REDHILL BIOPHARMA LTD.
21 Ha'arba'a Street
Tel-Aviv 6473921
Israel
NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
To Be Held on May 12, 2022
The Annual General Meeting of Shareholders of RedHill Biopharma Ltd. (the “Company”), will be held at the offices of the Company, 21 Ha'arba'a Street, 16th Floor,
Tel-Aviv, Israel, on May 12, 2022, at 3:00 p.m. Israel time, or at any adjournments thereof (the “General Meeting”), for the following purposes:
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To appoint Kesselman & Kesselman, certified public accountants in Israel and a member of PricewaterhouseCoopers International Limited, as the Company’s auditors for the year 2022 and for an additional period until the next Annual
General Meeting; and to inform the shareholders of the aggregate compensation paid to the auditors for the year ended December 31, 2021;
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To approve the re-election of Mr. Dror Ben-Asher, Dr. Kenneth Reed and Ms. Alla Felder to the board of directors of the Company (the "Board of Directors") for an additional three-year term until the annual general meeting to be held in
2025;
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To approve an amended Compensation Policy for a period of three years;
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To approve an amendment to the Company’s Letters of Exemption and Indemnification to the Company’s officers and directors;
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To approve a grant of restricted share units ("RSUs"), each with respect to one American Depository Shares (“ADS”) (each representing 10 ordinary shares, par value NIS 0.01 per share) (“Ordinary Shares”) of the Company to the
non-executive directors of the Company;
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To approve the grant of RSUs to Mr. Dror Ben-Asher, the Company's Chief Executive Officer and Chairman of the Board of Directors;
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To approve the grant of RSUs to Mr. Rick D. Scruggs, the Company’s Chief Commercial Officer and director; and
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To approve an increase in the Company’s authorized share capital.
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In addition, shareholders at the General Meeting will have an opportunity to review and ask questions regarding the financial statements of the Company for the fiscal year
ended December 31, 2021.
The Company is currently unaware of any other matters that may be raised at the General Meeting. Should any other matters be properly raised at the General Meeting, the
persons designated as proxies shall vote according to their own judgment on those matters.
Only holders of record of Ordinary Shares and holders of record of ADSs, evidenced by American Depositary Receipts issued by The Bank of New York Mellon at the close of business
on April 5, 2022, shall be entitled to receive notice of and to vote at the General Meeting.
The Board of Directors recommends that you vote FOR the proposals, as specified on the enclosed form of proxy.
Whether or not you plan to attend the General Meeting, it is important that your ADSs or Ordinary Shares be represented. Accordingly, you are kindly requested to complete,
date, sign and mail the enclosed proxy in the envelope to be provided at your earliest convenience so that it will be received no later than four hours prior to the General Meeting. Execution of a proxy will not in any way affect a shareholder’s
right to attend the General Meeting and vote in person, and any person giving a proxy has the right to revoke it at any time before it is exercised.
Shareholders who hold Ordinary Shares through members of the Tel-Aviv Stock Exchange Ltd. ("TASE"), who did not convert their Ordinary Shares to ADSs, may vote in the General
Meeting in person or vote through the enclosed proxy card, which also serves as their voting card, by completing, dating, signing and mailing the proxy card to the Company’s offices so that it is received by the Company no later than May 12, 2022
at 11:00 a.m. Israel time, and must also provide the Company with a copy of their identity card, passport or certificate of incorporation (as the case may be), and an ownership certificate confirming their ownership of the Company’s Ordinary Shares
on the record date. Such certificate must be approved by a recognized financial institution, as required by the Israeli Companies Regulations (Proof of Ownership of Shares for Voting at General Meeting) of 2000, as amended.
ADS holders should return their proxies by the date set forth on the form of proxy.
Shareholders wishing to express their position on an agenda item for this General Meeting may do so by submitting a written statement (“Position Statement”) to the Company’s
offices, c/o Mr. Micha Ben Chorin, at 21 Ha'arba'a Street, Tel-Aviv, 6473921 Israel, by no later than May 2, 2022. Any Position Statement received, that is in accordance with the guidelines set by the Israel Companies Law, will be furnished to the
U.S. Securities and Exchange Commission (the “Commission”) on Form 6-K, and will be made available to the public on the Commission’s website at http://www.sec.gov.
If within half an hour from the time appointed for the General Meeting a quorum is not present, the General Meeting shall be adjourned to the next business day following the
day of the scheduled General Meeting, at the same time and place, or at another day, time and place prescribed by the Board of Directors in a notification to the shareholders.
This Notice and the documents mentioned therein, as well as the proposed resolutions on the agenda, will be made available to the public on the Company's website http://www.redhillbio.com
and on the Commission’s website at http://www.sec.gov.
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By Order of the Board of Directors,
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Dror Ben-Asher
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Chairman of the Board of Directors
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Tel-Aviv, Israel
April 5, 2022
REDHILL BIOPHARMA LTD.
21 Ha'arba'a Street
Tel-Aviv 6473921
Israel
PROXY STATEMENT
FOR ANNUAL GENERAL MEETING OF SHAREHOLDERS
To Be Held On May 12, 2022
This Proxy Statement is furnished to the holders of ordinary shares, par value NIS 0.01 per share (the “Ordinary Shares”), and to holders of American Depository Shares (“ADSs”),
evidenced by American Depositary Receipts issued by The Bank of New York Mellon (“BNY Mellon”), of RedHill Biopharma Ltd. (the “Company” or “RedHill”) in connection with the solicitation by the board of directors of the Company (the “Board of
Directors” or the “Board”) of proxies for use at the Annual General Meeting of Shareholders (the “General Meeting”), to be held on Monday, May 12, 2022, at 3:00 p.m. Israel time at the offices of the Company, 21 Ha'arba'a Street, 16th
Floor, Tel-Aviv, Israel, or at any adjournments thereof.
