DEF 14A of Madrigal Pharmaceuticals, Inc.
Filed Apr 29, 2024 · FY20230001193125-24-122657
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
| • | We built an expert leadership and commercial team to support the launch of Rezdiffra and Madrigal’s long-term aspirations following my start as CEO in September. We’re now more than 400 employees strong after beginning 2023 with 100 employees; |
Bill Sibold
| | Page | | PROXY STATEMENT SUMMARY | i | | QUESTIONS AND ANSWERS ABOUT THESE PROXY MATERIALS AND VOTING | 1 | | MANAGEMENT AND CORPORATE GOVERNANCE | 7 | | The Board of Directors | 7 | | Director Independence | 12 | | Committees of the Board of Directors and Meetings | 12 | | Board Leadership Structure | 16 | | Our Board of Directors’ Role in Risk Oversight | 16 | | Stockholder Communications to the Board | 17 | | Information About Our Executive Officers | 18 | | COMPENSATION DISCUSSION AND ANALYSIS | 20 | | Madrigal’s Focus and Achievements | 21 | | 2023 Executive Compensation Highlights | 23 | | Overview of Our Executive Compensation Program | 23 | | Direct Compensation Components | 25 | | Clawback Policies | 31 | | Advisory Vote on Executive Compensation | 31 | | Executive Compensation and Risk-Taking | 31 | | EXECUTIVE OFFICER AND DIRECTOR COMPENSATION | 33 | | Summary Compensation Table | 33 | | Grants of Plan-Based Awards | 34 | | Outstanding Equity Awards at Fiscal Year End | 35 | | Option Exercises and Stock Vested | 36 | | Pay Ratio | 36 | | Pay Versus Performance | 37 | | Employment Retention, Severance and Change in Control Arrangements | 41 | | Potential Qualifying Separation and Change of Control Payments | 45 | | Director Compensation | 46 | | Director Compensation Tables | 47 | | Report of the Compensation Committee of the Board of Directors | 48 | | EQUITY COMPENSATION PLAN INFORMATION | 48 | | DELINQUENT SECTION 16(a) REPORTS | 48 | | CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS | 49 | | PROPOSAL 1: ELECTION OF CLASS II DIRECTORS | 52 |
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PROXY STATEMENT We prepared this proxy statement under the direction of our Board of Directors to solicit your proxy for use at our 2024 Annual Meeting of Stockholders to be held via internet webcast on Tuesday, June 25, 2024, at 9:00 a.m. Eastern Time. As used in this proxy statement, the terms “Madrigal,” “Public Madrigal,” the “Company,” “we,” “our” and “us” refer to Madrigal Pharmaceuticals, Inc., a Delaware corporation that has been publicly traded since July 22, 2016. QUESTIONS AND ANSWERS ABOUT THESE PROXY MATERIALS AND VOTING How do I attend the Annual Meeting? The 2024 Annual Meeting will be a completely virtual meeting. There will be no physical meeting location. The meeting will only be conducted via live webcast. To participate in the 2024 Annual Meeting virtually, via the Internet, please visit www.proxydocs.com/MDGL. In order to attend, you must register in advance at www.proxydocs.com/MDGL prior to the deadline of June 24, 2024 at 9:00 a.m. Eastern Time. Upon completing your registration, you will receive further instructions via email, including your unique links that will allow you access to the meeting and will permit you to submit questions. You will not be able to attend the 2024 Annual Meeting in person. Why did I receive a notice regarding the availability of proxy materials on the Internet? Pursuant to rules adopted by the Securities and Exchange Commission (the “SEC”), we have elected to provide access to our proxy materials over the Internet. Accordingly, we have sent you a Notice of Internet Availability of Proxy Materials (the “Notice”), because the Board of Directors is soliciting your proxy to vote at the Annual Meeting, including at any adjournments or postponements of the Annual Meeting. All stockholders will have the ability to access the proxy materials on the website referred to in the Notice or request to receive a printed set of the proxy materials. Instructions on how to access the proxy materials over the Internet or to request a printed copy may be found in the Notice. We intend to mail the Notice on or about May 9, 2024, to all stockholders of record entitled to vote at the Annual Meeting. Who can vote at the Annual Meeting? Only stockholders of record at the close of business on April 26, 2024, will be entitled to vote at the Annual Meeting. On April 26, 2024, there were 21,284,598 shares of common stock outstanding and entitled to vote. If on April 26, 2024, your shares were registered directly in your name with our transfer agent, then you are a stockholder of record. As a stockholder of record, you may vote directly through any of the following means: (1) electronically over the Internet, (2) by telephone, or (3) by completing and returning a printed proxy card that you may request or that we may elect to deliver at a later time, to ensure your vote is counted.
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Beneficial Owner: Shares Registered in the Name of a Broker or Bank If on April 26, 2024, your shares were held, not in your name, but rather in an account at a brokerage firm, bank or other similar organization, then you are the beneficial owner of shares held in “street name” and the Notice is being forwarded to you by that organization. The organization holding your account is considered to be the stockholder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to direct your broker, bank or other agent regarding how to vote the shares in your account. You are also invited to attend the Annual Meeting, on a virtual basis. What am I voting on? There are four matters scheduled for a vote:
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| • | election of three Class II directors (Proposal 1); |
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| • | ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2024 (Proposal 2); |
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| • | approval, on an advisory basis, of the compensation of our named executive officers, as disclosed in this proxy statement (Proposal 3); and |
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| • | to approve an amendment to the Madrigal Pharmaceuticals, Inc. 2015 Amended Stock Plan (the “2015 Stock Plan”) to increase the total number of shares of our common stock available for issuance by 750,000 shares and to extend the expiration date of the Plan by ten years through April 23, 2035. (Proposal 4). |
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What if another matter is properly brought before the meeting? As of the date of this proxy statement, the Board of Directors knows of no other matters that will be presented for consideration at the Annual Meeting. If any other matters are properly brought before the Annual Meeting, it is the intention of the persons acting as proxies to vote on those matters in accordance with their best judgment. How do I vote? For Proposal 1 to be voted on at the Annual Meeting, you may vote “For” or “Withhold” for each nominee for director. For each of Proposals 2, 3 and 4 to be voted on at the Annual Meeting, you may vote “For” or “Against” or abstain from voting. See the table below for more details. Stockholder of Record: Shares Registered in Your Name If you are a stockholder of record, you may vote by proxy over the telephone, vote by proxy through the Internet or vote by proxy using a proxy card that you may request. Whether or not you plan to participate in the virtual Annual Meeting webcast, we urge you to vote in advance by proxy by one of the foregoing means to ensure your vote is counted.
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| • | To vote through the Internet, go to www.proxypush.com/MDGL to complete an electronic proxy card. You will be asked to provide the company number and control number from the Notice. You must cast your Internet vote by 11:59 p.m. Eastern Time on June 24, 2024. |
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| • | To vote using the proxy card, simply complete, sign and date the proxy card that may be delivered and return it promptly in the envelope provided. If you return your signed proxy card to us before the Annual Meeting, we will vote your shares as you direct. |
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| • | To vote over the telephone, dial toll-free 1-866-249-5094 using a touch-tone phone and follow the recorded instructions. You will be asked to provide the company number and control number from the Notice. You must cast your telephone vote by 11:59 p.m. Eastern Time on June 24, 2024. |
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Beneficial Owner: Shares Registered in the Name of Broker or Bank If you are a beneficial owner of shares registered in the name of your broker, bank or other agent, you should have received a Notice containing voting instructions from that organization rather than from us. Simply follow the voting instructions in the Notice to ensure that your vote is counted. Alternatively, you may vote by telephone or over the Internet as instructed by your broker or bank. Follow the instructions from your broker, bank or other agent included with these proxy materials, or contact that organization for assistance on how to vote. How many votes do I have? On each matter to be voted upon, you have one vote for each share of common stock you owned as of April 26, 2024. If I am a stockholder of record and I do not vote, or if I return a proxy card or otherwise vote without giving specific voting instructions, what happens? If you are a stockholder of record and do not vote through the Internet, by telephone, or by completing a proxy card that may be delivered to you, your shares will not be voted. If you return a signed and dated proxy card or otherwise vote without marking voting selections, your shares will be voted “For” each of the proposals, including for each nominee for director. If any other matter is properly presented at the meeting, your proxyholder (one of the individuals named on your proxy card) will vote your shares in his or her discretion. If I am a beneficial owner of shares held in street name and I do not provide my broker or bank with voting instructions, what happens? If you are a beneficial owner of shares held in street name and you do not instruct your broker, bank or other agent how to vote your shares, your broker, bank or other agent may still be able to vote your shares in its discretion. In this regard, under the rules of the New York Stock Exchange, or NYSE, brokers, banks and other securities intermediaries that are subject to NYSE rules may use their discretion to vote your “uninstructed” shares with respect to matters considered to be “routine” under NYSE rules, but not with respect to “non-routine” matters. In this regard, we believe that Proposals 1, 3 and 4 are considered to be “non-routine” under NYSE rules meaning that your broker may not vote your shares on those proposals in the absence of your voting instructions. However, Proposal 2 is considered a “routine” matter under stock exchange rules, meaning that if you do not return voting instructions to your broker by its deadline, your shares may be voted by your broker in its discretion on Proposal 2. If you are a beneficial owner of shares held in street name, to ensure your shares are voted in the way you would prefer, you must provide voting instructions to your broker, bank or other agent by the deadline provided in the materials you receive from your broker, bank or other agent. Who is paying for this proxy solicitation? We will pay for the entire cost of soliciting proxies. In addition to these proxy materials, our directors and employees may also solicit proxies in person, by telephone, or by other means of communication. Directors and employees will not be paid any additional compensation for soliciting proxies. We may also reimburse brokerage firms, banks and other agents for the cost of forwarding proxy materials to beneficial owners. What does it mean if I receive more than one Notice? If you receive more than one Notice, your shares may be registered in more than one name or in different accounts. Please follow the voting instructions on the Notices to ensure that all of your shares are voted.
