DEF 14A of Kiniksa Pharmaceuticals International, plc
Filed Apr 23, 2024 · FY20230001104659-24-050621
What We Do
What We Do ✓ Provide a Mix of Fixed and Variable Compensation, with Emphasis on Variable Compensation ✓ Provide a Mix of Annual- and Long-Term Incentive Compensation, with Emphasis on Long-Term Incentive Compensation ✓ Engage Independent Compensation Consultants ✓ Design Compensation Programs to Have a Strong Link Between Performance Measures and Strategic Objectives ✓ Utilize Competitive Market Data and a Compensation Peer Group ✓ Maintain Policy Prohibiting Hedging and Pledging
ANNUAL MEETING PROPOSALS TO BE VOTED ON Annual Meeting Proposal No. 1—Election of Directors
ANNUAL MEETING PROPOSALS TO BE VOTED ON Annual Meeting Proposal No. 1—Election of Directors At the Annual Meeting, three Class III Directors are to be elected to hold office until the Annual Meeting of Shareholders to be held in 2027 (the “2027 Annual Meeting”) and until their respective successors are elected and qualified or until their earlier death, resignation or removal in accordance with the Bye-laws of Kiniksa Bermuda. We currently have nine directors on our Board of Directors, including three Class I Directors consisting of Sanj K. Patel, Thomas R. Malley, and Richard S. Levy; three Class II Directors consisting of Stephen R. Biggar, G. Bradley Cole, and Barry D. Quart; and three Class III Directors consisting of Felix J. Baker, Tracey L. McCain, and Kimberly J. Popovits. Our Board has nominated three director candidates for election as Class III Directors at the Annual Meeting: • Felix J. Baker; • Tracey L. McCain; and • Kimberly J. Popovits Proxies cannot be voted for a greater number of persons than the number of nominees named in this proposal. There are no family relationships among any of our executive officers or directors. All of the persons whose names and biographies appear below are currently serving as our directors. In the event any of the nominees should become unable to serve, or for good cause will not serve, as a director, it is intended that votes will be cast for a substitute nominee designated by our Board of Directors, or the Board may elect to reduce its size. The Board has no reason to believe that the nominees named below will be unable to serve if elected. Each of the nominees has consented to being named in this proxy statement and to serve if elected.
NOMINEES FOR CLASS III DIRECTORS (TERMS EXPIRE AT THE 2027 ANNUAL MEETING)
NOMINEES FOR CLASS III DIRECTORS (TERMS EXPIRE AT THE 2027 ANNUAL MEETING) The nominees for election to the Board of Directors as Class III Directors, who are also current members of the Board, are as follows:
NOMINEES FOR CLASS III DIRECTORS (TERMS EXPIRE AT THE 2027 ANNUAL MEETING)
| Name | Age | Served as a Director Since | Position(s) with Kiniksa | | Felix J. Baker, Ph.D. | 55 | 2015 | Lead Independent Director | | Tracey L. McCain | 56 | 2018 | Director | | Kimberly J. Popovits | 65 | 2018 | Director |
NOMINEES FOR CLASS III DIRECTORS (TERMS EXPIRE AT THE 2027 ANNUAL MEETING)
The principal occupations and business experience, for at least the past five years of each Class III Director are as follows:
NOMINEES FOR CLASS III DIRECTORS (TERMS EXPIRE AT THE 2027 ANNUAL MEETING)
| | Felix J. Baker, Ph.D. | Age 55 |
NOMINEES FOR CLASS III DIRECTORS (TERMS EXPIRE AT THE 2027 ANNUAL MEETING)
Felix J. Baker, Ph.D., has served as our Lead Independent Director (as defined below) and on our Board of Directors since October 2015. Dr. Baker is a Managing Member of Baker Bros. Advisors LP (“Baker Bros. Advisors”), a biotechnology-focused investment adviser to find partnerships whose investors are primarily endowments and foundations, which Dr. Baker founded, together with his brother Julian Baker, in 2000. Dr. Baker holds a B.S. and a Ph.D. in Immunology from Stanford University, where he also completed two years of medical school. He serves on the boards of Kodiak Sciences, Inc., IGM Biosciences, Inc. and N-Power Medicine. We believe Dr. Baker is qualified to serve on our Board of Directors due to his extensive experience in the biotechnology industry and experience working with and serving on the boards of directors of numerous biotechnology and pharmaceutical companies.
NOMINEES FOR CLASS III DIRECTORS (TERMS EXPIRE AT THE 2027 ANNUAL MEETING)
| | Tracey L. McCain | Age 56 |
NOMINEES FOR CLASS III DIRECTORS (TERMS EXPIRE AT THE 2027 ANNUAL MEETING)
Tracey L. McCain has served as a member of our Board of Directors since February 2018. Since September 2016, Ms. McCain has served as Executive Vice President and Chief Legal and Compliance Officer of Blueprint Medicine Corporation, a biotechnology company (“Blueprint”). Prior to Blueprint, from January 2016 to September 2016, Ms. McCain was Senior Vice President and Head of Legal for Sanofi Genzyme, a global business unit of Sanofi S.A. (“Sanofi”). From May 1997 to September 2016, Ms. McCain held various roles at Genzyme Corporation (“Genzyme”), including as General Counsel following Genzyme’s acquisition by Sanofi in 2011. Ms. McCain currently serves on the board of the Dana Farber Cancer Institute, a non-profit. Ms. McCain holds a J.D. from Columbia University School of Law and a B.A. from the University of Pennsylvania. We believe Ms. McCain is qualified to serve on our Board of Directors due to her experience working with numerous biotechnology and pharmaceutical companies and her significant legal expertise.
NOMINEES FOR CLASS III DIRECTORS (TERMS EXPIRE AT THE 2027 ANNUAL MEETING)
| | Kimberly J. Popovits | Age 65 |
NOMINEES FOR CLASS III DIRECTORS (TERMS EXPIRE AT THE 2027 ANNUAL MEETING)
Kimberly J. Popovits has served as a member of our Board of Directors since February 2018. Ms. Popovits served as Genomic Health’s Chairman of the Board from 2012 through 2019, and Chief Executive Officer and President from 2009 through 2019. She was President and Chief Operating Officer upon joining the company in 2002. Prior to leading Genomic Health, Ms. Popovits served as Senior Vice President, Marketing and Sales at Genentech, Inc. (“Genentech”). During her 15 years at Genentech, Ms. Popovits led the successful commercialization of 14 new therapies, including Herceptin. Ms. Popovits currently serves on the board of directors of 10x Genomics, Inc. and previously served on the boards of directors of MyoKardia, Inc. and ZS Pharma, Inc. She also serves on the boards of directors of the Coalition for 21st Century Medicine, the Personalized Medicine Coalition, Talis Biomedical Corporation, Wamberg Genomic Advisors, and Genomic Life, Inc. She also serves as an Executive Advisor to Blackstone Life Sciences and is an Advisor to the Healthcare Businesswomen’s Association. Ms. Popovits holds a B.A. in Business from Michigan State University. We believe Ms. Popovits is qualified to serve on our Board of Directors due to her experience working with and serving on the boards of directors of numerous biotechnology and pharmaceutical companies.