It is proposed at the General Meeting to adopt the following proposals or to consider the following items:
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To appoint Kesselman & Kesselman, certified public accountants in Israel and a member of PricewaterhouseCoopers International Limited, as the Company’s auditors for the year 2022 and for an additional period until the next Annual
General Meeting; and to inform the shareholders of the aggregate compensation paid to the auditors for the year ended December 31, 2021;
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To approve the re-election of Mr. Dror Ben-Asher, Dr. Kenneth Reed and Ms. Alla Felder to the board of directors of the Company (the "Board of Directors") for an additional three-year term until the annual general meeting to be held in
2025;
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To approve an amended Company's Compensation Policy for a period of three years;
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To approve an amendment to the Company’s Letters of Exemption and Indemnification to the Company’s officers and directors;
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To approve a grant of restricted share units ("RSUs"), each with respect to one American Depository Shares (“ADS”) (each representing 10 Ordinary Shares) of the Company to non-executive directors of the Company;
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To approve the grant of RSU’s to Mr. Dror Ben-Asher, the Company’s Chief Executive Officer and Chairman of the Board of Directors;
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To approve the grant of RSUs to Mr. Rick D. Scruggs, the Company’s Chief Commercial Officer and director; and
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To approve an increase in the Company’s authorized share capital.
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In addition, shareholders at the General Meeting will have an opportunity to review and ask questions regarding the financial statements of the Company for the fiscal year
ended December 31, 2021.
The Company is currently unaware of any other matters that may be raised at the General Meeting. Should any other matters be properly raised at the General Meeting, the
persons designated as proxies shall vote according to their own judgment on those matters.
Shareholders may present proposals for consideration at the General Meeting by submitting their proposals to
the Company no later than April 12, 2022 in accordance with applicable law.
Shareholders Entitled to Vote
Only holders of ADSs and Ordinary Shares of record at the close of business on April 5, 2022, shall be entitled to receive notice of and to vote at the General Meeting. At the
close of business on April 4, 2022, the Company had outstanding 527,511,364 Ordinary Shares (represented by 52,751,136 ADSs), each of which is entitled to one vote on each of the matters to be presented at the General Meeting.
Proxies
A form of proxy card for use at the General Meeting is attached to this Proxy Statement and has been sent to the holders of ADSs and Ordinary Shares together with a prepaid
return envelope for the proxy. By executing the proxy card and appointing “proxies”, holders of ADSs and Ordinary Shares may vote at the General Meeting, whether or not they attend.
ADS holders should return their proxies in the enclosed form to BNY Mellon by the date set forth on the proxy card. If a properly executed proxy is received by the BNY Mellon by
the date set forth on the proxy card, all of the Ordinary Shares represented by the proxy shall be voted as indicated on the proxy card.
Shareholders who hold Ordinary Shares through members of the Tel-Aviv Stock Exchange Ltd. (“TASE”), who did not convert their Ordinary Shares to ADSs, may vote in the General
Meeting in person or vote through the attached form of proxy card, which also serves as their voting card, by completing, dating, signing and mailing the proxy card to the Company’s offices so that it is received by the Company no later than May
12, 2022 at 11:00 a.m. Israel time, and must also provide the Company with a copy of their identity card, passport or certificate of incorporation (as the case may be), and an ownership certificate confirming their ownership of the Company’s
ordinary shares on the April 5, 2022, the record date. Such certificate must be approved by a recognized financial institution, as required by the Israeli Companies Regulations (Proof of Ownership of Shares for Voting at General Meeting) of 2000,
as amended.
Subject to applicable law and the rules of the NASDAQ Stock Market (“NASDAQ”), in the absence of instructions, the ADSs and Ordinary Shares represented by properly executed and
received proxies will be voted FOR all of the proposed resolutions to be presented at the General Meeting for which the Board of Directors recommends a “FOR”. Holders of ADSs and Ordinary Shares may revoke their proxies at any time before the
deadline for receipt of proxies by filing with the Company (in the case of holders of Ordinary Shares) or with BNY Mellon (in the case of holders of ADSs) a written notice of revocation or duly executed proxy bearing a later date.
Expenses and Solicitation
The Board of Directors is soliciting proxies for use at the General Meeting. The Company expects to mail this Proxy Statement and the accompanying proxy cards
to ADS holders on or about April 11, 2022. In addition to solicitation of proxies to holders of ADSs and Ordinary Shares by mail, certain officers, directors, employees and agents of the Company, may solicit proxies by telephone, mail or other
personal contact. The Company shall bear the cost of the solicitation of the proxies, including postage, printing and handling and shall reimburse the reasonable expenses of brokerage firms and others for forwarding materials to beneficial owners
of ADSs or Ordinary Shares. In addition, we have retained Kingsdale Advisors (“Kingsdale”) to assist in the solicitation of proxies.
This proxy statement and proxy card shall also serve as a voting deed (ktav hatzba’a), as such term is defined under the Israel Companies Law 1999 (the “Companies Law”).
Quorum and Voting
Two or more shareholders holding ADSs or Ordinary Shares conferring in the aggregate at least twenty-five percent (25%) of the voting power of the Company, present in person or
by proxy at the General Meeting and entitled to vote thereat, shall constitute a quorum. If within half an hour from the time appointed for the General Meeting a quorum is not present, the General Meeting shall be adjourned to the next business day
following the day of the scheduled meeting, at the same time and place, or at such other day, time and place as shall be prescribed by the Board of Directors in a notification to the shareholders. At such reconvened meeting, any one (1) shareholder
present in person or by proxy shall constitute a quorum regardless of the number of Ordinary Shares represented.
The approval of Proposals 1, 2, 5, 7 and 8 each requires the affirmative vote of at least a majority of the voting power represented at the General Meeting, in person or by
proxy, and voting on the matter presented.
The approval of Proposals 3, 4 and 6 each requires the affirmative vote of at least a majority of the voting power represented at the General Meeting, in person or by proxy, and
voting on the matter presented, provided that either: (i) such majority vote at the General Meeting shall include at least a majority of the total votes of shareholders who are not controlling shareholders of the Company (as defined in the
Companies Law) and do not have a personal interest in the approval of the proposal, participating in the voting at the General Meeting, in person or by proxy, without taking abstentions into account; or (ii) the total number of votes of the
non-controlling shareholders mentioned in clause (i) above that are voted against such proposal does not exceed two percent (2%) of the total voting rights in the Company.