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Can I change my vote after submitting my proxy? Stockholder of Record: Shares Registered in Your Name Yes. You can revoke your proxy before the final vote at the Annual Meeting. If you are the record holder of your shares, you may revoke your proxy in any one of the following ways:
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| • | You may grant a subsequent proxy by telephone or through the Internet. |
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| • | You may submit another properly completed proxy card with a later date. |
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| • | You may send a timely written notice that you are revoking your proxy to our Secretary at Four Tower Bridge, 200 Barr Harbor Drive, Suite 200, West Conshohocken, Pennsylvania 19428. Such notice will be considered timely if it is received at the indicated address by the close of business on June 24, 2024. |
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Your most current proxy card or most current vote via telephone or Internet proxy will be the vote that is counted. Beneficial Owner: Shares Registered in the Name of Broker or Bank If your shares are held by your broker, bank or other agent, you should follow the instructions provided by your broker, bank or other agent. How are votes counted? Votes will be counted by the inspector of election appointed for the meeting, who will separately count votes in accordance with the requirements summarized in the table below. What are “broker non-votes?” When a beneficial owner of shares held in street name does not give voting instructions to his or her broker, bank or other securities intermediary holding his or her shares as to how to vote on matters deemed to be “non-routine” under NYSE rules (as described above), the broker, bank or other such agent cannot vote the shares. These un-voted shares are counted as “broker non-votes.” As a reminder, if you are a beneficial owner of shares held in street name, to ensure your shares are voted in the way you would prefer, you must provide voting instructions to your broker, bank or other agent by the deadline provided in the materials you receive from your broker, bank or other agent. What Vote is Required to Approve Each Proposal and How Are Votes Counted?
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| Proposal 1: Election of Directors | The three nominees for director who receive the most votes (also known as a “plurality” of the votes cast) will be elected. You may vote either FOR any one or more of the nominees, or WITHHOLD your vote from any one or more of the nominees. WITHHOLD votes will not be included in the vote tally for the election of the directors. Brokerage firms do not have authority to vote customers’ unvoted shares held by the firms in street name for the election of directors. As a result, any shares not voted by a customer will be treated as a broker non-vote. Such broker non-votes will have no effect on the results of this vote. | | Proposal 2: Ratify Appointment of Independent Registered Public Accounting Firm | The vote of a majority of the shares of our common stock cast affirmatively at the Annual Meeting is required to ratify the appointment of our independent registered public accounting firm. Abstentions are not considered votes cast on Proposal 2 and will have no effect on the results of this vote. Brokerage firms |
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| | have authority to vote customers’ unvoted shares held by the firms in street name on Proposal 2. If a broker does not exercise this authority, such broker non-votes will have no effect on the results of this vote. We are not required to obtain the approval of our stockholders to select our independent registered public accounting firm. However, if our stockholders do not ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the 2024 fiscal year, our Audit Committee will reconsider its selection. | | Proposal 3: Approve an Advisory Vote on the Compensation of our Named Executive Officers | The vote of a majority of the shares of our common stock cast affirmatively at the Annual Meeting is required to approve on an advisory basis the compensation of our named executive officers, as described in this proxy statement. Abstentions are not considered votes cast and will have no effect on the results of this vote. Brokerage firms do not have authority to vote customers’ unvoted shares held by the firms in street name on this proposal. As a result, any shares not voted by a customer will be treated as a broker non-vote. Such broker non-votes will have no effect on the results of this vote. Although the advisory vote is non-binding, the Compensation Committee and the Board of Directors will review the voting results and take them into consideration when making future decisions regarding executive compensation. | | Proposal 4: Approve Amendment to our 2015 Stock Plan | The vote of a majority of the shares of our common stock cast affirmatively at the Annual Meeting is required to approve the amendment to our 2015 Stock Plan. Abstentions are not considered votes cast and will have no effect on the results of this vote. Brokerage firms do not have authority to vote customers’ unvoted shares held by the firms in street name on this proposal. As a result, any shares not voted by a customer will be treated as a broker non-vote. Broker non-votes will have no effect on the results of this vote. |
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The following table summarizes the applicable vote required for approval of each item of business to be transacted at the Annual Meeting, assuming there is a quorum. In addition, the table shows the effect on the outcome of the vote of: (i) abstentions (or, in the case of Proposal 1, WITHHOLD votes); (ii) “broker non-votes” or shares held by brokers when a beneficial owner of shares held in “street name” does not provide voting instructions for non-routine matters and, as a result, the broker/nominee is prohibited from voting those shares); and (iii) signed but unmarked proxy cards.
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| Proposal | Vote Required for Approval | Effect of Abstentions/ Withhold Votes (1) | Uninstructed Shares/ Effect of Broker Non-Votes (1) | Signed but Unmarked Proxy Cards (2) | | 1. Election of Directors | Plurality of Votes Cast | No effect | Not voted / no effect | Voted “For” each nominee | | 2. Ratification of selection of independent registered public accounting firm | The vote of a majority of the shares of our common stock cast affirmatively or negatively | No effect | Not applicable— discretionary vote by broker | Voted “For” | | 3. Advisory Vote on Compensation of Our Named Executive Officers | The vote of a majority of the shares of our common stock cast affirmatively or negatively | No effect | Not voted / no effect | Voted “For” | | 4. Approval of Amendment to our 2015 Stock Plan | The vote of a majority of the shares of our common stock cast affirmatively or negatively | No effect | Not voted / no effect | Voted “For” |
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| (1) Abstentions, withheld votes and broker non-votes are included for purposes of determining whether a quorum is present. |
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| (2) If you sign and return your proxy card properly, but do not provide instructions on your proxy card as to how to vote your shares, your shares will be voted as shown in this column, and in accordance with the judgment of the individuals named as proxies on the proxy card as to any other matter properly brought before the Annual Meeting. |
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Under stock exchange rules, without voting instructions from beneficial owners, brokers will have discretion to vote on the ratification of the appointment of the independent registered public accounting firm but not on the other proposals. Is Voting Confidential? We will keep all the proxies and voting tabulations private. We only let our Inspector of Elections examine these documents. Management will not know how you voted on a specific proposal unless it is necessary to meet legal requirements. We will, however, forward to management any written comments you make, on the proxy card or elsewhere. Where Can I Find the Voting Results of the Annual Meeting? The preliminary voting results will be announced at the Annual Meeting, and we will publish preliminary, or final results if available, in a Current Report on Form 8-K within four business days of the Annual Meeting. If final results are unavailable at the time, we file the Form 8-K, then we will file an amended report on Form 8-K to disclose the final voting results within four business days after the final voting results are known. What Constitutes a Quorum for the Meeting? The presence, in person or by proxy, of the holders of a majority of the voting power of all outstanding shares of our common stock entitled to vote at the meeting is necessary to constitute a quorum at the meeting. Votes of stockholders of record who are deemed present at the meeting in person or by proxy, abstentions, and broker non-votes are counted for purposes of determining whether a quorum exists.
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The Board of Directors Our restated certificate of incorporation and restated bylaws provide that our business is to be managed by or under the direction of our Board of Directors. Our Board of Directors is divided into three classes for purposes of election. One class is elected at each Annual Meeting of Stockholders to serve for a three-year term. Our Board of Directors, which consists of nine members, is classified into three classes as follows:
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| • | the Class I directors are Paul A. Friedman, M.D., Kenneth M. Bate and James M. Daly, and their terms will expire at the Annual Meeting of Stockholders to be held in 2026; |
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| • | the Class II directors are Bill Sibold, Rebecca Taub, M.D. and Fred B. Craves, Ph.D., and their terms are scheduled to expire at this year’s Annual Meeting; and |
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| • | the Class III directors are Richard S. Levy, M.D., Julian C. Baker and Raymond Cheong, Ph.D./M.D., and their terms will expire at the Annual Meeting of Stockholders to be held in 2025. |
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On April 23, 2024, our Nominating and Governance Committee nominated, and our Board thereafter approved on the same date, Bill Sibold, Rebecca Taub, M.D. and Fred B. Craves, Ph.D. for election or re-election at the Annual Meeting for a term of three years to serve until the 2027 Annual Meeting of Stockholders, and until their respective successors have been elected and qualified. Set forth below are the names of the persons nominated as directors and directors, their ages, their offices in the Company, if any, their principal occupations or employment for at least the past five years, the length of their tenure as directors and the names of other public companies in which such persons hold or have held directorships during the past five years. Except as otherwise specified, such information is reflected as of April 29, 2024. As used in certain of the following biographical descriptions, the term “Private Madrigal” refers to Madrigal Pharmaceuticals, Inc., a privately held Delaware corporation focused on developing innovative therapeutic candidates for the treatment of cardiovascular, metabolic and liver diseases prior to the consummation of the Merger; the term “Merger” means the July 22, 2016 business combination transaction and name change which involved the merger of Private Madrigal and a subsidiary of Synta and resulted in the establishment of Public Madrigal; and the term “Synta” refers to Synta Pharmaceuticals Corp., a publicly traded Delaware corporation prior to the consummation of the Merger. Additionally, information is set forth below about the specific experience, qualifications, attributes or skills relevant to service on our Board of Directors.
