DEF 14A of Kodiak Sciences Inc.
Filed Apr 23, 2024 · FY20230001193125-24-107064
To Be Held on June 4, 2024
| 22 | EXECUTIVE COMPENSATION | | | | 32 | 2023 Summary Compensation Table | | | 33 | 2023 Outstanding Equity Awards at Fiscal Year-End Table | | | 34 | Executive Employment Contracts and Change in Control Arrangements | | | 35 | Pay Versus Performance | | 39 | PROPOSAL NO. 3 RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | | | | 39 | Fees Paid to the Independent Registered Public Accounting Firm | | | 39 | Auditor Independence | | | 40 | Audit Committee Policy on Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm | | 41 | AUDIT COMMITTEE REPORT | | | 42 | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | | | 44 | SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS | | | 45 | RELATED-PERSON TRANSACTIONS | | | 46 | OTHER MATTERS | | | 47 | QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING | |
Director Nominees for Election
Director Nominees for Election
Director Nominees for Election
| Committees: • Compensation (Chair) • Nominating and Governance | Felix J. Baker, Ph.D. | | | | Director Director since: 2015 Age: 55 | | | | Biography Felix J. Baker, Ph.D. has served as one of our directors since September 2015 and as chair of our compensation committee and a member of our nominating and governance committee since September 2018. Dr. Baker is a Managing Member of Baker Bros. Advisors LP a biotechnology-focused investment adviser to fund 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 also serves on the boards of Kiniksa Pharmaceuticals, Ltd., IGM Biosciences, Inc., Kymera Therapeutics, Inc., and Bicycle Therapeutics plc. Previously he served on the board of Seagen, Inc. from July 2003 through December 2023, and Alexion Pharmaceuticals, Inc. from June 2015 through February 2021. | Relevant Expertise We believe Dr. Baker’s experience as a board member and investor in many successful biotechnology companies qualify him to serve on our board of directors. Other Public Company Boards Kiniksa Pharmaceuticals, Ltd. IGM Biosciences, Inc. Kymera Therapeutics, Inc. Bicycle Therapeutics plc |
Director Nominees for Election
| | 2024 PROXY STATEMENT | 7 |
Director Nominees for Election
Director Nominees for Election
Director Nominees for Election
| Committees: • None | Victor Perlroth, M.D. | | | | Chairman and Chief Executive Officer Director since: 2009 Age: 51 | | | | Biography Victor Perlroth, M.D. is the co-founder of Kodiak Sciences and is the company’s chairman and chief executive officer. Together with a talented core team, Dr. Perlroth has built Kodiak on a foundation of scientific and operational excellence with a simple mission – to design and develop important new medicines for highly prevalent diseases. Under Dr. Perlroth’s leadership, Kodiak is building a pipeline of potentially life transforming ophthalmology drug candidates with the goal to build a leading retinal franchise for the benefit of patients globally. Prior to co-founding Kodiak, Dr. Perlroth co-founded Avidia Inc, a biopharmaceuticals drug discovery and development company where he served in senior corporate and research and development roles until Amgen acquired the company for $450 million. After Avidia, Dr. Perlroth worked in life sciences venture capital as venture partner then entrepreneur in residence. Earlier, Dr. Perlroth served as the chief operating officer at Guzik Technical Enterprises, the industry-leading provider of test equipment to the hard disk drive industry. Dr. Perlroth earned his M.D. and M.B.A. degrees from Stanford University and an A.B. in molecular biology summa cum laude from Princeton University. | Relevant Expertise We believe the perspective and experience Dr. Perlroth brings to Kodiak as a founder, our largest individual stockholder, and as our Chief Executive Officer allow him to provide unique contribution to the Board and qualify him to serve as a member of the Board. Other Public Company Boards None |
Director Nominees for Election
The Board of Directors recommends a vote “FOR” each of the director nominees named above.
Director Nominees for Election
| 8 | 2024 PROXY STATEMENT | |
Director Nominees for Election
| Committees: • Nominating and Governance | Richard S. Levy, M.D. | | | | Director Director since: 2018 Age: 66 | | | | Biography Richard S. Levy, M.D has served as a member of our board of directors since June 2018 and a member of our nominating and corporate governance committee since September 2018. From December 2016 to May 2019, Dr. Levy served as a senior advisor of Baker Bros. Advisors LP, a registered investment advisor focused on long-term investments in life sciences companies on behalf of major university endowments and foundations. From January 2009 to April 2016, Dr. Levy served as Executive Vice President and Chief Drug Development Officer of Incyte Corporation, a pharmaceutical company, where he previously served as Senior Vice President of Drug Development from August 2003 to January 2009. Prior to joining Incyte, Dr. Levy served as Vice President, Biologic Therapies, at Celgene Corporation, a biopharmaceutical company, from 2002 to 2003. From 1997 to 2002, Dr. Levy served in various executive positions with DuPont Pharmaceuticals Company, first as Vice President, Regulatory Affairs and Pharmacovigilance, and thereafter as Vice President, Medical and Commercial Strategy. Dr. Levy served at Sandoz, a predecessor company of Novartis, from 1991 to 1997 in positions of increasing responsibility in clinical research and regulatory affairs. Prior to joining the pharmaceutical industry, Dr. Levy served as an Assistant Professor of Medicine at the UCLA School of Medicine. Dr. Levy currently serves on the boards of directors of Kiniksa Pharmaceuticals, Ltd., Madrigal Pharmaceuticals Inc., and ProTara Therapeutics Inc. From April 2020 to June 2021, Dr. Levy served on the board of directors of Constellation Pharmaceuticals, a publicly traded biopharmaceutical company which was acquired by MorphoSys AG. Dr. Levy is board certified in Internal Medicine and Gastroenterology and received his A.B. in Biology from Brown University, his 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. | Relevant Expertise We believe Dr. Levy’s significant management experience in the pharmaceutical industry and medical training qualify him to serve on our board of directors. Other Public Company Boards Kiniksa Pharmaceuticals, Ltd. Madrigal Pharmaceuticals Inc. ProTara Therapeutics Inc. |
Director Nominees for Election
| | 2024 PROXY STATEMENT | 9 |
Director Nominees for Election
| Committees: • Compensation • Nominating and Governance (Chair) | Robert A. Profusek, J.D. | | | | Director Director since: 2018 Age: 74 | | | | Biography Robert A. Profusek, J.D. has served as one of our directors since June 2018, as chair of our nominating and corporate governance committee and a member of our compensation committee since September 2018 and as our lead independent director since August 2018. Mr. Profusek is a partner of the Jones Day law firm where he is the global chair of the firm’s mergers and acquisitions practice. His law practice focuses on mergers, acquisitions, takeovers, restructurings and corporate governance matters. Mr. Profusek is also the lead independent director of Valero Energy Corporation, a publicly traded international manufacturer and marketer of transportation fuels and other petrochemical products, and CTS Corporation, a publicly traded designer and manufacturer of sensors, actuators and electronic components. Mr. Profusek holds a B.A. from Cornell University and a J.D. from New York University. | Relevant Expertise We believe Mr. Profusek is qualified to serve as a board member because of his expertise in legal matters, including corporate governance, capital markets expertise attained through his extensive experience in mergers and acquisitions and financing activities; managerial experience attained through his leadership roles with Jones Day and the knowledge and experience he has attained through his service as a director of other public companies. Other Public Company Boards Valero Energy Corporation CTS Corporation |
