ITEM 10. Directors, Executive Officers
and Corporate Governance. Directors
The Company’s
Board has three staggered classes of Directors, each of which serves for a term of three years. The names of our directors, their ages
and their positions with the Company are set forth below, followed by certain other information about them:
Class I Directors: Term to Expire in
2022:
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Name
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Year
First Became A Director
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Rebecca J. Fischer (age 53)
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2019
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Dov Perlysky (age 59)
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2012
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Class II Director: Term to Expire in 2023
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Name
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Year
First Became a Director
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Mary Tagliaferri, M.D. (age 54)
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2020
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Class III Directors: Term to Expire in 2024
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Name
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Year
First Became a Director
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Elazar Rabbani, Ph.D. (age 78)
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1976
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Ian Walters, M.D. (age 53)
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2020
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REBECCA J. FISCHER
was appointed to the Board effective as of December 30, 2019. She is currently the Chief Financial Officer of Bellevue Hospital,
the world-renowned flagship institution for New York City Health and Hospitals, with over 900 licensed beds and an operating budget of
more than $950 million. She began her career at Bellevue as Associate Director in 2003, became Associate Executive Director in 2011,
was promoted to Deputy CFO in 2016 and then promoted to CFO in 2017. In her role as CFO of Bellevue, Ms. Fischer is responsible for managing
a team of financial managers and 400 other professionals. Her team oversees budgeting, revenue enhancement, utilization, financial reporting,
cash management productivity improvement and affiliate relations with the NYU School of Medicine. She is also a key advisor to the hospital’s
CEO and other members of the C-level team on strategic planning and resource allocation. In both her strategic and day-to-day responsibilities,
Ms. Fischer is directly involved in guiding Bellevue and its leaders through complex government and private reimbursement practices.
At Bellevue and throughout the HHC, she is viewed as a subject matter expert on optimal ways for hospitals to deliver the highest quality
care at a time of enormous technological change and financial pressure. Ms. Fischer received her undergraduate degree cum laude from
Cornell University and her Master of Public Administration in Health Policy and Management from New York University, where she was a
recipient of the Robert F. Wagner, Jr. Fellowship.
We believe that Ms.
Fischer’s qualifications to serve on the Board are demonstrated by her experience at Bellevue, her strengths at problem solving
and her keen understanding of how to successfully navigate the intersection of investment spending with an unwavering commitment to science
and innovation.
DOV PERLYSKY has
been a director of the Company since September 2012. He is currently a member of the Company’s Audit and Nominating/Governance
Committees. Mr. Perlysky became the Lead Independent Director in December 2019. Mr. Perlysky has been a member of the Board of Directors
of Pharma-Bio Serv, Inc. since 2004, and was a former Director of Highlands State Bank until their sale to Lakeland Bank. Mr. Perlysky
has also been the managing member of Nesher, LLC, a private investment firm, since 2000 and was a director of Engex, Inc., a closed-end
mutual fund and News Communications. Mr. Perlysky was a vice president in the private client group of Laidlaw Global Securities, a registered
broker-dealer. Mr. Perlysky received his Bachelor of Science in Mathematics and Computer Science from the University of Illinois in 1985
and his Master of Management from the J.L. Kellogg School of Management of Northwestern University in 1991.
We believe that Mr.
Perlysky’s qualifications to serve on the Board are demonstrated by his professional background, experience in the healthcare field
(including his director position at Pharma-Bio Serv, Inc.), other current and past board positions and finance background, making him
well qualified as a member of our Board.
MARY TAGLIAFERRI,
M.D., has been a director of the Company since November 17, 2020. Dr. Tagliaferri is currently chair of the Company’s Nominating/Governance
Committee and a member of both the Company’s Audit Committee and Compensation Committee. Dr. Tagliaferri has been serving on the
board of directors of RayzeBio, Inc., a biotechnology company, since [ ]. Dr. Tagliaferri has been serving as Senior Vice President and
Executive Clinical Fellow for Nektar Therapeutics, a Nasdaq-listed company, since March 2020 and previously served as Chief Medical Officer
from November 2017 to March 2020, Senior Vice President, Clinical Development from April 2017 to October 2017 and Vice President of Clinical
Development from January 2015 to March 2017. Dr. Tagliaferri served as Consultant for InterMune from March 2014 to December 2014. Dr.
Tagliaferri served as Chief Medical Officer of Kanglaite, Inc. from October 2012 to April 2014. Dr. Tagliaferri was the co-founder of
Bionovo, Inc. and served as its Chief Medical Officer, Chief Regulatory Officer, Secretary and Treasurer and a member of the Board of
Directors from February 2002 to June 2012 and President from May 2007 to June 2012. Dr. Tagliaferri received her Bachelor of Science
Degree in Agricultural Economics and Business Management from Cornell University in 1988, Post Baccalaureate Degree in Science from Bryn
Mawr College in 1996, Master of Science Degree, Oriental Medicine from the American College of Traditional Chinese Medicine, San Francisco,
California in 1995 and Medical Degree from the University of California, San Francisco in 2002. Dr. Tagliaferri completed her residency
in internal medicine at Alameda County Medical Center, Oakland, California, in 2003 and a research fellowship in translational science
at the University of California, San Francisco in 1999. She has contributed to approximately 70 publications.
We believe that Dr.
Tagliaferri’s qualifications to serve on the Board are demonstrated by her professional background, experience in the healthcare
field and past board position, making her well qualified as a member of our Board.
ELAZAR RABBANI, Ph.D.,
is an Enzo Biochem founder and has served as the Company’s Chairman of the Board since its inception in 1976 and as Secretary
since November 2009. Dr. Rabbani also served as the Company’s Chief Executive Officer from 1976 until November 2021. Dr. Rabbani
has authored numerous scientific publications in the field of molecular biology, in particular, nucleic acid labeling and detection.
He is also the lead inventor of many of the Company’s pioneering patents covering a wide range of technologies and products.
Dr. Rabbani received
his Bachelor of Arts degree from New York University in Chemistry and his Ph.D. in Biochemistry from Columbia University. He is a member
of the American Society for Microbiology.
