Class II Directors (Terms Expiring in 2023)
Joseph P. Errico
Joseph P. Errico, 54, served as the Company’s
Chief Science and Strategy Officer from July 2016 to June 2019, and previously served as the Company’s Chief Executive Officer from
January 2010 to July 2016. Mr. Errico has also served as a member of the Board since 2005, when he co-founded the Company with Thomas
J. Errico, M.D., and Peter S. Staats, M.D., and as chairman of the Board from March 2013 until June 2018. Prior to founding the Company,
Mr. Errico served as the General Manager of the Motion Preservation Unit of Stryker Spine, a Division of Stryker Corporation, from August
2004 through December 2007. Prior to that, Mr. Errico co-founded and served as the Chief Executive Officer and director for Spinecore,
Inc., from September 2001 through August 2004, when that company was sold to Stryker Corporation. Mr. Errico received his B.S. in Aeronautical
Engineering from the Massachusetts Institute of Technology, his M.S. in Mechanical Engineering and Materials Science from Duke University
School of Engineering and his J.D. from Duke University School of Law. Mr. Errico also serves as the Managing Member of Core Ventures
II, LLC and certain affiliated entities with an equity interest in the Company. The Board believes that Mr. Errico’s extensive senior
management experience in innovative healthcare technology companies, and his extensive knowledge and contributions to the Company’s
intellectual property, products, business, and the science of vagus nerve stimulation (VNS), qualify him to serve on the Board.
Trevor J. Moody
Trevor J. Moody, 58, has served as a member of
the Board since March 2013. Mr. Moody has served since January 2010 as President of TM Strategic Advisors LLC, a management consultancy
serving the boards, investors, and senior management of both emerging and established medical technology companies. He also served as
Medical Device Partner at MH Carnegie & Co. Pty Ltd from October 2013 until April 2022, where he made venture capital investments
in medical device companies. He served on the board of Simplify Medical Pty Ltd. from its recapitalization in December 2014 through to
its sale to NuVasive Inc. in February 2021. From July 2015 to December 2015, Mr. Moody served as interim CEO of a MH Carnegie & Co.
portfolio company, Cardiac Dimensions Pty Ltd. From 1999 to 2010, Mr. Moody was at Frazier Healthcare Ventures, a large healthcare-focused
venture capital and private equity investment firm. He was a General Partner at Frazier Healthcare Ventures from 2005 to 2010. Prior to
that, he was a Senior Consultant at The Wilkerson Group, a leading healthcare strategic consultancy. Mr. Moody currently also serves on
the board of directors of a non-profit called Angel Flight West, and on the boards of several private corporations, including Cardiac
Dimensions Pty Ltd., EBR Systems, Inc., Renew Medical Pty Ltd, Brain Protection Company Pty Ltd, and CurvaFix, Inc. Mr. Moody received
his B.E. from the University of Southern Queensland, Australia, and his M.S. in Management from the Massachusetts Institute of Technology
(Sloan School). The Board believes that Mr. Moody’s experience, with over 25 years in the development, commercialization and funding
of innovative, growth-oriented medical technologies, qualify him to serve on the Board.
Thomas M. Patton
Thomas M. Patton, 59, has served as a member of
the Board since April 2020. He is a seasoned healthcare executive and board member with operational, strategic, financial, legal, compliance
and transactional experience, from start-ups to growth companies, both public and private. He currently is an Advisor to the private equity
firm SV Health Investors and serves on the board of the Connecticut Port Authority and is Co-Chair of its audit committee. He was the
Chief Executive Officer and member of the board of directors of Ximedica, LLC, a private medical products outsource design and development
company from August 2020 to May 2021. From 2015 to 2021, he also served on the Board of Misonix, Inc., a publicly traded ultrasonic surgical
tools and wound care company, and chaired that company’s audit committee, from October 2015 to November 2021 and served as President
and Chief Executive Officer of CAS Medical Systems, a publicly traded developer and distributor of patient monitoring equipment, from
2010-2019. His prior experience includes as Co-Founder, President and CEO of QDx, Inc., a developer of unique micro-fluidic diagnostic
technology utilizing digital imaging techniques for hematologic analysis, as President and Chief Operating Officer of Novametrix Medical
Systems, Inc., and as CEO of Wright Medical Technology, Inc. Mr. Patton has served on more than a dozen boards of directors for both public
and private medical products and services companies. The Board believes that Mr. Patton’s business and financial experience, as
well as his medical device industry expertise, qualify him to serve on the Board.
Class III Directors (Terms Expiring in 2024)
Peter Cuneo
Peter Cuneo, 79, has served as a member of the
Board since April 2020 and been the Chairman of the Board since October 2021. He brings significant executive leadership and turn-around
experience to the Board. He currently serves as executive chairman of CIIG Capital Partners II, a special acquisition corporation listed
on Nasdaq. He also currently serves as a Managing Principal of Cuneo & Company LLC, a private investment and management company that
he founded. He was formerly the Chairman of Arrival Ltd., a global electric vehicle company, from September 2021 until February 2023.
Mr. Cuneo’s past experience includes serving as Chief Executive Officer of Marvel Entertainment and as Vice Chairmen until its sale
to Disney in 2009, and as Chairman of Iconix Brand Group from 2007 through 2021. Earlier in his career, he successfully led three turnarounds,
first as President of Clairol’s Personal Care Division, as President of Black and Decker’s Security Hardware Group, and as
Chief Executive Officer of Remington Products. Mr. Cuneo’s board experience includes serving as Chairman of Valiant Entertainment
from 2012 to 2018 following Cuneo & Company LLC’s investment in the company. He currently serves as Chairman emeritus of the
Alfred University Board of Trustees and on the Board of the National Archives Foundation in Washington, D.C. Mr. Cuneo holds an M.B.A.
from Harvard Business School, a B.S. from Alfred University and was a Lieutenant in the United States Navy, having served two deployments
during the Vietnam War. The Board believes that Mr. Cuneo’s extensive business and financial background, including his significant
consumer-focused expertise, qualify him to serve on the Board.
Thomas J. Errico, M.D.