For this purpose, “personal interest” is defined under the Companies Law as: (1) a shareholder’s personal interest in the approval of an act or a transaction of the Company,
including (i) the personal interest of any of his or her relatives (which includes for these purposes the foregoing shareholder’s spouse, siblings, parents, grandparents, descendants, and spouse’s descendants, siblings, and parents, and the spouse
of any of the foregoing); (ii) a personal interest of a corporation in which a shareholder or any of his/her aforementioned relatives serve as a director or the Chief Executive Officer, owns at least 5% of its issued share capital or its voting
rights or has the right to appoint a director or Chief Executive Officer; and (iii) a personal interest of an individual voting via a power of attorney given by a third party (even if the empowering shareholder has no personal interest), and the
vote of an attorney-in-fact shall be considered a personal interest vote if the empowering shareholder has a personal interest, and all with no regard as to whether the attorney-in-fact has voting discretion or not, but (2) excludes a personal
interest arising solely from the fact of holding shares in the Company.
Please note that you are required to indicate on the proxy card with respect to Proposals 3, 4 and 6 whether you are a controlling shareholder of the
Company, or acting on its behalf or not, and whether you have a personal interest in the approval of the proposals as provided above or not. If you fail to so indicate on the proxy card, your vote may not be counted with respect to the proposal(s)
for which you failed to provide notification.
Shareholders wishing to express their position on an agenda item for this General Meeting may do so by submitting a written statement (“Position Statement”) to the Company’s
offices, c/o Mr. Micha Ben Chorin, at 21 Ha’arba’a Street, Tel-Aviv, 6473921 Israel. Any Position Statement received, that is in accordance with the guidelines set by the Israel Companies Law, will be furnished to the U.S. Securities and Exchange
Commission (the “Commission”) on Form 6-K, and will be made available to the public on the Commission’s website at http://www.sec.gov.
Position Statements must be submitted to the Company by no later than May 2, 2022.
The rate of participation of each director in the Board of Directors meetings held during 2021 (for meetings held while each served as a member of the Board)
was as follows: (i) Dror Ben-Asher – 100%, (ii) Eric Swenden – 90%, (iii) Ofer Tsimchi – 100%, (iv) Dr. Kenneth Reed – 100%, (v) Rick D. Scruggs – 100%, (vi) Alla Felder – 95%, (vii) Dr. Shmuel Cabilly –
100%, (viii) Giuseppe Cipriano – 67% (served until February 1, 2021), and (ix) Alessandro Della Chà – 86% (served from July 26, 2021 until November
16, 2021). The rate of participation of each director in the Board of Directors meetings held during 2020 (for meetings held while each served as a member of the Board) was as follows: (i) Dror Ben-Asher – 100%, (ii) Eric Swenden – 94%,
(iii) Ofer Tsimchi – 100%, (iv) Dr. Kenneth Reed – 100%, (v) Rick D. Scruggs – 83%, (vi) Alla Felder – 100%, (vii) Dr. Shmuel Cabilly – 94%, (viii) Giuseppe Cipriano –
81%.
The rate of participation of each member of the audit committee of the Board of Directors (the “Audit Committee”) in the Audit Committee meetings during 2021 (for meetings held
while each served as a member of the committee) was as follows: (i) Eric Swenden – 100%, (ii) Ofer Tsimchi – 100% and (iii) Alla Felder – 100% and during 2020 was as follows: (i) Eric Swenden – 100%, (ii) Ofer Tsimchi – 100% and (iii) Alla Felder –
100%.
The rate of participation of the members of the compensation committee of the Board of Directors (the “Compensation Committee”) in the Compensation Committee meetings during 2021
(for meetings held while each served as a member of the committee) was as follows: (i) Dr. Kenneth Reed – 100%, (ii) Ofer Tsimchi – 100% and (iii) Alla Felder – 100%, and for 2020 was as follows: (i) Dr. Kenneth Reed – 100%, (ii) Ofer Tsimchi –
100% and (iii) Alla Felder – 100%.
All of our directors are independent other than Mr. Dror Ben-Asher and Mr. Rick D. Scruggs.
Reporting Requirements
The Company is subject to the information reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), applicable to foreign private issuers.
The Company fulfills these requirements by filing reports with the Commission. The Company’s filings are available to the public on the Commission’s website at http://www.sec.gov.
As a foreign private issuer, the Company is exempt from the rules under the Exchange Act related to the furnishing and content of proxy statements. The circulation of this notice
and proxy statement should not be considered as an admission that the Company is subject to the proxy rules under the Exchange Act.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR
EACH OF THE PROPOSALS.
Except as specifically provided herein, the lack of a required majority for the adoption of any resolution presented
shall not affect the adoption of any other resolutions for which the required majority was obtained.
We request you to carefully read this entire Proxy Statement, including the documents we refer to in this Proxy Statement. If you have any questions, need assistance in voting, or need additional material,
please contact our Strategic Shareholder Advisor and Proxy Solicitation Agent, Kingsdale Advisors:
+ 1 (866) 581-1392 (toll-free in North America)
+1 (416) 867-2272 (collect outside of North America)
e-mail: contactus@kingsdaleadvisors.com
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PROPOSAL NO. 1
APPOINTMENT OF AUDITORS
Under the Companies Law and the Company’s Amended and Restated Articles of Association (the “Articles”), the shareholders of the
Company are authorized to appoint the Company’s independent auditors. Under the Articles, the Board of Directors, following receipt of the recommendation of the Audit Committee, is authorized to determine the independent auditors’ remuneration. In
addition, the Listing Rules of NASDAQ require that the Audit Committee approve the re-appointment and remuneration of the independent auditors.