We believe that Dr.
Rabbani’s qualifications to serve on the Board are demonstrated by his extensive knowledge of our industry and his accomplishments
over the last 44 years, including building our intellectual property estate and the commercialization of technology, which has generated
significant revenues for the Company.
Ian
B. Walters, M.D. has been a director of the Company since November 25, 2020. Dr. Walters is an experienced entrepreneur and
drug developer with leadership in the development of over 30 drugs in multiple therapeutic areas involving diverse technologies, leading
to five new oncology drug approvals. His previous roles include Executive Director of Global Oncology Clinical Research, and Business
Development for Bristol-Myers Squibb and Medical Director at Millennium Pharmaceuticals. Dr. Walters is currently CEO and Director of
Portage Biotech, a publicly traded clinical stage biopharmaceutical company developing an innovative portfolio of immuno-oncology assets.
He is also founder of seven of Portage’s portfolio companies. Dr. Walters holds an MBA from the Wharton School of the University
of Pennsylvania. He received his MD at the Albert Einstein College of Medicine and completed doctoral training in experimental medicine
at The Rockefeller University. Dr. Walters has been the lead author or contributor to approximately 60 journal publications.
We believe that Dr.
Walter’s qualifications to serve on the Board are demonstrated by his professional background, experience in the healthcare field,
and other current and past board and management positions, making him well qualified as a member of our Board.
Family Relationships
There are no family
relationship of first cousins or closer, among the Company’s directors and executive officers, by blood, marriage or adoption,
except that Dr. Elazar Rabbani and Barry W. Weiner are brothers-in-law.
Corporate Governance
Policies and Practices
The Company has a variety
of policies and practices to foster and maintain responsible corporate governance, including the following:
Corporate
Governance Guidelines - The Board adopted Corporate Governance Guidelines, which collect in one document many of the corporate governance
practices and procedures that had evolved over the years. These guidelines address the duties of the Board, director qualifications and
selection process, Board operations, Board committee matters and continuing education. The guidelines also provide for annual self-evaluations
by the Board and its committees. The Board reviews these guidelines on an annual basis. The guidelines are available on the Company’s
website at www.enzo.com and in print by contacting Investor Relations at (212) 583-0100.
Corporate
Code of Business Conduct and Ethics - The Company has a Code of Business Conduct and Ethics that applies to all of the Company’s
employees, officers and members of the Board. The Code of Business Conduct and Ethics is available on the Company’s website at
www.enzo.com and in print by contacting Investor Relations at (212) 583-0100.
Board
Committee Charters - Each of the Company’s Audit, Compensation and Nominating/ Governance Committees has a written charter
adopted by the Board that establishes practices and procedures for such committee in accordance with applicable corporate governance
rules and regulations. The charters are available on the Company’s website at www.enzo.com and in print by contacting Investor
Relations at (212) 583-0100.
Diversity
Policy - As part of the Company’s commitment to improved governance and in connection with the Company’s shareholder
engagement program, the Board adopted a diversity policy in 2019. The Nominating/Governance Committee shall consider diversity in its
evaluation of candidates for Board membership in accordance with this policy. To reflect this policy, the Nominating/Governance Committee
seeks to include diverse candidates in all director searches, taking into account diversity of age, gender, race, culture, business experience,
education, skills, character and judgment, including by affirmatively instructing any search firm retained to assist the Nominating/Governance
Committee in identifying director candidates, to seek to include diverse candidates from traditional and non-traditional candidate groups.
Director
Term Limits - The total cumulative length of time an Outside Director may serve on the Board is limited to a maximum of three, three-year
terms, whether consecutively or in total, plus any portion of an earlier three-year term that such Outside Director may have been appointed
to serve. The term limit set forth above may be extended for a maximum of one additional term if such individual is re-nominated by the
unanimous agreement of the Board.
Lead
Independent Director Charter - As part of the Company’s ongoing commitment to improved governance and in connection with the
Company’s shareholder engagement program, the Company amended the Lead Independent Director Charter in 2019 to strengthen the duties
of the Lead Independent Director role. The duties of the Lead Independent Director, as set forth in the amended Lead Independent Director
Charter, among other things, are to:
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develop
the agendas for and serve as chairman of the executive sessions of the independent directors
of the Company;
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serve
as principal liaison between the independent directors of the Company and the Chairman of
the Board and between the independent directors and senior management;
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approve
the agendas for Board meetings;
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call
meetings of the independent directors;
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approve
the appropriate schedule of Board meetings; advise the Chairman of the Board as to the quality,
quantity and timeliness of the information submitted by the Company’s management that
is necessary or appropriate for the independent directors to effectively and responsibly
perform their duties;
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ensure
that independent directors have adequate opportunities to meet and discuss issues in executive
sessions without management present; if the Chairman of the Board is unable to attend a Board
meeting, act as chairman of such Board meeting;
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ensure
that he or she may be available for consultation and direct communication with major shareholders,
if deemed appropriate, and act as a contact for other interested persons, if other Company
spokespersons are not available;
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share
with other directors, as he or she deems appropriate, letters and other communications and
contact that he or she receives;
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and
perform such other duties as the Board shall from time to time delegate.
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In
addition, the Lead Independent Director may require information relating to any matter be distributed to the Board. Dov Perlysky has
served as Lead Independent Director since December 2019. The Lead Independent Director role was established in October 2005.
The
Lead Independent Director Charter, as amended, is available on the Company’s website at www.enzo.com, and in print by contacting
Investor Relations at (212) 583-0100.
Director Independence Requirements
The Board believes that
a majority of its members should be independent, non-employee directors. The Board adopted the following “Director Independence
Standards,” which are consistent with criteria established by the NYSE, to assist the Board in making these independence determinations:
No director can qualify
as independent if he or she has a material relationship with the Company outside of his or her service as a director of the Company.