Director Nominees for Election
| 10 | 2024 PROXY STATEMENT | |
Director Nominees for Election
| Committees: • Audit (Chair) • Compensation • Nominating and Governance | Charles A. Bancroft | | | | Director Director since: 2020 Age: 64 | | | | Biography Charles A. Bancroft has served as a member of our board of directors and as chair of our audit committee and a member of our nominating and governance committee since April 2020 and as a member of our compensation committee since April 2021. Prior to joining our company, Mr. Bancroft held a number of leadership roles in commercial, strategy and finance at Bristol-Myers Squibb Company, a global pharmaceutical company, from 1984 until his retirement in March 2020, including serving as the Chief Financial Officer from January 2010 to November 2019. Since May 2020, Mr. Bancroft has been serving as an independent director of GSK, a public pharmaceutical company. Since October 2020, Mr. Bancroft has been serving as an independent director of Biovector, Inc., a privately held healthcare company. In March 2024, Mr. Bancroft began serving as Executive Chairman of Patent Protection Research, a privately held investment company. Mr. Bancroft served as a member of the board of directors of Colgate-Palmolive Company, a public consumer products company, from January 2017 to March 2020. He holds a bachelor’s degree from Drexel University and a M.B.A. from Temple University. | Relevant Expertise We believe Mr. Bancroft’s extensive management and financial experiences as well as his extensive involvement in the pharmaceutical industry qualify him to serve on our board of directors. Other Public Company Boards GSK |
Director Nominees for Election
| | 2024 PROXY STATEMENT | 11 |
Director Nominees for Election
| Committees: • Audit | Bassil I. Dahiyat, Ph.D. | | | | Director Director since: 2018 Age: 53 | | | | Biography Bassil I. Dahiyat, Ph.D. has served as a member of our board of directors since June 2018 and as a member of our audit committee since September 2018. Dr. Dahiyat has served as President and Chief Executive Officer of Xencor, Inc., a biopharmaceutical company, since February 2005. Dr. Dahiyat co-founded Xencor in 1997, served as its Chief Executive Officer from 1997 to 2003 and served as its Chief Scientific Officer from 2003 to 2005. In 2005, Dr. Dahiyat was recognized as a technology pioneer by the World Economic Forum. Additionally, Dr. Dahiyat was named one of 2003’s Top 100 Young Innovators by MIT’s Technology Review magazine for his work on protein design and its development for therapeutic applications and has received awards from the American Chemical Society, the Controlled Release Society and the California Institute of Technology. Dr. Dahiyat currently serves on Xencor’s board of directors. Dr. Dahiyat holds a Ph.D. in Chemistry from the California Institute of Technology and B.S. and M.S.E. degrees in Biomedical Engineering from Johns Hopkins University. | Relevant Expertise We believe Dr. Dahiyat’s significant experience in the pharmaceutical industry and executive management experience qualify him to serve on our board of directors. Other Public Company Boards Xencor, Inc. |
Director Nominees for Election
| 12 | 2024 PROXY STATEMENT | |
Director Nominees for Election
| Committees: • Audit | Taiyin Yang, Ph.D. | | | | Director Director since: 2019 Age: 70 | | | | Biography Taiyin Yang, Ph.D. has served as a member of our board of directors and a member of our audit committee since December 2019. Dr. Yang is the former Executive Vice President of Pharmaceutical Development and Manufacturing at Gilead Sciences, Inc., a role she held from 2015 to 2022. She directed operations of chemical and biologics process development, device and formulation development, manufacturing, packaging, analytical operations, laboratory information systems, data science, quality assurance, CMC regulatory affairs, program management, supply chain management and site operations for all the company’s small molecules, biologics and antibody-drug conjugates of investigational compounds and marketed products. Under her leadership, Gilead developed the world’s first HIV single tablet regimen and advanced more than 25 compounds from early-stage development to market, reaching millions of people around the world. Prior to joining Gilead in 1993, Dr. Yang worked at Syntex Corporation from 1980 where she contributed to the development and commercialization of more than 10 medicines. Dr. Yang serves on the board of directors of Kronos Bio, Inc. since 2021 and Brii Biosciences since 2022. Dr. Yang was a member of the Expert Scientific Advisory Committee of Medicines for Malaria Venture from 2020 to 2023, and is a member of the scientific advisory board of Sionna Therapeutics since 2022. Dr. Yang received her bachelor’s degree in Chemistry from National Taiwan University and her Ph.D. in Organic Chemistry from the University of Southern California. Dr. Yang was inducted as a fellow of the American Institute for Medical and Biological Engineering in 2021 and elected a member of the National Academy of Engineering in 2022. | Relevant Expertise We believe Dr. Yang’s extensive management experience and internationally recognized scientific expertise in the pharmaceutical industry qualify her to serve on our board of directors. Other Public Company Boards Kronos Bio, Inc. Brii Biosciences Limited |
Compensation Committee
| • | establish and administer our non-employee director compensation; |
Considerations in Evaluating Director Nominees
Considerations in Evaluating Director Nominees The nominating and corporate governance committee uses a variety of methods for identifying and evaluating director nominees. In its evaluation of director candidates, the nominating and corporate governance committee will consider the current size and composition of the board of directors and the needs of the board of directors and the respective committees of the board of directors. Some of the qualifications that the nominating and corporate governance committee considers include, without limitation, issues of character, integrity, judgment, diversity, gender, age, independence, skills, education, expertise, business acumen, business experience, length of service, understanding of our company’s business and other commitments. Other than the foregoing, there are no stated minimum criteria for director nominees. Although our board of directors does not maintain a specific policy with respect to board diversity, our board of directors believes that the board of directors should be a diverse body, and the nominating and corporate governance committee considers a broad range of backgrounds and experiences. In making determinations regarding nominations of directors, the nominating and corporate governance committee may take into account the benefits of diverse viewpoints. The nominating and corporate governance committee also considers these and other factors as it oversees the annual board of directors and committee evaluations.
Non-Employee Director Compensation
Non-Employee Director Compensation The following table provides information regarding compensation paid by us to our non-employee directors during 2023. Directors who are also our employees receive no additional compensation for their service as a director. During 2023 one director, Dr. Perlroth, our Chief Executive Officer and Chairman, was an employee. Dr. Perlroth’s compensation is discussed under the caption “Executive Compensation.”