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| Name | Age | Position | | Julian Baker | 57 | Independent Chairman of the Board of Directors and Class III Director | | Kenneth M. Bate (1)(2) | 73 | Class I Director | | Raymond Cheong, Ph.D./M.D.(2)(3) | 42 | Class III Director | | Fred B. Craves, Ph.D. (1)(2)(3) | 78 | Lead Director and Class II Director | | James M. Daly (1)(3) | 62 | Class I Director | | Paul A. Friedman, M.D. | 81 | Class I Director | | Richard S. Levy, M.D. (2)(3) | 66 | Class III Director | | Bill Sibold | 57 | President and Chief Executive Officer and Class II Director | | Rebecca Taub, M.D. | 72 | President, Research & Development, Chief Medical Officer and Class II Director |
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| (1) Member of our Audit Committee. |
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| (2) Member of our Compensation Committee. |
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| (3) Member of our Nominating and Governance Committee. |
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In addition to the information presented below regarding each of our director’s specific experience, qualifications, attributes and skills that led our Board to the conclusion that he or she should serve as a director, we also believe that all of our directors have a reputation for integrity, honesty and adherence to high ethical standards. They each have demonstrated business acumen and an ability to exercise sound judgment, as well as a commitment of service to our company and our Board of Directors.
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| Julian Baker | | | Age: 57 Director Since: June 2023 | Biographical Information Mr. Baker is a Managing Member of Baker Brothers Investments which Mr. Baker founded, together with his brother Felix Baker, in 2000. Prior to Baker Brothers, Mr. Baker was a portfolio manager at Tisch Financial Management from 1994 to 1999. Previously, Mr. Baker was employed from 1988 to 1993 by the private equity investment arm of Credit Suisse First Boston Corporation. Mr. Baker holds an A.B. from Harvard University. He serves on the boards of Incyte Corporation, Acadia Pharmaceuticals, Inc. and Prelude Therapeutics, Inc. (each publicly-traded companies). | | Qualifications We believe Mr. Baker is qualified to serve on our Board of Directors due to his experience investing in many life sciences companies, as well as his experience serving on the board of directors of other public companies in the life sciences industry. | |
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| Kenneth M. Bate | | | Age: 73 Director Since: July 2016 | Biographical Information Mr. Bate currently works as an independent consultant. Previously, Mr. Bate was the President and Chief Executive Officer of Archemix Corp., a privately held biopharmaceutical company, a position he held from April 2009 through December 2011. From 2006 to April 2009, he served in various positions at NitroMed, Inc., a publicly held pharmaceutical company, most recently as President and Chief Executive Officer. From 2002 to 2005, Mr. Bate served as Head of Commercial Operations and Chief Financial Officer at Millennium Pharmaceuticals, Inc., a biopharmaceutical company. Prior to joining Millennium Pharmaceuticals, Mr. Bate co-founded JSB Partners, LLC, a banking and advisory services firm for biopharmaceutical and life sciences companies. From 1990 to 1996, Mr. Bate was employed with Biogen, Inc., a publicly held biotechnology company, first as its Chief Financial Officer and then as head of the commercial organization responsible for launching its multiple sclerosis business. Mr. Bate currently serves as chairman of the board of directors of Astria Therapeutics, Inc., a publicly held biopharmaceutical company. Mr. Bate previously served as chairman of the board of directors of Cubist Pharmaceuticals, Inc., AVEO Pharmaceuticals Inc. and Genocea Biosciences, Inc., as well as a director of BioMarin Pharmaceuticals, Inc. and Vanda Pharmaceuticals Inc., each publicly held biopharmaceutical companies. Mr. Bate holds a B.A. in Chemistry from Williams College and an M.B.A. from The Wharton School of the University of Pennsylvania. | | Qualifications We believe that Mr. Bate’s qualifications to serve on our Board of Directors include his operating, finance, commercial, transactional and senior management experience in the industry, such as his experience as chief executive officer of Archemix and NitroMed, as head of commercial operations and chief financial officer at Millennium Pharmaceuticals, and as chief financial officer and vice president of sales and marketing at Biogen, as well as his experience serving on the board of directors of other public companies in the life sciences industry. | |
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| Raymond Cheong, Ph.D./M.D. | | | Age: 42 Director Since: June 2023 | Biographical Information Dr. Cheong is a Managing Director at Baker Brothers Investments. Prior to joining Baker Brothers in 2013, Dr. Cheong completed an M.D. and a Ph.D. in Biomedical Engineering from Johns Hopkins University, where he was awarded the Michael A. Shanoff Award for best thesis research within the School of Medicine. Prior to Hopkins, he earned a B.S. in Chemical Engineering from the University of Maryland, College Park. He also serves on the boards of Istari Oncology, Inc., a privately held company, and Talis Biomedical Corporation and vTv Therapeutics Inc., each publicly-traded companies. | | Qualifications We believe Dr. Cheong is qualified to serve on our Board of Directors due to his experience investing in many life sciences companies, as well as his experience serving on the board of directors of other public companies in the life sciences industry. | |
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| Fred B. Craves, Ph.D. | | | Age: 78 Director Since: July 2016 | Biographical Information Dr. Craves co-founded and served as Chairman of the Board of Private Madrigal, a privately held biopharmaceutical company, from its inception in September 2011 through the Merger involving Synta, in July of 2016. Dr. Craves is a Managing Director and co-founder of Bay City Capital. In the course of his career, Dr. Craves has founded and managed several biotechnology companies. Dr. Craves previously served on the boards of directors of several privately held and publicly held companies. Dr. Craves currently serves as a member of the board of directors of Synchronicity Pharma, Inc. and IMIDomics, Inc., each a privately held life-science company. During the past five years, Dr. Craves served as a member of the board of directors of Dermira, Inc., KBP Pharmaceuticals, Inc. and Twist Bioscience, Inc., each a publicly held life science company. Dr. Craves earned a B.S. degree in biology from Georgetown University, an M.S. in biochemical pharmacology from Wayne State University and a Ph.D. in pharmacology and experimental toxicology from the University of California, San Francisco. | | Qualifications We believe that Dr. Craves is qualified to serve on our Board of Directors due to his extensive experience with founding, managing and serving on the boards of directors of life sciences companies, both public and private, and his extensive knowledge of the life sciences industry. | |
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| James M. Daly | | | Age: 62 Director Since: June 2019 | Biographical Information On June 27, 2019, our Board of Directors appointed James M. Daly as a member of our Board of Directors. Mr. Daly has over 30 years of experience leading U.S. and global businesses in the biopharmaceutical industry and also currently serves as a Director of Acadia Pharmaceuticals, argenx SE and Bellicum Pharmaceuticals. He previously served on the board of directors of Chimerix, Inc. Most recently, Mr. Daly served as Executive Vice President and Chief Commercial Officer at Incyte Corporation, a publicly held biopharmaceutical company from 2012 to 2015. Previously, Mr. Daly worked for Amgen, Inc. and held various leadership positions over a 10-year period, including his last role as Senior Vice President, North America Commercial Operations, Global Marketing and Commercial Development. Earlier in his career, he spent over 16 years with Glaxo Wellcome/GlaxoSmithKline (GSK), where he held roles of increasing responsibility, including his last role as Senior Vice President, General Manager of the Respiratory and Anti-Infective Business Unit. He earned a B.S. in Pharmacy and an M.B.A. from the University at Buffalo, The State University of New York. | | Qualifications We believe that Mr. Daly is qualified to serve on our Board of Directors due to his extensive experience as a pharmaceutical executive heading up major commercialization programs and given his extensive experience as a director with public biopharmaceutical companies. | |
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| Paul A. Friedman, M.D. | | | Age: 81 Director Since: July 2016 | Biographical Information Dr. Friedman served as our Chairman and Chief Executive Officer from 2016 through September 2023. Dr. Friedman also currently serves on the Board of Prelude Therapeutics, a publicly held biopharmaceutical company, where he serves as non-executive Chairman. Dr. Friedman served as the Chief Executive Officer of Incyte from November 2001 until his retirement in January 2014. Dr. Friedman served from 1994 to 1998, as President of Research & Development for the DuPont-Merck Pharmaceutical Company and from 1998 to 2001 as President of DuPont Pharmaceuticals Research Laboratories, a wholly owned subsidiary of the DuPont Company. From 1991 to 1994, he served as Senior Vice President at Merck Research Laboratories. Prior to his tenures at Merck and DuPont, Dr. Friedman was an Associate Professor of Medicine and Pharmacology at Harvard Medical School. Dr. Friedman is a diplomat of the American Board of Internal Medicine and a member of the American Society of Clinical Investigation. He also previously served on the board of directors of the following publicly held pharmaceutical companies in the last five years: Incyte (from November 2001 through May of 2021); Alexion Pharmaceuticals (through its acquisition by AstraZeneca in 2021); Cerulean Pharma Inc. (now Daré Bioscience, Inc.) (through January of 2017); and Verastem, Inc. (through April of 2017). Dr. Friedman received his A.B. in Biology from Princeton University and his M.D. from Harvard Medical School. Dr. Friedman and Dr. Taub, our Chief Medical Officer, President, Research & Development, and a director, are married to each other. | | Qualifications We believe that Dr. Friedman is qualified to serve on our Board of Directors due to his extensive experience in the biopharmaceutical industry; deep experience in research and both early and late stage clinical development; extensive experience building and leading R&D organizations, expanding company pipelines of assets, and overseeing the commercial development of innovative therapeutic products across a range of areas; and valuable perspectives to the Board as Madrigal’s former Chief Executive Officer. | |