A director is not independent if, within the preceding three years:
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the
director was an employee of the Company;
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an immediate
family member of the director was an executive officer of the Company;
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the
director was affiliated with or employed by a present or former internal or external auditor
of the Company;
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an immediate
family member of the director was affiliated with or employed in a professional capacity
by a present or former internal or external auditor of the Company;
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the
director, or an immediate family member of the director, received more than $120,000 per
year in direct compensation from the Company, other than director and committee fees and
pension or other forms of deferred compensation for prior services (provided such compensation
is not contingent in any way on continued service);
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the
director, or an immediate family member of the director, was employed as an executive officer
of another company where any of the Company’s executives served on that company’s
compensation committee of the board of directors;
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the
director was an executive officer or employee, or an immediate family member of the director
was an executive officer, of another company that made payments to, or received payments
from, the Company for property or services in an amount which, in any single fiscal year,
exceeded the greater of $1 million or two percent (2%) of such other company’s consolidated
gross revenues;
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the
director, or an immediate family member of the director, was an executive officer of another
company that was indebted to the Company, or to which the Company was indebted, where the
total amount of either company’s indebtedness to the other was five percent (5%) or
more of the total consolidated assets of the company he or she served as an executive officer;
or
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the
director, or an immediate family member of the director, was an officer, director or trustee
of a charitable organization where the Company’s annual discretionary charitable contributions
to the charitable organization exceeded the greater of $1 million or two percent (2%) of
that organization’s consolidated gross revenues.
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The Board has reviewed
all material transactions and relationships among each director, and any member of his or her immediate family, and the Company, its
senior management and its independent auditors. Based on this review and in accordance with its independence standards outlined above,
the Board has affirmatively determined that all of the non-employee directors are independent as such term is defined by the NYSE.
Board Leadership Structure and Role
in Risk Oversight
During the fiscal year ended July 31, 2021,
Elazar Rabbani, Ph.D., served as the Company’s Chairman of the Board and Chief Executive Officer, roles that he has served in since
the Company’s inception in 1976. On October 18, 2021, the Company announced the appointment of Hamid Erfanian to the position of
Chief Executive Officer, which appointment commenced on November 8, 2021. Dr. Rabbani remains Chairman of the Board. Dov Perlysky continues
to serve as Lead Independent Director, a role that he has served in since December 2019.
The Company believes
that this structure promotes effective oversight, strengthens our Board’s independent leadership, and supports our commitment to
enhancing shareholder value and strong governance. In addition, re-electing Dr. Rabbani as Chairman of the Board, with his deep industry
and executive management experience, his extensive knowledge of the operations of the Company and his own history of innovation and strategic
thinking, while also appointing a separate Chief Executive Officer is the best leadership structure for the Company at this time.
As described above,
four of the Company’s five directors are independent. In addition, all of the directors on each of the Audit Committee, Compensation
Committee and Nominations and Corporate Governance Committee are independent directors and each of these committees is led by a committee
chair. The committee chairs set the agendas for their committees and report to the full Board. All of the independent directors are highly
accomplished and experienced business people in their respective fields, have demonstrated leadership in significant enterprises and
are familiar with board processes. The Company’s independent directors bring experience, oversight and expertise from outside the
Company and industry. Dr. Rabbani, as the Company’s Chairman of the Board and former Chief Executive Officer, brings Company-specific
experience and expertise.
Additionally, the Company
has had a Lead Independent Director since October 2005, whose duties, among other things, are to approve the agendas for all Board meetings,
call and lead the executive sessions of the independent directors of the Company, be available for engagement with major shareholders,
serve as liaison between the independent directors of the Company on one hand and the Chairman of the Board and senior management on
the other hand, advise the Chairman of the Board as to the quality, quantity and timeliness of the information submitted by management
to the independent directors; and perform such other duties as the Board shall from time to time delegate.
While the Board is responsible
for overseeing the Company’s risk management, the Board has delegated many of these functions to the Audit Committee. Under its
charter, the Audit Committee is responsible for discussing the Company’s major financial risk exposures, the guidelines and policies
by which risk assessment and management is undertaken, and the steps management has taken to monitor and control risk exposure with management
and the independent auditors. In addition to the Audit Committee’s work in overseeing risk management, the full Board regularly
engages in discussions regarding the most significant risks that the Company is facing and how those risks are being managed. The Board
also receives risk management updates directly from the Company’s senior management and from the chair of the Audit Committee.
In addition, the Chairman of the Board’s extensive knowledge of the Company and experience in the industries in which we operate
uniquely qualifies him to lead the Board in assessing the whole panoply of risks the Company faces. The Board believes that the work
undertaken by the Audit Committee, the full Board and the Chairman of the Board, enables the Board to effectively oversee the Company’s
risk management function.
Board Nomination Policies and Procedure
The
Nominating/Governance Committee is responsible for identifying, evaluating and recommending candidates for election to the Board, with
due consideration for recommendations made by other Board members, the Chief Executive Officer and other sources, including shareholders.
The total cumulative length of time that any Outside Director may serve on the Board is limited to a maximum of three three-year terms,
whether consecutively or in total, plus any portion of an earlier three-year term that such Outside Director may have been appointed
to serve. The term limit set forth above may be extended for a maximum of one additional term if such individual is renominated by the
unanimous agreement of the Board. The Nominating/Governance Committee also considers the appropriate balance of experience, skills and
characteristics desirable among the members of the Board to maintain a diverse Board. The independent members of the Board review the
Nominating/Governance Committee candidates and nominate candidates for election by the Company shareholders. The Nominating/Governance
Committee will consider candidates for election to the Board recommended by shareholders of the Company. The procedures for submitting
shareholder recommendations are explained below under “Shareholder Proposals.”
Directors
must also possess the highest personal and professional ethics, integrity and values and be committed to representing the long-term interests
of all shareholders. Board members are expected to diligently prepare for, attend and participate in Board and applicable committee meetings.
Each Board member is expected to ensure that other existing and future commitments do not materially interfere with the member’s
service as a director.
The
Nominating/Governance Committee also reviews whether a potential candidate will meet the Company’s independence standards and any
other director or committee membership requirements imposed by law, regulation or NYSE rules.