Non-Employee Director Compensation
| Name | Fees Earned or paid in Cash(1) | Option Awards(2) | Total | | Felix J. Baker, Ph.D.(3) | $— | $161,896 | $161,896 | | Charles A. Bancroft(4) | 77,500 | 161,896 | 239,396 | | Bassil I. Dahiyat, Ph.D.(5) | 55,000 | 161,896 | 216,896 | | Richard S. Levy, M.D.(6) | 50,000 | 161,896 | 211,896 | | Robert A. Profusek, J.D.(7) | 86,500 | 161,896 | 248,396 | | Taiyin Yang, Ph.D.(8) | 55,000 | 161,896 | 216,896 |
Non-Employee Director Compensation
| (1) Represents fees earned during 2023. |
Non-Employee Director Compensation
| (2) Represents the aggregate grant date fair value of stock option awards granted in 2023. These amounts have been computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, without regard to estimated forfeitures. For a discussion of valuation assumptions, see Note 12 to our Consolidated Financial Statements included in our Annual Report on Form 10-K filed with the SEC on March 28, 2024. |
Non-Employee Director Compensation
| (3) Dr. Baker, who beneficially owns 33% of our common shares outstanding as of April 1, 2024, does not accept cash compensation for service as a director. As of December 31, 2023, Dr. Baker held options for the purchase of 108,356 shares of common stock, 68,356 of which were vested as of such date. |
Non-Employee Director Compensation
| (4) As of December 31, 2023, Mr. Bancroft held options for the purchase of 88,765 shares of common stock, 48,765 of which were vested as of such date. |
Non-Employee Director Compensation
| (5) As of December 31, 2023, Dr. Dahiyat held options for the purchase of 133,356 shares of common stock, 93,356 of which were vested as of such date. |
Non-Employee Director Compensation
| (6) As of December 31, 2023, Dr. Levy held options for the purchase of 158,356 shares of common stock, 118,356 of which were vested as of such date. |
Non-Employee Director Compensation
| (7) As of December 31, 2023, Mr. Profusek held options for the purchase of 158,356 shares of common stock, 118,356 of which were vested as of such date. |
Non-Employee Director Compensation
| (8) As of December 31, 2023, Dr. Yang held options for the purchase of 86,640 shares of common stock, 46,640 of which were vested as of such date. |
Outside Director Compensation Policy
Outside Director Compensation Policy Our board of directors has approved a compensation policy for our non-employee directors (the “Outside Director Compensation Policy”), effective June 24, 2023. For purposes of the Outside Director Compensation Policy, our board of directors has classified each director into one of the two following categories: (1) an “employee director,” is a director who is employed by us; and (2) a “non-employee director,” is a director who is not an employee director. Only non-employee directors receive compensation under the Outside Director Compensation Policy. Non-employee directors receive compensation in the form of equity and cash under the Outside Director Compensation Policy, as described below. We believe our Outside Director Compensation Policy provides reasonable compensation to our non-employee directors that is appropriately aligned with our peers and is commensurate with the services and contributions of our non-employee
Outside Director Compensation Policy
| 18 | 2024 PROXY STATEMENT | |
Outside Director Compensation Policy
directors. All directors will be reimbursed for expenses in their capacities as directors in accordance with our standard expense reimbursement policy. Director compensation is typically reviewed on an annual basis.
Overview
| • | A substantial portion of our executive compensation is delivered through variable incentives that are “at risk”. We structure a significant portion of our named executive officers’ compensation to be variable, at risk and tied directly to our measurable performance. For 2023, approximately 73% of our Chief Executive Officer’s total reported compensation and approximately 70% of our Chief Financial Officer’s total reported compensation was at risk, consisting of annual bonuses and long-term incentive compensation granted in the form of stock options to purchase shares of our common stock, as reported in the “2023 Summary Compensation Table.” |
Overview
| • | Our executive bonuses are entirely dependent on meeting corporate objectives. Our named executive officers’ annual bonus opportunities are entirely dependent upon our achievement of annual corporate objectives established each year. For 2023, our named executive officers received annual bonuses equal to 95% of their target annual bonus opportunity based on our performance as measured against the pre-established corporate goals for 2023. |
Overview
| • | We emphasize long-term equity incentives. Equity awards are an integral part of our executive compensation program and comprise the primary “at-risk” portion of each named executive officer’s compensation package. We have historically granted equity awards primarily in the form of stock options. These awards strongly align our named executive officers’ interests with those of our stockholders by providing a continuing financial incentive to maximize long-term value for our stockholders and by encouraging our named executive officers to remain in our long-term employ. Stock options are also the predominant vehicle among biopharmaceutical companies at our stage of development, and the most prevalent type of equity award used by our peer companies. The Company also grants RSU awards as part of the equity award mix from time to time, which we believe improves the balance and risk profile of our executive compensation program, in addition to further incentivizing retention and aligning our named executive officers’ interest with those of our stockholders. |
Overview
| • | Change in control benefits are limited to double-trigger payments which require termination of employment other than for cause or resignation for good reason in connection with a change in control of the Company to trigger payments. |
Overview
| • | Our compensation committee has retained an independent third-party compensation consultant for guidance in analyzing our executive compensation program and making compensation decisions, including market practices, so that our compensation committee can regularly assess our individual compensation packages and total compensation programs against our peer companies, the competitive marketplace and other relevant industry data points. |
Overview
| • | The equity awards granted to our named executive officers have multiple-year vesting requirements, consistent with our retention objectives. |
Objectives, Philosophy and Elements of Compensation
| • | provide incentives that reward the achievement of performance goals that directly correlate to the enhancement of stockholder value, as well as to facilitate executive retention; and |
Objectives, Philosophy and Elements of Compensation
| • | align our executives’ interests with those of our stockholders through long-term incentives linked to specific performance. |
Objectives, Philosophy and Elements of Compensation
| Element of Compensation | Objectives | Key Features | | Base Salary (fixed cash) | Provides financial stability and security through a fixed amount of cash for performing job responsibilities. | Generally reviewed annually and determined based on a number of factors (including individual performance, internal equity, retention, expected cost of living increases and the overall performance of our Company) and by reference to market data provided by the compensation committee’s compensation consultant. | | Annual Bonus (“at-risk” cash) | Motivates and rewards our named executive officers for attaining rigorous annual corporate performance goals that relate to our key business objectives. | Bonus opportunities are entirely dependent upon achievement of specific corporate performance objectives, generally determined by the compensation committee and our board of directors and communicated at the beginning of the year. Actual bonus amounts earned are determined after the end of the year, based on achievement of the pre-established corporate performance objectives. | | Long-Term Incentive: Long-Term Performance Incentive Plan (“LTPIP”) stock options (“at-risk” equity) | Motivates our named executive officers and eligible employees to create significant stockholder value through a combination of stock price triggers and operational milestones. | Named executive officers and eligible employees were provided a one-time opportunity to ‘buy-in’ to the 2021 LTPIP via an election and agreement to forgo up to 75% of their annual equity incentive awards for seven years from FY 2021-2028. In return, participants received a one-time grant of performance-based stock options that could potentially provide up to three times more value than the forgone annual equity incentive awards as of 2021. The 2021 LTPIP performance-based stock options vest based on the achievement of certain stock price targets and operational milestones, subject to the recipient’s continued employment, during a seven-year performance period. | | Long-Term Incentive: Performance stock options (“at-risk” equity) | Motivates our named executive officers to achieve our corporate objectives by tying compensation to the performance of our common stock over the long term and/or the achievement of business, clinical development and regulatory goals over the long term; motivates our named executive officers to remain with the Company by mitigating swings in incentive values during periods when market volatility weighs on our stock price. | Earned portions of the awards begin vesting once the performance milestone is achieved and then vest through the remainder of the seven-year period in equal monthly increments, ensuring a true long-term incentive program. | | Long-Term Incentive: Service-based stock options (“at-risk” equity) | Motivates our named executive officers to achieve our business objectives by tying incentives to the appreciation of our common stock over the long term. | Stock options have an exercise price equal to or greater than the fair market value of our common stock on the date of grant. The ultimate value realized, if any, depends on the appreciation of our common stock price and if our stock price does not appreciate, there is no value realized by our executive officers. Stock options may vest based on continued service over a specified period of time and/or achievement of pre-established performance goals. |