CURRENT CLASS I DIRECTORS (TERMS EXPIRE AT THE 2025 ANNUAL MEETING OF SHAREHOLDERS)
CURRENT CLASS I DIRECTORS (TERMS EXPIRE AT THE 2025 ANNUAL MEETING OF SHAREHOLDERS) Current members of the Board of Directors who are Class I Directors are as follows:
CURRENT CLASS I DIRECTORS (TERMS EXPIRE AT THE 2025 ANNUAL MEETING OF SHAREHOLDERS)
| Name | Age | Served as a Director Since | Position(s) with Kiniksa | | Sanj K. Patel | 54 | 2015 | Chief Executive Officer and Chairman of the Board | | Thomas R. Malley | 55 | 2016 | Director | | Richard S. Levy, M.D. | 66 | 2019 | Director |
CURRENT CLASS I DIRECTORS (TERMS EXPIRE AT THE 2025 ANNUAL MEETING OF SHAREHOLDERS)
The principal occupations and business experience, for at least the past five years of each Class I Director are as follows:
CURRENT CLASS I DIRECTORS (TERMS EXPIRE AT THE 2025 ANNUAL MEETING OF SHAREHOLDERS)
| | Sanj K. Patel | Age 54 |
CURRENT CLASS I DIRECTORS (TERMS EXPIRE AT THE 2025 ANNUAL MEETING OF SHAREHOLDERS)
Sanj K. Patel has served as our Chief Executive Officer and Chairman of our Board of Directors since our formation in July 2015. In June 2008, Mr. Patel formed Synageva BioPharma Corp., a biotechnology company focused on rare diseases (“Synageva”), where he served as President and Chief Executive Officer and was a member of its board of directors until Synageva’s sale to Alexion Pharmaceuticals, Inc. (“Alexion”) in June 2015. Prior to Synageva, Mr. Patel held various roles at Genzyme, from 1999 to 2008, including as head of U.S. Sales, Marketing and Commercial Operations for the Genzyme Therapeutics franchise. Mr. Patel previously served as a member of the boards of directors of Syros Pharmaceuticals, Inc., BioCryst Pharmaceuticals, Inc., and Intercept Pharmaceuticals, Inc. He is also the founder and director of the Sanj & Kristin Patel Family Foundation, a philanthropic organization that supports charities for patients with rare and devastating diseases. Mr. Patel holds a B.Sc. with Honors from the University of the South Bank, London and completed his management and business studies at Ealing College, London and his Pharmacology research program at the Wellcome Foundation. We believe that Mr. Patel is qualified to serve on our Board of Directors due to his extensive business, sales and product development experience in the biotechnology industry.
CURRENT CLASS I DIRECTORS (TERMS EXPIRE AT THE 2025 ANNUAL MEETING OF SHAREHOLDERS)
| | Thomas R. Malley | Age 55 |
CURRENT CLASS I DIRECTORS (TERMS EXPIRE AT THE 2025 ANNUAL MEETING OF SHAREHOLDERS)
Thomas R. Malley has served as a member of our Board of Directors since December 2016. Since May 2007, Mr. Malley has served as the President of Mossrock Capital, LLC, a private investment firm. From 1991 to 2007, Mr. Malley held several positions at Janus Capital Group, including serving as the Portfolio Manager leading the Janus Global Life Sciences Fund. Mr. Malley serves on the boards of directors of BeiGene, Ltd. and Kura Oncology, Inc., and previously served on the boards of directors of OvaScience, Inc., Cougar Biotechnology, Inc., Puma Biotechnology, Inc. and Synageva. Mr. Malley holds a B.S. degree in Biology from Stanford University. Mr. Malley is also a Chartered Financial Analyst. We believe Mr. Malley is qualified to serve on our Board of Directors due to his substantial capital markets expertise and experience working with and serving on the boards of directors of numerous biotechnology and pharmaceutical companies.
CURRENT CLASS I DIRECTORS (TERMS EXPIRE AT THE 2025 ANNUAL MEETING OF SHAREHOLDERS)
| | Richard S. Levy, M.D. | Age 66 |
CURRENT CLASS I DIRECTORS (TERMS EXPIRE AT THE 2025 ANNUAL MEETING OF SHAREHOLDERS)
Richard S. Levy, M.D. has served on our Board of Directors since March 2019. Dr. Levy served as a Senior Advisor at Baker Bros. Advisors from December 2016 to May 2019. Prior to that, Dr. Levy served as Executive Vice President and Chief Drug Development Officer at lncyte Corporation, a biopharmaceutical company, from January 2009 until June 2016, and as Senior Vice President of Drug Development from August 2003 to January 2009. Dr. Levy currently serves on the boards of directors of Madrigal Pharmaceuticals, Inc., Protara Therapeutics, Inc. (f/k/a ArTara Therapeutics, Inc.) and Kodiak Sciences, and previously served on the board of directors of Constellation Pharmaceuticals, Inc. and Aquinox Pharmaceuticals, Inc. Dr. Levy is Board Certified in Internal Medicine and Gastroenterology and holds an A.B. in Biology from Brown University and an M.D. from the University of Pennsylvania School of Medicine, and completed his training in Internal Medicine at the Hospital of the University of Pennsylvania and a fellowship in Gastroenterology and Hepatology at UCLA. We believe Dr. Levy is qualified to serve on our Board of Directors due to his experience in the biotechnology industry, his medical and scientific training and experience working with and serving on the boards of directors of numerous biotechnology and pharmaceutical companies.
CURRENT CLASS II DIRECTORS (TERMS EXPIRE AT THE 2026 ANNUAL MEETING OF SHAREHOLDERS)
CURRENT CLASS II DIRECTORS (TERMS EXPIRE AT THE 2026 ANNUAL MEETING OF SHAREHOLDERS) Current members of the Board of Directors who are Class II Directors are as follows:
CURRENT CLASS II DIRECTORS (TERMS EXPIRE AT THE 2026 ANNUAL MEETING OF SHAREHOLDERS)
| Name | Age | Served as a Director Since | Position(s) with Kiniksa | | Stephen R. Biggar, M.D., Ph.D. | 53 | 2015 | Director | | G. Bradley Cole | 68 | 2020 | Director | | Barry D. Quart, Pharm. D. | 67 | 2015 | Director |
CURRENT CLASS II DIRECTORS (TERMS EXPIRE AT THE 2026 ANNUAL MEETING OF SHAREHOLDERS)
The principal occupations and the business experience, for at least the past five years of each Class II Director are as follows:
CURRENT CLASS II DIRECTORS (TERMS EXPIRE AT THE 2026 ANNUAL MEETING OF SHAREHOLDERS)
| | Stephen R. Biggar, M.D. | Age 53 |
CURRENT CLASS II DIRECTORS (TERMS EXPIRE AT THE 2026 ANNUAL MEETING OF SHAREHOLDERS)
Stephen R. Biggar, M.D. has served as a member of our Board of Directors since October 2015. Dr. Biggar is a Partner at Baker Bros. Advisors, a registered investment advisor focused on long-term investments in life-sciences companies. Dr. Biggar joined Baker Bros. Advisors in 2000. Dr. Biggar has served on the board of directors of Acadia Pharmaceuticals Inc. since 2013, where he has served as chairman since 2016 and also serves on its compensation and nominating and corporate governance committees. Dr. Biggar has also served on the board of directors of TScan Therapeutics, Inc. since 2021, where he also serves on its compensation and nominating and corporate governance committees. Dr. Biggar received an M.D. and a Ph.D. in Immunology from Stanford University and received a B.S. in Genetics from the University of Rochester. We believe Dr. Biggar is qualified to serve on our Board of Directors due to his experience in the biotechnology industry, his medical and scientific training and experience working with and serving on the boards of directors of numerous biotechnology and pharmaceutical companies.