At the General Meeting, shareholders will be asked to approve the re-appointment of Kesselman & Kesselman, Certified Public
Accountants (Isr.), a member of PricewaterhouseCoopers International Limited, an independent registered public accounting firm, as the Company’s auditors for the year ending December 31, 2022 and for an additional period until the next Annual
General Meeting. Kesselman & Kesselman has no relationship with the Company or with any affiliate of the Company except to provide audit services and tax consulting services.
Information on fees paid to the Company’s independent auditors may be found in the Company’s Annual Report on Form 20-F filed with the
Securities and Exchange Commission.
It is proposed that at the General Meeting, the following resolution be adopted:
“RESOLVED, that
Kesselman & Kesselman be, and hereby is, appointed as the auditors of the Company for the year 2022 and for an additional period until the next annual general meeting.”
The affirmative vote of at least a majority of the voting power represented at the General Meeting, in person or by
proxy and voting thereon, is required to adopt this resolution.
THE COMPANY’S AUDIT COMMITTEE AND THE BOARD OF DIRECTORS RECOMMEND A VOTE FOR APPROVAL OF THIS
RESOLUTION.
PROPOSAL NO. 2
RE-ELECTION OF MR. DROR BEN-ASHER, DR. KENNETH REED AND MS. ALLA FELDER AS DIRECTORS
According to the Articles, the Company’s directors are divided into three groups with as nearly equal in number of directors as practicable. The term of one group of directors
expires at each annual general meeting, at which time the directors of such group are re-nominated to serve an additional three-year term that expires at the annual general meeting held in the third year following such election.
The current members of the first group are Mr. Dror Ben-Asher, Dr. Kenneth Reed and Ms. Alla Felder, whose terms expire as of the General Meeting. The members of the second
group, currently consisting of Mr. Rick D. Scruggs and Dr. Shmuel Cabilly, will hold office until our annual general meeting to be held in the year 2023, and the members of the third group, currently consisting of Mr. Ofer Tsimchi and Mr. Eric
Swenden, will hold office until our annual general meeting to be held in the year 2024. The Company is proposing that Mr. Dror Ben-Asher, Dr. Kenneth Reed and Ms. Alla Felder each be re-elected, for a three-year term as part of the first group.
Proxies (other than those directing the proxy holders not to vote for the listed nominees) will be voted for the election of each of the nominees to hold office until the annual
general meeting to be held in 2025, or such earlier time as they may resign or be removed from the Board of Directors, all pursuant to the terms of the Articles. The Company is not aware of any reason why any of the nominees, if elected, should not
be able to serve as a director.
Each of Mr. Dror Ben-Asher, Dr. Kenneth Reed and Ms. Alla Felder has attested to the Board of Directors and to the Company that he/she meets all the requirements in connection
with the election of directors under the Companies Law, in substance as described on Appendix A.
The nominees to serve on the Board of Directors are below and the following information with respect to the nominees is supplied based upon the information furnished to the
Company by the nominees:
Dror Ben-Asher has served as the Company’s Chief Executive Officer and as a director since August 2009. Since May 2011, Mr. Ben-Asher has
also served as Chairman of the Company’s Board of Directors. From January 2002 to November 2010, Mr. Ben-Asher served as a manager at P.C.M.I. Ltd., an affiliate of ProSeed Capital Holdings CVA. Mr. Ben-Asher holds an LLB from the University of
Leicester, U.K., an MJur. from Oxford University, U.K. and completed LLM studies at Harvard University.
Dr. Kenneth Reed has served as a member of the Company’s Board of Directors since December 2009. Dr. Reed is a dermatologist practicing
in private practice under the name of Kenneth Reed M.D. PC. Dr. Reed currently serves on the board of directors of Minerva Biotechnologies Corporation. Dr. Reed received his B.A. from Brown University in the U.S. and an M.D from the University of
Medicine and Dentistry of New Jersey in the U.S. Dr. Reed is a board-certified dermatologist with over 25 years of clinical experience since completing the Harvard Medical School Residency Program in Dermatology. Dr. Reed is also a co-founder of
Early Cell, a prenatal diagnostics company, Prescient Pharma and Lispiro.
Alla Felder has served as a director on the Company’s board of directors and a Chair of its Audit Committee and a member of its
Compensation Committee since May 2019. Ms. Felder currently serves as a director in numerous publicly listed leading Israeli companies across several industries, such as Ashtrom Properties Ltd., Israel Shipyards Ltd, Carmit Industries Ltd.
Biolight Ltd. Photomyne Ltd. and IdoMoo Ltd. Ms. Felder also serves as the CFO of Weebit Nano Ltd, a high-tech company traded on the Australian stock exchange (ASX), and also provide financial and business advisory Ms. Felder also served on the
board of Neuroderm Ltd., leading up to its acquisition by Mitsubishi Tanabe Pharma Corporation in 2017. From 1997 to 2010 Ms. Felder was with PriceWaterhouseCoopers where she served in her last role as a Senior Manager. Ms. Felder received a
degree in Business Administration and Accounting from the College of Management Academic Studies Division in Rishon Lezion, Israel and an Executive Master’s degree in the Science of Finance from the City University of New York.
It is proposed that at the General Meeting the following resolution be adopted:
“RESOLVED, that Mr. Dror Ben-Asher, Dr. Kenneth Reed and Ms. Alla Felder each be re-elected to hold
office as a director of the Company for a three-year term until the annual general meeting to be held in 2025.”
The affirmative vote of at least a majority of the voting power represented at the General Meeting, in person or by proxy and voting thereon, is required to adopt this
resolution.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES TO THE BOARD OF DIRECTORS.
PROPOSAL NO. 3
AMENDED COMPENSATION POLICY
Under the Companies Law, the terms of employment and service of officers and directors of public companies, such as the Company, must be determined in accordance with a directors
and officers (D&O) compensation policy (the “Compensation Policy”). The Compensation Policy must be approved by (i) the Board of Directors, upon recommendation of the Compensation Committee and (ii) the shareholders of the Company (except in
limited circumstances set forth in the Companies Law). All companies subject to the Companies Law are required to review and re-approve their Compensation Policy based on the guidelines specified in the Companies Law every three years. The
shareholders of the Company approved the adoption of the Company’s Compensation Policy on June 24, 2019.