Objectives, Philosophy and Elements of Compensation
| Element of Compensation | Objectives | Key Features | | Long-Term Incentive: RSU awards (“at-risk” equity) | Motivates our named executive officers to achieve our corporate objectives by tying compensation to the performance of our common stock over the long term and/or the achievement of business, clinical development and regulatory goals over the long term; motivates our named executive officers to remain with the Company by mitigating swings in incentive values during periods when market volatility weighs on our stock price. | RSU awards may vest based on continued service over a specified period of time and/or achievement of pre-established performance goals; the ultimate value realized varies with our common stock price. |
Objectives, Philosophy and Elements of Compensation
In evaluating our executive compensation policies and programs, as well as the short-term and long-term value of our executive compensation plans, we consider both the performance and skills of each of our named executive officers, as well as the compensation paid to executives in similar companies with similar responsibilities. We focus on providing a competitive compensation package which provides significant short-term and long-term incentives for the achievement of measurable corporate objectives. We believe that this approach provides an appropriate blend of short-term and long-term incentives to maximize stockholder value. In determining the aggregate size of equity grants in any given year, the compensation committee (or our board of directors in the case of our Chief Executive Officer) generally considers the same factors described above under “Base Salary” with respect to performance during the prior fiscal year, as well as the criticality of the executive officer to the long-term achievement of corporate goals. The compensation committee also considers the impact of dilution by reviewing overall share utilization and usage. We do not have any formal policies for allocating compensation among base salary, annual bonus awards and equity awards, short-term and long-term compensation or among cash and non-cash compensation. Instead, the compensation committee uses its judgment to establish a total compensation package for each named executive officer that is a mix of current, short-term and long-term incentive compensation, and cash and non-cash compensation, that it believes appropriate to achieve the goals of our executive compensation program and our corporate objectives. However, a significant portion of the named executive officers’ target total direct compensation is comprised of target bonus opportunities and long-term equity awards, in order to align the named executive officers’ incentives with the interests of our stockholders and our corporate objectives. In making executive compensation decisions, the compensation committee generally considers each named executive officer’s target total direct compensation, which consists of base salary, target bonus opportunity, which together with base salary we refer to as target total cash compensation and long-term equity awards (valued based on an approximation of grant date fair value).
Role of Our Compensation Consultant
Role of Our Compensation Consultant The compensation committee has the authority to retain compensation consultants to assist it in fulfilling its responsibilities. For purposes of evaluating 2023 compensation for each of our named executive officers and making 2023 compensation decisions, the compensation committee retained Compensia, Inc., a national compensation consulting firm, to assist the compensation committee in reviewing our executive compensation program and to ensure that our compensation programs remain competitive in attracting and retaining talented executives. During 2023, Compensia assisted the compensation committee in developing a group of peer companies to use as a reference in making compensation decisions, developing the compensation committee’s executive pay philosophy, evaluating current pay practices and considering different compensation programs and compensation and corporate governance best practices. As described further below, Compensia also prepared an analysis of our compensation practices with respect to base salaries, annual bonuses and equity awards against competitive market practices. Compensia reports directly to the compensation committee, which maintains the authority to direct Compensia’s work and engagement, and advises the compensation committee and our human resources department from time to time. Compensia interacts with management to gain access to Company information that is required to perform its services and to understand the culture and policies of our organization. The compensation committee and Compensia meet in executive session with no members of management present as needed to address various compensation matters, including deliberations regarding our Chief Executive Officer’s compensation. Our compensation committee has assessed the independence of Compensia pursuant to the applicable Nasdaq listing standards and SEC rules, and concluded that Compensia is independent and that the work of Compensia has raised no conflict of interest that would prevent Compensia from independently representing the compensation committee.
Use of Competitive Market Compensation Data
Use of Competitive Market Compensation Data We aim to attract and retain the most highly qualified executive officers in an extremely competitive market. Accordingly, the compensation committee believes that it is important when making its compensation decisions to be informed as to the current practices of comparable public companies with which we compete for top talent. To this end, the compensation committee reviews market data for each named executive officer’s position, compiled by Compensia as described below, including information relating to the compensation for executive officers in the biopharmaceutical industry. In developing a proposed list of our peer group companies to be used in connection with making compensation decisions for 2023, Compensia examined our compensation philosophy and selected companies that would be appropriate peers based on geography, industry focus, stage of development and market capitalization. Specifically, companies were selected with the following parameters:
Use of Competitive Market Compensation Data
| • | Geography: We focused on biopharmaceutical companies listed on a U.S. national securities exchange with preference for companies with U.S. headquarters. |
Use of Competitive Market Compensation Data
| • | Industry Focus: We focused on biopharmaceutical companies employing platform technologies to develop high complexity drugs and / or treating complex or high prevalence diseases. |
Use of Competitive Market Compensation Data
| • | Stage of development: We focused on companies conducting at least one registrational study or early commercial (less than $200 million in annual revenue) companies. |
Use of Competitive Market Compensation Data
| 26 | 2024 PROXY STATEMENT | |
Use of Competitive Market Compensation Data
| • | Market Capitalization: We focused on companies with market capitalization representing roughly 1/3 to nine times our market capitalization at the time of evaluation. |
Use of Competitive Market Compensation Data
Based on these criteria, for 2023, Compensia recommended, and our compensation committee approved, the following peer group for use in analyzing 2023 compensation:
Use of Competitive Market Compensation Data
| • AbCellera Biologics | • IVERIC bio | | • Allakos | • Mersana Therapeutics | | • Allogene Therapeutics | • Nektar Therapeutics | | • Annexon | • Ocular Therapeutix | | • Apellis Pharmaceuticals | • Prelude Therapeutics | | • Denali Therapeutics | • REGENXBio | | • Fate Therapeutics | • TG Therapeutics | | • FibroGen | • Viridian Therapeutics | | • Iovance Biotherapeutics | |
Use of Competitive Market Compensation Data
Using the peer companies listed above, Compensia prepared, and the compensation committee reviewed, a range of market data reference points (generally at the 25th, 50th, 60th and 75th percentiles of the market data) with respect to base salary, annual bonuses, equity awards (valued based on an approximation of grant date fair value and as an ownership percentage), target total cash compensation (including base salary and the target annual bonus) and target total direct compensation (total target cash compensation and equity compensation). The compensation committee reviews these market data reference points and structures each component of compensation (including target total direct compensation) to be competitive with the market. However, the market data is only one of the factors that the compensation committee considers in making compensation decisions, and therefore, individual named executive officer compensation may fall above or below these general guidelines.
