Item 10. Directors, Executive Officers and Corporate Governance.
DIRECTORS
Set forth below is certain biographical
information regarding our current directors.
Jonathan
Christodoro (age 44) – Mr. Christodoro has been a director of our Company since October 2013 and the Chairman
of our Board of Directors since November 2013. Mr. Christodoro is a Partner at Patriot Management LP, an investment management
firm. Mr. Christodoro served as a Managing Director of Icahn Capital LP, the entity through which Carl C. Icahn manages investment
funds, from July 2012 to February 2017. Mr. Christodoro was responsible for identifying, analyzing and monitoring investment opportunities
and portfolio companies for Icahn Capital. Prior to joining Icahn Capital, Mr. Christodoro served in various investment and research
roles at P2 Capital Partners, LLC, Prentice Capital Management, LP and S.A.C. Capital Advisors, LP. Mr. Christodoro began his
career as an investment banking analyst at Morgan Stanley, where he focused on merger and acquisition transactions across a variety
of industries. Mr. Christodoro has been a director of: PayPal Holdings, Inc., a technology platform company that enables digital
and mobile payments worldwide, since July 2015; Herbalife Nutrition Ltd., a developer and seller of nutrition solutions since
March 2013; Lyft, Inc., a mobile ride-sharing application from May 2015 to March 2019; Xerox Corporation, a provider of document
management solutions, from June 2016 to December 2017 and since May 2019; Cheniere Energy, Inc., a developer of natural gas liquification
and export facilities and related pipelines, from August 2015 until August 2017; Hologic, Inc., a supplier of diagnostic, medical
imaging and surgical products, from December 2013 to March 2016; eBay Inc., a global commerce and payments company, from March
2015 to July 2015; Talisman Energy, Inc., an independent oil and gas exploration and production company, from December 2013 to
May 2015; American Railcar Industries, Inc., a railcar manufacturing company, from June 2015 to February 2017; and Sandridge Energy,
an oil and gas exploration and natural gas exploration company, since June 2019. American Railcar Industries, Inc. is indirectly
controlled by Carl C. Icahn. Mr. Icahn has or previously had non-controlling interests in each of Xerox, Cheniere, PayPal, eBay,
Lyft, Hologic, Talisman, Enzon and Herbalife through the ownership of securities. Mr. Christodoro received an M.B.A. from the
University of Pennsylvania’s Wharton School of Business with Distinction, majoring in Finance and Entrepreneurial Management.
Mr. Christodoro received a B.S. in Applied Economics and Management Magna Cum Laude with Honors Distinction in Research from Cornell
University. Mr. Christodoro also served in the United States Marine Corps. Mr. Christodoro’s qualifications to serve as
a director of our Company include his service on boards of other public companies, as well as his extensive investment, research
and investment banking experience in a variety of industries.
Odysseas
Kostas, M.D. (age 45) – Dr. Kostas has been a director of our Company since September 2013. Dr. Kostas is a Partner
and Senior Managing Director at Sarissa Capital Management LP. Sarissa Capital focuses on improving the strategies of companies
to enhance shareholder value. Prior to joining Sarissa Capital, Dr. Kostas served as a Director at Evercore ISI (formerly ISI),
covering the biotechnology and pharmaceutical industries. Previously, Dr. Kostas practiced internal medicine as part of the Yale
New Haven Health System and was engaged as a consultant to various biotechnology companies. Dr. Kostas has been a director of
Armata Pharmaceuticals, a clinical-stage biotechnology company, since February 2018 and a director of Innoviva, Inc., a biopharmaceutical
company, since December 2017. Dr. Kostas has a B.S. from Massachusetts Institute of Technology (MIT) and an M.D. from University
of Texas Southwestern Medical School. Dr. Kostas’ qualifications to serve as a director of our Company include his service
on the board of another public company, as well as his extensive experience in the biotechnology and pharmaceutical industries.
Jennifer
McNealey (age 46) – Ms. McNealey has been a director of our Company since September 2013. Since December 2016,
Ms. McNealey has been Vice President, Investor Relations and Strategy of Calithera Biosciences, Inc. From February 2015 to December
2016, Ms. McNealey was Senior Director Investor Relations and served as a member of the management team at Calithera Biosciences,
Inc. Prior to joining Calithera Biosciences, Inc., Ms. McNealey served as an advisor to biotechnology companies. In 2005, Ms.
McNealey founded Laurient LLC, a research company focused on the biotechnology and pharmaceutical industries, where she worked
until 2012. Prior to founding Laurient LLC, Ms. McNealey served as a portfolio manager and biotechnology analyst at various firms,
including Paramount Capital, Franklin Templeton, Amerindo Investment Advisors and Morgan Stanley Dean Witter Advisors. Ms. McNealey
has a B.A. and an M.H.A. from Cornell University. Ms. McNealey’s qualifications to serve as a director of our Company include
her service as a member of the management team of another public company, as well as her extensive experience in the biotechnology
and pharmaceutical industries.