The
Nominating/Governance Committee will consider, among other factors, the following to evaluate recommended nominees:
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the Board’s current composition, including
expertise, diversity, balance of management and non-management directors;
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independence
and other qualifications required or recommended by applicable laws, rules and regulations
(including NYSE requirements) and the Company’s policies and procedures; and
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the
general qualifications of potential nominees, including, but not limited to: personal integrity,
loyalty to the Company and concern for its success and welfare; experience with strategy
and policy setting; high-level leadership experience in business; breadth of knowledge about
issues affecting the Company; an ability to work effectively with others; sufficient time
to devote to the Company; and freedom from conflicts of interest.
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Director
candidates recommended to the Nominating/Governance Committee are subject to full Board approval and subsequent election by the shareholders.
The Board is also responsible for electing directors to fill vacancies on the Board that occur due to retirement, resignation, expansion
of the Board or other reasons between the annual meetings of shareholders. The Nominating/Governance Committee may retain a recruitment
firm, from time to time, to assist in identifying and evaluating director candidates. When a firm is used, the Nominating/Governance
Committee provides specified criteria for director candidates, tailored to the needs of the Board at that time, and pays the firm a fee
for these services. Suggestions for director candidates are also received from Board members, management, shareholders and may be solicited
from professional associations as well.
Board Committees
All
members of each of the Company’s three standing committees - Audit, Compensation and Nominating/Governance - are required to meet
the Company’s Director Independence Standards as well as the independent director standards established by NYSE. See below for
a description of the responsibilities of the Board’s standing committees.
Executive Sessions
of Non-Management Directors
The
Board periodically holds meetings of only the independent directors without management or other board members present.
Board Access to
Independent Advisors
The
Board as a whole, and each of the Board committees separately, has authority to retain and terminate such independent consultants, counselors
or advisors to the Board as each shall deem necessary or appropriate.
Communications
with the Board
Direct Communications
- Any interested party desiring to communicate with the Board or with any director regarding the Company
may write to the Board or the Secretary c/o Elazar Rabbani, Office of the Secretary, Enzo Biochem, Inc., 527 Madison Avenue, New York,
New York 10022. The Office of the Secretary will forward all such communications to the director(s). Interested parties may also submit
an email by filling out the email form on the Company’s website at www.enzo.com. Moreover, any interested party may contact the
non-management directors of the Board by emailing the Lead Independent Director or asking the Chairman to share information with the
non-management members.
Annual Meeting
- The Company encourages its directors to attend the annual meeting of shareholders each year. All
directors attended the Annual Meeting of Shareholders held in January 2021.
Meetings of the
Board and its Committees
During
the fiscal year ended July 31, 2021, there were eighteen formal meetings of the Board, and several informal meetings. None of the directors
attended less than 75% of the meetings of the Board (including committee meetings).
Currently,
the Board has a Nominating/Governance Committee, an Audit Committee and a Compensation Committee. The Nominating/Governance Committee
had one formal meeting, the Audit Committee had four formal meetings and the Compensation Committee had one formal meeting. Each of the
committees also had informal meetings.
The
Audit Committee was established by and among the Board for the purpose of overseeing the accounting and financial reporting processes
of the Company and audits of the financial statements of the Company as defined in Section 3(a)(58)(A) of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”). The Audit Committee is authorized to review proposals of the Company’s auditors
regarding the annual audit, recommend the engagement or discharge of the auditors, review recommendations of such auditors concerning
accounting principles and the adequacy of internal controls and accounting procedures and practices, review the scope of the annual audit,
approve or disapprove each professional service or type of service other than standard auditing services to be provided by the auditors,
and review and discuss the audited financial statements with the auditors. The current members of the Audit Committee are Ms. Rebecca
J. Fischer, Mr. Perlysky, and Dr. Tagliaferri. Ms. Fischer has been the Chairman since December 2019. The Board has determined that each
of the Audit Committee members is independent, as defined in the NYSE’s listing standards and applicable SEC Rules. The Board has
further determined that Ms. Fischer is an “audit committee financial expert” as such term is defined under Item 407(d)(5)(ii)
of Regulation S-K promulgated under the Exchange Act, and that each director is financially literate as required under the NYSE listing
standards.
The
Compensation Committee has the power and authority to (i) establish a general compensation policy for the officers and employees of the
Company, including to establish and at least annually review executive officers’ salaries and non-equity incentive compensation
plan program and levels of officers’ participation in the benefit plans of the Company, (ii) prepare any reports that may be required
by the regulations of the SEC or otherwise relating to officer compensation, (iii) approve any increases in directors’ fees, (iv)
grant stock options and/or other equity instruments authorized by senior executives for non-executive officers and (v) exercise all other
powers of the Board with respect to matters involving the compensation of employees and the employee benefits of the Company as shall
be delegated by the Board to the Compensation Committee. The current members of the Compensation Committee are Mr. Perlysky and Ms. Fischer.
The Board has determined that each member of the Compensation Committee is independent, as defined in the NYSE listing standards. Mr.
Perlysky has been the Chairman of the Compensation Committee since January 2017.
The
Nominating/Governance Committee has the power to recommend to the Board prior to each annual meeting of the shareholders of the Company:
(i) the appropriate size and composition of the Board; and (ii) nominees: (1) for election to the Board for whom the Company should solicit
proxies; (2) to serve as proxies in connection with the annual meeting of shareholders; and (3) for election to all committees of the
Board other than the Nominating/Governance Committee. The Nominating/Governance Committee will consider nominations from the shareholders,
provided that they are made in accordance with the By-Laws. When evaluating prospective director candidates, the Nominating/Governance
Committee conducts individual evaluations against the criteria stated in the Nominating and Corporate Governance guidelines. All director
candidates, regardless of the source of their nomination, are evaluated using the same criteria. The current members of the Nominating/Governance
Committee are Mr. Perlysky and Ms. Fischer, who has been the Chairman since December 2019.