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| Richard S. Levy, M.D. | | | Age: 66 Director Since: August 2016 | Biographical Information Dr. Levy has served on Madrigal’s Board of Directors since August of 2016. Dr. Levy also serves on the board of directors of ProTara Therapeutics, Inc., Kodiak Sciences Inc. and Kiniksa Pharmaceuticals, Ltd., each a publicly held pharmaceutical company. Dr. Levy previously served on the board of Aquinox Pharmaceuticals, Inc. and Constellation Pharmaceuticals. Previously, from December 2016 to May 2019, Dr. Levy was a part-time Senior Advisor for Baker Bros. Advisors, L.P., a firm that primarily manages long-term investment funds focused on publicly traded life sciences companies. Dr. Levy served as Executive Vice President and Chief Drug Development Officer at Incyte from January 2009 until his retirement in April 2016, and as Senior Vice President of Drug Development at Incyte from August 2003 to January 2009. Prior to joining Incyte, Dr. Levy served as Vice President, Biologic Therapies, at Celgene Corporation, a publicly held 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 Pharmacovigilence, and thereafter as Vice President, Medical and Commercial Strategy. Dr. Levy served at Novartis, and its predecessor company Sandoz, from 1991 to 1997 in positions of increasing responsibility in clinical research and regulatory affairs. Dr. Levy has more than 30 years of experience in the pharmaceutical and biotechnology industries through his prior positions at Incyte, Celgene, DuPont Pharmaceuticals and Novartis, has extensive clinical research, regulatory and product development skills and has worked in multiple therapeutic areas. Prior to joining the pharmaceutical industry, Dr. Levy served as an Assistant Professor of Medicine at the UCLA School of Medicine. 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. | | Qualifications We believe that Dr. Levy is qualified to serve on our Board of Directors due to his extensive and diverse experience in the pharmaceutical and biotechnology industries. | |
PROXY STATEMENT
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PROXY STATEMENT
| Bill Sibold | | | Age: 57 Director Since: September 2023 | Biographical Information Mr. Sibold has more than 30 years of experience in the biopharmaceutical industry. From 2017 until joining Madrigal as President and Chief Executive Officer in September of 2023, he served as Executive Vice President, Specialty Care of Sanofi and President, Sanofi North America, where he led a global organization of approximately 10,000 employees across five specialty therapeutic areas and served as a member of the Sanofi Executive Committee. From 2015 to 2017, he served as Senior Vice President, Global Franchise Head, Multiple Sclerosis, Oncology & Immunology, Sanofi Genzyme. Mr. Sibold first joined Sanofi Specialty Care in 2011 as Global Franchise Head Multiple Sclerosis. Previously, Mr. Sibold served as Chief Commercial Officer of Avanir Pharmaceuticals, President and CEO of Lycera Corp., and Senior Vice President, U.S. Commercial for Biogen. Mr. Sibold holds a B.A. in Molecular Biophysics and Biochemistry from Yale University and an M.B.A. from Harvard Business School. | | Qualifications We believe Mr. Sibold is qualified to serve on our Board of Directors due to his extensive operating, commercial, transactional and senior management experience as a pharmaceutical executive heading up major commercialization programs working for pharmaceutical and biotechnology companies. | |
PROXY STATEMENT
| Rebecca Taub, M.D. | | | Age: 72 Director Since: July 2016 | Biographical Information Dr. Taub has been a member of our Board of Directors since July 2016 and has served as our President, Research & Development since June 2019 and our Chief Medical Officer since July 2016. She also served as Executive Vice President, Research & Development, from July 2016 through June 2019. Dr. Taub also currently serves on the board of directors of BriaCell Therapeutics Corp., a publicly held immuno-oncology biotechnology company. Dr. Taub served on the board of directors of Private Madrigal and as Chief Executive Officer of Private Madrigal from its inception in September 2011 through the Merger in July 2016. Prior to joining Private Madrigal, Dr. Taub served as Senior Vice President, Research and Development of VIA Pharmaceuticals from 2008 to 2011 and as Vice President, Research, Metabolic Diseases at Hoffmann-La Roche from 2004 to 2008. In those positions, Dr. Taub oversaw clinical development and drug discovery programs in cardiovascular and metabolic diseases including the conduct of a series of Phase 1 and 2 proof of concept clinical trials. Dr. Taub led drug discovery including target identification, lead optimization and advancement of preclinical candidates into clinical development. From 2000 through 2003, Dr. Taub worked at Bristol-Myers Squibb Co. and DuPont Pharmaceutical Company, in a variety of positions, including Executive Director of CNS and metabolic diseases research. Before becoming a pharmaceutical executive, Dr. Taub was a tenured Professor of Genetics and Medicine at the University of Pennsylvania, and remains an adjunct professor. Dr. Taub is the author of more than 120 research articles. Before joining the faculty of the University of Pennsylvania, Dr. Taub served as an Assistant Professor at the Joslin Diabetes Center of Harvard Medical School, Harvard University and an associate investigator with the Howard Hughes Medical Institute. Dr. Taub received her M.D. from Yale University School of Medicine and B.A. from Yale College. Dr. Taub and Dr. Friedman, a current board member and former Chief Executive Officer and Chairman of the Board of Directors, are married to each other. | | Qualifications We believe that Dr. Taub is qualified to serve on our Board of Directors based on her experience as our Chief Medical Officer and President, Research and Development, and due to her extensive experience as a pharmaceutical executive heading up major development programs in non-alcoholic steatohepatitis, or NASH. | |
PROXY STATEMENT
| 2024 PROXY STATEMENT | 11 |
PROXY STATEMENT
Director Independence Our Board of Directors has reviewed the materiality of any relationship that each of our directors has with our company, either directly or indirectly. Based on this review, our Board of Directors has determined that each of its current and nominated directors is independent under applicable listing standards of the Nasdaq Stock Market LLC, or Nasdaq, other than Mr. Sibold, who is our President and Chief Executive Officer, Dr. Taub, who is our Chief Medical Officer and President, Research & Development and Dr. Friedman, who served as our Chief Executive Officer through September 8, 2023. Six of our nine Board members therefore satisfy such independence requirements. Committees of the Board of Directors and Meetings
Compensation Committee
| • | administer our stock incentive plan; |
Compensation Committee
The Compensation Committee is charged with establishing a compensation policy for our executives and directors that is designed to attract and retain the best possible executive talent, to motivate them to achieve corporate objectives, and reward them for superior performance. Our Compensation Committee is also responsible for establishing and administering our executive compensation policies and equity compensation plans. The Compensation Committee meets at least twice per year and more often as necessary to review and make decisions with regard to executive compensation matters. As part of its review of executive compensation matters, the Compensation Committee may delegate any of the powers given to it to a subcommittee of the committee consisting of one or more members of the Compensation Committee or certain members of executive management, with regard to non-executive equity awards and new hire awards. The Compensation Committee has the authority to directly retain the services of independent consultants and other experts to assist in fulfilling its responsibilities. In October 2016, the Compensation Committee engaged Compensia, Inc., or Compensia, as its independent compensation consultant, continuing through to the present. Compensia was engaged to review all aspects of our executive compensation programs. As described in the CD&A, Compensia assists the Compensation Committee in defining the appropriate peer companies for executive compensation and practices and in benchmarking our executive compensation program against the peer group. The Compensation Committee also uses information obtained from Compensia, as well as survey data, for evaluating our executive compensation practices, measuring the competitiveness of our practices, and reviewing and implementing our cash bonus policy, equity awards, and base salary benchmarks across all levels of the Company. The Compensation Committee has assessed the independence of Compensia pursuant to SEC rules and the corporate governance rules of Nasdaq and concluded that no conflict of interest exists that would prevent Compensia from independently representing the Compensation Committee. In compliance with SEC rules and the corporate governance rules of Nasdaq, Compensia provided the Compensation Committee with a letter addressing each of the six independence factors. Their responses affirm the independence of Compensia and the partners, consultants, and employees who service the Compensation Committee on executive compensation matters and governance issues. Please also see the CD&A and the report of the Compensation Committee set forth elsewhere in this proxy statement.