Factors Used in Determining Executive Compensation
| • | A range of market data reference points, as described above under “Use of Competitive Market Compensation Data”; and |
Factors Used in Determining Executive Compensation
| • | The recommendations of compensation consultants on compensation policy determinations for our executive officers. |
Annual Bonuses
Annual Bonuses In early 2024, our compensation committee approved our 2023 annual bonus program. The 2023 annual bonus each named executive officer was eligible to receive was based on the individual’s target bonus, calculated as a percentage of base salary, or target bonus percentage, and the extent to which we achieved the corporate objectives that our board of directors established for the year. There is no specified minimum or maximum bonus percentage or amount established for the named executive officers. Specifically, the compensation committee determined that the 2023 target bonus percentage should remain at 65% for Dr. Perlroth and 45% for Mr. Borgeson. The compensation committee’s decision regarding 2023 target bonus percentages for our NEOs was based on a review of a competitive market analysis prepared by Compensia, as well as an assessment of target bonus percentages appropriate to align us competitively with our 2023 compensation peer group. In connection with establishing the 2023 annual bonus program, the compensation committee approved the corporate goals identified in the table below. In selecting these goals, the compensation committee believed that they were appropriate drivers for our business, as they supported tarcocimab clinical development and advanced our research and discovery pipeline, all while maintaining a solid financial position, which together, would enhance stockholder value. At the time the 2023 corporate goals were set, the compensation committee and management believed that such goals were challenging and achieving them would require not only continued strong research and product development success as well as prudent fiscal and legal management, but also a high level of effort and execution on the part of our named executive officers. The compensation committee also applied a performance weighting to each goal relative to the overall performance of the Company to reflect the prioritization of key business objectives in the table below. No specific individual objectives were established for any of our named executive officers for 2023, so our named executive officers’ 2023 annual bonuses were entirely dependent on the achievement of our 2023 corporate goals.
Annual Bonuses
| 28 | 2024 PROXY STATEMENT | |
Annual Bonuses
During 2023, management reported regularly to the compensation committee on the status of our performance against these goals and in January 2024, the compensation committee evaluated our performance in relation to the 2023 goals. After consideration of such performance, the compensation committee concluded that 2023 was a year of important learnings and advancements during which the Company achieved the majority of our pre-established corporate goals, as further described in the table below. The table below describes each corporate goal as well as the achievements related to each goal.
Annual Bonuses
| Corporate Goal | 2023 Achievements | Weighting | | Advance tarcocimab Phase 3 clinical studies across the primary endpoints for GLEAM, GLIMMER, GLOW1 and DAYLIGHT. Advance clinical regulatory towards BLA readiness. | During 2023, the Company advanced four Phase 3 pivotal studies of tarcocimab through primary endpoints: Phase 3 GLEAM and GLIMMER studies in diabetic macular edema (“DME”), Phase 3 DAYLIGHT study in wet age-related macular degeneration (“wet AMD”), and Phase 3 GLOW1 study in non-proliferative diabetic retinopathy (“NPDR”). Of these four studies, DAYLIGHT and GLOW1 met their primary endpoints. In addition, the Company also announced positive one-year results from the Phase 3 BEACON study in retinal vein occlusion (“RVO”). Rating: Partially achieved goal | 25% | | Advance tarcocimab manufacturing and controls to support BLA submission and commercial supply. | During 2023, the Company worked together with Lonza and regulatory authorities to obtain approval for Ursus, our custom-built commercial scale manufacturing facility. We also released our first commercial scale cGMP batch of tarcocimab in July 2023. In addition, we advanced manufacturing of the go-to-market formulation for tarcocimab that improves the manufacturability in a prefilled syringe and may also enhance the utility of the product. Rating: Exceeded goal | 25% | | Advance tarcocimab nonclinical development towards BLA readiness. | In 2023, the Company advanced tarcocimab nonclinical development towards BLA readiness. Rating: Achieved goal | 5% | | Advance KSI-501 clinical development into Phase 1 including multiple dose evaluation and develop further clinical development concepts. Advanced KSI-501 CMC to ensure clinical supply and towards scale-up formulation development. | In 2023, we initiated and completed the Phase 1 multiple-ascending dose study of KSI-501 with 16 DME patients dosed. Results from the study were presented at a medical conference in the first quarter of 2024. We also expanded the KSI-501 development program with the launch of the KSI-101 (formerly KSI-101P) program in 2023. KSI-101 is the unconjugated anti-IL-6 and VEGF trap bispecific protein portion of KSI-501. KSI-101 represents a market opportunity outside the established anti-VEGF class and, being independent of our ABC Platform, the molecule will have a development path separate from our ABC medicines, tarcocimab and KSI-501. In addition, we progressed the manufacturing of KSI-501 and KSI-101 in 2023. We successfully manufactured cGMP batches of KSI-501 with the enhanced formulation as informed from tarcocimab’s commercial manufacturing scale up, in preparation for clinical studies that are planned to be initiated in 2024. Rating: Exceeded goal | 15% | | Advance triplet technology platform development across various components. Advance digital health technology platform with continued improvement of hardware and software of the VETi (Visual Engagement Technology and Imager) platform. | We advanced the “duet” and “triplet” technology platform towards initial clinical product concepts. We advanced the VETi (Visual Engagement Technology and Imager) platform towards readiness for initial clinical testing. Rating: Achieved goal | 15% | | Advance corporate development initiatives, including: - Evaluating critically and creatively avenues for cash preservation in support of Company priorities. - Maintain and expand team capabilities in accordance with operational need. | Ended 2023 with $285.5 million of cash and cash equivalents, which we believe is sufficient to fund our operations into 2026. Retained key team members and expanded team capabilities to further our clinical programs and early discovery pipeline. Rating: Achieved goal | 15% |
Annual Bonuses
| | 2024 PROXY STATEMENT | 29 |
Annual Bonuses
As shown in the table below, based on our performance relative to the 2023 corporate goals, the compensation committee awarded each of our named executive officers (other than Dr. Ehrlich) an annual bonus equal to 95% of his target bonus opportunity for 2023. Due to his resignation from the Company effective August 25, 2023, Dr. Ehrlich did not receive a 2023 annual bonus.
Annual Bonuses
| Named Executive Officer | 2023 Target Bonus(1) | 2023 Actual Bonus | | Victor Perlroth, M.D. | $468,468 | $445,044 | | John A. Borgeson | $223,751 | $212,564 |
Annual Bonuses
| (1) These amounts are based on actual base salaries paid during 2023, which reflect the mid-year adjustments to the named executive officers’ respective base salaries. |
Long-Term Incentive Compensation
Long-Term Incentive Compensation In June 2023, our compensation committee granted an annual service-based equity award to each of our NEOs in the form of an option to purchase common stock. In determining the form of the annual equity awards for our NEOs, the compensation committee took into consideration both the practices of the companies in our compensation peer group and competitive market data provided by its compensation consultant. The compensation committee determined that the 2023 equity awards would be in the form of service-based stock options. To determine the value of these equity awards, the compensation committee considered a competitive market analysis of long-term incentive compensation prepared by Compensia using the 60th percentile of the competitive market data as the starting point and then adjusting the value of the annual equity awards as it deemed appropriate in its discretion. In addition, the size of the option award ultimately awarded to each NEO in 2023 was reduced to reflect the elections our NEOs made in connection with the 2021 LTPIP. In October 2021, our NEOs received stock options under the 2021 LTPIP, which vest subject to the achievement of certain stock price goals and operational milestones (and subject to their continued employment) during a seven-year performance period. In connection with receiving these awards, each NEO agreed to forgo a corresponding percentage of the annual equity incentive awards they would otherwise have received for the seven-year period from 2021 to 2028. As a result, Dr. Perlroth’s 2023 annual option award was reduced by 75%, Mr. Borgeson’s 2023 annual option award was reduced by 50%, and Dr. Ehrlich’s 2023 annual option award was reduced by 50%. These stock options vest monthly over a four-year period, subject to the NEO’s continued service with us through the applicable vesting date. The table below shows the 2023 annual service-based equity awards approved by the compensation committee for each of our named executive officers and the final awards, after giving effect to each individual’s 2021 LTPIP election to forego a portion of the awards as described above.