On October 26, 2020 and July 26, 2021, the shareholders approved amendments to the Compensation Policy to, among other things, reflect the current development stage of the
Company and amend the method of paying certain officer and director compensation.
On March 16, 2022, following the recommendation of the Compensation Committee, the Board of Directors approved amendments to the Compensation Policy and recommended its approval by the shareholders
in the form attached hereto as Appendix B (marked to show changes from the current Compensation Policy) (the “Amended Compensation Policy”). The Amended Compensation Policy is substantially the same as the current Compensation Policy and
the changes primarily relate to (i) clarifying that Company officers outside Israel may receive similar, comparable or customary benefits as benefits provided to Israeli officers, as applicable in the relevant jurisdiction in which he or she is
employed, and (ii) clarifying the language where provisions of the compensation policy appeared to be inconsistent.
Due to changes to the Compensation Policy previously approved by the shareholders at the 2020 and 2021 shareholder meetings described above, and following a Compensation Policy
market review conducted by the Company’s independent compensation advisor, the Company has determined that other than the changes described, no other changes are required to the Amended Compensation Policy.
The Amended Compensation Policy was reviewed and amended with due consideration to the nature of the Company’s operations in the biopharmaceutical sector, territories where the
Company operates, market capitalization on the applicable stock exchange or trading platforms on which the Company's ADSs are then listed or traded, as well as other criteria including the magnitude of future cash needs, capitalization, future
development plans, and shareholders' equity. The Amended Compensation Policy will be effective for three years from the General Meeting, if approved by the shareholders.
The Amended Compensation Policy principles were designed, inter alia, to grant proper, fair and well-considered compensation to officers and directors, in alignment with the
Company's long-term best interests and overall organizational strategy. Part of the rationale is that the Amended Compensation Policy should encourage a sense of identification with the Company and its objectives on the part of its officers and
directors. An increase in officer and director satisfaction and motivation should retain the employment of high-quality officers and directors in the Company's service over the long term. Additionally, the Amended Compensation Policy intends, inter alia, to allow the Company to preserve and recruit senior executives with specific professional knowledge and unique expertise and with the ability to lead the Company to business success and to face the
challenges confronted by the Company, to grant rational, appropriate and fair compensation to officers and directors, taking into consideration their duties and areas of responsibilities, giving focus on the contribution of the officers and
directors to achieve the Company objectives and performance maximization.
It is proposed that at the General Meeting, the following resolution be adopted:
“RESOLVED that, in compliance with the requirements of the Companies Law, 1999, the Amended Compensation Policy
for the Company's directors and officers, in the form attached hereto as Appendix B, and as previously approved by the Board of Directors at the recommendation of the Compensation Committee, for a term of three years from approval by this
General Meeting, be, and is hereby approved.”
The affirmative vote of at least a majority of the voting power represented at the General Meeting, in person or by proxy, and voting on the matter presented, is required
for shareholders to approve this resolution provided that either: (i) such majority vote at the General Meeting shall include at least a majority of the total votes of shareholders who are not controlling shareholders of the Company (as defined
in the Companies Law) and do not have a personal interest in the approval of the proposal, participating in the voting at the General Meeting, in person or by proxy, without taking abstentions into account; or (ii) the total number of votes of
the non-controlling shareholders mentioned in clause (i) above that are voted against such proposal does not exceed two percent (2%) of the total voting rights in the Company.
Under certain circumstances and subject to certain exceptions, the Companies Law enables the Board of Directors to approve the Amended Compensation Policy despite the
objection of the shareholders provided that the Compensation Committee and the Board of Directors determine that it is for the benefit of the Company, following additional discussions and supported by detailed arguments.
THE COMPANY'S COMPENSATION COMMITTEE AND BOARD OF DIRECTORS RECOMMEND THAT THE SHAREHOLDERS VOTE FOR THE APPROVAL OF THE AMENDED COMPENSATION POLICY.
PROPOSAL NO. 4
AN AMENDMENT TO THE COMPANY’S LETTERS OF EXEMPTION AND INDEMNIFICATION
TO THE COMPANY’S OFFICERS AND DIRECTORS
Under the Companies Law, a prospective undertaking by a company to indemnify its officers and directors must be approved first by a
company's compensation committee and then by its board of directors and subsequently by the company's shareholders. At the Company's general meeting on January 26, 2011, the shareholders of the Company adopted Letters of Exemption and
Indemnification to indemnify the Company's directors and officers, which were later amended at the Company's general meeting on July 31, 2013 and on July 26, 2021 (the "Letters of Exemption and Indemnification").
Under the Companies Law, an undertaking by a company to indemnify its officers and directors must specify the events that, in the board of directors’
opinion, are foreseeable in view of the company’s actual business at the time of the undertaking and the amount or the standards that the board of directors deemed reasonable at the time. The Letters of Exemption and Indemnification were
originally approved at a time when the Company did not yet have substantial commercial operations. In light of the expansion of the Company's business to include significant commercial operations since the original adoption of Letters of
Exemption and Indemnification and in accordance with the Compensation Policy, the Compensation Committee and Board of Directors recommend amending the Letters of Exemption and Indemnification, in the form attached hereto as Appendix C
(marked to show changes from the current Letters of Exemption and Indemnification) to expand the description of events related to commercial operations which are anticipated in light of the Company's development as a company with
significant commercial operations. The other proposed amendment is intended to clarify the language in the event the maximum indemnity amount is insufficient to cover all indemnity amounts payable to all persons who are party to Letters of
Exemption and Indemnification.
It is proposed that the following resolutions be adopted at the General Meeting:
“RESOLVED, to approve the amendment to the Letters of Exemption and Indemnification as described in the proxy
statement and in the form attached hereto as Appendix C.”