Nominating and Governance Committee
| • | candidates must be committed to promoting and enhancing the long-term value of our company for our stockholders; |
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ATTN: SECURITY HOLDER COMMUNICATION Board of Directors Madrigal Pharmaceuticals, Inc. Four Tower Bridge 200 Barr Harbor Drive, Suite 200 West Conshohocken, PA 19428 Such communications should not exceed 500 words in length and must be accompanied by the following information:
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| • | a statement of the type and amount of the securities of our company that the person holds; |
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| • | any special interest, meaning an interest not in the capacity as a stockholder of our company, that the person has in the subject matter of the communication; and |
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| • | the address, telephone number and e-mail address, if any, of the person submitting the communication. |
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The following types of communications are not appropriate for delivery to directors under these procedures:
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| • | communications regarding individual grievances or other interests that are personal to the party submitting the communication and could not reasonably be construed to be of concern to security holders or other constituencies of our company (such as employees, members of the communities in which we operate our businesses, customers and suppliers) generally; |
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| • | communications that advocate engaging in illegal activities; |
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| • | communications that, under community standards, contain offensive, scurrilous or abusive content; and |
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| • | communications that have no rational relevance to the business or operations of our company. |
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Communications will be distributed to the Board of Directors, or to any individual director or directors as appropriate, depending on the facts and circumstances outlined in the communications. Items that are unrelated to the duties and responsibilities of the Board of Directors may be excluded, such as:
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| • | junk mail and mass mailings; |
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| • | résumés and other forms of job inquiries; |
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| 2024 PROXY STATEMENT | 17 |
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| • | surveys; and |
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| • | solicitations or advertisements. |
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In addition, any material that is unduly hostile, threatening, or illegal in nature may be excluded, provided that any communication that is filtered out will be made available to any outside director upon request. Information About Our Executive Officers The following table sets forth certain information regarding our executive officers as of April 29, 2024:
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| Name | Age | Position | | Bill Sibold | 57 | President and Chief Executive Officer | | Rebecca Taub, M.D. | 72 | President, Research & Development, and Chief Medical Officer | | Mardi C. Dier | 60 | Senior Vice President and Chief Financial Officer | | Carole Huntsman | 59 | Chief Commercial Officer | | Robert Waltermire, Ph.D. | 61 | Chief Pharmaceutical Development Officer |
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Bill Sibold, Mr. Sibold’s biographical information is set forth above under “Management and Corporate Governance—The Board of Directors.” Rebecca Taub, M.D., Dr. Taub’s biographical information is set forth above under “Management and Corporate Governance—The Board of Directors.” Mardi C. Dier was appointed as Senior Vice President and Chief Financial Officer on March 11, 2024. Prior to joining Madrigal, Ms. Dier was most recently Chief Financial Officer of Acelyrin, Inc., where she completed the company’s $621 million initial public offering before departing in August 2023. Prior to that, Ms. Dier was Chief Financial Officer and Executive Vice President of Ultragenyx, responsible for leading the corporate strategy, FP&A, accounting, tax, investor relations, global corporate communications and information technology functions. She joined Ultragenyx from Portola Pharmaceuticals (acquired by Alexion), where she served as Chief Financial Officer for 14 years and, most recently, as Chief Business Officer and Chief Financial Officer. Over the course of her time at Portola, Ms. Dier oversaw a wide range of functions and helped scale the organization from one site with fewer than 100 employees to a global organization with multiple sites in the U.S. and Europe and over 450 employees. Prior to Portola, she served as Vice President of Investor Relations at Chiron Corporation until its acquisition by Novartis. Earlier in her career, she worked as an investment banker at Prudential Securities and, prior to that, was in the audit department of KPMG Peat Marwick. Ms. Dier serves on the Boards of Directors of ORIC Pharmaceuticals, Prelude Therapeutics, Synthekine, Inc. and Health Care Royalty and is a member of the Board of Advisors for the Anderson School of Management at the University of California, Los Angeles (UCLA). Carole Huntsman was appointed as Chief Commercial Officer on November 20, 2023. Prior to joining Madrigal, Ms. Huntsman was most recently Senior Vice President, Head of Specialty Care North America and U.S. Country Lead at Sanofi, a global pharmaceutical company. In her time at Sanofi, Ms. Huntsman held positions of increasing responsibility, including Head of Multiple Sclerosis, Oncology & Immunology Specialty Care North America, Global Multiple Sclerosis Lead, Sanofi Genzyme, and Vice President, Business Unit Head, Multiple Sclerosis, North America Sanofi Genzyme. Prior to joining Sanofi, during her 32 years in the industry, she served as Senior Vice President, U.S. Neurology & Rheumatology at EMD Serono, Inc. and Vice President, Marketing U.S. Neurology at Serono, Inc. as well as multiple positions at Muro Pharmaceuticals and Pfizer Inc. Prior to joining the biopharmaceutical industry, she served as an Officer in the U.S. Army. Ms. Huntsman holds a B.A. in History from Boston College and an M.B.A. from The Carroll School, Boston College.
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Robert Waltermire, Ph.D., joined Madrigal in August of 2021, bringing proven expertise in all aspects of chemistry, manufacturing and control (CMC), as well as experience in manufacturing new commercial products. Prior to joining Madrigal, Dr. Waltermire served as Senior Vice President, CMC at VenatoRx from November 2020 to July 2021 and as Senior Vice President, Product Development, of Palatin Technologies from February 2020 to November 2020. From 1988 to 2020, Dr. Waltermire held positions of increasing responsibility at Bristol-Myers Squibb (including Vice President Chemical and Synthetic Development from 2016 to January 2020) and Dupont Pharmaceutical Company.
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| 2024 PROXY STATEMENT | 19 |
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| | Page | | COMPENSATION DISCUSSION AND ANALYSIS | 20 | | Madrigal’s Focus and Achievements | 21 | | 2023 Executive Compensation Highlights | 23 | | Overview of Our Executive Compensation Program | 23 | | Direct Compensation Components | 25 | | Clawback Policies | 31 | | Advisory Vote on Executive Compensation | 31 | | Executive Compensation and Risk-Taking | 31 |
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This Compensation Discussion and Analysis, or CD&A, explains the policies and objectives underlying our executive compensation program as it relates to the following “named executive officers” whose compensation information is presented in the tables following this discussion under “Executive Officer and Director Compensation,” in accordance with SEC rules.
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| Name | Position | | Current Executive Officers | | | Bill Sibold | President and Chief Executive Officer | | Rebecca Taub, M.D. | President, Research & Development, and Chief Medical Officer | | Carole Huntsman | Chief Commercial Officer | | Former Executive Officers who Departed Prior to 2024 Annual Meeting* | | | Paul A. Friedman, M.D. | Former Chief Executive Officer | | Alex Howarth | Former Senior Vice President and Chief Financial Officer | | Brian J. Lynch | Former Senior Vice President and General Counsel | | Remy Sukhija | Former Senior Vice President, Chief Commercial Officer |
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| * Dr. Friedman was replaced by Mr. Sibold as Chief Executive Officer effective September 8, 2023. Mr. Sukhija was relieved of his duties as Chief Commercial Officer of the Company effective September 25, 2023. Mr. Howarth was replaced by Ms. Dier as Chief Financial Officer effective March 11, 2024. Mr. Lynch ceased performing the General Counsel duties effective March 19, 2024, and is departing the Company following a transitional period expected to conclude on or before May 31, 2024. |
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Executive Summary
CEO Transition and Leadership Changes
| • | A target annual bonus opportunity equal to 75% of his annual base salary |
CEO Transition and Leadership Changes
| • | A one-time sign-on cash bonus of $520,000 |
CEO Transition and Leadership Changes
| • | An initial restricted stock unit (RSU) award with a target value of $9,250,000, subject to time-based vesting over 4 years from Mr. Sibold’s employment start date, and |
CEO Transition and Leadership Changes
| • | An initial performance-based restricted stock unit (PSU) award with a target value of $9,250,000 subject to performance-based vesting subject to achievement of rigorous stock price appreciation hurdles over a five-year period as described in “Chief Executive Officer Appointment” below. |
Key Developments
| • | Continuation of our cash bonus program to provide our executive officers with a direct financial incentive tied to our achievement of pre-established objectives, including clinical, research and development, commercial development, medical affairs, chemistry, manufacturing and controls (CMC), operations, business development, finance, investor relations and communications objectives. Consistent with our strong performance during the year, the Compensation Committee determined that we outperformed on our 2023 performance objectives, resulting in achievement at 122.5% of each named executive’s target bonus amount |
Key Developments
| • | Awards of restricted stock units (“RSUs”) to our named executive officers, in lieu of stock options granted in prior years, to meet our incentive and retention objectives given the criticality of these executives’ continued execution during 2023 to successfully drive continued clinical progress. |
Key Developments
Executive Compensation Determination Process The Compensation Committee assists the Board of Directors in fulfilling its fiduciary responsibilities with respect to the oversight of our compensation plans, policies and programs, especially those regarding executive compensation and employee benefits. The Compensation Committee’s responsibilities include reviewing and establishing the compensation arrangements for management, including the compensation for our Chief Executive Officer, and establishing and reviewing general compensation policies with the objective to attract and retain industry-leading talent, to reward individual performance and to achieve our financial goals. The Compensation Committee reviews executive compensation annually. As part of this process, our Chief Executive Officer makes recommendations to the Compensation Committee with respect to the compensation levels for individual executives other than himself. The Compensation Committee reviews this information and adjusts or approves the recommendations as appropriate. In making its determination for each named executive officer, the Compensation Committee considers our performance against established performance objectives and market data regarding executive compensation at comparable companies. In the case of our Chief Executive Officer, the Compensation Committee evaluates his performance against our established performance objectives and market data regarding executive compensation at comparable companies. Since 2016, the Compensation Committee has retained the services of Compensia. Compensia assists the Compensation Committee in defining the appropriate peer companies for executive compensation and practices and in measuring our executive compensation program against the peer group. The Compensation Committee uses the information obtained from Compensia primarily for evaluating our executive compensation practices, including measuring the competitiveness of our practices. The Compensation Committee also uses information obtained from Compensia to review our cash bonus policy, equity awards, and base salary benchmarks across all levels of the Company. The Compensation Committee determined that Compensia was independent pursuant to SEC rules and the corporate governance rules of Nasdaq and concluded that no conflict of interest exists that would prevent Compensia from independently representing the Compensation Committee. Comparative Analysis For purposes of measuring the competitive positioning of our compensation packages, peer companies are generally selected by the Compensation Committee with input from Compensia, primarily using the following criteria: publicly held pre-commercial or early-commercial U.S. biotechnology companies; and companies that fall within a specific market capitalization range relative to our market capitalization at the time of the peer evaluation. Because the biotechnology industry is a dynamic industry, the comparator group used by the Compensation Committee to measure the competitive positioning of our compensation packages is periodically updated to ensure that companies continue to meet the established criteria. Following positive topline data readouts and a significant increase in the Company’s market capitalization in late 2022, the Compensation Committee approved a new peer group for 2023 to reflect the Company’s updated size. The Company removed 11 peer companies from its peer group for 2022 (Agios Pharmaceuticals, Akero Therapeutics, Cara Therapeutics, Crinetics Pharmaceuticals, CytoDyn, FibroGen, Global Blood Therapeutics, Inovio Pharmaceuticals, Karyopharm Therapeutics, REGENXBIO and Travere Therepeutics) and added five new companies to the peer group (Cerevel Therapeutics Holdings, Denali Therapeutics, Halozyme Therapeutics, Ionis Pharmaceuticals and Sarepta Therapeutics). The selected companies had market capitalizations between $1 billion and $12 billion and generally had revenues of less than $500 million.