CURRENT CLASS II DIRECTORS (TERMS EXPIRE AT THE 2026 ANNUAL MEETING OF SHAREHOLDERS)
| | G. Bradley Cole | Age 68 |
CURRENT CLASS II DIRECTORS (TERMS EXPIRE AT THE 2026 ANNUAL MEETING OF SHAREHOLDERS)
G. Bradley Cole has served as a member of our Board of Directors since July 2020. He has served as the Chief Financial Officer of Genomic Life, Inc. since February 2022. Previously, he served as Executive Advisor of Exact Sciences Corporation (“Exact Sciences”), from April 2020 to September 2020, and from November 2019 until April 2020 he served as its GM, Precision Oncology. Prior to that, Mr. Cole served as Chief Financial Officer of Genomic Health, Inc. (“Genomic Health”), a molecular diagnostics company, from July 2014 to November 2019 and from July 2004 to January 2011, and as Chief Operating Officer of Genomic Health from January 2009 until March 2018, when it was acquired by Exact Sciences. Mr. Cole served as Secretary of Genomic Health from February 2005 until July 2012. From December 1997 to May 2004, he served in various roles at Guidant Corporation, a medical device company, including as Vice President, Finance and Business Development for the Endovascular Solutions Group. From January 2001 until May 2004 he served as Vice President, Finance and Chief Financial Officer of Endovascular Technologies, Inc., a medical device company that was acquired by Guidant Corporation. Previously, Mr. Cole served as Vice President, Finance and Chief Financial Officer of Applied Biosystems Incorporated, a life sciences systems company. Mr. Cole currently serves on the board of directors of Castle Biosciences, a skin cancer diagnostics company. He also serves on the Genomic Life, Inc. board of directors and as Vice Chairman of the Board of Trustees of Biola University. Mr. Cole holds a B.S. in Business from Biola University and an M.B.A. from San Jose State University. We believe Mr. Cole is qualified to serve on our Board of Directors due to his extensive management and operational experience in the life sciences industry and his experience working with and serving on the boards of directors of life science companies.
CURRENT CLASS II DIRECTORS (TERMS EXPIRE AT THE 2026 ANNUAL MEETING OF SHAREHOLDERS)
| | Barry D. Quart, Pharm. D. | Age 67 |
CURRENT CLASS II DIRECTORS (TERMS EXPIRE AT THE 2026 ANNUAL MEETING OF SHAREHOLDERS)
Barry D. Quart, Pharm. D., has served as a member of our Board of Directors since October 2015. From 2013 to 2023, Dr. Quart served as the Chief Executive Officer and a member of the board of directors of Heron Therapeutics, Inc., a biotechnology company. In 2006, Dr. Quart co-founded Ardea Biosciences, Inc., a biotechnology company, and served as its President and Chief Executive Officer, and on its board of directors, from its inception through May 2013, when it was acquired by AstraZeneca plc. At Ardea, Dr. Quart invented and oversaw the development of a drug for gout (ZURAMPIC®). Ardea also designed and developed a series of MEK inhibitors for cancer that were licensed to Bayer AG. Previously, he was with Pfizer Inc. as Senior Vice President of Pfizer Global Research and Development, and the director of Pfizer’s La Jolla Laboratories. Prior to Pfizer’s acquisition of the Warner-Lambert Company, Dr. Quart was President of Research and Development at Agouron Pharmaceuticals, Inc., a division of Warner-Lambert Company. Dr. Quart previously served on the board of directors of Synageva. Dr. Quart holds a Pharm.D. degree from the University of California, San Francisco. We believe Dr. Quart is qualified to serve on our Board of Directors due to his extensive management experience in the biotechnology industry and his experience developing pharmaceutical products.
ATTENDANCE BY MEMBERS OF THE BOARD OF DIRECTORS AT MEETINGS
ATTENDANCE BY MEMBERS OF THE BOARD OF DIRECTORS AT MEETINGS There were four meetings of the Board of Directors during 2023. During 2023, each director attended at least 75% of the aggregate of all meetings of the Board of Directors and meetings of the committees on which such director served during the period in which he or she served as a director. Currently, we do not maintain a formal policy regarding director attendance at the Annual Meeting; however, it is expected that directors will attend. Eight of our directors attended our 2023 Annual Meeting of Shareholders. Our Board of Directors has established four standing committees—the Audit Committee, the Compensation Committee, the Governance Committee and the Science Committee—each of which operates under a written charter. The charters of our committees are available in the “Corporate Governance” section of the “Investors” page of our website located at www.kiniksa.com. The information contained on our website is not incorporated by reference into this proxy statement, and you should not consider any information contained on, or that can be accessed through, our website as part of this proxy statement. Our Board of Directors has determined that (a) all of the members of each of the Board’s four standing committees are independent as defined under Nasdaq rules, where applicable, (b) all of the members of the Audit Committee meet the independence requirements of Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and (c) all members of the Compensation Committee meet the heightened standard for independence specific to members of a compensation committee under Nasdaq rules. The current members of each of the Board committees and committee Chairs are set forth in the following chart.
ATTENDANCE BY MEMBERS OF THE BOARD OF DIRECTORS AT MEETINGS
| Name | Audit | Compensation | Nominating and Corporate Governance | Science and Research | | Felix J. Baker, Ph.D. | | Chair | X | X | | Stephen R. Biggar, M.D., Ph.D. | | | Chair | X | | G. Bradley Cole | X | | | | | Richard S. Levy | | | | Chair | | Thomas R. Malley | Chair | | X | | | Tracey McCain | X | | | | | Kimberly J. Popovits | | X | | | | Barry D. Quart, Pharm.D.* | X | X | | X |
ATTENDANCE BY MEMBERS OF THE BOARD OF DIRECTORS AT MEETINGS
* Dr. Quart was appointed to the Science Committee by the Board of Directors in November 2023.