EXECUTIVE OFFICERS
Set forth below is certain biographical
information regarding our current executive officers.
Andrew
Rackear (age 66) – Mr. Rackear has served as our Chief Executive Officer and Secretary since March 2016. Prior
to that, since November 2013, Mr. Rackear provided consulting services to the Company. Mr. Rackear previously served as the Company’s
Vice President and General Counsel from April 2010 to November 2013. Prior to that, Mr. Rackear served as Senior Vice President
and General Counsel for NPS Pharmaceuticals, and Vice President and General Counsel for Chugai Pharma USA and Amersham Biosciences
Corp, where he also served as President of North American Operations. Prior to that, Mr. Rackear engaged in litigation and commercial
law practice at Marks & Murase and served as Associate General Counsel at Sharp Electronics Corp. Mr. Rackear holds a J.D.
from New York University School of Law.
Mr.
Rackear currently serves as our Chief Executive Officer and Secretary on a consulting basis at a rate of $325 per hour for each
hour worked, together with reimbursement for reasonable expenses incurred in performing his services, pursuant to the terms of
a separation agreement, as amended.
Richard
L. Feinstein (age 76) – Mr. Feinstein has served as our Vice President-Finance and Chief Financial Officer since
March 2016. Prior to that, Mr. Feinstein served as our Vice President - Finance and Principal Financial Officer since December
2013. Mr. Feinstein is a retired partner of KPMG LLP and currently a private consultant providing management and financial advice
to clients in a variety of industries. From 2015 to 2019, he provided financial consulting services to General Cannabis Corp,
a public company. During July 2016, he provided consulting services to Hamaspik, Inc. From September 2010 to July 2013, as a consultant,
he was the Chief Financial Officer of Ameritrans Capital Corporation. From April 2004 to December 2004, Mr. Feinstein, as a consultant,
served as Chief Financial Officer for Image Technology Laboratories, Inc., a developer and provider of radiological imaging, archiving
and communications systems. From December 1997 to October 2002, Mr. Feinstein was a Senior Vice-President and Chief Financial
Officer for The Major Automotive Companies, Inc., formerly a diversified holding company, but now engaged solely in retail automotive
dealership operations. Mr. Feinstein has served on boards of both publicly-held and not-for-profit enterprises. Mr. Feinstein
previously served as a board member and chair of the audit committee of MKTG, Inc.; a board member and chief financial officer
of the not-for-profit USA Fitness Corps; a board member and chair of the audit committee of EDGAR Online, Inc., a board member
and chair of the finance committee of the New York Road Runners and a member of the executive committee of the Association for
a Better New York. Mr. Feinstein, a certified public accountant, received a BBA degree from Pace University. Mr. Feinstein also
served in the United States Marine Corps.
Mr.
Feinstein currently serves as our Vice President-Finance and Chief Financial Officer on a consulting basis at a rate of $325 per
hour for each hour worked, together with reimbursement for reasonable expenses incurred in performing his services, pursuant to
the terms of an independent contractor agreement, as amended.
There
are no family relationships among any of our directors or executive officers.
CORPORATE GOVERNANCE
Director Independence
Although our common stock is no longer listed
on The Nasdaq Stock Market (“Nasdaq”), our Board of Directors (our “Board”) continues to use the definition
of independence set forth in the listing standards of Nasdaq in evaluating the independence of our directors. Our Board has determined
that each current member of our Board is independent as defined by the listing standards of Nasdaq.
Meetings and Attendance
Our Board held six meetings during fiscal
year 2019. Each director attended at least 75% of the total number of meetings held during fiscal year 2019 by our Board and committees
of our Board of which such director was a member.
Board Leadership Structure
Our Board is led by a Chairperson appointed
by our Board annually. The Chairperson leads our Board in its role of providing advice to, and overseeing the performance of, our
Chief Executive Officer. Mr. Christodoro currently serves as the Chairman of the Board, and Mr. Rackear currently serves as our
Chief Executive Officer. Our Board does not have a formal policy with respect to the separation of the positions of Chairperson
and Chief Executive Officer. However, our Board believes that separating these positions allows the Chief Executive Officer to
focus on day-to-day operations, while allowing the Chairperson to lead our Board in its primary role of review and oversight of
management.
Communications with Directors
Stockholders may communicate directly with
our directors. All communications should be sent in care of our Secretary at our address and should prominently indicate on the
outside of the envelope that it is intended for our Board or for a specific director. If no director is specified, the communication
will be forwarded to the entire Board.