Key Developments
| * Reflects new additions to peer group during 2023. |
Key Developments
| Element | Fixed or Variable | Compensation Objective | | Base Salary | Fixed | To attract and retain executives by offering fixed compensation that is competitive with market opportunities and that recognizes each executive’s position, role, responsibility and experience. | | Annual Cash Incentive Bonus | Variable | To motivate and reward the achievement of annual individual performance objectives and corporate goals. | | Equity Awards | Variable | To align our executives’ interests with the interests of stockholders and to promote the long-term retention of our executives and all employees through equity-based compensation. For 2023, equity awards were granted in the form of RSUs and, in the case of our CEO, RSUs and PSUs. |
Key Developments
Annual Cash Incentive Bonus Our named executive officers are eligible to receive annual cash incentive bonuses. The annual cash incentive bonus each named executive officer is eligible to receive is based on the individual’s target bonus, as a percentage of base salary, and an assessment of individual performance and achievement of pre-established objectives, including research and development, commercial development, and finance and corporate development goals for the 2023 year. The specified percentages for each NEO are established taking into consideration the factors described above and are intended to make our total cash compensation competitive when compared to the peer companies. It is also designed to allocate a significant portion of each executive’s cash compensation opportunity to be contingent on goal achievement and create a significant performance-based component of each executive’s total compensation. For 2023, the target cash bonus percentage for each of our named executive officers remained in line with 2022 levels, as set forth in the table further below. For 2023, the Compensation Committee assigned points to each “core” bonus objective based on its determination, with input from our senior management team, of the value of the objective in light of our overall corporate goals and relevant objective achievement for 2023. The Compensation Committee also assigned bonus points for certain additional “bonus” performance objectives within each primary group of performance objectives. Potential achievement of core performance objectives ranged from 0% to 150% as follows: If we achieved a performance objective at less than 75% of the target level, no payout could be earned for that performance objective. If we achieved a performance objective at the target level, 100% of the weighted portion for that objective could be earned. If we achieved a performance objective above the target level, up to 150% of the assigned weighting such objective could be earned. The maximum total cash bonus percentage attainable was 200% of the target level, presuming outperformance of all specified core performance objectives and achievement of all of the bonus performance objectives.
Key Developments
| Name | Target Cash Bonus Percentage (% of base salary) | Target Award for 2023 ($) | Actual Award Paid for 2023 ($) | | Bill Sibold | 75% | 219,000 | 268,000(1) | | Paul A. Friedman, M.D. | 50% | 355,000 | 110,000(2) | | Rebecca Taub, M.D. | 40% | 289,000 | 354,000 | | Brian J. Lynch | 40% | 202,000 | 247,000 | | Alex Howarth | 40% | 201,000 | 246,000 | | Remy Sukhija | 40% | 208,000 | 58,000(2) | | Carole Huntsman | 40% | 26,000 | 32,000(1) |
Key Developments
| (1) Reflects pro rata bonus, based upon negotiated terms of offer letter to join the Company. |
Key Developments
Long-Term Incentives We believe that long-term incentives in the form of equity-based awards are critical to meeting the following objectives:
Key Developments
| • | focus all employees, including our named executive officers, on our long-term performance by aligning their interests with those of our stockholders; |
Key Developments
We typically grant initial equity awards to new employees, including our executive officers, and annual equity grants as part of our overall compensation program. The Compensation Committee believes that equity-based awards are a strong executive retention tool and align the interests of our executives with the interests of shareholders. Annual grants of equity awards to our executive officers are approved by our Compensation Committee. The timing of annual equity grants has been generally consistent, with a first quarter grant each year at a regularly scheduled meeting of our Compensation Committee. Such awards have not been coordinated with the public release of material non-public information. In 2023, the Compensation Committee determined to award time-based RSUs to our continuing executive officers in lieu of the stock option awards that it had granted in prior years. In doing so, the Compensation Committee considered that RSUs were the most appropriate award vehicle to meet our incentive and retention objectives for the year given the criticality of named executives’ continued execution over 2023 to successfully achieve our corporate objectives. The Compensation Committee also considered the durability of our program across market conditions as the company approached commercialization given that awards in prior years were 100% stock option-based. The RSUs vest on a one-for-one basis into shares of our common stock. The determination of the annual grant value levels is a function of a number of factors considered by the Compensation Committee, including in particular for 2023 the significance of the individual to the Company’s successful execution of its strategy and clinical milestones at this point of inflection as we approached
Key Developments
commercialization, the need to strongly incentivize our executive team to continue to execute on our clinical roadmap and achieve FDA approval, and market competitiveness. As discussed in “Other Compensation Policies and Information—Recent Fiscal 2024 Compensation Decisions” below, we have continued to evolve our long-term incentive structure in 2024 with the introduction of PSUs, in addition to RSUs and stock options, and reduced equity award values compared to 2023. Accordingly, in January of 2023, at a regularly scheduled meeting, the Compensation Committee made an annual grant of time-based RSUs in the amount of 26,668 RSUs to Dr. Friedman, 20,001 RSUs to Dr. Taub, and 15,001 RSUs to Messrs. Lynch, Howarth and Sukhija. The RSUs vest in four equal installments on each of the four anniversaries of the grant date, provided the recipient remains in service with the Issuer on each such date. Chief Executive Officer Appointment As mentioned above, in connection with Mr. Sibold’s appointment as the Company’s President and Chief Executive Officer in September 2023, the Board structured Mr. Sibold’s compensation to create alignment between our strategic goals and stockholder interests as follows:
Key Developments
| • | A target annual bonus opportunity equal to 75% of his annual base salary |
Key Developments
| • | A one-time sign-on cash bonus of $520,000 |
Key Developments
| • | An initial restricted stock unit (RSU) award of 50,000 RSUs with a target value of $9,250,000, subject to time-based vesting in four equal annual installments on the anniversary of Mr. Sibold’s employment start date, and |
Key Developments
| • | An initial performance-based restricted stock unit (PSU) award of 50,000 PSUs with a target value of $9,250,000 subject to performance-based vesting subject to achievement of rigorous stock price appreciation hurdles over a five-year period. |
Key Developments
In determining the value of Mr. Sibold’s compensation opportunity, the Compensation Committee considered the amount that was necessary to attract an executive of his caliber in light of his extensive operating, commercial, transactional and senior management experience. To replace Mr. Sibold’s foregone year-to-date earned bonus at his prior employer, the Compensation Committee awarded the one-time cash sign-on bonus. The Compensation Committee also considered the equity awards forfeited from his prior employer, in determining the amount of his RSU award. The PSU awards can be earned at an amount ranging from 0-300% of target based on achievement of three significant sustained stock price appreciation hurdles over a five-year period. The stock price hurdles are each between 29% and 40% higher than the prior hurdle with the final price hurdle being more than double the stock price at the time of Mr. Sibold’s PSU grant. The Company’s stock must trade at or above the applicable hurdle for 80 trading days in any period of 100 consecutive trading days and for at least 20 days during a single period when the trading window for directors and executive leadership is open in order for the stock price hurdle to be considered achieved. Further, the PSU awards are settled on an extended basis, notwithstanding the date of achievement of the stock price hurdles, pursuant to a vesting schedule that occurs over the 4th to 6th anniversaries of Mr. Sibold’s start date. As of March 31, 2024 none of the three hurdles had been achieved. We believe the structure of the PSU awards will encourage holistic performance achievement, incentivize sustained performance, encourage the long-term retention of Mr. Sibold’s services and directly align Mr. Sibold’s interests with those of our shareholders. Significant Competitive Harm in Disclosing Thresholds We have not publicly disclosed the specific stock price hurdles for Mr. Sibold’s PSU award because we believe advance disclosure of the thresholds could cause significant competitive harm to our business. The thresholds were purposefully set to be more aggressive than our long-term financial plan, and fully achievable only by outperforming
Key Developments