Executive officers and key employees
Set
forth below is the name, age and title of each executive officer and key employee of the Company followed by a summary of each executive’s
and key employee’s background.
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Name
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Age
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Year Became
a Director,
Executive Officer
or Key Employee
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Position
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Hamid Erfanian(1)
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52
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2021
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Chief Executive Officer*
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Barry W. Weiner
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71
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1977
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President and Treasurer
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David Bench
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48
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2019
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Chief Financial Officer
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Dieter Schapfel, M.D.
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58
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2014
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Chief Medical Director, Enzo Clinical Labs
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Kara Cannon
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53
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2018
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Chief Commercial Officer
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Elazar Rabbani, Ph.D. (1)
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78
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1976
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Chairman of the Board
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Dov Perlysky
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59
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2012
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Director
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Rebecca J. Fischer
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53
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2019
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Director
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Mary Tagliaferri, M.D.
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54
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2020
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Director
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Ian B. Walters, M.D.
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53
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2020
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Director
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(1)
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Mr.
Erfanian started his tenure as our Chief Executive Officer on November 8, 2021. Dr.
Rabbani served as Chief Executive Officer during our entire fiscal year ended July 31, 2021.
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Biographical Information Regarding Executive
Officers and Key Employees
Hamid
Erfanian has been the Company’s Chief Executive Officer since November 2021. Mr. Erfanian has over 28 years of experience
as a seasoned healthcare executive specializing in the diagnostic, medical devices, and life sciences industry. Prior to his appointment
as Chief Executive Officer of the Company, Mr. Erfanian was most recently Chief Commercial Officer of EUROIMMUN, a PerkinElmer Company.
He previously served as Chief Executive Officer of its US subsidiary, a position he held from June 2014 through August 2021. Prior to
EUROIMMUN, Mr. Erfanian held executive and senior positions at several notable diagnostics companies including Diagnostica Stago, Beckman
Coulter, and Abbott Laboratories. Earlier in his career, Mr. Erfanian worked at leading diagnostic laboratory testing companies, Quest
Diagnostics and Laboratory Corporation of America. He received his Bachelor’s Degree in Science and Mathematics from North Dakota
State University and a Masters of Business Administration from the Cox School of Business at Southern Methodist University.
BARRY W. WEINER
is the Company’s President, Chief Financial Officer, Principal Accounting Officer as well as a director and founder of the Company.
He has served as the Company’s President since 1996, and previously held the position of Executive Vice President. Before his employment
with Enzo Biochem, he worked in several managerial and marketing positions at the Colgate Palmolive Company. Mr. Weiner is a member of
the New York Biotechnology Association. He received his Bachelor of Arts degree in Economics from New York University and his Master
of Business Administration in Finance from Boston University.
DAVID BENCH has
been the Chief Financial Officer for Enzo Biochem since December 2019. Mr. Bench has over 23 years of financial experience as a Chief
Financial Officer, investment banker, research analyst, and financial advisor. He most recently served as Chief Financial Officer of
ELLKAY, LLC, a healthcare information technology company servicing diagnostic laboratories, electronic medical record providers, payers,
hospital/health systems and ambulatory practices. Mr. Bench was also Founder and President of DBC Group, Corp., an advisory and consulting
firm based in New York City, where he assisted both public and private global corporations with cash flow management, operational performance,
strategic growth planning, capital structure, valuation analysis, as well as budgeting and expense control. He previously held the position
of senior investment banker at Arete Wealth Management, where he covered the telecommunications, media and technology industries. Earlier
in his career, Mr. Bench was a Vice President of Institutional Equity Research at Arnhold and S. Bleichroeder in New York and in the
Mergers & Acquisitions Group within the Investment Banking division of Lazard Fréres L.L.C. He received his Bachelor’s
degree in Economics from Brandeis University and his Master’s degree in International Economics and Finance from the International
Business School at Brandeis University. Mr. Bench received his Series 7, 63, 79, 86, and 87 securities licenses from the Financial Industry
Regulatory Authority (FINRA).
DIETER
SCHAPFEL, M.D. is the Chief Medical director for Enzo Clinical Labs and has been employed with the Company since 2012, initially
as a consulting pathologist. Dr.Schapfel served as Medical Director of Pathology at Southside Hospital–North Shore/Long Island
Jewish Health System from 2006 to 2012. He served as a staff pathologist at Huntington Hospital from January 2004 to June 2006. Dr. Schapfel
served as director of Pathology and Medical Affairs and the College of American Pathologists director of Pathology, Dublin, Ireland and
Farmingdale, New York for Icon Laboratories from February 2002 to October 2003. Dr. Schapfel is a graduate of the State University of
New York at Stony Brook, College of Medicine, where he also served his residency. He is a diplomat of the American Board of Pathology
with certification in Anatomic and Clinical Pathology and is also a diplomat of The National Board of Medical Examiners.
KARA
CANNON is Corporate Vice President of Commercial Operations and has been employed with the Company since 2011. She is responsible
for strategic and tactical marketing, sales, manufacturing and general management of the operations. Ms. Cannon previously held executive
positions at Pall Corporation, where she focused on commercial operations within the areas of diagnostics, biotechnology and biosciences.
She has also held marketing and technical positions at Dynal Biotech (now ThermoFisher Scientific). She has had extensive experience
in the marketing and selling of innovative platforms for the diagnostics markets, as well as, the development and execution of strategic
plans for the growth and sustainability of diagnostic-related businesses. Ms. Cannon holds a BA from Franklin and Marshall College.