Thomas J. Errico, M.D., 71, has served as a member
of the Board since 2005, when he co-founded the company with Joseph P. Errico and Peter S. Staats, M.D. Dr. Errico has been a board-certified
orthopedic surgeon since 1986, and currently serves as a pediatric orthopedic spine surgeon at Nicklaus Children’s Hospital. He
served as the Chief, Division of Spine Surgery in Orthopedics, NYU Langone Health from 1997 until 2019. He currently serves on the board
of Setting Scoliosis Straight, a nonprofit organization focused on advancing medical techniques in the treatment of spinal deformities
and is also an Adjunct Professor of the Department of Orthopaedic Surgery in the NYU Grossman School of Medicine. In addition, Dr. Errico
is a member of the International Society for the Advancement of Spine Surgery, and served as its President from 2010 to 2011. He is also
an original member of the North American Spine Society, and served as its President from 2003 to 2004. Dr. Errico has founded multiple
companies in the healthcare industry, including Spinecore, Inc. in 2001, where he served as a director until it was sold to Stryker, Inc.
in 2004. Dr. Errico was also a founding member of K2M Group Holdings, Inc. in January 2004. Dr. Errico holds a B.S. in Zoology from Rutgers
University and an M.D. from Rutgers Medical School, formerly the University of Medicine and Dentistry of New Jersey. The Board believes
Dr. Errico is qualified to serve on the Board due to his long tenure as a practicing spine-surgeon and his leadership role with a world-class
medical institution, as well as serving as a co-founder, director and investor in a number of successful early stage healthcare companies.
John P. Gandolfo
John P. Gandolfo, 62, has served as a member of
the Board since April 2020. He brings to the Board more than 30 years of financial leadership at both public and private companies across
multiple industry sectors, including in expense control and cash flow optimization. He currently serves as Chief Financial Officer of
Eyenovia, Inc., a publicly held, late clinical stage biopharmaceutical company focusing on the development of ophthalmic drugs since 2018.
Prior to Eyenovia, he served as Chief Financial Officer of Xtant Medical Holdings, Inc., a publicly held orthopedic and spine medical
device company with multiple operations throughout the United States from 2010 to 2017. His prior healthcare-related experience includes
roles as Chief Financial Officer of Progenitor Cell Therapy LLC, Power Medical Interventions and Bioject, Inc., among others. Mr. Gandolfo’s
experience also includes serving on the audit committees of the boards of multiple medical technology companies including the Odyssey
Health, Inc., a medical device company which he has served as a director since 2019. The Board believes that these experiences, and his
ability to serve as a financial expert on the Company’s audit committee, qualify him to serve on the Board.
Class I Directors (Terms Expiring in 2025)
Daniel S. Goldberger
Daniel S. Goldberger, 61, has served as the Company’s
Chief Executive Officer and a member of the Board since October 2019. Mr. Goldberger served as a Director of Koru Medical Systems, a manufacturer
of infusion pump systems, from April 2017 until May 2022 and he served as its Executive Chairman from August 2017 until September 2019.
. From January 2018 to September 2019, Mr. Goldberger served as the Chief Executive Officer of Synergy Disc Replacement Inc., a private
company commercializing a proprietary total disc implant for cervical spine therapy. From July 2017 to September 2017, Mr. Goldberger
served as chief executive officer of Milestone Medical, Inc. Prior to this he served as the chief executive officer of Xtant Medical Holdings,
Inc. from August 2013 to January 2017. He also served as the chief executive officer of Sound Surgical Technologies LLC from April 2007
to February 2013. Mr. Goldberger also served on the boards of Xtant Medical Holdings, Inc., Sound Surgical, Xcorporeal and Glucon. He
currently serves as an advisor to investment funds Meridian Capital and Wellfleet Capital. Mr. Goldberger earned a B.S. in Mechanical
Engineering from The Massachusetts Institute of Technology, and a M.S. in Mechanical Engineering from Stanford University. The Board believes
that Mr. Goldberger’s extensive senior management experience in the medical device industry, including as the Company’s Chief
Executive Officer, qualify him for service on the Board.
Julie A. Goldstein
Julie A. Goldstein, 63, has served as a member
of the Board since March 2022. Ms. Goldstein has more than 30 years of leadership expertise in product, media and entertainment marketing,
which spans a career in radio, television, music and theater. Ms. Goldstein’s specific expertise includes operations, sales development,
advertising, and project management. She has also spearheaded many major national and international marketing campaigns. She was a producer
for the Broadway musical First Date from 2013 to 2014. At music labels JIVE Records, RCA Records, and Virgin Records, she served as Vice
President of marketing and development. She also held the position of Vice President of marketing and sales at NewsCorp / TV Guide Television
Network and began her career in radio marketing. Her expertise around spending and strategic marketing techniques contributed to RCA’s
turnaround. She received the Billboard Magazine’s Radio Promotion Director of the Year, Bertelsmann Key Management Award, and Virgin
Records Promotion Director of the Year. Ms. Goldstein holds a B.A. in Communications and Social Welfare from California State University
at Chico. The Board believes Ms. Goldstein’s extensive media and marketing expertise qualifies her to serve on the Board.
Patricia Wilber
Patricia Wilber, 61, has served as a member of
the Board since March 2022. Ms. Wilber has been a Chief Marketing Officer, global business strategist, and board member who delivers organizational
and cultural transformation for branding. She is a pioneer in new franchise models and branded partnerships. Ms. Wilber last served as
the Executive Vice President, CMO, and Managing Director of Partnerships, EMEA, the highest position in the marketing department at Disney
from 2015 to 2018, where she drove growth for Walt Disney Company’s marquee brands by leading marketing and communications for Disney,
Pixar, Star Wars, and Marvel. Additionally, she established and led EMEA’s 40-country integrated marketing, franchise and partnership
functions, including a major reorganization of the EMEA channels to boost growth and profitability by significantly reducing expenses.
Ms. Wilber has also served as a member of the board of CIIG Capital Partners II, a special acquisition corporation listed on Nasdaq since
March 2023. She also currently serves on the board of the medical nonprofit organizations, Vibrant Emotional Health and Yale New Haven
Hospital. She served on the board of Euro Disney SCA from 2015 to 2018, and Magical Cruise Company, more commonly known as the Disney
Cruise Line from 2013 to 2018. Ms. Wilber holds a B.A. in History from Brown University. The Board believes Ms. Wilber’s strategic
marketing expertise qualifies her to serve on the Board.
![](https://content.edgar-online.com/edgar_conv_img/2023/05/01/0001193805-23-000639_image_001.jpg)
Demographic Background
The Board is committed to having diverse individuals
from different backgrounds with varying perspectives, professional experience, education and skills serving as members of the Board. The
Board believes that a diverse membership with a variety of perspectives and experiences is an important feature of a well-functioning
board.
Board Diversity
Each of the categories listed in the below table
has the meaning as it is used in Nasdaq Rule 5605(f).