Long-Term Incentive Compensation
| Named Executive Officer: | 2023 Stock Option Grant (# of shares) | | Victor Perlroth, M.D. | 335,000 | | John A. Borgeson | 207,500 | | Jason Ehrlich, M.D., Ph.D. (1) | 207,500 |
Long-Term Incentive Compensation
| (1) Dr. Ehrlich forfeited the unvested portion of his 2023 stock option grant upon his resignation from the Company effective August 25, 2023. |
Timing of Equity Awards
Timing of Equity Awards Annual grants of equity awards to our named executive officers are generally determined and approved at compensation committee meetings, with such meeting date typically serving as the grant date. However, the compensation committee may sometimes approve the grant of equity awards to our named executive officers and other employees in advance of its next scheduled meeting, either at a special meeting or by unanimous written consent, in connection with certain new hires, promotions and other circumstances where the compensation committee deems it appropriate to grant such awards. The grant dates for these equity awards are typically the same date that a newly hired executive officer begins employment or the effective date of an executive officer’s promotion, as applicable. All stock options are granted with an
Timing of Equity Awards
| 30 | 2024 PROXY STATEMENT | |
Timing of Equity Awards
exercise price that is not less than the closing price of our common stock on the grant date. We have no plan or practice to time option grants in coordination with the release of non-public information, and we do not time the release of non-public information to affect the value of executive compensation.
Employment Agreements with Our Named Executive Officers
Employment Agreements with Our Named Executive Officers We entered into employment agreements with each of our named executive officers upon their initial commencement of employment with us. Each of our named executive officers is employed “at will” and may be terminated at any time for any reason. All of our named executive officers are eligible for severance and change in control payments and benefits pursuant to the terms of their respective employment agreements, the terms of which are described below under “Severance and Change in Control Payments and Benefits” and “Executive Employment Contracts and Change in Control Arrangements.”
Severance and Change in Control Payments and Benefits
Severance and Change in Control Payments and Benefits The employment agreements with our named executive officers provide for certain severance payments and benefits (cash payments, payments for benefits continuation and equity acceleration) upon a termination of employment without cause or resignation for good reason, either outside of or within the three months prior to or 24 months following a corporate transaction. We do not provide any excise or other tax reimbursement (including “gross up”) payments in connection with severance or change in control transactions. Our compensation committee periodically reviews the severance payments and benefits that we provide, including by reference to market data, to ensure that the payments and benefits remain appropriately structured and at reasonable levels. The compensation committee believes that severance protection payments and benefits are necessary to provide stability among our named executive officers, serve to focus our named executive officers on our business operations, and avoid distractions in connection with a potential change in control transaction or period of uncertainty. A more detailed description of the severance payments and benefits for each of our named executive officers is provided below under “Executive Employment Contracts and Change in Control Arrangements.” Regardless of the manner in which a named executive officer’s service terminates, the named executive officer is entitled to receive amounts earned during his term of service, including base salary earned and accrued paid time-off.
2023 Summary Compensation Table
2023 Summary Compensation Table The following table provides information regarding the compensation of our named executive officers during 2023 and 2022.
2023 Summary Compensation Table
| Name and Principal Position | Year | Salary | Stock Awards | Option Awards(1) | Non-Equity Incentive Plan Compensation(2) | All Other Compensation(3)(4) | Total | | Victor Perlroth, M.D(3) Chief Executive Officer and Chairman of the Board | 2023 | $720,575 | $— | $1,548,605(6) | $445,044 | $10,844 | $2,725,068 | | | 2022 | 691,000 | — | 1,915,745(6) | 381,832 | 10,844 | 2,999,421 | | John A. Borgeson(4) Executive Vice President, Chief Financial Officer and Secretary | 2023 | 497,125 | — | 959,210(6) | 212,564 | 10,802 | 1,679,701 | | | 2022 | 475,000 | — | 839,981(6) | 181,719 | 10,802 | 1,507,502 | | Jason Ehrlich, M.D., Ph.D.(5) Former Chief Medical Officer and Chief Development Officer | 2023 | 332,850 | — | 959,210(6) | — | 107,828 | 1,399,888 | | | 2022 | 496,500 | — | 839,981(6) | 189,935 | 99,381 | 1,625,797 |
2023 Summary Compensation Table
| (1) The dollar amounts in this column represent the aggregate grant date fair value of stock option awards granted under the 2018 Plan. These amounts have been computed in accordance with FASB ASC Topic 718. Pursuant to SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. For a discussion of valuation assumptions, see Note 12 to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2023. |
2023 Summary Compensation Table
| (2) Amounts for 2023 represent cash bonuses earned in that year and paid in the subsequent year based on achievement of performance goals and other factors deemed relevant by our Board and compensation committee. For additional details regarding our 2023 annual bonus program, see discussion above under “Executive Compensation—2023 Executive Compensation Program—Annual Bonuses.” |
2023 Summary Compensation Table
| (3) “All Other Compensation” for Dr. Perlroth includes matching of contributions made under the Company’s Section 401(k) plan as well as term life insurance premiums paid by us on behalf of the named executive officers. All of these benefits are provided to the named executive officers on the same terms as provided to all of our regular full-time employees. |
2023 Summary Compensation Table
| (4) “All Other Compensation” for Mr. Borgeson includes matching of contributions made under the Company’s Section 401(k) plan as well as term life insurance premiums. |
2023 Summary Compensation Table
| (5) Dr. Ehrlich resigned from the Company effective August 25, 2023. “All Other Compensation” for Dr. Ehrlich includes matching of contributions made under the Company’s Section 401(k) plan, term life insurance premiums, amounts paid to Dr. Ehrlich relating to his housing and travel allowance, while employed by the Company, and amounts paid for accrued paid time-off upon Dr. Ehrlich’s termination. |
2023 Summary Compensation Table
| (6) In order to participate in the LTPIP, each NEO had to “opt-in” and agree to forgo a corresponding percentage of annual equity incentive awards for years 2021-2028. As reflected, Dr. Perlroth’s 2023 annual incentive awards were reduced by 75%, and Mr. Borgeson’s and Dr. Ehrlich’s 2023 annual incentive awards were reduced by 50%. |
2023 Summary Compensation Table
| 32 | 2024 PROXY STATEMENT | |
2023 Outstanding Equity Awards at Fiscal Year-End Table
2023 Outstanding Equity Awards at Fiscal Year-End Table The following table presents information concerning equity awards held by our named executive officers as of December 31, 2023.