Code
of Business Conduct and Ethics
The
Company has adopted a Code of Business Conduct and Ethics (as such term is defined in Item 406 of Regulation S-K). The Code of Business
Conduct and Ethics is available on the Company’s website at www.enzo.com, and in print by contacting Investor Relations at (212)
583-0100. The Code of Business Conduct and Ethics applies to the Company’s employees, officers and members of the Board. The Code
of Business Conduct and Ethics has been designed to deter wrongdoing and to promote:
|
|
●
|
Honest
and ethical conduct, including the ethical handling of actual or apparent conflicts of interest
between personal and professional relationships;
|
|
|
●
|
Full,
fair, accurate, timely and understandable disclosure in reports and documents that the Company
files with, or submits to, the SEC and in other public communications made by the Company;
|
|
|
●
|
Compliance
with applicable governmental laws, rules and regulations;
|
|
|
●
|
The
prompt internal reporting or violations of the Code of Business Conduct and Ethics to an
appropriate person or persons identified in the Code of Business Conduct and Ethics; and
|
|
|
●
|
Accountability
for adherence to the Code of Business and Conduct and Ethics.
|
ITEM 11. Executive Compensation.
Director Compensation
The
following table sets forth the information concerning compensation earned during our fiscal year ended July 31, 2021 by all non-employee
Directors (table format below):
|
Name
|
|
Fees Earned or Paid in Cash
|
|
|
Restricted
Stock/Stock Options Awards(1)
|
|
|
Change in Pension Value and Non-Qualified
Deferred Compensation Earnings
|
|
|
All Other Compensation
|
|
|
Total
|
|
Dov Perlysky
Lead Independent Director
|
|
$
|
90,000
|
|
|
$
|
100,000
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
190,000
|
|
Rebecca
J. Fischer
Director
|
|
$
|
85,000
|
|
|
$
|
100,000
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
185,000
|
|
|
Mary Tagliaferri, M.D.
|
|
$
|
80,400
|
|
|
$
|
100,000
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
180,400
|
|
|
Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ian B. Walters, M.D.
|
|
$
|
75,000
|
|
|
$
|
100,000
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
175,000
|
|
|
Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Represents
the grant fair value on the respective grant date for the fiscal year ended July 31, 2021,
in accordance with accounting authoritative guidance. The assumptions used in calculating
these amounts are set forth in Note 12 to the Company’s consolidated financial statements
for the fiscal year ended July 31, 2021, included in the Company’s Annual Report on
Form 10-K for the fiscal year ended July 31, 2021 filed with the SEC on November 12, 2021.
|
Compensation of Executive Officers
Summary Compensation Table
The
following table sets forth summary information concerning compensation awarded to, paid to or earned by each of the following persons:
(i) our Chairman of the Board, Chief Executive Officer and Secretary, (ii) our President, Chief Financial Officer, Principal Accounting
Officer and Treasurer, (iii) our other executive officers (the “Named Executive Officers”) and (iv) Key Employees for each
of the fiscal years ended July 31, 2021 and 2020.
|
Name
and Principal Position
|
|
Year
|
|
Base
Pay
Salary(1)
|
|
|
Option
Awards(2)
|
|
|
Performance
Stock Units
Award(3)
|
|
|
Non-Equity
Incentive Plan
Compensation(4)
|
|
|
All
Other
Compensation(5)
|
|
|
Total
|
|
|
Elazar
Rabbani, Ph.D.
|
|
2021
|
|
$
|
611,000
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
*
|
(7)
|
|
$
|
197,621
|
|
|
$
|
808,621
|
|
|
Chairman
of the Board and Secretary,
|
|
2020
|
|
$
|
611,000
|
|
|
$
|
112,400
|
|
|
$
|
69,740
|
|
|
$
|
500,000
|
(8)
|
|
$
|
194,661
|
|
|
$
|
1,487,801
|
|
|
Former
Chief Executive Officer (6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barry
W. Weiner
|
|
2021
|
|
$
|
542,000
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
*
|
(7)
|
|
$
|
181,518
|
|
|
$
|
723,518
|
|
|
President
and Treasurer
|
|
2020
|
|
$
|
542,000
|
|
|
$
|
101,000
|
|
|
$
|
55,600
|
|
|
$
|
375,000
|
(8)
|
|
$
|
177,949
|
|
|
$
|
1,251,607
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dieter
Schapfel, M.D.
|
|
2021
|
|
$
|
330,000
|
|
|
$
|
72,131
|
|
|
$
|
-
|
|
|
$
|
*
|
(7)
|
|
$
|
14,032
|
|
|
$
|
416,163
|
|
|
Chief
Medical Director,
|
|
2020
|
|
$
|
330,000
|
|
|
$
|
49,000
|
|
|
$
|
29,260
|
|
|
$
|
60,000
|
|
|
$
|
13,532
|
|
|
$
|
481,792
|
|
|
Enzo
Clinical Labs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Base
salaries set as of January 1 each year.
|
|
|
(2)
|
Represent
the fair market value of incentive stock option awards granted to Named Executive Officers
and Key Employees on the date of grant, calculated in accordance with FASB ASC Topic 718
for all awards of stock options granted during the relevant fiscal year. Assumptions used
in the calculation of these amounts are included in Note 12 to the Notes to Consolidated
Financial Statements in our Annual Report on Form 10-K for the year ended July 31, 2021.
|
|
|
(3)
|
Represents
the grant date fair value of performance stock units granted in the applicable year, calculated
in accordance with ASC 718. The amount included in 2020 for the performance stock unit awards
are calculated based on the closing market price of the Company’s common stock and
the probable satisfaction of the performance conditions for such awards as of the date of
grant. Assuming the highest level of performance is achieved for the 2020 performance share
unit awards, the maximum value of these awards at the grant date would be as follows: Dr.
Rabbani-$104,610; Mr. Weiner-$83,490; and Dr. Schapfel-$43,890. Assumptions used in the calculation
of these amounts are included in Note 12 to the Notes to Consolidated Financial Statements
in our Annual Report on Form 10-K for the year ended July 31, 2021.
|
|
|
(4)
|
Represents
awards accrued under the Pay for Performance Plan for the years ended July 31, 2021 and 2020.
|
|
|
(5)
|
See
the “All Other Compensation” chart for additional information.
|
|
|
(6)
|
Dr.