COMPENSATION COMMITTEE
COMPENSATION COMMITTEE The Compensation Committee is responsible for assisting the Board in the discharge of its responsibilities relating to the compensation of our executive officers and directors, among other things. In fulfilling its purpose, the Compensation Committee’s responsibilities include: • reviewing and approving, or recommending for approval by the Board of Directors, the compensation of our Chief Executive Officer and our other executive officers; • overseeing and administering our cash and equity incentive plans; • reviewing and approving Kiniksa’s corporate goals relevant to the compensation of our Chief Executive Officer and our other named executive officers and evaluating the executive officers’ performance against such goals; • reviewing and approving Kiniksa’s compensation peer group by which executive and director compensation is evaluated; • administering any recoupment or clawback policy or policies adopted by Kiniksa; • reviewing and making recommendations to the Board of Directors with respect to director compensation; and • reviewing and discussing with management strategies related to human capital management, including talent acquisition, retention, inclusion and diversity and overseeing risks related thereto. The Compensation Committee has the authority to retain or obtain the advice of compensation consultants, legal counsel and other advisors to assist in carrying out its responsibilities. During 2023, the Compensation Committee engaged Compensia, Inc., a compensation consulting firm (“Compensia”), to, among other things, assess and, as applicable, make recommendations with respect to the amount and types of compensation to provide our executives and directors and related matters. Compensia reported directly to the Compensation Committee. In its role as an advisor to the Compensation Committee, Compensia consulted with certain of our executive officers and other members of senior management with respect to assessments of executive and director compensation and related matters to be provided to the Compensation Committee. The Compensation Committee reviewed compensation assessments provided by Compensia comparing our compensation to that of a group of peer companies within our industry, and met with Compensia to discuss compensation of our executive officers and to receive its input and advice. The Compensation Committee considered the advisor independence factors required under SEC and Nasdaq rules as they relate to Compensia, and did not find any conflicts of interest concerns in 2023. For 2023, Compensia did not provide any additional services to us for which the fees exceeded $120,000. The Compensation Committee may delegate its authority under its charter to one or more subcommittees as it deems appropriate from time to time as further described in its charter. The Compensation Committee may delegate to one or more of our executive officers the authority to grant equity awards to certain employees, as further described in its charter and subject to the terms of our equity plans and any such delegation. The members of our Compensation Committee are Drs. Baker and Quart and Ms. Popovits. Dr. Baker serves as the Chairperson of the committee. The Compensation Committee met three times in 2023.
2023 SUMMARY COMPENSATION TABLE
2023 SUMMARY COMPENSATION TABLE The following table sets forth information concerning the compensation of our named executive officers for the years ended December 31, 2023 and 2022, as applicable.
2023 SUMMARY COMPENSATION TABLE
| Name and principal position | Year | Salary ($) | Share awards ($)(1) | Option awards ($)(1) | Non-equity incentive plan compensation ($)(2) | All other compensation ($)(3) | Total ($) | | Sanj K. Patel Chief Executive Officer and Chairman of our Board of Directors | 2023 | 864,218 | 739,381 | 2,984,605 | 695,663 | 13,200 | 5,297,067 | | | 2022 | 834,918 | 922,039 | 3,746,557 | 597,408 | 12,200 | 6,113,122 | | John F. Paolini, M.D. Senior Vice President and Chief Medical Officer | 2023 | 541,014 | 185,266 | 748,051 | 301,578 | 13,200 | 1,789,109 | | | 2022 | 514,583 | 230,469 | 936,346 | 226,919 | 12,200 | 1,920,518 | | Eben Tessari Senior Vice President and Chief Operating Officer | 2023 | 449,510 | 202,235 | 816,573 | 278,783 | 4,995 | 1,752,096 | | | 2022 | 443,534 | 251,578 | 1,022,122 | 195,782 | 4,435 | 1,917,452 |
2023 SUMMARY COMPENSATION TABLE
(1) Amounts reflect the grant date fair value of options and restricted share units (“RSUs”) computed in accordance with Financial Accounting Standards Board Accounting Standards Codification, or FASB ASC, Topic 718, excluding the effect of estimated forfeitures, rather than the amounts paid to or realized by the named executive officer. We provide information regarding the assumptions used to calculate the value of share option and RSU awards in Note 11 to our consolidated financial statements included in our Annual Report filed with the SEC on February 28, 2024. (2) Non-equity incentive plan compensation for 2023 was approved in December 2023 and paid in January 2024. For additional information, refer to the discussion in “Narrative Disclosure to Summary Compensation Table” below under the heading “—2023 Annual Cash Incentive Compensation.” (3) Amount shown represents 401(k) matching contributions. For additional information, refer to the discussion in the “Narrative Disclosure to Summary Compensation Table” below under the heading “—Other Elements of Compensation— Retirement Plans.”
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR END
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR END The following table summarizes the number of Class A Shares underlying outstanding equity incentive plan awards for each named executive officer as of December 31, 2023.
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR END