2023 Outstanding Equity Awards at Fiscal Year-End Table
| | | Option Awards | | | | | Stock Awards | | | | | Number of Securities Underlying Option (#) | | | | | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Share or Units of Stock That Have Not Vested ($)(8) | | Name | Vesting Commencement Date | Exercisable (#) | Unexercisable (#) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options | Option Exercise Price ($) | Option Expiration Date | | | | Victor Perlroth, M.D. | 7/1/2023 | 34,895 | 300,105(3)(4) | — | $7.24 | 6/23/2033 | — | $— | | | 7/1/2022 | 115,104 | 209,896(3)(4) | — | 8.15 | 7/5/2032 | — | — | | | 2/16/2022 | 42,500 | 17,500(3)(6) | — | 131.44 | 2/21/2031 | — | — | | | 10/13/2021 | — | — | 2,177,334(3)(11) | 88.21 | 10/13/2031 | — | — | | | 6/30/2021 | 37,656 | 22,594(3)(4) | — | 88.21 | 8/11/2031 | — | — | | | 6/11/2021 | 83,887 | 27,963(3)(7) | — | 73.51 | 12/30/2029 | — | — | | | 6/30/2020 | 216,560 | 30,938(3)(4) | — | 54.12 | 6/29/2030 | — | — | | | 12/30/2019 | 241,500 | —(3)(4) | — | 73.51 | 12/29/2029 | — | — | | | 7/16/2019 | 241,500 | —(3)(4) | — | 14.23 | 7/15/2029 | — | — | | | 10/3/2018 | 540,791 | —(1)(2) | — | 10.00 | 9/30/2028 | — | — | | | 3/1/2018 | 600,000 | —(2)(3)(4) | — | 5.38 | 4/2/2028 | — | — | | | 9/8/2015 | 300,000 | —(2)(3)(4) | — | 1.04 | 6/22/2026 | — | — | | John A. Borgeson | 7/1/2023 | 21,614 | 185,886(4) | — | 7.24 | 6/23/2033 | — | — | | | 7/1/2022 | 50,468 | 92,032(4) | — | 8.15 | 7/5/2032 | — | — | | | 2/16/2022 | 10,625 | 4,375(6) | — | 131.44 | 2/21/2031 | — | — | | | 10/13/2021 | — | — | 500,000(11) | 88.21 | 10/13/2031 | — | — | | | 6/30/2021 | 15,625 | 9,375(4) | — | 88.21 | 8/11/2031 | — | — | | | 6/15/2021 | — | — | — | — | — | 3,750(7) | 11,400 | | | 6/11/2021 | 14,437 | 4,813(7) | — | 73.51 | 12/30/2029 | — | — | | | 6/11/2021 | — | — | — | — | — | 3,025(10) | 9,196 | | | 6/30/2020 | 40,392 | 5,771(4) | — | 54.12 | 6/29/2030 | — | — | | | 6/15/2020 | — | — | — | — | — | 3,619(7) | 11,002 | | | 12/30/2019 | 67,500 | —(4) | — | 73.51 | 12/29/2029 | — | — | | | 7/16/2019 | 67,500 | —(4) | — | 14.23 | 7/15/2029 | — | — | | | 10/3/2018 | 161,662 | —(1)(2) | — | 10.00 | 9/30/2028 | — | — | | | 3/1/2018 | 200,000 | —(2)(4) | — | 5.38 | 4/2/2028 | — | — | | | 1/1/2016 | 88,614 | —(2)(3)(4) | — | 1.04 | 6/22/2026 | — | — | | Jason Ehrlich, M.D., Ph.D.(9) | — | — | — | — | — | — | — | — |
2023 Outstanding Equity Awards at Fiscal Year-End Table
| (1) Vests over five years in equal monthly installments, subject to continued service on the applicable vesting date. |
2023 Outstanding Equity Awards at Fiscal Year-End Table
| (2) Vesting is subject to the vesting acceleration provisions set forth in the named executive officer’s employment agreement. See “Executive Employment Contracts and Change in Control Arrangements” below for more information on vesting acceleration. |
2023 Outstanding Equity Awards at Fiscal Year-End Table
| (3) Subject to an early exercise right and may be exercised in full prior to vesting of the shares underlying such option. |
2023 Outstanding Equity Awards at Fiscal Year-End Table
| (4) Vests over four years in equal monthly installments, subject to continued service on the applicable vesting date. |
2023 Outstanding Equity Awards at Fiscal Year-End Table
| (5) Vests as to 25% of the shares on the first anniversary of the vesting commencement date, with the remainder vesting in equal monthly installments over the following 36 months, subject to continued service through the applicable vesting date. |
2023 Outstanding Equity Awards at Fiscal Year-End Table
| (6) Vests as to 25% of the shares on the vesting commencement date, with the remainder vesting in equal monthly installments over the following 36 months, subject to continued service on the applicable vesting date. |
2023 Outstanding Equity Awards at Fiscal Year-End Table
| (7) Vests over four years in equal annual installments. |
2023 Outstanding Equity Awards at Fiscal Year-End Table
| (8) The market value of unvested shares is calculated by multiplying the number of unvested shares by the closing market price ($3.04) of our common stock on December 29, 2023, the last trading day of the year, as reported by Nasdaq. |
2023 Outstanding Equity Awards at Fiscal Year-End Table
| | 2024 PROXY STATEMENT | 33 |
2023 Outstanding Equity Awards at Fiscal Year-End Table
| (9) Dr. Ehrlich’s employment with the Company terminated in August 2023 and as such, he had no equity awards outstanding as of December 31, 2023. |
2023 Outstanding Equity Awards at Fiscal Year-End Table
| (10) Vests as to 25% of the shares on the vesting commencement date, with the remainder vesting in annual installments over the following 3 years, subject to continued service through the applicable vesting date. |
2023 Outstanding Equity Awards at Fiscal Year-End Table
| (11) Vesting conditions applicable to the 2021 LTPIP awards. |
Pay Versus Performance
Pay Versus Performance As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K, we are providing the following information regarding the relationship between “compensation actually paid” to our named executive officers and certain financial performance of the Company for the past three fiscal years.