Rabbani served as Chief Executive Officer during our entire fiscal year ended July 31, 2021
and until November 8, 2021 when Mr. Hamid Erfanian started his tenure as our Chief Executive
Officer.
|
|
|
(7)
|
The fiscal year 2021 non-equity incentive plan
compensation is not calculable at this time, as amounts remain subject to determination by our Board of Directors. Such amounts are
expected to be determined in January 2022.
|
|
|
(8)
|
The fiscal year 2020 non-equity incentive plan
compensation for Elazar Rabbani and Barry Weiner of $500,000 and $375,000 respectively, was settled in the form of 190,114 and 142,586
shares of three year restricted common stock, respectively in lieu of cash on January 11, 2021, at the closing price of $2.63 per
share.
|
All Other Compensation
The
following table contains information regarding each component of “All Other Compensation” in the Summary Compensation Table
to the Named Executive Officers and Key Employees for the fiscal years ended July 31, 2021 and 2020.
|
|
|
|
Year
|
|
|
|
401(k)(1)
|
|
|
|
Life
Insurance(2)(3)
|
|
|
Medical
and
Disability
Insurance(4)
|
|
|
Personal
Use of
Auto(5)
|
|
|
Total All Other Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Elazar Rabbani, Ph.D.
|
|
|
2021
|
|
|
$
|
13,000
|
|
|
$
|
105,212
|
|
|
$56,499
|
|
$
|
22,910
|
|
$
|
197,621
|
|
|
|
|
2020
|
|
|
$
|
12,500
|
|
|
$
|
105,212
|
|
|
$54,038
|
|
$
|
22,910
|
|
$
|
194,661
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barry W. Weiner
|
|
|
2021
|
|
|
$
|
13,000
|
|
|
$
|
100,623
|
|
|
$40,625
|
|
$
|
27,270
|
|
$
|
181,518
|
|
|
|
|
2020
|
|
|
$
|
12,500
|
|
|
$
|
100,623
|
|
|
$39,966
|
|
$
|
24,860
|
|
$
|
177,949
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dieter Schapfel, M.D.
|
|
|
2021
|
|
|
$
|
13,000
|
|
|
$
|
1,032
|
|
|
—
|
|
|
—
|
|
$
|
14,032
|
|
|
|
|
2020
|
|
|
$
|
12,500
|
|
|
$
|
1,032
|
|
|
—
|
|
|
|
|
$
|
13,532
|
|
|
(1)
|
Represents Company
matches under our 401(k) plan.
|
|
|
(2)
|
Represents premiums
of term policies of which the Named Executive Officers or other party is the beneficiary.
|
|
|
(3)
|
Represents the
contractual payment for life insurance reimbursement for Dr. Rabbani and Mr. Weiner.
|
|
|
(4)
|
Represents supplemental
medical and disability benefits costs.
|
|
|
(5)
|
Represents the
personal use of Company-provided auto or car allowance.
|
Employment Agreements
Mr. Barry Weiner and
Dr. Elazar Rabbani (each, an “Executive”) are parties to employment agreements with the Company, effective May 4, 1994, as
subsequently amended (the “Employment Agreements”). Each Executive also receives a non-equity incentive plan bonus - the
amount of which shall be determined by the Compensation Committee and/or the Board based on approved financial and non-financial objectives.
Each Employment Agreement provides that, in the event of termination of employment by the Executive for “good reason,” or
a termination of employment by the Company without “cause”, change in control or nonrenewal, as such terms are defined in
the Employment Agreement, each Executive shall be entitled to receive: (i) a lump sum in an amount equal to three years of the Executive’s
base annual salary; (ii) a lump sum in an amount equal to the annual bonus paid by the Company to the Executive for the last fiscal year
of the Company ending prior to the date of termination multiplied by three; (iii) insurance coverage for the Executive and his dependents,
at the same level and at the same charges to the Executive as immediately prior to his termination, for a period of three (3) years following
his termination from the Company; (iv) all accrued obligations, as defined therein; and (v) with respect to each incentive pay plan (other
than stock option or other equity plans) of the Company in which the Executive participated at the time of termination, an amount equal
to the amount the Executive would have earned if he had continued employment for three additional years. If the Executive is terminated
by reason of his disability, he shall be entitled to receive, for three years after such termination, his base annual salary less any
amounts received under a long-term disability plan. If the Executive’s employment with the Company is terminated by reason of his
death, his legal representatives shall receive the balance of any remuneration due him under the terms of his Employment Agreement. The
Employment Agreements were amended on January 5, 2017 and automatically renew for successive two-year periods unless notice is given
to the Company within 180 days of the end of such successive term.
Mr. David Bench, Dr. Dieter Schapfel and Ms.
Kara Cannon are “at will” employees and are parties to certain change in control provisions with the Company which is deemed
customary practice for their respective positions, as more fully discussed below.
Benefits and All
Other Compensation
We maintain broad-based
benefits that are provided to all employees, including health and dental insurance, group life insurance and a 401(k) plan. Named Executive
Officers and Key Employees are eligible to participate in our employee benefit plans. The annual Company match for our Named Executive
Officers and other employees is up to $13,000 if over 50 years old, or limited to 50% of the maximum contribution made.
Certain of our Named
Executive Officers may be entitled to benefits that are not otherwise available to all of our employees, including supplemental health,
life insurance and disability benefits. We do not provide post-retirement health coverage to our Named Executive Officers or our employees.
Our health and insurance plans are substantially the same among all management levels at the Company. Dr. Rabbani and Mr. Weiner are
provided life insurance benefits in connection with their total compensation arrangements.
In particular circumstances,
we may provide relocation allowances when executives first join us. The purpose of this program is to attract talented executives outside
our geographic area. Certain Named Executives Officers and Key Employees are provided use of a Company-owned vehicle for business and
personal use or provided a car allowance.
Severance and Change
in Control Benefits
Mr. Barry Weiner and
Dr. Elazar Rabbani (each, an “Executive”) are parties to employment agreements with the Company, effective May 4, 1994, as
subsequently amended (the “Employment Agreements”). Each Executive also receives a non-equity incentive plan bonus - the
amount of which shall be determined by the Compensation Committee and/or the Board based on approved financial and non-financial objectives.