such plan. If specific thresholds were disclosed, they could be viewed by our shareholders or the investment community as representing the Company’s public guidance as to its future enterprise value and/or long-term financial plan, which would not align with (i) the Company’s purpose of using the PSU award thresholds to encourage exceptional outperformance of our rigorous financial plan, and (ii) how the Company understands the role the PSU award thresholds have in our long-term business and strategy. Disclosing the specific thresholds could also create a retention risk for our CEO who is crucial to the execution of our next phase of growth by giving insight into the retentive value of the PSU Awards. Companies competing for our top executive talent could use the thresholds’ rigor and the significant challenge of achieving the full award, depending on how many tranches have been earned and what remains of the performance period, to undercut the value of the PSUs by offering a sign-on bonus or a more easily achievable compensation package to induce our CEO to leave the Company. Chief Commercial Officer Appointment Ms. Huntsman was appointed as the Company’s Chief Commercial Officer effective November 10, 2023. In connection with the commencement of her employment, the Board approved the following compensation and benefits for Ms. Huntsman: (i) an initial annual base salary of $525,000, (ii) a target annual bonus opportunity equal to 40% of her annual base salary, and (iii) a sign-on equity award of 7,834 time-based RSUs, which will vest ratably over four years, and options to purchase 10,077 shares, of which 25% of the option shares will vest on the first anniversary of the date of grant and 6.25% of the option shares shall vest on each quarterly anniversary following the first anniversary of the date of grant. Other Compensation Policies and Information Recent Fiscal 2024 Compensation Decisions As noted above, the Compensation Committee annually reassesses the company’s compensation approach to align with the continuing maturity and position of the Company. As part of the Company’s continued evolution, in January 2024, the Compensation Committee approved a change to the annual long-term incentive program for 2024 such that the annual grant of equity awards to our executive officers would be comprised of a mix of RSUs, stock options, and PSUs, with each comprising one-third of the total award mix. The Compensation Committee determined that this mix of equity compensation was the most appropriate award vehicle for fiscal year 2024 to address the continued maturity of the Company, motivate our executive officers and align executive performance with interests of shareholders. In addition, the target values of the 2024 equity awards for our executive officers were set below equivalent levels for 2023 awards. The 2024 PSUs for executive officers are set to pay out depending on the Company’s total shareholder return (TSR) performance compared to biotechnology stock index companies as follows: (i) at less than target if TSR performance is less than the 50th percentile of index peer TSR performance and (ii) at 2x of target if TSR performance is equal to or greater than the 90th percentile of index peer TSR performance. Linear interpolation will be applied to determine the payout (between the target and 2x target levels) if TSR performance is between the 50th percentile and the 90th percentile of index peer TSR performance. Termination of the Employment of Mr. Friedman Mr. Friedman’s departure qualified as a termination without cause under his existing employment arrangements, and entitled him to receive his annual base salary for 12 months following his departure, his target annual bonus for 2023, paid over 12 months following his departure, and continued vesting of equity awards due to his continued service as a director. Termination of the Employment of Mr. Sukhija Upon ceasing to serve as the Company’s Chief Commercial Officer effective September 25, 2023, Mr. Sukhija was entitled to receive separation consideration for a termination without cause consisting of: payment of his annual base salary for 12 months; his target annual bonus for 2023, paid over 12 months; acceleration of stock options to
Key Developments
| Name and Principal Position | Year | Salary ($) | Bonus ($)(1) | Stock Awards ($)(2) | Option Awards ($)(2) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($)(3) | Total ($) | | Bill Sibold President and Chief Executive Officer(4) | 2023 | 275,400 | 520,000 | 31,205,000 | — | 268,000 | — | 32,268,400 | | Paul A. Friedman, M.D. Former Chief Executive Officer (5) | 2023 | 498,846 | — | 7,999,867 | — | — | 1,064,573 | 9,563,286 | | | 2022 | 658,021 | — | — | 4,239,900 | 497,464 | — | 5,395,385 | | | 2021 | 627,650 | — | — | 4,267,500 | 423,239 | — | 5,318,389 | | Rebecca Taub, M.D. President, Research & Development and Chief Medical Officer | 2023 | 574,108 | — | 5,999,900 | — | 354,000 | — | 6,928,008 | | | 2022 | 535,208 | — | — | 3,725,055 | 404,618 | — | 4,664,881 | | | 2021 | 510,500 | — | — | 3,755,400 | 344,246 | — | 4,610,146 | | Brian J. Lynch Former Senior Vice President and General Counsel | 2023 | 501,590 | — | 4,500,000 | — | 247,000 | 17,994 | 5,266,584 | | | 2022 | 467,604 | — | — | 3,994,400 | 282,807 | 13,338 | 4,758,149 | | | 2021 | 445,333 | — | — | 2,731,200 | 240,610 | 13,338 | 3,430,481 | | Alex Howarth Former Senior Vice President and Chief Financial Officer | 2023 | 498,829 | — | 4,500,000 | — | 246,000 | 17,194 | 5,262,023 | | | 2022 | 465,625 | — | — | 2,725,650 | 281,250 | 10,381 | 3,482,906 | | | 2021 | 281,250 | 75,000 | — | 6,526,500 | 241,200 | 7,854 | 7,131,804 | | Remy Sukhija Former Senior Vice President, Chief Commercial Officer (5) | 2023 | 387,718 | — | 4,500,000 | — | — | 2,474,660 | 7,362,378 | | | 2022 | 482,813 | — | — | 2,725,650 | 292,005 | 10,381 | 3,510,849 | | | 2021 | 461,250 | — | — | 2,048,400 | 248,436 | 10,381 | 2,768,467 | | Carole Huntsman Chief Commercial Officer | 2023 | 61,922 | — | 1,488,852 | 1,559,501 | 32,000 | 79 | 3,142,354 |
Bill Sibold
Bill Sibold On September 7, 2023, the Company entered into an agreement (the “Sibold Letter Agreement”), with Mr. Sibold, for the positions of President and Chief Executive Officer of the Company. Under the terms of the Sibold Letter Agreement, Mr. Sibold is entitled to an annual base salary of $875,000 (subject to adjustment by the Compensation Committee) and an annual target bonus of 75% of his base salary (subject to adjustment by the Compensation Committee). In addition, Mr. Sibold received in connection with the Sibold Letter Agreement (1) a one-time sign-on cash bonus of $520,000, (2) a one-time sign-on equity award of 50,000 time-based RSUs and (3) a one-time sign-on award of PSUs with a target award of 50,000 PSUs. Mr. Sibold is entitled to dividend equivalent rights on the RSUs and PSUs until the awards are settled, payable as additional RSUs and PSUs. The foregoing RSUs vest ratably on the first four anniversaries of September 8, 2023. The foregoing PSUs can be earned at 0-300% of target based on achievement of significant sustained stock price appreciation hurdles over a five-year performance period. Upon achievement of the hurdles, the PSUs will time-vest subject to Mr. Sibold’s continued employment with the Company through the date of such achievement. The PSUs settle on an extended basis via the issuance of common stock after the vesting of PSUs and following the 4th to 6th anniversaries of the hiring date. There is no guaranteed level of performance; if the performance goals are not achieved, the PSUs will not vest, except in specified circumstances involving a change of control. If the performance vesting condition is not met with respect to any portion of the PSUs within the five-year performance period, such portion of the PSUs will be forfeited. Unvested PSUs will be forfeited upon the termination of Mr. Sibold’s employment for any reason except as provided in the Sibold Severance Agreement (as defined below). Pursuant to the terms of a severance and change of control agreement entered into with Mr. Sibold (the “Sibold Severance Agreement”), Mr. Sibold is also entitled to severance benefits if we terminate his employment other than for “Cause” (as defined) or if Mr. Sibold voluntarily resigns for “Good Reason” (as defined), which we refer to herein collectively as a “Qualifying Separation,” consisting of:
Bill Sibold
| • | severance payments in the form of (i) a lump sum equal to 18 months of Mr. Sibold’s then-current base salary if the Qualifying Separation occurs following a change of control of the Company or (ii) continuation of payments in an amount equal to Mr. Sibold’s then-current base salary for an 18-month period if the Qualifying Separation does not occur following a change of control of the Company; |
Bill Sibold
| • | payment in lump sums of (i) any earned but unpaid bonus for the year prior to the Qualifying Separation, based on actual Company performance, and (ii) an amount equal to the bonus to which Mr. Sibold would or may have been entitled based on actual Company performance for the year in which the Qualifying Separation occurs, prorated based on the number of days of the calendar year that Mr. Sibold was employed by the Company; |
Bill Sibold
| • | a separation bonus in an amount equal to 150% or, if the Qualifying Separation occurs following a change of control of the Company, 200% of the target annual bonus to which Mr. Sibold would have been entitled in the year in which the Qualifying Separation occurs, paid over 18 months in accordance with the Company’s normal payroll practices or, if the Qualifying Separation occurs following a change of control of the Company, in a lump sum; |
Bill Sibold
| • | full vesting of any and all unvested time-based equity awards (including the RSUs) if the Qualifying Separation occurs follow a change of control of the Company, and, if the Qualifying Separation does not occur follow a change of control, (i) vesting of 50% of the RSUs on the date of a Qualifying Separation that occurs in the first 12 months of employment and 12 months’ vesting of the RSUs and any and all other outstanding time-based equity awards and (ii) continuation of any unvested PSUs in accordance with the terms of the award agreement (but without regard for Executive’s termination of employment) for 120 days following the date of the Qualifying Separation; and |
Bill Sibold
| 2024 PROXY STATEMENT | 41 |
Bill Sibold
| • | continuation of medical benefits for 18 months following the Qualifying Separation. |
Bill Sibold
Mr. Sibold has also entered into a customary indemnification agreement with us with respect to his service as an officer and director of the Company. Rebecca Taub, M.D. On April 13, 2016, Private Madrigal entered into an agreement, (the “Taub Letter Agreement”), with Rebecca Taub, M.D. for the position of Chief Medical Officer and Executive Vice President, Research & Development, of the Company following the completion of the Merger. We assumed the Taub Letter Agreement upon completion of the Merger. Under the terms of the Taub Letter Agreement, Dr. Taub is entitled to an annual base salary of $370,000 (subject to adjustment by the Compensation Committee) and an annual target bonus of 40% of her base salary (subject to adjustment by the Compensation Committee, which has since been adjusted to 50%). Dr. Taub is also entitled to severance benefits upon a Qualifying Separation consisting of:
Bill Sibold
| • | a severance payment equal to 12 months of Dr. Taub’s then-current base salary and target bonus, payable (i) in a lump sum if the Qualifying Separation occurs following a change of control of the Company, or (ii) in 12 equal monthly payments if the Qualifying Separation does not occur following a change of control of the Company; |
Bill Sibold
| • | full vesting of restricted stock and stock options held by Dr. Taub, in particular if a Qualifying Separation occurs following a change of control of the Company; and 12-months’ vesting of restricted stock and stock options held by Dr. Taub upon a Qualifying Separation, if such Qualifying Separation does not occur following a change of control of the Company; and |
Bill Sibold
| • | reimbursement of and continuation of medical benefits for 12 months following a Qualifying Separation. |
Bill Sibold
Dr. Taub has also entered into a customary indemnification agreement with us with respect to her service as an officer and director of the Company.