The affirmative vote of at least a majority of the voting power represented at the General Meeting, in person or by proxy, and voting on the matter presented, is required for
shareholders to approve this resolution provided that either: (i) such majority vote at the General Meeting shall include at least a majority of the total votes of shareholders who are not controlling shareholders of the Company (as defined in the
Companies Law) and do not have a personal interest in the approval of the proposal, participating in the voting at the General Meeting, in person or by proxy, without taking abstentions into account; or (ii) the total number of votes of the
non-controlling shareholders mentioned in clause (i) above that are voted against such proposal does not exceed two percent (2%) of the total voting rights in the Company.
THE COMPANY'S COMPENSATION COMMITTEE AND THE BOARD OF DIRECTORS RECOMMEND A VOTE FOR APPROVAL OF THE AMENDMENT TO THE COMPANY’S LETTERS OF
EXEMPTION AND INDEMNIFICATION.
PROPOSAL NO. 5
GRANT OF RSUs TO THE NON-EXECUTIVE DIRECTORS OF THE COMPANY
It is proposed to grant RSUs each with respect to one ADS of the Company to each of the following Company non-executive directors: Mr. Eric Swenden, Dr. Kenneth Reed, Mr. Ofer
Tsimchi, Ms. Alla Felder and Dr. Shmuel Cabilly (with respect to Dr. Kenneth Reed and Ms. Alla Felder, subject to their respective re-election as a member of the Board, as provided in this Proxy Statement).
The Compensation Committee and Board of Directors have approved the proposed grant of RSUs in light of each such non-executive director's
contribution and anticipated contribution to the Company. The proposed grants comply with the principles of the Compensation Policy. The purpose of the grant is, inter alia, to compensate each such director
for his/her service and contribution to the Company as well as to provide an equity incentive to continue to contribute to the Company's success and results of operations.
The background and qualifications of Dr. Kenneth Reed and Ms. Alla Felder are described in Proposal 2 of this Proxy Statement. Below are summaries of the background and
qualifications of Dr. Shmuel Cabilly, Mr. Eric Swenden and Mr. Ofer Tsimchi.
Dr. Shmuel Cabilly has served as a member of the Company’s Board of Directors since August 2010. Dr. Cabilly is a scientist and
inventor in the field of immunology. In the Backman Research Institute of the City of Hope, Dr. Cabilly initiated the development of a new breakthrough technology for recombinant antibody production, which was patented and known as the “Cabilly
Patent.” Dr. Cabilly was also a co-founder and a Chief Scientist of Ethrog Biotechnology, where he invented dry buffer technologies enabling the production of a liquid-free disposable apparatus for gel electrophoresis and a technology that enables
the condensation of molecular separation zones to a small gel area. This technology was sold to Invitrogen in 2001. Dr. Cabilly serves as a board member at several companies, including BioKine Therapeutics Ltd., and Minovia Ltd. Dr. Cabilly holds a
B.Sc. in Biology from the Ben Gurion University of Beer Sheva, Israel, an M.Sc. in Immunology and Microbiology from the Hebrew University of Jerusalem, Israel, and a Ph.D. in Immunology and Microbiology from the Hebrew University of Jerusalem,
Israel.
Eric Swenden has served as a member of the Company’s Board of Directors since May 2010 and has served on its Audit Committee since
December 2015. From 1966 until 2001 Mr. Swenden served in various positions including Chief Executive Officer (since 1985) and Executive Chairman (since 1990) of Vandemoortele Food Group, a privately held Belgium-based European food group with
revenue of approximately EUR 2 billion. Mr. Swenden holds an M.A. in Commercial Science from the University of Antwerp, Belgium. The board of directors has determined that Mr. Swenden is a financial and accounting expert under Israeli law.
Ofer Tsimchi has served as a director on the Company’s Board of Directors, a member of its Audit Committee and the Chairman of its
Compensation Committee since May 2011. From 2008 to 2012, Mr. Tsimchi served as the Chairman of the board of directors of Polysack Plastic Industries Ltd. and Polysack-Agriculture Products, and since 2006, he has served as a Partner in the Danbar
Group Ltd., a holding company. Mr. Tsimchi currently serves on the board of directors of Caesarstone Ltd., Amutat Zionut 2000, Danbar Group Ltd, and Maabarot Products Ltd. Mr. Tsimchi received his BA in Economics and Agriculture from the Hebrew
University of Jerusalem, Israel. The board of directors has determined that Mr. Tsimchi is a financial and accounting expert under Israeli law.
The proposal would grant to each of Mr. Eric Swenden, Mr. Ofer Tsimchi, Ms. Alla Felder, Dr. Shmuel Cabilly and Dr. Kenneth Reed RSUs with respect to 10,000 ADSs of the
Company. The RSUs would vest annually over two (2) years in equal parts. First vesting (i) to each of Mr. Eric Swenden, Mr. Ofer Tsimchi, Ms. Alla Felder and Dr. Shmuel Cabilly would be as of January 20, 2023, and (ii) as to Dr. Kenneth Reed would
be as of May 12, 2023, and the RSUs will become fully vested, in accordance with the terms of the grant, (i) to each of Mr. Eric Swenden, Mr. Ofer Tsimchi, Ms. Alla Felder and Dr. Shmuel Cabilly on January 20, 2024, and (ii) to Dr. Kenneth Reed on
May 12, 2024.
The equity grants and related terms would be in accordance with the Company's Amended and Restated Award Plan (2010), as amended. The proposed equity grant to each of the
directors represents 0.02% of the total outstanding equity of the Company on a fully diluted basis as of the date of approval by the Board of Directors.
It is proposed that at the General Meeting, the following resolution be adopted:
“RESOLVED, to approve the grant of RSUs with respect to 10,000 ADSs of the Company to each of Mr. Eric Swenden, Dr. Kenneth Reed, Mr. Ofer
Tsimchi, Ms. Alla Felder and Dr. Shmuel Cabilly
The affirmative vote of at least a majority of the voting power represented at the General Meeting, in person or by proxy and voting thereon, is required to adopt this
resolution.
THE COMPENSATION COMMITTEE AND THE BOARD OF DIRECTORS RECOMMEND THAT YOU VOTE FOR THE APPROVAL OF THE RSUs GRANTS
TO THE NON-EXECUTIVE DIRECTORS OF THE COMPANY.