| Name | | Option awards(1) | | | | Share awards(1) | | | | Vesting start date | Number of securities underlying unexercised options (#) exercisable | Number of securities underlying unexercised options (#) unexercisable | Option exercise price ($) | Option expiration date | Number of shares or units of shares that have not vested (#) | Market value of shares or units of shares that have not vested ($)(2) | | Sanj K. Patel | 8/1/2015 | 325,271 | — | 1.59 | 12/15/2025 | — | — | | | 6/29/2017 | 257,969 | — | 3.80 | 6/28/2027 | — | — | | | 3/1/2018 | 426,007 | 13,175(3) | 10.36 | 2/29/2028 | — | — | | | 9/20/2018 | 125,000 | — | 30.93 | 9/19/2028 | — | — | | | 3/4/2019 | 187,000 | — | 17.92 | 3/3/2029 | — | — | | | 9/17/2019 | 190,000 | — | 8.83 | 9/16/2029 | — | — | | | 3/13/2020 | 168,751 | 11,249(4) | 15.52 | 3/12/2030 | — | — | | | 9/10/2020 | 150,001 | 29,999(4) | 15.50 | 9/9/2030 | — | — | | | 3/16/2021 | 108,391 | 49,267(4) | 22.89 | 3/15/2031 | — | — | | | 3/16/2021 | — | — | — | — | 13,138(5) | 230,441 | | | 9/2/2021 | 91,969 | 65,689(4) | 12.97 | 9/1/2031 | — | — | | | 9/2/2021 | — | — | — | — | 13,138(5) | 230,441 | | | 4/7/2022 | 104,912 | 134,883(4) | 11.10 | 4/6/2032 | — | — | | | 4/7/2022 | — | — | — | — | 29,975(5) | 525,762 | | | 9/1/2022 | 79,933 | 159,862(4) | 11.97 | 8/31/2032 | — | — | | | 9/1/2022 | — | — | — | — | 29,975(5) | 525,762 | | | 4/1/2023 | — | 155,500(4) | 10.76 | 3/31/2033 | — | — | | | 4/1/2023 | — | — | — | — | 25,925(5) | 454,725 | | | 9/1/2023 | — | 155,500(4) | 17.76 | 8/31/2033 | — | — | | | 9/1/2023 | — | | | | 25,925(5) | 454,725 | | John F. Paolini, M.D. | 9/14/2016 | 111,217 | — | 1.86 | 9/13/2026 | — | — | | | 6/29/2017 | 66,542 | — | 3.80 | 6/28/2027 | — | — | | | 3/1/2018 | 122,330 | 19,169(3) | 10.36 | 2/29/2028 | — | — | | | 9/20/2018 | 45,000 | — | 30.93 | 9/19/2028 | — | — | | | 3/4/2019 | 51,000 | — | 17.92 | 3/3/2029 | — | — | | | 9/17/2019 | 46,000 | — | 8.83 | 9/16/2029 | — | — | | | 3/13/2020 | 46,876 | 3,124(4) | 15.52 | 3/12/2030 | — | — | | | 9/10/2020 | 40,626 | 9,374(4) | 15.50 | 9/9/2030 | — | — | | | 3/16/2021 | 10,350 | 31,050(4) | 22.89 | 3/15/2031 | — | — | | | 3/16/2021 | — | — | — | — | 3,450(5) | 60,513 | | | 9/2/2021 | 23,288 | 18,112(4) | 12.97 | 9/1/2031 | — | — | | | 9/2/2021 | — | — | — | — | 3,450(5) | 60,513 | | | 4/7/2022 | 24,972 | 34,958(4) | 11.10 | 4/6/2032 | — | — | | | 4/7/2022 | — | — | — | — | 7,492(5) | 131,410 | | | 9/1/2022 | 18,729 | 41,201(4) | 11.97 | 8/31/2032 | — | — | | | 9/1/2022 | — | — | — | — | 7,492(5) | 131,410 | | | 4/1/2023 | — | 38,974(4) | 10.76 | 3/31/2033 | — | — | | | 4/1/2023 | — | — | — | — | 6,496(5) | 113,940 | | | 9/1/2023 | — | 38,974(4) | 17.76 | 8/31/2033 | — | — | | | 9/1/2023 | — | — | — | — | 6,496(5) | 113,940 |
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR END
| Name | | Option awards(1) | | | | Share awards(1) | | | | Vesting start date | Number of securities underlying unexercised options (#) exercisable | Number of securities underlying unexercised options (#) unexercisable | Option exercise price ($) | Option expiration date | Number of shares or units of shares that have not vested (#) | Market value of shares or units of shares that have not vested ($)(2) | | Eben Tessari | 8/1/2015 | 56,673 | — | 1.59 | 12/15/2025 | — | — | | | 6/29/2017 | 35,049 | — | 3.80 | 6/28/2027 | — | — | | | 3/1/2018 | 104,855 | | 10.36 | 2/29/2028 | — | — | | | 9/20/2018 | 45,000 | — | 30.93 | 9/19/2028 | — | — | | | 3/4/2019 | 42,000 | | 17.92 | 3/3/2029 | — | — | | | 9/17/2019 | 45,000 | | 8.83 | 9/16/2029 | — | — | | | 3/13/2020 | 56,251 | 3,749(4) | 15.52 | 3/12/2030 | — | — | | | 9/10/2020 | 48,751 | 11,249(4) | 15.50 | 9/9/2030 | — | — | | | 3/16/2021 | 32,408 | 14,730(4) | 22.89 | 3/15/2031 | — | — | | | 3/16/2021 | — | — | — | — | 3,928(5) | 68,897 | | | 9/2/2021 | 26,516 | 20,622(4) | 12.97 | 9/1/2031 | — | — | | | 9/2/2021 | — | — | — | — | 3,928(5) | 68,897 | | | 4/7/2022 | 27,259 | 38,161(4) | 11.10 | 4/6/2032 | — | — | | | 4/7/2022 | — | — | — | — | 8,178(5) | 143,442 | | | 9/1/2022 | 20,444 | 44,976(4) | 11.97 | 8/31/2032 | — | — | | | 9/1/2022 | — | — | — | — | 8,178(5) | 143,442 | | | 4/1/2023 | — | 42,544(4) | 10.76 | 3/31/2033 | — | — | | | 4/1/2023 | — | — | — | 7,091(5) | 124,376 | — | | | 9/1/2023 | — | 42,544(4) | 17.76 | 8/31/2033 | — | — | | | 9/1/2023 | — | — | — | 7,091(5) | 124,376 | — |
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR END
(1) Each equity award is subject to accelerated vesting upon certain events pursuant to the terms of the named executive officers’ employment arrangements, as described below under “Employment Arrangements”. In addition, pursuant to the equity award agreements governing the awards reflected in this table, in the event of a change in control (as defined in the applicable equity award agreement), each named executive officer will become immediately vested in any outstanding equity awards to the extent that such equity awards are not assumed or substituted in such transaction. If the equity awards are assumed or substituted in connection with a change in control, each named executive officer will become vested in such equity awards in the event his employment is terminated by the surviving entity without cause (as defined in the applicable equity award agreement) within 12 months following a change in control. (2) Amounts in this column are calculated based on a per share price of $17.54, the closing price per share of the Class A Shares on December 29, 2023. (3) The options vest over a six-year period with 16% of the shares vesting on the first anniversary of the corresponding vesting start date, 48% of the shares vesting in 36 equal monthly installments over the following three years and 36% of the shares vesting in 24 equal monthly installments over the two years thereafter, generally subject to continued service to Kiniksa. (4) The options vest over a four-year period with 25% of the shares vesting on the first anniversary of the corresponding vesting start date, and the remainder vesting monthly for three years thereafter, generally subject to continued service to Kiniksa. (5) The RSUs vest over a four-year period, with 25% of such RSUs vesting on each anniversary date from the date of grant, generally subject to continued service to Kiniksa.
PAY VERSUS PERFORMANCE TABLE (2021-2023)
PAY VERSUS PERFORMANCE TABLE (2021-2023) The following table sets forth the compensation of our principal executive officer, who is our CEO, and the average compensation of the other non-CEO named executive officers (“NEOs”) as reported in the Summary Compensation Table (“SCT”) for the past two fiscal years, the Compensation Actually Paid (“CAP”) and our total shareholder return (“TSR”) over the provided periods, calculated in accordance with Item 402(v) of Regulation S-K.