Standing Committees of our Board
Finance and Audit Committee
All three current members of our Board currently
constitute the Finance and Audit Committee. Accordingly, our entire Board currently acts as the Finance and Audit Committee. When
our Board acts as the Finance and Audit Committee, Mr. Christodoro acts as the Chairman of the Finance and Audit Committee. Our
Board acting as the Finance and Audit Committee held four meetings during fiscal year 2019.
In evaluating the composition of our Board
when acting as the Finance and Audit Committee, our Board has determined that each current member of our Board is independent
as defined by the listing standards of Nasdaq and Rule 10A-3 under the Securities Exchange Act of 1934. Our Board has determined
that Mr. Christodoro satisfies the definition of “audit committee financial expert” within the meaning of Item 407(d)(5)
of Regulation S-K.
The primary purpose of the Finance and Audit
Committee is to monitor the integrity of our Company’s financial reporting process and financial statements, the systems
of internal controls and controls over financial reporting, our Company’s compliance with legal and regulatory requirements,
and the performance and independence of our Company’s independent registered public accounting firm. The Finance and Audit
Committee is responsible for discussing with management the adequacy of our Company’s internal controls and the financial
reporting process. The Finance and Audit Committee also is responsible for discussing these matters with our Company’s independent
registered public accounting firm. In addition, the Finance and Audit Committee is responsible for reviewing our financial statements
and discussing them with management and our Company’s independent registered public accounting firm before those financial
statements are filed with the SEC. The charter of the Finance and Audit Committee may be found on our website at www.enzon.com.
Compensation Committee
All three current members of our Board currently
constitute the Compensation Committee. Accordingly, our entire Board currently acts as the Compensation Committee. When our Board
acts as the Compensation Committee, Ms. McNealey acts as the Chairwoman of the Compensation Committee. Our Board acting as the
Compensation Committee held three meetings during fiscal year 2019.
In evaluating the composition of our Board
when acting as the Compensation Committee, our Board has determined that each current member of our Board is independent as defined
by the listing standards of Nasdaq.
The primary duties and responsibilities
of the Compensation Committee are to oversee our overall compensation structure, policies and programs, and assess whether our
compensation structure establishes appropriate incentives for management.
The
Compensation Committee has the authority to retain, at our expense, such outside counsel, experts and other advisors as it determines
appropriate to assist it in the performance of its functions, including the sole authority to retain and terminate any compensation
consultant and to approve the consultant’s fees and other retention terms.
The charter of the Compensation Committee
may be found on our website at www.enzon.com.
Governance and Nominating Committee
All three current members of our Board currently
constitute the Governance and Nominating Committee. Accordingly, our entire Board currently acts as the Governance and Nominating
Committee. When our Board acts as the Governance and Nominating Committee, Dr. Kostas acts as the Chairman of the Governance and
Nominating Committee. Our Board acting as the Governance and Nominating Committee held four meetings during fiscal year 2019.
In evaluating the composition of our Board
when acting as the Governance and Nominating Committee, our Board has determined that each current member of our Board is independent
as defined by the listing standards of Nasdaq.
The Governance and Nominating Committee
is responsible for reviewing and setting corporate governance policy and is responsible for making recommendations on organization
and procedures, performance evaluation of our Board and individual directors, and nomination of directors. The Governance and Nominating
Committee’s Charter may be found on our website at www.enzon.com.
Code of Conduct
Our Board has adopted a Code of Conduct
that is applicable to all of our directors and executive officers. Any material changes made to the Code of Conduct or any waivers
granted to any of our directors and executive officers will be publicly disclosed on our website at www.enzon.com within four business
days of such material change or waiver. A copy of our Code of Conduct is available on the Corporate Governance page of our website
at www.enzon.com.
Item 11. Executive Compensation.
Named Executive Officers
The following individuals were our named
executive officers for fiscal year 2019, whom we refer to in this Form 10-K/A as our named executive officers:
Andrew
Rackear – Mr. Rackear currently serves as our Chief Executive Officer and Secretary. During fiscal year 2019,
Mr. Rackear served as our Chief Executive Officer and Secretary on a consulting basis at a rate of $300 per hour for each hour
worked, together with reimbursement for reasonable expenses incurred in performing his services, pursuant to the terms of a separation
agreement, as amended.
Richard
L. Feinstein – Mr. Feinstein currently serves as our Vice President - Finance and Chief Financial Officer.
During fiscal year 2019, Mr. Feinstein served as our Vice President-Finance and Chief Financial Officer on a
consulting basis at a rate of $300 per hour for each hour worked, together with reimbursement for reasonable expenses
incurred in performing his services, pursuant to the terms of an independent contractor agreement, as amended.