Board Diversity Matrix |
Board Size |
|
|
|
|
· Total Number of Directors |
9 |
|
|
|
|
|
|
|
|
Gender: |
Male |
Female |
Non-Binary |
Gender Undisclosed |
|
7 |
2 |
- |
- |
|
|
|
|
|
Number of directors who identify in any of the categories below: |
|
|
|
|
· African American or Black |
- |
- |
- |
- |
· Alaskan Native or American Indian |
- |
- |
- |
- |
· Asian |
- |
- |
- |
- |
· Hispanic or Latinx |
- |
- |
- |
- |
· Native Hawaiian or Pacific Islander |
- |
- |
- |
- |
· White |
7 |
2 |
- |
- |
· Two or more races or ethnicities |
- |
- |
- |
- |
· LGBTQ+ |
- |
· Undisclosed |
- |
Of our nine current directors, approximately twenty-two
percent identify as having at least one diversity characteristic (i.e., female, non-binary, LGBTQ+ and/or race or ethnicity other than
white).
During 2021 and early 2022, the Nomination and
Governance Committee made a concerted effort to recruit new diverse directors to the Board culminating in the appointment of Ms. Goldstein
and Ms. Wilber in March 2022.
Executive Officers
Set forth below is the name, age as of April 26,
2023, and certain biographical information for our current executive officer other than the Company’s Chief Executive Officer, Daniel
S. Goldberger, whose information is set forth above in “Class I Directors (Terms Expiring in 2025).
Brian M. Posner
Brian M. Posner, 61, has served as the Company’s
Chief Financial Officer since April 2019. He joined the Company from Cellectar Biosciences, where he most recently served as chief financial
officer from April 2018 to March 2019. Prior to Cellectar, Mr. Posner was chief financial officer at Alliqua BioMedical from 2013 to 2018,
chief financial officer at Ocean Power Technologies from 2010 to 2013 and chief financial officer at Power Medical Interventions in 2009.
Before such time, Mr. Posner spent nine years at Pharmacopeia from 1999 to 2008, where he served as director of finance before serving
as chief financial officer from 2006 to 2008 upon Pharmacopeia’s acquisition by Ligand Pharmaceuticals. Before his employment with
Pharmacopeia, Mr. Posner was chief financial officer and vice president of operations at Photosynthetic Harvest, a start-up biotechnology
company, and regional chief financial officer at Omnicare. Mr. Posner began his career as an audit supervisor at Coopers & Lybrand,
which merged with Price Waterhouse to become PricewaterhouseCoopers. Mr. Posner earned an M.B.A. in Managerial Accounting from Pace University’s
Lubin School of Business and a B.A. in Accounting from Queens College.
Executive officers serve at the pleasure of our
Board of Directors.
CORPORATE GOVERNANCE
Board Operating and Governance Guidelines
The Company has adopted Corporate Governance Guidelines
to assure that the Board has the necessary authority and practices in place to review and evaluate the Company’s business operations
as needed and can make decisions that are independent of the Company’s management. The guidelines are also intended to align the
interests of directors and management with those of the Company’s stockholders. The Corporate Governance Guidelines set forth the
practices the Board intends to follow with respect to board composition and selection, board meetings and involvement of senior management,
Chief Executive Officer performance evaluation and succession planning, and board committees and compensation. The Corporate Governance
Guidelines, as well as the charters for each committee of the Board, are available on the Company’s website at www.electrocore.com.
Board Leadership Structure
The Board has an independent chairman, Mr. Cuneo,
who has authority, among other things, to call and preside over Board meetings, including meetings of the independent directors, to set
meeting agendas and to determine materials to be distributed to the Board. Accordingly, the Board Chairman has substantial ability to
shape the work of the Board. The Company believes that separation of the positions of Board Chairman and Chief Executive Officer reinforces
the independence of the Board in its oversight of the business and affairs of the Company. In addition, the Company believes that having
an independent Board Chairman creates an environment that is more conducive to objective evaluation and oversight of management’s
performance, increasing management accountability and improving the ability of the Board to monitor whether management’s actions
are in the best interests of the Company and the Company’s stockholders. As a result, the Company believes that having an independent
Board Chairman enhances the effectiveness of the Board as a whole.
There are no family relationships among any of
the Company’s directors and executive officers, except that Dr. Thomas J. Errico is the uncle of Joseph P. Errico nor have any of
our executive officers or key employees been involved in a legal proceeding that would be required to be disclosed pursuant to Item 401(f)
of Regulation S-K of the Exchange Act.
Role Of The Board In Risk Oversight
One of the key functions of the Board is informed
oversight of the Company’s risk management process. The Board does not have a standing risk management committee, but rather administers
this oversight function directly through the Board as a whole, as well as through various standing committees of the Board that address
risks inherent in their respective areas of oversight. In particular, the Board is responsible for monitoring and assessing strategic
risk exposure and the Company’s audit committee is responsible for considering and discussing the Company’s major financial
risk exposures and the Company’s risk assessment and risk management policies (including those related to data privacy, data security
and cybersecurity). The Company’s audit committee also periodically reviews the general process for the oversight of risk management
by the Board.
The nominating and governance committee monitors
compliance with legal and regulatory requirements and the effectiveness of the Company’s corporate governance practices, including
whether they are successful in preventing illegal or improper liability-creating conduct. The Company’s nominating and governance
committee is responsible for overseeing the Company’s risk management efforts generally, including the allocation of risk management
functions among the Board and its committees. The Company’s compensation committee is responsible for assessing and monitoring whether
any of the Company’s compensation policies and programs has the potential to encourage excessive risk-taking.
Nominating and Governance Committee
The Company’s nominating and governance
committee currently consists of three directors, Mr. Cuneo, Dr. Errico and Ms. Goldstein. Dr. Errico is the current chairman of the nominating
and governance committee.
The Board has determined that the composition
of the Company’s nominating and governance committee satisfies the applicable independence requirements under, and the functioning
of the Company’s nominating and governance committee complies with, the applicable requirements of Nasdaq standards and SEC rules
and regulations. All of the members of the Company’s nominating and governance committee satisfy the applicable independence requirements
of the SEC and Nasdaq. The Company will continue to evaluate and will comply with all future requirements applicable to the Company’s
nominating and governance committee. The nominating and governance committee’s responsibilities include:
| · | annually reviewing the list of director selection criteria contained in the Company’s corporate
governance guidelines, and making recommendations to the Board regarding necessary or appropriate changes thereto; |
| · | identifying, reviewing and evaluating candidates, including candidates submitted by stockholders, for
election to the Board and recommending to the Board (i) nominees to fill vacancies or new positions on the Board and (ii) the slate of
nominees to stand for election by the Company’s stockholders at each annual meeting of stockholders; |
| · | annually recommending to the Board (i) the assignment of directors to serve on each committee; (ii) the
chairman of each committee and (iii) the chairman of the Board or lead independent director, as appropriate; developing, recommending,
overseeing the implementation of and monitoring compliance with, the Company’s corporate governance guidelines, and periodically
reviewing and recommending any necessary or appropriate changes thereto; reviewing the adequacy of the Company’s certificate of
incorporation and bylaws and recommending to the Board, as conditions dictate, amendments for consideration by the stockholders; and |
| · | such other matters as directed by the Board. |
The nominating and governance committee believes
that candidates for director should have certain minimum qualifications, which are described in the Company’s Corporate Governance
Guidelines. The nominating and governance committee also takes these minimum qualifications into account in identifying and evaluating
director nominees, including nominees recommended by stockholders. In identifying director nominees, the nominating and governance committee
strives for a diverse mix of backgrounds and expertise that enhances the ability of the directors collectively to understand the issues
facing the Company and to fulfill the responsibilities of the Board and its committees. During 2021 and early 2022, the Nomination and
Governance Committee made a concerted effort to recruit diverse directors to the Board culminating in the appointment of Ms. Goldstein
and Ms. Wilber in March 2022.