PAY VERSUS PERFORMANCE TABLE (2021-2023)
| Year (a) | SCT Total for CEO ($)(1) (b) | CAP to CEO ($)(2) (c) | Average SCT Total for (non-CEO) NEOs ($)(1)(3) (d) | Average CAP to (non-CEO) NEOs ($)(2)(3) (e) | Value of Initial Fixed $100 Investment Based on Total Shareholder Return (TSR) ($)(4) (f) | Net Income (Loss) (in thousands) ($)(5) (g) | | 2023 | 5,297,067 | 6,804,798 | 1,770,603 | 2,168,721 | 98.75 | 14,084 | | 2022 | 6,113,122 | 8,730,830 | 1,918,984 | 2,622,018 | 84.78 | 183,363 | | 2021 | 6,588,178 | 579,468 | 1,700,470 | 395,753 | 66.61 | (157,924) |
PAY VERSUS PERFORMANCE TABLE (2021-2023)
(1) The dollar amounts reported in column (b) and (d) represent the amount of total compensation reported for our CEO and the average total compensation reported for our remaining NEOs, respectively, for each covered fiscal year in the “Total” column of the SCT for each applicable year. Please refer to “Executive Compensation—2023 Summary Compensation Table.” (2) The dollar amounts reported in column (c) and (e) represent the amount of “compensation actually paid” to our CEO and the average “compensation actually paid” to our remaining NEOs, respectively, as computed in accordance with Item 402(v) of Regulation S-K, for each covered fiscal year. The dollar amounts do not reflect the actual amount of compensation earned or received by or paid to the CEO and NEOs during the applicable fiscal year. The SCT Total to CAP reconciliation is outlined in the tables below. (3) In 2023 and 2022, our NEOs (excluding our CEO) were John Paolini and Eben Tessari. In 2021, our NEOs (excluding our CEO) were John Paolini and Arian Pano. (4) TSR (column (f)) is calculated by dividing the sum of the cumulative amount of dividends during the measurement period, assuming dividend reinvestment, and the difference between the price of our Class A Shares at the end of the applicable measurement period and the beginning of the measurement period (December 31, 2021) by the price of our Class A Shares at the beginning of the measurement period. The dollar amounts reported in column (g) represent the amount of net income (loss) reflected in our audited financial statements for each covered fiscal year. Our net income in 2022 was primarily attributable to out-licensing activities and the release of our deferred tax asset valuation allowance and should not necessarily be considered indicative of future performance. Our net income in 2023 was materially impacted by the release of our deferred tax asset valuation allowances. For more information, see Notes 12 and 14 to our consolidated financial statements included in our Annual Report filed with the SEC on February 28, 2024. CEO—SCT Total to CAP Reconciliation(1)
PAY VERSUS PERFORMANCE TABLE (2021-2023)
| | 2021 | 2022 | 2023 | | SCT—Total Compensation(a) | $6,588,178 | $6,113,122 | $5,297,067 | | Grant Date Fair Value of Share Awards and Option Awards Granted in Fiscal Year Reported in the “Stock Awards” column of the SCT(b) | (4,979,216) | (4,668,596) | (3,723,986) | | Fair Value at Fiscal Year End of Outstanding and Unvested Share Awards and Option Awards Granted in Fiscal Year(c) | 2,818,653 | 6,294,377 | 4,632,687 | | Change in Fair Value of Outstanding and Unvested Share Awards and Option Awards Granted in Prior Fiscal Years(d) | (3,244,052) | 1,223,833 | 800,197 | | Fair Value at Vesting of Share Awards and Option Awards Granted in Fiscal Year That Vested During Fiscal Year(e) | — | — | — | | Change in Fair Value as of Vesting Date of Share Awards and Option Awards Granted in Prior Fiscal Years That Vested During Fiscal Year(f) | (604,095) | (231,907) | (201,167) | | Fair Value as of Prior Fiscal Year End of Share Awards and Option Awards Granted in Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year(g) | — | — | — | | CAP | $579,468 | $8,730,830 | $6,804,798 |
PAY VERSUS PERFORMANCE TABLE (2021-2023)
Equity Award Valuations—Share option grant date fair values are calculated based on the Black-Scholes option pricing model as of the date of grant. The valuation assumptions used to calculate the fair values of the share options held by our CEO that vested during or were outstanding as of the end of each covered fiscal year differed from those valuation assumptions disclosed at the time of grant primarily based on the differing option value assumptions: 2021 year-end calculations were based on an expected life of 4.70, volatility of 74.53%, and risk-free rate of 1.2%; 2022 year-end calculations were based on an expected life of 4.82, volatility of 75.15%, and risk-free rate of 4.0%; and 2023 year-end calculations were based on an expected life of 5.24, volatility of 68.29%, and risk-free rate of 3.83%. RSUs and PSU award grants were not valued in a materially different way than the grant date fair value. Average Non-CEO NEO—SCT Total to CAP Reconciliation(1)
PAY VERSUS PERFORMANCE TABLE (2021-2023)
| | 2021 | 2022 | 2023 | | SCT—Total Compensation(a) | $1,700,470 | $1,918,984 | $1,770,603 | | Grant Date Fair Value of Share Awards and Option Awards Granted in Fiscal Year Reported in the “Stock Awards” column of the SCT(b) | (1,042,072) | (1,220,258) | (976,063) | | Fair Value at Fiscal Year End of Outstanding and Unvested Share Awards and Option Awards Granted in Fiscal Year(c) | 439,000 | 1,645,196 | 1,214,235 | | Change in Fair Value of Outstanding and Unvested Share Awards and Option Awards Granted in Prior Fiscal Years(d) | (575,861) | 344,114 | 214,562 | | Fair Value at Vesting of Share Awards and Option Awards Granted in Fiscal Year That Vested During Fiscal Year(e) | — | — | — | | Change in Fair Value as of Vesting Date of Share Awards and Option Awards Granted in Prior Fiscal Years That Vested During Fiscal Year(f) | (125,785) | (66,019) | (54,616) | | Fair Value as of Prior Fiscal Year End of Share Awards and Option Awards Granted in Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year(g) | — | — | — | | CAP | $395,753 | $2,622,018 | $2,168,721 |
PAY VERSUS PERFORMANCE TABLE (2021-2023)
(1) Equity Award Valuations—Share option grant date fair values are calculated based on the Black-Scholes option pricing model as of the date of grant. The valuation assumptions used to calculate the fair values of the share options held by our remaining NEOs that vested during or were outstanding as of the end of each covered fiscal year differed from those valuation assumptions disclosed at the time of grant primarily based on the differing option value assumptions: 2021 year-end calculations were based on an expected life range of 4.29 to 4.67, volatility of 74.35% to 74.54%, and risk-free rate of 1.15% to 1.20%; 2022 year-end calculations were based on an expected life range of 4.78 to 4.83, volatility of 75.13% to 75.14%, and risk-free rate of 4.0%; and 2023 year-end calculations were based on an expected life range of 5.21 to 5.22, volatility of 57.8% to 69.4%, and risk-free rate of 3.83%. RSUs and PSU award grants were not valued in a materially different way than the grant date fair value.
Analysis of the Information Presented in the Pay Versus Performance Table
Analysis of the Information Presented in the Pay Versus Performance Table As described above under “Executive and Director Compensation—Narrative Disclosure to Summary Compensation Table,” our Compensation Committee evaluates executive performance and rewards our executives based on the achievement of established long and short-term strategic goals intended to align our executives’ interests with those of our shareholders and Kiniksa. In accordance with Item 402(v) of Regulation S-K, we are providing the following graphs that describe the relationships between information presented in the tables above. CAP and Cumulative TSR The following graph describes the relationship between the CAP of our CEO and the average of our remaining NEOs and our cumulative TSR over the two years presented in the table. As demonstrated by such graph, the amount of CAP to our CEO and NEOs is generally aligned with our TSR for the period presented in the Pay Versus Performance table primarily because a significant portion of the amount reflected by CAP is comprised of equity awards. (1) Total Shareholder Return illustrates the value, as of the last day of the indicated fiscal year, of an investment of $100 in Kiniksa Bermuda’s Class A Shares on December 31, 2020. CAP and Net Income The following graph describes the relationship between the CAP of our CEO and the average of our remaining NEOs and our net income over the two years presented in the table. We have not historically used GAAP or non-GAAP net income as a financial performance measure in our overall executive compensation program. (1) Our net income in 2022 was primarily attributable to out-licensing activities and the release of our deferred tax asset valuation allowance and should not necessarily be considered indicative of future performance. Our net income in 2023 was materially impacted by the release of our deferred tax asset valuation allowances. For more information, see Notes 12 and 14 to our consolidated financial statements included in our Annual Report filed with the SEC on February 28, 2024.