Each Employment Agreement provides that, in the event of termination of employment by the Executive for “good reason,” or
a termination of employment by the Company without “cause”, change in control or nonrenewal, as such terms are defined in
the Employment Agreement, each Executive shall be entitled to receive: (i) a lump sum in an amount equal to three years of the Executive’s
base annual salary; (ii) a lump sum in an amount equal to the annual bonus paid by the Company to the Executive for the last fiscal year
of the Company ending prior to the date of termination multiplied by three; (iii) insurance coverage for the Executive and his dependents,
at the same level and at the same charges to the Executive as immediately prior to his termination, for a period of three (3) years following
his termination from the Company; (iv) all accrued obligations, as defined therein; and (v) with respect to each incentive pay plan (other
than stock option or other equity plans) of the Company in which the Executive participated at the time of termination, an amount equal
to the amount the Executive would have earned if he had continued employment for three additional years. If the Executive is terminated
by reason of his disability, he shall be entitled to receive, for three years after such termination, his base annual salary less any
amounts received under a long-term disability plan. If the Executive’s employment with the Company is terminated by reason of his
death, his legal representatives shall receive the balance of any remuneration due him under the terms of his Employment Agreement. The
Employment Agreements were amended on January 5, 2017 and automatically renew for successive two-year periods unless notice is given
to the Company within 180 days of the end of such successive term.
Mr. David Bench, Dr.
Dieter Schapfel and Ms. Kara Cannon are “at will” employees and are parties to certain change in control provisions with
the Company which is deemed customary practice for their respective positions, as more fully discussed below.
Outstanding Equity Awards at Fiscal
Year End—July 31, 2021
The
following table sets forth summary information regarding the outstanding equity awards made to the Named Executive Officers and Key Employees
at July 31, 2021.
|
|
|
Options
Awards
|
|
Performance
Stock Awards
|
|
|
Name
|
|
Number
of
Securities
Underlying
Unexercised
Options
Exercisable
|
|
|
Number
of
Securities
Underlying
Unexercised
Options
Unexercisable(1)
|
|
|
Option
Exercise
Price
|
|
|
Options
Expiration
Date
|
|
Equity
Incentive
Plan; Number
of Unearned Shares,
Units or Other
Rights That Have
Not Vested(2)
|
|
|
Equity
Inventive
Plan Awards;
Market or Payout
Value of Unearned
Shares, Units or Other Rights That
Have Not Vested(3)
|
|
|
Elazar
Rabbani, Ph.D.
|
|
|
75,000
|
|
|
|
—
|
|
|
$
|
7.07
|
|
|
1/5/2022
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
90,000
|
|
|
|
—
|
|
|
$
|
4.42
|
|
|
7/31/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
128,000
|
|
|
|
|
|
|
$
|
2.80
|
|
|
1/3/2024
|
|
|
25,000
|
(4)
|
|
$
|
122,250
|
|
|
|
|
|
65,000
|
|
|
|
65,000
|
|
|
$
|
2.20
|
|
|
2/24/2025
|
|
|
31,700
|
(5)
|
|
$
|
155,013
|
|
|
Barry
W. Weiner
|
|
|
65,000
|
|
|
|
—
|
|
|
$
|
7.07
|
|
|
1/5/2022
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
80,000
|
|
|
|
—
|
|
|
$
|
4.42
|
|
|
7/31/2023
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
115,000
|
|
|
|
—
|
|
|
$
|
2.80
|
|
|
1/3/2024
|
|
|
20,000
|
(4)
|
|
$
|
97,800
|
|
|
|
|
|
58,450
|
|
|
|
58,450
|
|
|
$
|
2.20
|
|
|
2/24/25
|
|
|
25,300
|
(5)
|
|
$
|
123,717
|
|
|
Dieter
Schapfel, M.D.
|
|
|
27,000
|
|
|
|
—
|
|
|
$
|
7.07
|
|
|
1/5/2022
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
35,000
|
|
|
|
|
|
|
$
|
4.42
|
|
|
7/31/2023
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
17,333
|
|
|
|
—
|
|
|
$
|
2.80
|
|
|
1/3/2024
|
|
|
—
|
|
|
$
|
—
|
|
|
|
|
|
18,467
|
|
|
|
36,933
|
|
|
$
|
2.20
|
|
|
2/24/25
|
|
|
10,500
|
(4)
|
|
$
|
51,345
|
|
|
|
|
|
18,467
|
|
|
|
36,933
|
|
|
$
|
2.63
|
|
|
1/11/26
|
|
|
13,300
|
(5)
|
|
$
|
65,037
|
|
|
(1)
|
Each
option award vests in equal amounts on the first, second and third anniversaries of the award
which was January 5, 2017 for the options granted at $7.07 per share, July 31, 2018 for the
options granted at $4.42 per share, January 3, 2019 for the options granted at $2.80 per
share, February 24, 2020 for the options granted at $2.20 per share, and January 11, 2021
for the options granted at $2.63 per share. For Dr. Rabbani and Mr. Weiner, options vest
in equal amounts on the first and second anniversary dates.
|
|
(2)
|
The
number of unearned performance stock options (“PSUs”) in this column is based
on awards made during the 2019 and 2020 fiscal years and equals the target number of PSUs
that may be earned based on the Company’s Revenue and Adjusted EBITDA during the 2020
through 2022, and 2021 through 2023 fiscal year periods.
|
|
(3)
|
Calculated using the closing market price of the Common Stock on July 31, 2021 of $3.26 per share
after applying the maximum relative total shareholder return (TSR) modifier.
|
|
|
(4)
|
Represents
PSUs granted on January 3, 2019 that will vest, subject to the achievement of threshold performance
goals for the fiscal years 2020-2022 performance period, on October 15, 2022, the third anniversary
of the grant measurement date.
|
|
|
(5)
|
Represents
PSUs granted on February 24, 2020 that will vest, subject to the achievement of threshold
performance goals for the fiscal years 2020-2023 performance period, on October 19, 2023,
the third anniversary of the grant measurement date.
|