Audit Committee
The Company’s audit committee reviews the
Company’s internal accounting procedures and consults with and reviews the services provided by the Company’s independent
registered public accountants. The Company’s audit committee currently consists of three directors, Mr. Gandolfo, Mr. Patton and
Ms. Wilber. Mr. Patton is the chairman of the audit committee and the Board has determined that Mr. Gandolfo and Mr. Patton are each an
“audit committee financial expert” as defined by SEC rules and regulations. The Board has determined that each of the members
of the Company’s audit committee is independent under Nasdaq listing rules and under Rule 10A-3 under the Exchange Act. The Company
intends to continue to evaluate the requirements applicable to it and intends to comply with the future requirements to the extent that
they become applicable to the Company’s audit committee. The principal duties and responsibilities of the Company’s audit
committee include:
| · | appointing, compensating, retaining, evaluating, terminating and overseeing the Company’s independent
registered public accounting firm; |
| · | discussing with the Company’s independent registered public accounting firm their independence from
management and the Company; |
| · | reviewing with the Company’s independent registered public accounting firm the scope and results
of their audit; |
| · | approving all audit and permissible non-audit services to be performed by the Company’s independent
registered public accounting firm and related fees; |
| · | overseeing the financial reporting process and discussing with management and the Company’s independent
registered public accounting firm the interim and annual financial statements that the Company files with the SEC; |
| · | reviewing and monitoring the Company’s accounting principles, accounting policies, financial and
accounting controls and compliance with legal and regulatory requirements; |
| · | establishing procedures for the confidential anonymous submission of concerns regarding questionable accounting,
internal control or auditing matters; |
| · | reviewing the Company’s code of business conduct and ethics and recommending any changes to the
Board; |
| · | reviewing and approving certain related party transactions; and |
| · | discussing the Company’s major financial risk exposures (including those related to data privacy,
data security and network security) and management's program to monitor, assess and control such exposures, including the Company’s
risk assessment and risk management policies. |
Compensation Committee
The Company’s compensation committee reviews
and determines the compensation of the Company’s executive officers. The Company’s compensation committee currently consists
of three directors, Dr. Errico, Mr. Moody and Mr. Gandolfo, each of whom is a non-employee member of the Board as defined in Rule 16b-3
under the Exchange Act. Mr. Moody is the chairman of the compensation committee. The Board has determined that the composition of the
Company’s compensation committee satisfies the applicable independence requirements under, and the functioning of the Company’s
compensation committee complies with the applicable requirements of, Nasdaq rules and SEC rules and regulations. The Company intends to
continue to evaluate and intends to comply with all future requirements applicable to its compensation committee. The principal duties
and responsibilities of the Company’s compensation committee include:
| · | establishing, approving, and making recommendations to the Board regarding performance goals and objectives
relevant to the compensation of the Company’s chief executive officer, evaluating the performance of the Company’s chief executive
officer in light of those goals and objectives and recommending to the full Board for approval, the chief executive officer’s compensation,
including incentive-based and equity-based compensation, based on that evaluation; |
| · | setting the compensation of the Company’s other executive officers, based in part on recommendations
of the chief executive officer; |
| · | reviewing, approving, and making recommendations to the Board regarding employment agreements, severance
arrangements and change of control agreements for the chief executive officer and other executive officers, as appropriate; |
| · | exercising administrative authority under the Company’s stock plans and employee benefit plans; |
| · | establishing policies and making recommendations to the Board regarding director compensation; |
| · | reviewing compensation plans, programs and policies; and |
| · | handling such other matters that are specifically delegated to the compensation committee by the Board
from time to time. |
The compensation committee meets regularly in
executive session without management present. However, from time to time, various members of management and other employees as well as
outside advisors or consultants may be invited by the compensation committee to make presentations, to provide financial or other background
information or advice or to otherwise participate in compensation committee meetings. The Chief Executive Officer may not participate
in, or be present during, any deliberations or determinations of the compensation committee regarding his compensation or individual performance
objectives. The charter of the compensation committee grants the compensation committee the authority to conduct or authorize investigations
into any matters within the scope of its responsibilities as it will deem appropriate. In addition, under its charter, the compensation
committee has the authority to select, retain and terminate, at the expense of the Company, advice and assistance from any consultants,
independent legal counsel or other advisors.
During the year ended December 31, 2022 and 2021,
the compensation committee in its discretion did not engage a compensation consultant.
The compensation committee also considers matters
related to individual compensation, such as compensation for new executive hires, as well as high-level strategic issues, such as the
efficacy of the Company’s compensation strategy, potential modifications to that strategy and new trends, plans or approaches to
compensation, at various meetings throughout the year. For executives other than the Chief Executive Officer, the compensation committee
solicits and considers evaluations and recommendations submitted to the compensation committee by the Chief Executive Officer with respect
to individual employee performance. In the case of the Chief Executive Officer, the evaluation of his performance is conducted by the
compensation committee with input from other independent Board members, which determines any adjustments to his compensation as well as
awards to be granted. For all executives and directors as part of its deliberations, the compensation committee may review and consider,
as appropriate, materials such as financial reports and projections, operational data, tax and accounting information, tally sheets that
set forth the total compensation that may become payable to executives in various hypothetical scenarios, executive and director share
ownership information, stock performance data, analyses of historical executive compensation levels and current Company-wide compensation
levels and recommendations of the compensation consultant, including analyses of executive and director compensation paid at other companies
identified by the consultant to be comparable to us.
Meetings Of The Board Of Directors
The Board met five times during 2022. Each Board
member attended 75% or more of the aggregate number of meetings of the Board and of the committee(s) on which he or she served, that were
held during the portion of 2022 for which he or she was a director or committee member.