PROPOSAL NO. 6
GRANT OF RSUs OF THE COMPANY TO MR. DROR BEN-ASHER
The Companies Law requires that the terms of service and employment of a company’s Chief Executive Officer be approved by the company’s compensation committee, the board of
directors and the shareholders of the company, except in the limited circumstances set forth in the Companies Law. In addition, the Companies Law provides that transactions between a company and its directors regarding their terms of office as
director, and with respect to their terms of employment in other positions in the company, are subject to the approval of such company's audit committee or compensation committee, as applicable, board of directors and shareholders.
Mr. Dror Ben-Asher has served as the Company's Chief Executive Officer and the Chairman of the Board of Directors since its incorporation. In
light of Mr. Ben-Asher's contribution to the Company, and in accordance with the Company's Compensation Policy, the Board of Directors and Compensation Committee have determined that the proposed grant of RSUs with respect to 45,000 ADSs is
appropriate, reasonable and reflect the significant contribution of Mr. Ben-Asher to the Company.
The RSUs would vest annually over two (2) years in equal parts. The first vesting would be as of January 20, 2023, and the RSUs would become fully vested, in accordance with the
terms of the grant, on January 20, 2024.
The equity grant would be in accordance with the Plan, and the remaining terms of the equity grant would be in accordance with such plan. The proposed equity grant represents
0.08% of the total outstanding equity of the Company on a fully diluted basis, as of the date of approval by the Board of Directors.
The purpose of the grant is, inter alia, to compensate Mr. Ben-Asher for his service and his continual contribution to the Company as
well as to incentivize Mr. Ben-Asher to continue to contribute to the Company's success and results of operations.
It is proposed that at the General Meeting the following resolution be adopted:
“RESOLVED, to approve the grant of RSUs with respect to 45,000 ADSs of the Company to Mr. Dror Ben-Asher.”
The affirmative vote of at least a majority of the voting power represented at the General Meeting, in person or by proxy, and voting on the matter presented, is required for
shareholders to approve this resolution provided that either: (i) such majority vote at the General Meeting shall include at least a majority of the total votes of shareholders who are not controlling shareholders of the Company (as defined in the
Companies Law) and do not have a personal interest in the approval of the proposal, participating in the voting at the General Meeting, in person or by proxy, without taking abstentions into account; or (ii) the total number of votes of the
non-controlling shareholders mentioned in clause (i) above that are voted against such proposal does not exceed two percent (2%) of the total voting rights in the Company.
THE COMPENSATION COMMITTEE AND THE BOARD OF DIRECTORS RECOMMEND A VOTE FOR THE APPROVAL OF GRANT OF RSUs TO MR. DROR BEN-ASHER.
PROPOSAL NO. 7
GRANT OF RSUs OF THE COMPANY TO MR. RICK D. SCRUGGS
The Companies Law requires that transactions between a company and its directors regarding their terms of office as director, and with respect to their terms of employment in
other positions in the company, are subject to the approval of such company's compensation committee, board of directors and shareholders.
Mr. Rick D. Scruggs has served as a director of the Company since January 1, 2016. On February 25, 2019, the Board of Directors approved the appointment of Mr. Scruggs, effective
as of January 1, 2019, as the Chief Operations Officer, U.S. Operations of the Company's wholly-owned U.S. subsidiary, RedHill Biopharma Inc. and is currently its Chief Commercial Officer. Mr. Scruggs has significant business development and
commercial experience in the biopharma industry, including as the former Executive Vice President Business Development at Salix Pharmaceuticals.
The Company's Board of Directors and Compensation Committee approved and recommended that the Company’s shareholders to approve the grant of RSUs with respect to 45,000 ADSs of
the Company to Mr. Scruggs.
The RSUs would vest annually over two (2) years in equal parts. The first vesting would be as of May 12, 2023, and the RSUs would become fully vested, in accordance with the
terms of the grant, on May 12, 2024.
The equity grants and related terms would be in accordance with the Plan. The proposed equity grant to Mr. Scruggs represented 0.08% of the total outstanding equity of the
Company on a fully diluted basis on the date of approval by the Board of Directors.
The purpose of the grant is, inter alia, to compensate Mr. Scruggs for his service and his continual contribution to the Company as well
as to incentivize Mr. Scruggs to continue to contribute to the Company's success and results of operations.
It is proposed that at the General Meeting the following resolution be adopted:
“RESOLVED, to approve the grant of RSUs with respect to 45,000 ADSs of the Company to Mr. Rick D.
Scruggs.”
The affirmative vote of at least a majority of the voting power represented at the General Meeting, in person or by proxy and voting thereon, is required to adopt this
resolution.
THE COMPENSATION COMMITTEE AND THE BOARD OF DIRECTORS RECOMMEND A VOTE FOR THE APPROVAL OF GRANT OF RSUs TO MR. RICK D. SCRUGGS.
PROPOSAL NO. 8
INCREASE OF AUTHORIZED SHARE CAPITAL
The Company's authorized share capital is currently NIS 8,000,000, consisting of (i) 794,000,000 Ordinary Shares, NIS 0.01 par value per share, and (ii) 6,000,000 preferred
shares, NIS 0.01 par value per share. As of March 31, 2022, the Company had approximately 182,578,826 Ordinary Shares (the equivalent of 18,257,883 ADSs) available for future issuance after taking into account the shares available for issuance
under existing options and RSUs (consisting of approximately 10.5% of its current authorized share capital).
The Board of Directors recommends that at the General Meeting, the shareholders approve an amendment to the Company's Articles of Association increasing the authorized share
capital of the Company by an additional NIS 8,000,000 such that the authorized share capital shall be NIS 16,000,000, consisting of (i) 1,594,000,000 Ordinary Shares, NIS 0.01 par value per share (the equivalent of 159,400,000 ADSs), and (ii)
6,000,000 preferred shares, NIS 0.01 par value per share. The Board of Directors believes that, in light of the overall decrease in the market price of securities of biotechnology companies in the U.S., the proposed increase in the Company's share
capital is necessary to ensure that the Company will have sufficient authorized share capital available to pursue opportunities in the future without undue delay and expenses. These opportunities could include, without limitation, subject to
receipt of all requisite approvals under Israeli law, the issuance of additional shares and/or warrants to raise additional capital for the Company's business, to execute potential acquisitions, or to make future grants under the Company's Amended
and Restated Award Plan (2010), as amended.