Pay Versus Performance
| Year(1) | Summary Compensation Table Total for PEO(2)(3) | Compensation Actually Paid to PEO(4) | Average Summary Compensation Table Total for Non-PEO NEOs(3) | Average Compensation Actually Paid to Non-PEO NEOs(4) | Value of Initial Fixed $100 Investment Based on: Total Shareholder Return(5) | Net (Loss)(6) | | 2023 | $2,725,068 | $(830,470) | $1,539,795 | $(316,524) | $2.07 | $(260,491,000) | | 2022 | 2,999,421 | (118,830,622) | 1,566,650 | (32,548,607) | 4.87 | (333,823,000) | | 2021 | 113,371,207 | 26,950,967 | 27,909,177 | 4,216,112 | 57.71 | (266,990,000) |
Pay Versus Performance
| (1) We are a smaller reporting company pursuant to Rule 405 of the Securities Act of 1933, as amended (the “Securities Act”), and as such, are only required to include information for the past three fiscal years in this table. |
Pay Versus Performance
| | 2024 PROXY STATEMENT | 35 |
Pay Versus Performance
| (2) Victor Perlroth, M.D. served as the principal executive officer (“PEO”) of the Company during 2023, 2022, and 2021. |
Pay Versus Performance
| (3) The dollar amounts reported as total compensation for the Company’s PEO and the average of the amounts reported for the Company’s other named executive officers (excluding Dr. Perlroth) as a group (“Non-PEO NEOs”) for each corresponding year are the amounts reported in the “Total” column of the Summary Compensation Table. Refer to “Executive Compensation – 2023 Summary Compensation Table” of this Proxy Statement and the Company’s proxy statements for fiscal years 2022 and 2021. The names of each of the Non-PEO NEOs included for purposes of calculating the average amounts in each of 2023, 2022, and 2021 are John A. Borgeson and Jason Ehrlich (whose employment with the Company terminated in August 2023). |
Pay Versus Performance
| (4) The dollar amounts reported as “compensation actually paid” to the Company’s PEO and the average amount reported as “compensation actually paid” to the Non-PEO NEOs, are computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amounts of compensation earned by or paid to such PEO and Non-PEO NEOs during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to total reported compensation for 2023 to determine the compensation actually paid to the PEO and the average compensation actually paid to the Non-PEO NEOs: |
Pay Versus Performance
| Year | Position | Reported Summary Compensation Table Total for PEO | (Less): Reported Value of Equity Awards(A) | Plus: Fair Value at Fiscal Year-End of Outstanding and Unvested Option Awards and Stock Awards Granted in Fiscal Year(B) | Plus: Change in Fair Value of Outstanding and Unvested Option Awards and Stock Awards Granted in Prior Fiscal Years(B) | Plus: Fair Value at Vesting of Option Awards and Stock Awards Granted in Fiscal Year that Vested During Fiscal Year(B) | Plus: Change in Fair Value as of Vesting Date of Option Awards and Stock Awards Granted in Prior Fiscal Years for which Applicable Vesting Conditions Were Satisfied During Fiscal Year(B) | Equals: Compensation Actually Paid to PEO | | 2023 | PEO | $2,725,068 | $(1,548,605) | $521,365 | $(2,569,580) | $41,282 | $— | $(830,470) |
Pay Versus Performance
| Year | Position | Average Reported Summary Compensation Table Total for Non-PEO NEOs | (Less): Average Reported Value of Equity Awards(A) | Plus: Average Fair Value at Fiscal Year- End of Outstanding and Unvested Option Awards and Stock Awards Granted in Fiscal Year(B) | Plus: Average Change in Fair Value of Outstanding and Unvested Option Awards and Stock Awards Granted in Prior Fiscal Years(B) | Plus: Average Fair Value at Vesting of Option Awards and Stock Awards Granted in Fiscal Year that Vested During Fiscal Year(B) | Plus: Average Change in Fair Value as of Vesting Date of Option Awards and Stock Awards Granted in Prior Fiscal Years for which Applicable Vesting Conditions Were Satisfied During Fiscal Year(B) | Less: Average Fair Value as of Start of Fiscal Year of Stock Awards that Failed to Meet Applicable Vesting Conditions(B) | Equals: Average Compensation Actually Paid to Non-PEO NEOs | | 2023 | Non-PEO NEOs | $1,539,795 | $(959,210) | $161,468 | $(427,991) | $16,424 | $— | $(647,010) | $(316,524) |
Pay Versus Performance
| (A) The grant date fair value of equity awards represents for the PEO, the total, and for the Non-PEO NEOs as a group, the average of the total, of the amounts reported in the “Option Awards” column in the Summary Compensation Table for 2023. |
Pay Versus Performance
| (B) The equity award adjustments for 2023 include the addition (or subtraction, as applicable) of the following (all shown as averages for the Non-PEO NEOs as a group): (i) the year-end fair value of any equity awards granted in 2023 that are outstanding and unvested as of the end of 2023; (ii) the change in fair value during 2023 of any equity awards granted in a prior year that are outstanding and unvested as of the end of 2023; (iii) for awards that are granted and vest in the same year, the fair value as of the vesting date; and (iv) for awards granted in prior years that vest in 2023, the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value. The valuation assumptions used to calculate fair value did not materially differ from those disclosed as of the grant date of the equity awards. |
Pay Versus Performance
| (5) Cumulative total shareholder return (“TSR”) is calculated by dividing (a) the sum of (i) the cumulative amount of dividends on our common stock for the measurement period (if any), assuming dividend reinvestment, and (ii) the difference between the Company’s share price at the end and the beginning of the measurement period by (b) the Company’s share price at the beginning of the measurement period. |
Pay Versus Performance
| (6) The dollar amounts reported represent the amount of net income (loss) reflected in the Company’s audited financial statements for the applicable year. |
Analysis of the Information Presented in the Pay Versus Performance Table
Analysis of the Information Presented in the Pay Versus Performance Table In accordance with Item 402(v) of Regulation S-K, we are providing the following descriptions of the relationships between information presented in the Pay Versus Performance table above.
Analysis of the Information Presented in the Pay Versus Performance Table
| 36 | 2024 PROXY STATEMENT | |
Compensation Actually Paid and Cumulative TSR
Compensation Actually Paid and Cumulative TSR We believe the compensation paid to our executives demonstrates our commitment to aligning long-term equity incentives with the interests of our stockholders. The substantial drop in Kodiak’s share price in 2022 following our Phase 2b/3 study in wet AMD topline data release significantly impacted compensation actually received by our executives in 2022 and 2023. For example, in October 2021, our NEOs received stock options under the 2021 LTPIP, which vest subject to the achievement of certain stock price goals and operational milestones (and subject to their continued employment) during a seven-year performance period. All of the LTPIP options granted to our NEOs have an exercise price of $88.21 per share and will provide no realizable value to our NEOs unless and until our stock price exceeds $88.21 per share. The following graph sets forth the relationship between compensation actually paid (“CAP”) to our PEO, the average of compensation actually paid to the Non-PEO NEOs, and the Company’s cumulative TSR over the three most recently completed fiscal years.
Compensation Actually Paid and Cumulative TSR
| | 2024 PROXY STATEMENT | 37 |
Compensation Actually Paid and Net Income (Loss)
Compensation Actually Paid and Net Income (Loss) The following graph sets forth the relationship between compensation actually paid to our PEO, the average of compensation actually paid to our other NEOs, and the Company’s net income (loss) over the three most recently completed fiscal years. All information provided above under the “Pay Versus Performance” heading will not be deemed to be incorporated by reference into any filing of the Company under the Securities Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing, except to the extent the Company specifically incorporates such information by reference.
Compensation Actually Paid and Net Income (Loss)
| 38 | 2024 PROXY STATEMENT | |
Compensation Actually Paid and Net Income (Loss)
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The audit committee of the board of directors has appointed PricewaterhouseCoopers LLP, independent registered public accountants, to audit our financial statements for the year ending December 31, 2024. During the year ended December 31, 2023, PricewaterhouseCoopers served as our independent registered public accounting firm. Notwithstanding its selection and even if our stockholders ratify the selection, our audit committee, in its discretion, may appoint another independent registered public accounting firm at any time during the year if the audit committee believes that such a change would be in the best interests of Kodiak and its stockholders. At the Annual Meeting, the stockholders are being asked to ratify the appointment of PricewaterhouseCoopers as our independent registered public accounting firm for the year ending December 31, 2024. Our audit committee is submitting the selection of PricewaterhouseCoopers to our stockholders because we value our stockholders’ views on our independent registered public accounting firm and as a matter of good corporate governance. Representatives of PricewaterhouseCoopers will be present via webcast at the Annual Meeting, and they will have an opportunity to make statements and will be available to respond to appropriate questions from stockholders. If the stockholders do not ratify the appointment of PricewaterhouseCoopers, the audit committee would reconsider the appointment.