Nasdaq rules require that the non-management directors
of the board meet at regularly scheduled executive sessions, without management present, in order to empower the non-management directors
to serve as a more effective check on management. During 2022, the Company’s non-management directors met in executive session,
without management present, at the end of regularly scheduled board meetings or during scheduled executive session calls. Mr. Cuneo, the
Company’s current Board Chairman, presided over the executive sessions.
Information Regarding Committees Of The Board
Of Directors
The following table provides membership and meeting
information for 2022 for each of the Board’s standing committees.
Name |
|
Audit Committee |
|
Compensation Committee |
|
Nominating & Governance Committee |
Michael G. Atieh(1) |
|
X |
|
|
|
|
|
X |
|
Peter Cuneo |
|
X |
|
|
X |
|
|
X |
|
Thomas J. Errico, M.D |
|
|
|
|
X |
|
|
X |
* |
John P. Gandolfo |
|
X |
|
|
X |
|
|
|
|
Julie Goldstein(2) |
|
|
|
|
|
|
|
X |
|
Trevor J. Moody |
|
|
|
|
X |
* |
|
|
|
Stephen L. Ondra, M.D. (3) |
|
|
|
|
|
|
|
X |
|
Thomas M. Patton |
|
X |
* |
|
|
|
|
|
|
Patricia Wilber(4) |
|
X |
|
|
|
|
|
|
|
Number of meetings in 2022 |
|
6 |
|
|
5 |
|
|
5 |
|
*Committee Chair
(1) Mr.
Atieh resigned from the Board and its committees effective June 8, 2022.
(2) Ms.
Goldstein joined the Board on March 15, 2022 and became a member of the Nominating and Governance Committee on May 5, 2022.
(3) Dr.
Ondra resigned from the Board and its committees effective March 4, 2022.
(4) Ms.
Wilber joined the Board on March 15, 2022 and became a member of the Audit Committee on May 5, 2022.
Director Nominating Procedures
The Nominating and Governance Committee assists
our Board in identifying director nominees consistent with criteria established by our Board. Although the Governance and Nominating Committee
does not currently have a specific policy with regard to consideration of director candidates recommended by stockholders, the Board and
the Nominating and Governance Committee believe that the Nominating and Governance Committee would provide such recommendations the same
consideration as other candidates. Any recommendation submitted by a stockholder to the Nominating and Governance Committee should include
information relating to each of the qualifications outlined below concerning the potential candidate along with the other information
required by the rules of the SEC, our Bylaws for stockholder nominations.
Generally, nominees for director are identified
and suggested to the Governance and Nominating Committee by the Company’s current directors or management using their business networks
and evaluation criteria they deem important, which may or may not include diversity. While the Company does not have a specific policy
regarding diversity and has not established minimum experience or diversity qualifications for director candidates, when considering the
nomination of directors, the Governance and Nominating Committee does generally consider the diversity of its directors and nominees in
terms of knowledge, experience, background, skills, expertise and other demographic factors. The Company does not impose formal term limits
on its directors.
Section 16(A) Beneficial Ownership Reporting
Compliance
Section 16(a) of the Exchange Act requires the
Company’s directors and executive officers, and persons who own more than 10% of a registered class of the Company’s equity
securities, to file with the SEC initial reports of ownership and reports of changes in ownership of the Company’s shares of common
stock and other equity securities. Officers, directors and greater than 10% stockholders are required by SEC regulations to furnish the
Company with copies of all Section 16(a) forms they file.
To the Company’s knowledge, based solely
on a review of the copies of such reports furnished to it and written representations that no other reports were required, during the
fiscal year ended December 31, 2022, all Section 16(a) filing requirements applicable to its officers, directors and greater than 10%
beneficial owners were complied with.
Code Of Business Conduct And Ethics For Employees,
Executive Officers And Directors
The Company has adopted a Code of Business Conduct
and Ethics, (the “Code of Conduct”) applicable to all of its employees, executive officers and directors. The Code of Conduct
is available on the Company’s website at www.electrocore.com, under the “Corporate Governance” tab of the “Investors”
section. The audit committee of the Board is responsible for overseeing the Code of Conduct and must approve any waivers of the Code of
Conduct for executive officers and directors. The Company expects that any amendments to the Code of Conduct, or any waivers of its requirements,
will be disclosed on its website.
| ITEM 11. | EXECUTIVE COMPENSATION. |
Named Executive Officers Summary Compensation
Table
The Company is currently an emerging growth company
and is thus subject to the scaled reporting rules applicable to emerging growth companies. The following section and notes describe, under
such scaled reporting rules, information for the fiscal years ended December 31, 2022 and 2021, concerning the compensation awarded to,
earned by or paid to: (i) our principal executive officer during the fiscal year ended December 31, 2022, and (ii) the most highly compensated
executive officer, other than the principal executive officer, during the fiscal year ended December 31, 2022 (collectively, the “NEOs”).
The Company’s only executive officers are its Chief Executive Officer (the “CEO”) and its Chief Financial Officer.
Summary Compensation Table
Name and Principal
Position |
|
Year |
|
Salary
($) |
|
Bonus
($)(1) |
|
Stock
Awards
($) |
|
Option
Awards ($)(2)(3) |
|
Non-Equity
Incentive Plan Compensation ($) |
|
All
Other Compensation ($)(4) |
|
Total
($) |
Daniel S. Goldberger |
|
2022 |
|
556,500 |
|
278,250 |
|
- |
|
136,912 |
|
- |
|
25,943 |
|
997,605 |
Chief Executive Officer |
|
2021 |
|
525,000 |
|
262,000 |
|
- |
|
493,669 |
|
- |
|
23,670 |
|
1,304,339 |
Brian M. Posner |
|
2022 |
|
387,000 |
|
154,800 |
|
- |
|
54,770 |
|
- |
|
18,260 |
|
614,830 |
Chief Financial Officer |
|
2021 |
|
365,000 |
|
146,000 |
|
- |
|
301,175 |
|
- |
|
23,280 |
|
835,455 |
| 1. | Bonuses in this column represent discretionary cash bonuses
approved by the Board and/or compensation committee of the Board for 2022 or 2021, as applicable. |
| 2. | Includes the value of stock options determined using the grant
date fair value computed in accordance with FASB ASC 718. See Note 12 to the consolidated financial statements of the Company for the
fiscal year ended December 31, 2022 in the Form 10-K filed by the Company on March 8, 2023 for additional description of the assumptions
used in the valuation. Amounts in this column do not reflect the actual economic value that may be realized by the applicable NEO. |
| 3. | On April 17, 2023, Mr. Goldberger voluntarily relinquished the
Option Awards granted to him on October 1, 2019, January 25, 2021, and January 17, 2022. |
| 4. | These amounts consist of payments of health care premiums, contributions
to health savings accounts, and employer 401(k) contributions. |
Executive Compensation Philosophy
The Company reviews compensation annually for
all employees, including its NEOs. The Company’s compensation philosophy is centered around two key tenets: (1) building long-term
value for the Company’s stockholders, and (2) driving employee engagement. To that end, the Company’s executive compensation
program is grounded in the following principles:
· Attraction and Engagement: |
Enable the Company to attract highly-talented people with exceptional leadership capabilities and engage high-caliber talent. |
|
|
· Competitiveness: |
Provide total compensation opportunity levels that are competitive with those being offered to individuals holding comparable positions at other companies with which the Company competes for business and leadership talent. |
|
|
· Stockholder Alignment: |
Deliver majority of compensation through pay elements that are designed to create long-term value for the Company’s stockholders, as well as foster a culture of ownership. |
The Decision-Making Process
In establishing NEO compensation (base salaries,
bonuses and annual equity incentive awards), the Company considers the following:
| · | the relative importance of each NEO’s role and responsibilities; |
| · | how the NEO has performed relative to these roles and responsibilities; |
| · | overall company performance; and |
| · | compensation for comparable positions in the market (as defined by a combination of identified industry
comparables and industry/size-specific survey data).The compensation committee oversees the executive compensation program for the Company’s
NEOs. The committee may work closely with an independent consultant and management to examine the effectiveness of the Company’s
executive compensation program throughout the year and seeks to ensure that the executive compensation program supports the Company’s
business goals and aligns with stockholder interests. |
Since the IPO, the compensation committee was
tasked with the review and approval of compensation for all executive officers other than the CEO. The Company’s compensation committee
typically reviews and discusses management’s proposed compensation with the CEO for all executives other than the CEO.