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION Mr. Patel does not receive compensation for his service on our Board of Directors. His compensation for 2023 is described above under “Executive Compensation.” We maintain a compensation program for our non-employee directors (the “Director Compensation Program”), which our Board of Directors and the Compensation Committee may review from time to time. Under the Director Compensation Program, as amended, each non-employee director received the following amounts for their services on our Board of Directors during 2023: Cash Component Director fees under the program are payable in arrears in four equal quarterly installments and are prorated for any partial quarters of service. Board of Directors • an annual director fee of $40,000; and • if the director serves on a committee of our Board of Directors or in the other capacities stated below, an additional annual fee as follows: Chairman of the Board of Directors or Lead Independent Director, $30,000. Audit Committee • Chairman of the Audit Committee, $19,000; and • Members of the Audit Committee other than the chairman, $9,000. Compensation Committee • Chairman of the Compensation Committee, $13,400; and • Members of the Compensation Committee other than the chairman, $6,300. Nominating and Corporate Governance Committee • Chairman of the Governance Committee, $9,300; and • Members of the Governance Committee other than the chairman, $5,000. Science and Research Committee • Chairman of the Science Committee, $13,400; and • Members of the Science Committee other than the chairman, $6,300.
2023 DIRECTOR COMPENSATION TABLE
2023 DIRECTOR COMPENSATION TABLE The following table sets forth in summary form information concerning the compensation that was earned by or paid to each of our non-employee directors in their capacity as members of our Board of Directors during the fiscal year ended December 31, 2023:
2023 DIRECTOR COMPENSATION TABLE
| Name | Fees earned or paid in cash ($) | Share awards ($)(1) | Option awards ($)(1) | All other compensation ($)(2) | Total ($) | | Felix J. Baker, Ph.D. | 94,700 | 66,426 | 249,932 | — | 411,058 | | Stephen R. Biggar, M.D., Ph.D. | 55,600 | 66,426 | 249,932 | — | 371,958 | | G. Bradley Cole | 49,000 | 66,426 | 249,932 | — | 365,358 | | Richard S. Levy, M.D. | 53,400 | 111,413 | 249,932 | 45,000 | 459,745 | | Thomas R. Malley | 64,000 | 66,426 | 249,932 | — | 380,358 | | Tracey L. McCain | 49,000 | 66,426 | 249,932 | — | 365,358 | | Kimberly J. Popovits | 46,300 | 66,426 | 249,932 | — | 362,658 | | Barry D. Quart, Pharm.D(2) | 56,193 | 66,426 | 249,932 | — | 372,551 |
2023 DIRECTOR COMPENSATION TABLE
(1) Amounts reflect the grant date fair value of options and RSUs computed in accordance with FASB ASC Topic 718, excluding the effect of estimated forfeitures, rather than the amounts paid to or realized by the director. For Dr. Levy, amount reflects the grant date fair value of options and RSUs granted in respect of his service as a member of our Board of Directors ($249,932 and $66,426, respectively) and fully vested RSUs granted in respect of his consulting services ($44,987). We provide information regarding the assumptions used to calculate the value of share option and RSU awards in Note 11 to our consolidated financial statements included in our Annual Report filed with the SEC on February 28, 2024. (2) Amount for Dr. Levy reflects cash consulting fee paid pursuant to his consulting agreement with us, as described above under “Director Compensation—Other Compensation”. (3) In November 2023, our Board of Directors appointed Dr. Quart to our Science Committee. He received prorated cash compensation for his time served on such committee in 2023. The following table sets forth the aggregate numbers of share options (exercisable and unexercisable) and RSUs held by our non-employee directors as of December 31, 2023. Refer to our “Outstanding Equity Awards at 2023 Fiscal Year-End” table for information regarding equity awards held by Mr. Patel as of December 31, 2023.
2023 DIRECTOR COMPENSATION TABLE
| Name | Option awards(#) | RSU awards (#) | | Felix J. Baker, Ph.D. | 145,753 | 4,373 | | Stephen R. Biggar, M.D., Ph.D. | 145,753 | 4,373 | | G. Bradley Cole | 127,438 | 4,373 | | Richard S. Levy, M.D. | 146,198 | 4,373 | | Thomas R. Malley | 196,529 | 4,373 | | Tracey L. McCain | 172,741 | 4,373 | | Kimberly J. Popovits | 172,741 | 4,373 | | Barry D. Quart, Pharm.D | 174,570 | 4,373 |
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS Kiniksa Bermuda. The Bermuda Companies Act and Kiniksa Bermuda’s Bye-laws provide for a minimum of five directors and not more than such maximum number of directors as the Board may from time to time determine. Where persons are validly proposed for re-election or election as a director, the persons receiving the most votes (up to the number of directors to be elected) shall be elected as directors, and an absolute majority of the votes cast shall not be a prerequisite to the election of such directors. Directors serve three-year terms. New Kiniksa. The Companies Act provides for a minimum of two directors. New Kiniksa’s articles of association provide for a minimum of five directors and a maximum of such number of directors as the Board may determine from time to time. The shareholders of New Kiniksa may from time to time increase or reduce the maximum number of directors by ordinary resolution, or increase the minimum number of directors by a special resolution amending the articles of association. Directors are elected by the affirmative vote of a majority of the votes cast by shareholders at an annual general meeting. Any nominee for director who does not receive a majority of the votes cast is not elected to the board of directors. New Kiniksa’s articles of association provide for three categories of directors (Class I, Class II and Class III). At the first general meeting of New Kiniksa, the articles of association provide that Class I directors shall be elected for a three-year term of office, Class II directors shall be elected for a one-year term of office and Class III directors shall be elected for a two-year term of office. At each succeeding annual general meeting, successors to the class of Directors whose term expires at that annual general meeting shall be elected for a three-year term.
VACANCIES ON BOARD OF DIRECTORS
VACANCIES ON BOARD OF DIRECTORS Kiniksa Bermuda. Any vacancy on the Board that results from the death, disability, disqualification or resignation of a director or, as a result of an increase in the size of the Board of Directors, or any other means, may be filled by the Board of Directors, provided that a quorum is present. New Kiniksa. New Kiniksa’s articles of association provide that the shareholders at a general meeting shall have the authority to appoint one or more directors to New Kiniksa’s board of directors, subject to the maximum number of directors provided for in the articles of association. A vacancy caused by the removal of a director by shareholders may be filled at the meeting at which the director is removed by resolution of New Kiniksa’s shareholders. If not, it may be filled by the board of directors. Any director so appointed or elected shall constitute a member of the class of directors represented by the person that was replaced. During any vacancy in the board of directors, the remaining directors shall have full power to act as the board of directors. Any vacancy on the Board that results from the death, disability, disqualification or resignation of a director or, as a result of an increase in the size of the Board of Directors, or any other means, may be filled by the Board of Directors, provided that a quorum is present. Any director so appointed shall hold office only until the next following annual general meeting.