Upon approval by shareholders, the first sentence of section 7.1 of the Company’s Articles of Association shall be amended to read as follows: “The Company's registered share
capital is NIS 16,000,000, divided into (i) 1,594,000,000 registered ordinary shares of NIS 0.01 par value each (hereinafter: "share", "ordinary share", "shares" or "ordinary shares", as the case may be) and (ii) 6,000,000 preferred shares of NIS
0.01 par value each (hereinafter: “the preferred shares").”
It is proposed that at the General Meeting the following resolution be adopted:
"RESOLVED, to approve an amendment to the Company's Articles of Association increasing the authorized share capital
of the Company from NIS 8,000,000, consisting of (i) 794,000,000 Ordinary Shares, NIS 0.01 par value per share, and (ii) 6,000,000 preferred shares, NIS 0.01 par value per share, to NIS 16,000,000, consisting of (i) 1,594,000,000 Ordinary Shares,
NIS 0.01 par value per share, and (ii) 6,000,000 preferred shares, NIS 0.01 par value per share."
The affirmative vote of at least a majority of the voting power represented at the General Meeting, in person or by proxy and voting thereon, is required to adopt this
resolution.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE APPROVAL OF THE INCREASE OF THE AUTHORIZED SHARE CAPITAL.
Other than as set forth above, as of the mailing of this Proxy Statement, management knows of no business to be transacted at the General Meeting, but, if any other matters
are properly presented at the General Meeting, the persons named in the enclosed form of proxy will vote upon such matters in accordance with their best judgment.
By order of the Board of Directors
Dror Ben-Asher
Chairman of the Board of Directors
Dated: April 5, 2022
Appendix A - Form of Statement of a Candidate to Serve as a Director
The undersigned, ____________________, hereby declares to RedHill Biopharma Ltd. (the “Company”), effective as of ____________________________, as follows:
I am making this statement as required under Section 224B of the Israeli Companies Law, 5759-1999 (the “Israeli Companies Law”). Such provision requires that I make the
statements set forth below prior to, and as a condition to, the submission of my election as a director of the Company to the approval of the Company's shareholders.
I possess the necessary qualifications and skills and have the ability to dedicate the appropriate time for the purpose of performing my service as a director in the Company,
taking into account, among other things, the Company's special needs and its size.
My qualifications were presented to the Company. In addition, attached hereto is a biographical summary as contained in the Company's most recent Form 20-F, which includes a
description of my academic degrees, as well as previous experience relevant for the evaluation of my suitability to serve as a director.
I am not restricted from serving as a director of the Company under any items set forth in Sections 2261, 226A2 or 2273 of the Israeli Companies
Law, which include, among other things, restrictions relating to the appointment of a minor, a person who is legally incompetent, a person who was declared bankrupt, a person who has prior convictions or anyone whom the administrative enforcement
committee of the Israel Securities Law 5728-1968 (the “Israel Securities Law”) prohibits from serving as a director.
I am aware that this statement shall be presented at the Annual General Meeting of Shareholders of the Company in which my election shall be considered, and that pursuant to
Section 241 of the Israeli Companies Law it shall be kept in the Company’s registered office and shall be available for review by any person.
Should a concern arise of which I will be aware and/or that will be brought to my attention, pursuant to which I will no longer fulfill one or more of the requirements and/or the
declarations set forth above, I shall notify the Company immediately, in accordance with Section 227A of the Israeli Companies Law.
IN WITNESS WHEREOF, the undersigned has signed this statement as of the date set forth above.
Name: _________________
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Signature: __________________
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Date: __________________
1 As of the date hereof, Section 226 of the Israeli Companies Law generally provides that a candidate shall not be appointed as a director of a public company (i) if the person was convicted of an offense not
listed below but the court determined that due to its nature, severity or circumstances, he/she is not fit to serve as a director of a public company for a period that the court determined which shall not exceed five years from judgment or (ii) if
he/she has been convicted of one or more offences specified below, unless five years have elapsed from the date the convicting judgment was granted or if the court has ruled, at the time of the conviction or thereafter, that he/she is not prevented
from serving as a director of a public company:
(1) offenses under Sections 290-297 (bribery), 392 (theft by an officer), 415 (obtaining a benefit by fraud), 418-420 (forgery), 422-428 (fraudulent
solicitation, false registration in the records of a legal entity, manager and employee offences in respect of a legal entity, concealment of information and misleading publication by a senior officer of a legal entity, fraud and breach of trust in
a legal entity, fraudulent concealment, blackmail using force, blackmail using threats) of the Israel Penal Law 5737-1997; and offences under sections 52C, 52D (use of inside information), 53(a) (offering shares to the public other than by way of a
prospectus, publication of a misleading detail in the prospectus or in the legal opinion attached thereto, failure to comply with the duty to submit immediate and period reports) and 54 (fraud in securities) of the Israel Securities Law;
(2) conviction by a court outside of the State of Israel of an offense of bribery, fraud, offenses of directors/managers in a corporate body or exploiting
inside information.
2 As of the date hereof, Section 226A of the Israeli Companies Law provides that if the administrative enforcement committee of the Israel Securities Authority has imposed on a person enforcement measures
that prohibited him/her from holding office as director of a public company, that person shall not be appointed as a director of a public company in which he/she is prohibited to serve as a director according to this measure.
3 As of the date hereof, Section 227 of the Israeli Companies Law provides that a candidate shall not be appointed as a director of a company if he/she is a minor, legally incompetent, was declared bankrupt
and not discharged, and with respect to a corporate body – in case of its voluntary dissolution or if a court order for its dissolution was granted.