For the CEO, the compensation committee reviews
and recommends to the Board for approval annual compensation targets and associated performance goals. Based on those discussions and
after receiving recommendations from the compensation committee, the Board, in its discretion and without members of management participating
and ultimately sets compensation for the CEO.
During the year ended December 31, 2022 and 2021,
the compensation committee in its discretion did not engage a compensation consultant.
Annual Base Salary
For 2021, Mr. Goldberger received a base salary
of $525,000 per annum, which was increased to $556,000 for 2022 and $601,020 for 2023. For 2021, Mr. Posner received a base salary of
$365,000 per annum, which was increased to $387,000 for 2022 and $415,000 for 2023.
Annual Bonus
The Company offers its NEOs the opportunity to
earn annual discretionary cash bonuses, as determined by the Board or the compensation committee annually at their discretion. The CEO
makes recommendations to the compensation committee regarding annual bonus payouts for the executive officers including the Company’s
other NEOs. With respect to the CEO’s bonus, the compensation committee makes a recommendation to the Board, both of which and act
without the participation of management including the CEO as to his own salary and bonus determination.
For 2022, annual bonuses were based on such factors
as the Board and the compensation committee deemed appropriate, including a variety of individual and Company priorities and objectives
relating to 2022, as well as the individual NEO’s performance as it related to his area of responsibility.
Long-Term Incentives
The Company’s equity-based incentive awards
are designed to align the Company’s interests with those of its employees and consultants, including its executive officers. The
Company’s compensation committee is responsible for approving equity grants for executive officers other than the CEO. As noted
above, CEO equity awards are recommended by the compensation committee for approval by the Board. The Company’s executives generally
are awarded an initial new hire grant upon commencement of employment.
Following the IPO, all employee equity awards
have been granted pursuant to the 2018 Omnibus Incentive Compensation Plan. All options are granted with a per share exercise price equal
to no less than the closing price of the common stock on the Nasdaq Stock Market on or immediately prior to the date of grant. Both time-vested
stock options and restricted stock generally vest over a four-year period.
Equity Compensation
The Company generally has granted equity awards
to its employees, including its NEOs, as the long-term incentive component of its compensation program.
On January 25, 2021, Mr. Goldberger received an
incentive award of 18,000 options to purchase shares of common stock, at an exercise price of $39.90 per share. One-fourth of the options
vest on each of the first four anniversaries of the date of grant, subject to Mr. Goldberger’s continued employment with the Company
on the applicable vesting dates.
On January 17, 2022, Mr. Goldberger received an
incentive award of 16,666 options to purchase shares of common stock, at an exercise price of $11.55 per share. One-third of the options
vest on each of the first three anniversaries of the date of grant, subject to Mr. Goldberger’s continued employment with the Company
on the applicable vesting dates.
On April 17, 2023, Mr. Goldberger voluntarily relinquished the foregoing
incentive awards granted on January 25, 2021 and January 17, 2022, as well as an incentive award of stock options granted to him on October
1, 2021.
On January 18, 2021, Mr. Posner received an incentive
award of 16,666 options to purchase shares of common stock, at an exercise price of $26.55 per share. One-fourth of the options vest on
each of the first four anniversaries of the grant date, subject to Mr. Posner’s continued employment with the Company on the applicable
vesting dates.
On January 14, 2022, Mr. Posner received an incentive
award of 6,666 options to purchase shares of common stock, at an exercise price of $11.55 per share. One-third of the option vests on
each of the first three anniversaries of the grant date, subject to Mr. Posner’s continued employment with the Company on the applicable
vesting dates.
Other Compensation and Benefits
The Company’s NEOs are eligible to participate
in the Company’s employee benefit plans and programs, including medical and dental benefits and flexible spending accounts, to the
same extent as the Company’s other full-time employees, subject to the terms and eligibility requirements of those plans. The Company
also sponsors a 401(k) defined contribution plan in which its NEOs may participate, subject to limits imposed by the Internal Revenue
Code, to the same extent as its other full-time employees.
Employment Agreements
The Company’s current executive officers
are not party to employment agreements with a fixed term. They are employed on an at-will basis, subject to the terms of (i) their respective
offer letters, and (ii) the Executive Severance Policy described below.
Daniel S. Goldberger
Pursuant to his Offer Letter (the “Goldberger
Agreement”), Mr. Goldberger was paid an annual base salary of $556,500 for 2022, which was increased to $601,020 for 2023. In addition,
Mr. Goldberger is entitled to receive, subject to employment by the Company on the applicable date of bonus payout, an annual target discretionary
bonus of up to 50% of his annual base salary, payable at the discretion of the Board. In January 2023, on the recommendation of the compensation
committee, Mr. Goldberger’s target discretionary bonus opportunity for 2023 was adjusted to be for up to 60% of his base salary.
Pursuant to the Goldberger Agreement, Mr. Goldberger is also eligible to receive healthcare benefits as may be provided from time to time
by the Company to its employees generally, to participate in the Company’s 401(k) plan and to receive paid time off annually in
accordance with the Company’s policies in effect from time to time.