Historical Compensation of our Named Executive
Officers
The following table sets forth information
concerning compensation earned for services rendered to us by our named executive officers for fiscal year 2019 and fiscal year
2018.
Summary Compensation Table
Name and Principal Position
|
|
Year
|
|
|
Bonus
($)
|
|
|
All Other
Compensation
($)(1)
|
|
|
Total ($)
|
|
Andrew Rackear
|
|
|
2019
|
|
|
|
0
|
|
|
|
173,513
|
|
|
|
173,513
|
|
Chief Executive Officer and Secretary
|
|
|
2018
|
|
|
|
0
|
|
|
|
161,796
|
|
|
|
161,796
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard L. Feinstein
|
|
|
2019
|
|
|
|
0
|
|
|
|
160,875
|
|
|
|
160,875
|
|
Vice President - Finance and Chief Financial Officer
|
|
|
2018
|
|
|
|
0
|
|
|
|
151,116
|
|
|
|
151,116
|
|
|
(1)
|
The amounts in this column for Mr. Rackear reflect fees
and expenses related to his services rendered as our Chief Executive Officer and Secretary on a consulting basis. The amounts
in this column for Mr. Feinstein reflect fees and expenses related to his services rendered as our Vice President - Finance and
Chief Financial Officer on a consulting basis. Neither Mr. Rackear nor Mr. Feinstein received a base salary for fiscal year
2019 or 2018.
|
Outstanding Equity Awards at December 31, 2019
The following table sets forth information
with respect to outstanding equity awards held by each of our named executive officers as of December 31, 2019.
|
|
OPTION AWARDS
|
|
|
STOCK AWARDS
|
|
Name
|
|
Number of Securities Underlying Unexercised Options (#) Exercisable(1)
|
|
|
Number of Securities Underlying Unexercised Options (#) Unexercisable
|
|
|
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)
|
|
|
Option Exercise Price(1) ($)
|
|
|
Option Expiration Date
|
|
|
Number of Shares or Units of Stock That Have Not Vested (#)
|
|
|
Market Value of Shares or Units of Stock That Have Not Vested ($)
|
|
|
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)
|
|
|
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
|
|
Andrew Rackear
|
|
|
25,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2.93
|
|
|
|
1/17/2022
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Richard L. Feinstein
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
(1)
|
The amounts in this column reflect equitable adjustments that were approved by the Compensation Committee and made to the stock
options in connection with the special cash dividend of $1.60 per share of common stock that we paid on June 4, 2013, the special
cash dividend of $0.45 per share of common stock that we paid on December 23, 2013, the special cash dividend of $0.10 per share
of common stock that we paid on January 28, 2015, the special cash dividend of $0.50 per share of common stock that we paid on
August 12, 2015, the special cash dividend of $0.25 per share of common stock that we paid on December 29, 2015, the special cash
dividend of $0.15 per share of common stock that we paid on December 12, 2016, the special cash dividend of $0.15 per share of
common stock that we paid on September 28, 2017, the special cash dividend of $0.06 per share of common stock that we paid
on March 21, 2019 and the special cash dividend of $0.12 per share of common stock that we paid on October 15, 2019.
|
Potential Payments Upon Termination or Change in Control
None of our named executive officers is
covered by a severance or change in control agreement and, accordingly, none of our named executive officers would have been entitled
to receive any termination or change in control-related payments as of December 31, 2019.
DIRECTOR COMPENSATION
Amended and Restated 2013 Outside Director Compensation
Plan
Under the Amended and Restated 2013 Outside
Director Compensation Plan, each non-employee director (i) receives an annual cash retainer of $30,000, (ii) for service as chair
of the Finance and Audit Committee receives an additional annual cash retainer of $10,000 and (iii) for service as a non-chair
member of the Finance and Audit Committee receives an additional annual cash retainer of $5,000. These annual cash retainers are
payable quarterly at the end of each quarter.
Total Director Compensation
A summary of compensation paid to each of
our directors during fiscal year 2019 is set forth below.
Name
|
|
Fees Earned or Paid in Cash ($)
|
|
|
Stock Awards ($)(1)
|
|
|
Option Awards
($)(2)
|
|
|
Total ($)
|
|
Jonathan Christodoro
|
|
|
40,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
40,000
|
|
Odysseas Kostas, M.D.
|
|
|
35,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
35,000
|
|
Jennifer McNealey
|
|
|
35,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
35,000
|
|
___________________
|
(1)
|
As of December 31, 2019, none of our directors held any
outstanding restricted stock units.
|
|
(2)
|
As of December 31, 2019, none of our directors held any
outstanding stock options.
|