REMOVAL OF DIRECTORS
REMOVAL OF DIRECTORS Kiniksa Bermuda. Kiniksa Bermuda’s Bye-laws provide that shareholders may remove a director only for cause (defined as a conviction for a criminal offence involving dishonesty or engaging in conduct which brings the Director or Kiniksa Bermuda into disrepute and which results in material financial detriment to Kiniksa Bermuda). A director may be removed at a special general meeting convened for that purpose provided notice is served upon the director concerned not less than 14 days before the meeting. A director is entitled to attend the meeting and be heard on the motion for his or her removal. New Kiniksa. The Companies Act provide that notwithstanding anything contained in the articles of association of a company or in any agreement between that company and a director, the shareholders may by an ordinary resolution remove a director from office before the expiration of his or her term. Because of this provision of the Companies Act, which does not have an analog under Bermuda law, the New Kiniksa articles of association do not deny the power of the shareholders to remove any director from office without cause, even though the Kiniksa Bermuda Bye-laws do deny such power as described above. The power of removal is without prejudice to any claim for damages for breach of contract (e.g., employment contract) which the director may have against New Kiniksa in respect of his or her removal.
BOARD AND COMMITTEE COMPOSITION; MANAGEMENT
BOARD AND COMMITTEE COMPOSITION; MANAGEMENT Kiniksa Bermuda. Subject to the Bermuda Companies Act, Kiniksa Bermuda’s Bye-laws provide that Kiniksa Bermuda’s business is to be managed and conducted by the Board of Directors. Subject to the Bye-laws, the Board of Directors may delegate to any director, officer, other person or committee any of the powers, authorities and discretions exercisable by it as the Board of Directors sees fit. New Kiniksa. The articles of association of New Kiniksa delegate the day-to-day management of New Kiniksa to the board of directors. The board of directors may then delegate management of New Kiniksa to committees, executives or to a management team, but regardless, the directors will remain responsible, as a matter of English law, for the proper management of the affairs of New Kiniksa. It is the intention of New Kiniksa to replicate the existing committees that are currently in place for Kiniksa Bermuda, which include a Compensation Committee, a Nominating and Corporate Governance Committee, an Audit Committee and a Science and Research Committee. It also is the intention of New Kiniksa to adopt Kiniksa Bermuda’s current Code of Business Conduct and Ethics.
DUTIES OF THE BOARD OF DIRECTORS
DUTIES OF THE BOARD OF DIRECTORS Kiniksa Bermuda. As a general rule, directors’ fiduciary and statutory duties are to the company as a whole and not to individual shareholders or creditors (however directors must have regard to the interests of creditors if the company is insolvent). Directors have a fiduciary duty to the company and such duty has four general aspects: (i) duty to act in good faith and in the best interests of the company; (ii) duty to exercise powers for a proper purpose (i.e., advance the interests of the company and not a particular group of shareholders); (iii) duty not to put themselves in a position in which their duties to the company and their personal interests may conflict; and (iv) duty to avoid secret profits, meaning that unless the Bye-laws specifically provide, a director may not make a personal profit from any opportunities arising out of his or her directorship. The duty and skill and care a director must exercise has three aspects: (i) skill of a person of his or her particular knowledge and experience; (ii) attention to the business; and (iii) reliance on others, meaning that director may rely in good faith on officers who have been appointed for specific purposes of attending to the detail of the management, however they cannot absolve themselves entirely of their responsibility by delegation to others. New Kiniksa. The directors of New Kiniksa have certain statutory and fiduciary duties. All of the directors have equal and overall responsibility for the management of New Kiniksa (although directors who also serve as employees will have additional responsibilities and duties arising under their employment agreements and will be expected to exercise a greater degree of skill and diligence than non-executive directors). The principal directors’ duties include: (i) to act within powers; (ii) to promote the success of the company for the benefit of its shareholders as a whole; (iii) to exercise independent judgement; (iv) to exercise reasonable care, skill and diligence; (v) to avoid conflicts of interest; (vi) not to accept benefits from third parties; and (vii) to declare an interest in proposed transactions or arrangements. Particular duties also apply to directors of insolvent companies (for example, the directors could be liable to sanctions where they are deemed by the court to have carried on the business of New Kiniksa while insolvent, without due regard to the interests of creditors). For public limited companies like New Kiniksa, directors are under a specific duty to ensure that the Secretary is a person with the requisite knowledge and experience to discharge the role.
INDEMNIFICATION OF DIRECTORS AND OFFICERS; INSURANCE
INDEMNIFICATION OF DIRECTORS AND OFFICERS; INSURANCE Kiniksa Bermuda. Under Bermuda law, any provision in the Bye-laws or any contract or other arrangement of a company purporting to exempt a director or any officer from, or to indemnify him against, liability in respect of any fraud or dishonesty, is void. However. it is permissible to exempt or indemnify directors or officers from liability arising from negligence, default, breach of duty or breach of trust not involving dishonesty or fraud. This exemption will cover all liabilities, loss, damage or expense (including but not limited to liabilities under contract, tort and statute). This indemnification may also cover any liabilities which the director or officer incurs in defending any proceedings (criminal or civil) where relief is granted to him, where he or she is acquitted, or where judgment is given in his or her favor. The Bye-laws of Kiniksa Bermuda provide for the indemnity by Kiniksa Bermuda of its directors and officers to the fullest extent permitted by law. Kiniksa Bermuda Bye-laws provide that the shareholders waive all claims or rights of action that they might have, individually or in right of the company, against any of the company’s directors or officers for any act or failure to act in the performance of such director’s or officer’s duties, except in respect of any fraud or dishonesty of such director or officer. Section 98A of the Bermuda Companies Act permits us to purchase and maintain insurance for the benefit of any officer or director in respect of any loss or liability attaching to him or her in respect of any negligence, default, breach of duty or breach of trust, whether or not Kiniksa Bermuda may otherwise indemnify such officer or director. Kiniksa Bermuda purchased and maintains a directors’ and officers’ liability policy for such a purpose. New Kiniksa. New Kiniksa’s articles of association confer an indemnity on its directors and Secretary that is more limited than the analogous indemnity in Kiniksa Bermuda’s Bye-laws because the Companies Act prescribe that such an indemnity only permits a company to pay the costs or discharge the liability of a director or the Secretary where judgment is given in any civil or criminal action in respect of such costs or liability, or where a U.K. court grants relief because the director or Secretary acted honestly and reasonably and ought fairly to be excused. This restriction does not apply to executives who are not directors or the Secretary of New Kiniksa. Any provision which seeks to indemnify a director or secretary of a U.K. company over and above this shall be void under English law, whether contained in its articles of association or any contract between the director and the company. U.K. companies may take out directors and officers liability insurance, as well as other types of insurance, for their directors and officers. Upon the completion of the Redomiciliation, we expect that New Kiniksa will take out directors and officers liability insurance of a type and scope substantially similar (so far as commercially able to) to the insurance taken out by Kiniksa Bermuda immediately prior to the Redomiciliation.
DIRECTORS
DIRECTORS 83.