Brian M. Posner
Pursuant to his Offer Letter (the “Posner
Agreement”), Mr. Posner was paid an annual base salary of $ $387,000 in 2022, which was increased to $415,000 in 2023. In addition,
Mr. Posner is entitled to receive, subject to employment by the Company on the applicable date of bonus payout, an annual target discretionary
bonus of up to 40% of his annual base salary, payable at the discretion of the Board or the compensation committee. Pursuant to the Posner
Agreement, Mr. Posner is also eligible to receive healthcare benefits as may be provided from time to time by the Company to its employees
generally, to participate in the Company’s 401(k) plan and to receive paid time off annually in accordance with the Company’s
policies in effect from time to time.
Outstanding Equity Awards at End of 2022
The following table provides information about
outstanding options, units and stock awards issued by the Company held by each of the Company’s NEOs as of December 31, 2022. None
of the Company’s NEOs held any other equity awards from the Company as of December 31, 2022.
|
|
Option Awards |
Stock Awards |
Name |
|
Number of Securities Underlying Unexercised Options Exercisable (#) |
|
Number of Securities Underlying Unexercised Options Unexercisable (#) |
|
|
Option Exercise Price
($) |
|
Option Award Grant Date |
|
Option Expiration Date |
|
Award Grant Date |
|
Number of shares or units of stock that have not vested
(#) |
|
|
Market value of shares or unit of stock that have not vested
($) |
Daniel S. Goldberger(1) |
|
38,217 |
|
12,738 |
|
$ |
27,90 |
|
10/1/2019 |
|
10/1/2029 |
|
- |
|
3,584 |
|
$ |
13,834 |
|
|
4,500 |
|
13,500 |
|
$ |
39.90 |
|
1/25/2021 |
|
1/25/2031 |
|
- |
|
- |
|
|
- |
|
|
- |
|
16,666 |
|
$ |
11.55 |
|
1/17/2022 |
|
1/17/2032 |
|
- |
|
- |
|
|
- |
Brian M. Posner |
|
6,562 |
|
437 |
|
$ |
120.90 |
|
3/11/2019 |
|
3/11/2029 |
|
- |
|
- |
|
|
- |
|
|
3,500 |
|
3,500 |
|
$ |
21.00 |
|
6/12/2020 |
|
6/12/2030 |
|
- |
|
- |
|
|
- |
|
|
4,167 |
|
12,499 |
|
$ |
26.55 |
|
1/18/2021 |
|
1/18/2031 |
|
- |
|
- |
|
|
- |
|
|
- |
|
6,666 |
|
$ |
11.55 |
|
1/14/2022 |
|
1/14/2032 |
|
- |
|
- |
|
|
- |
1 On April 17, 2023, Mr. Goldberger
voluntarily relinquished the Option Awards granted on October 1, 2019, January 25, 2021, and January 17, 2022.
Potential Payments upon Termination or Change
in Control
Under the Company’s Executive Severance
Policy, if the Company terminates an eligible member of its senior management team without “cause” or if the executive resigns
for “good reason” (as those terms are defined below), the Company will provide the following severance benefits: (i) severance
payment in an amount equal to six months of base salary (or one year of base salary and target bonus in the case of the Company’s
Chief Executive Officer or Chief Science and Strategy Officer) payable in equal installments over the six-month or one-year period, as
applicable, (ii) the accrued but unpaid annual incentive bonus, if any, for the year ended prior to the executive’s termination
of employment payable at the same time such annual bonuses for such year to other members of the senior management team, (iii) an annual
incentive bonus, if any, for the year in which the executive’s termination of employment occurred based on actual performance and
pro-rated for the period of employment during such year through the executive’s termination of employment; provided that no such
pro-rated bonus shall be payable unless the period of employment during such year exceeds a specified number of months which will be paid
at the same time annual incentive bonuses for such year are paid to other members of the senior management team and (iv) reimbursement
of COBRA premiums for group health continuation coverage paid by the terminated executive for the duration of the “severance period”
(as defined below). If the termination without cause or resignation for good reason occurs within two years after a “change in control”
the Company will provide the following severance benefits in lieu of the benefits provided in the previous sentence: (i) a lump sum severance
payment in an amount equal to one year of base salary (or one and one-half (1.5) years of the sum of base salary and target bonus in the
case of the Company’s Chief Executive Officer or Chief Science and Strategy Officer), and (ii) reimbursement of COBRA premiums for
group health continuation coverage paid by the terminated executive for the duration of the severance period, and (iii) acceleration of
vesting for all outstanding equity compensation and an extension of the period of time to exercise outstanding stock options and stock
appreciation rights until the earlier of 150 days following the executive’s termination of employment or the original expiration
date for such options or stock appreciation rights.
For purposes of the Executive Severance Policy,
“cause” means any of the following: (a) the executive’s willful failure to fulfill, in any material respect, his or
her duties and responsibilities to the Company (other than by reason of death, illness or disability); (b) the executive’s willful
misconduct, gross negligence or willful acts of personal dishonesty in the performance of his or her duties to the Company that directly,
materially and demonstrably impairs or damages the Company’s property, goodwill, reputation, business or finances; (c) the conviction
of, or plea of nolo contendere by, the executive to, a felony or a crime involving moral turpitude that materially and demonstrably impairs
or damages the Company’s property, goodwill, reputation, business or finances; (d) the executive’s commission of fraud or
embezzlement against us; (e) the executive’s willful or intentional violation of any lawful policy that directly, materially and
demonstrably impairs or damages the Company’s property, goodwill, reputation, business or finances; or (f) the executive’s
breach of the terms of any confidentiality and assignment agreement, which contains restrictive covenants in favor of us.
For purposes of the Executive Severance Policy
“good reason” means any of the following (a) any material reduction in the executives base annual compensation prior to a
“change in control”; provided, however, that a reduction in the executives base annual compensation will not constitute “good
reason” if the Company reduces the annual base compensation of all participants in the Executive Severance Policy on a substantially
equivalent basis; (b) any material reduction in the executive’s base annual compensation during the period commencing on or after
a “change in control” and ending on the second anniversary of a “change in control”; (c) any material diminution
in the executive’s authority, duties, offices, title or responsibilities; or (d) a transfer of executive’s principal place
of employment to a location that is more than 30 miles from the executive’s then current principal place of employment.
For purposes of the Executive Severance Policy,
“severance period” means the number of months set forth in the table below based on the executive’s employment position
at the time of his involuntary termination of employment that results in the executive’s termination for “good reason”:
|
|
Severance Period |
Employment Position |
|
Prior to a Change in Control or on or After the Second Anniversary of a Change in Control |
|
Two-Year Period After a Change in Control |
CEO |
|
12 months |
|
18 months |
All Other Participants |
|
6 months |
|
12 months |
In connection with the appointment of Mr. Posner
as Chief Financial Officer effective April 2019, the Company agreed to increase (i) the severance period for Mr. Posner under the Executive
Severance Policy from six months to 12 months, and (ii) the Severance Multiple (as defined in the Executive Severance Policy) payable
to Mr. Posner from 0.5 to 1.0.
COMPENSATION OF DIRECTORS
Director Compensation Table
The following table shows certain information
with respect to the compensation of all non-employee directors of the Company for the fiscal year ended December 31, 2022.
Name |
|
Fees
Earned or Paid in Cash
($) |
|
Stock Awards ($)(1)(2)(3) |
|
Option Awards ($)(2)(4) |
|
All Other Compensation ($)(5) |
|
Total
($) |
Michael G. Atieh* |
|
23,500 |
|
-- |
|
- |
|
- |
|
23,500 |
Peter Cuneo |
|
67,000 |
|
- |
|
117,435 |
|
- |
|
184,435 |
Thomas J. Errico, M.D. |
|
55,000 |
|
75,000 |
|
- |
|
- |
|
130,000 |
Joseph P. Errico |
|
47,000 |
|
75,000 |
|
- |
|
36,000 |
|
158,000 |
John P. Gandolfo |
|
47,000 |
|
75,000 |
|
- |
|
- |
|
122,000 |
Julie Goldstein |
|
37,208 |
|
75,000 |
|
- |
|
- |
|
112,208 |
Trevor J. Moody |
|
58,000 |
|
75,000 |
|
- |
|
- |
|
133,000 |
Stephen L. Ondra, M.D.* |
|
11,750 |
|
-- |
|
- |
|
- |
|
11,750 |
Thomas M. Patton |
|
64,000 |
|
75,000 |
|
- |
|
- |
|
139,000 |
Patricia Wilber |
|
37,208 |
|
75,000 |
|
- |
|
- |
|
112,208 |
* Mr. Atieh resigned from the board effective
June 8, 2022. Dr. Ondra resigned from the Board effective March 4, 2022.
| (1) | Represents the grant date fair value of annual equity awards,
granted on December 2, 2022, of 13,732 shares to Joseph P. Errico, Thomas J. Errico, M.D., John P. Gandolfo, Trevor J. Moody and Thomas
M. Patton. The awards were granted as either restricted stock units (“RSUs”) or deferred stock units (“DSUs”).
Amounts in this column do not reflect the actual economic value that may be realized by the applicable non-employee director. |
| (2) | Annual equity awards vest in 12 equal monthly installments from
the grant date, provided that such grants shall become fully vested on (i) the one-year anniversary of the grant date and (ii) the close
of business one business day prior to the Company’s next annual stockholder meeting following the grant date, whichever is earlier,
subject to the grantee’s continued service to the Company on the applicable vesting date and earlier vesting upon a change of control
of the Company. |
| (3) | Represents grant date fair value of annual equity awards granted
to Peter Cuneo on December 2, 2022, of 10,752 options with an exercise price of $5.46 per share, 4,504 options with an exercise price
of $25.35, and 10,000 options with an exercise price of $11.55. The grant date fair value was computed in accordance with FASB ASC 718.
See Note 12 to the consolidated financial statements in the Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed
by the Company on March 9, 2023, for a description of the assumptions used in valuing these options. Amounts in this column do not reflect
the actual economic value that may be realized by the applicable nonemployee director. |
| (4) | Represents the grant date fair value of inaugural director equity
awards, granted on March 16, 2022, of 10,000 shares to Julie Goldstein and Patricia Wilber. The awards were granted as either RSUs or
DSUs. Amounts in this column do not reflect the actual economic value that may be realized by the applicable non-employee director. |
| (5) | Represents consulting fees paid for the year ended December
31, 2022. |
Narrative to Director Compensation Table
The Company’s Director Compensation Policy
is intended to provide a total compensation package of cash and equity incentives that enables the Company to attract and retain qualified
and experienced individuals to serve as directors and to align its directors’ interests with those of its stockholders.
Annual Cash Compensation
The Company pays each of its non-employee directors
a cash retainer for service on the Board. The chairman of the Board and of each committee receives an additional retainer for such service.
These retainers are payable in quarterly installments on the 15th day of the second month of each calendar quarter, provided that no payment
will be made to any director who is no longer serving as a non-employee member of the Board on the relevant payment date. Effective January
1, 2023, the retainers paid to non-employee directors for service on the Board and for service on each committee of the Board on which
the director is a member are as follows:
Annual Board Service Retainer |
|
|
|
All non-employee directors |
|
$ |
47,000 |
Non-executive Chairman of the Board |
|
$ |
67,000 |
Annual Committee Chair Service Retainer |
|
|
|
Chair of the Audit Committee |
|
$ |
17,000 |
Chair of the Compensation Committee |
|
$ |
11,000 |
Chair of the Nominating & Governance Committee |
|
$ |
8,000 |
All fees are paid quarterly. In addition, we reimburse
our directors for their reasonable expenses incurred in attending meetings of the Board and its committees. Each member of the Board is
entitled to be reimbursed for reasonable travel and other expenses incurred in connection with attending meetings of the Board and any
committee of the Board on which he or she serves.
Annual Equity Incentive Compensation
The equity incentive compensation set forth below
is granted under the 2018 Plan. All stock options granted under this plan and the Director Compensation Policy are nonstatutory stock
options, with an exercise price per share equal to 100% of the Fair Market Value (as defined in the 2018 Plan) of the underlying shares
of common stock on the date of grant, and a term of 10 years from the date of grant (subject to earlier termination in connection with
a termination of service as provided in the 2018 Plan).
Initial Equity Grant
Under the Director Compensation Policy each new
non-employee director receives an inaugural equity grant valued at $150,000, subject to a cap of 10,000 shares underlying the applicable
award of stock options, restricted stock units or deferred stock units. Each of Ms. Goldstein and Ms. Wilber received an initial equity
award under the amended Director Compensation Policy in March 2022.
Annual Equity Grant
In 2022, on the date of the annual meeting, the
Board approved a one-time cap on the number of shares issuable pursuant to such awards valued at $75,000 to each of the six continuing
non-employee directors, as follows: (i) 13,732 RSUs or DSUs per director, and (ii) 21,502 stock options for the Chairman of the Board.
All such annual awards vest in a single installment on the next annual meeting of stockholders, subject to earlier vesting in the case
of a change of control (as defined in the 2018 Plan).
Ms. Goldstein and Ms. Wilber received inaugural
grants in March 2022. The inaugural grants vest in equal monthly increments over a three-year period from the grant date (subject to earlier
vesting in the case of a change of control).