Carole Huntsman
Carole Huntsman On November 6, 2023, the Company entered into an agreement, (the “Huntsman Letter Agreement”) with Carole Huntsman for the position of Chief Commercial Officer. Under the terms of the Huntsman Letter Agreement, Ms. Huntsman is entitled to an annual base salary of $525,000 (subject to adjustment by the Compensation Committee) and an annual target bonus of 40% of her base salary (subject to adjustment by the Compensation Committee). In addition, Ms. Huntsman received in connection with the Huntsman Letter Agreement a sign-on equity award of 7,834 time-based RSUs, which will vest ratably over four years and options to purchase 10,077 shares, of which 25% of the option shares will vest on the first anniversary of the date of grant and 6.25% of the option shares shall vest on each quarterly anniversary following the first anniversary of the date of grant. Pursuant to the terms of a severance and change of control agreement entered into with Ms. Huntsman, she is also entitled to severance benefits upon a Qualifying Separation consisting of:
Carole Huntsman
| • | a severance payment equal to 12 months of Ms. Huntsman’s then-current base salary and target bonus, payable (i) in a lump sum if such Qualifying Separation occurs following a change of control of the Company, or (ii) in 12 equal monthly payments if such Qualifying Separation does not occur following a change of control of the Company; |
Carole Huntsman
| • | full vesting of restricted stock, if any, and stock options held by Ms. Huntsman upon a Qualifying Separation, if such Qualifying Separation occurs following a change in control of the Company, or (ii) 12-months’ vesting of restricted stock and stock options held by Ms. Huntsman upon a Qualifying Separation, if such Qualifying Separation does not occur following a change of control of the Company; and |
Carole Huntsman
| • | reimbursement of and continuation of medical benefits for 12 months following a Qualifying Separation. |
Carole Huntsman
| 42 | |
Carole Huntsman
Ms. Huntsman has also entered into a customary indemnification agreement with us with respect to her service as an officer of the Company. Paul A. Friedman, M.D. On April 13, 2016, Private Madrigal entered into an agreement, or the Friedman Letter Agreement, with Dr. Friedman, for the position of Chairman and Chief Executive Officer of the Company following the completion of the Merger. We assumed the Friedman Letter Agreement upon completion of the Merger. Under the terms of the Friedman Letter Agreement, Dr. Friedman was entitled to an annual base salary of $400,000 (subject to adjustment by the Compensation Committee) and an annual target bonus of 50% of his base salary (subject to adjustment by the Compensation Committee). On September 8, 2023, Dr. Friedman was replaced as Chief Executive Officer (although he continues to serve as a director of the Company). In accordance with the terms of the Friedman Letter Agreement, Dr. Friedman’s separation qualified as a termination of employment without cause, which is a “Qualifying Separation” under the agreement. Consistent with a Qualifying Separation, Dr. Friedman received the following severance benefits:
Carole Huntsman
| • | a severance payment in the amount of $1,065,000, payable in 12 equal monthly payments; and |
Carole Huntsman
| • | continued vesting of restricted stock and stock options held by Dr. Friedman for so long as he serves as a director on the Board. |
Non-Employee Director Compensation Program
Non-Employee Director Compensation Program A non-employee director is a director who is not employed by us and who does not receive compensation from us through any business relationship with us that is inconsistent with applicable Nasdaq or SEC independence rules. Our Board of Directors approves the form and amount of non-employee director compensation. Our Compensation Committee makes recommendations on the form and amount of non-employee director compensation. In July 2016, we adopted a non-employee director compensation program that became effective upon its adoption, and which has been amended from time to time, as described below. Policy for Non-Employee Director Equity Awards. Under our policy for equity grants to our non-employee directors included in the Amended 2015 Stock Plan, as of, or as soon as practicable following, the regularly scheduled annual equity award grant date for the Company’s executive officers, an annual equity grant is made to each non-employee director serving on the Board of Directors with a grant-date fair value equal to the 50th percentile value of the director annual equity awards for the Company’s peer group, as benchmarked with the advice of the Company’s compensation consultant in the ordinary course. In 2023, the Compensation Committee approved annual awards to the Company’s non-employee directors under the policy consisting of time-based RSUs that vest on the anniversary of grant, provided continuing service as of such date. In accordance with this policy, in June of 2023, our non-employee directors received an annual grant of 1,198 RSUs with a fair-market value of $306,125. In addition, pursuant to the Amended 2015 Stock Plan, one-time equity grants will be made to each new non-employee director upon his/her first election to the Board of Directors, with a value equivalent to two times (2x) the 50th percentile value of the Company’s peer group director annual equity awards as benchmarked with the advice of the Company’s compensation consultant. Such initial grant would vest as to 50% of the underlying shares on the first anniversary of the grant date and as to an additional 12.5% of the underlying shares on the last day of each successive quarterly period thereafter for four successive quarterly periods, subject to the non-employee director’s continued service on such dates. Pursuant to this policy, new directors Julian Baker and Dr. Raymond Cheong were each granted 2,396 time-based RSUs with fair market values of $612,250 in connection with their appointment to the Board in June 2023. Annual Cash Compensation In addition to stock options, each non-employee director was eligible during 2023 to receive for his or her service on our Board of Directors or committees thereof annual cash retainers (payable quarterly, in arrears), as follows:
Non-Employee Director Compensation Program
| Position | Retainer ($) | | Board Member | 42,500 | | Lead Independent Director | 25,000 | | Audit Committee Chair | 20,000 | | Compensation Committee Chair | 15,000 | | Nominating and Governance Committee Chair | 10,000 | | Audit Committee Member | 10,000 | | Compensation Committee Member | 7,500 | | Nominating and Governance Committee Member | 5,000 |
Non-Employee Director Compensation Program
| 46 | |
Non-Employee Director Compensation Program
Expenses Finally, we reimburse our non-employee directors for their reasonable out-of-pocket expenses incurred in attending meetings of our Board of Directors and committee meetings. Director Compensation Tables The following tables set forth information about the compensation paid to the non-employee members of our Board of Directors who served as a director during the year ended December 31, 2023. Other than as set forth in the tables and described more fully below, during the year ended December 31, 2023, we did not pay any fees to, make any equity awards to or pay any other compensation to the non-employee members of our Board of Directors. The stock options granted in 2023 and disclosed in the table below were granted under our Amended 2015 Stock Plan. Neither Mr. Sibold, our Chief Executive Officer and a director, nor Dr. Taub, our President, Research & Development, and Chief Medical Officer, and a director, received any compensation from us in 2023 for service as a director and, therefore, they are not included in the table below. Dr. Friedman began to receive director compensation following the conclusion of his service as our Chief Executive Officer effective September 8, 2023.
Non-Employee Director Compensation Program
| Name | Fees Earned or Paid in Cash ($) (1) | Share Awards ($) (2)(3) | All Other Compensation ($) | Total ($) | | Julian Baker | 33,750 | 612,250 | — | 646,000 | | Kenneth M. Bate | 77,500 | 306,125 | — | 383,625 | | Raymond Cheong, Ph.D./M.D. | 27,500 | 612,250 | — | 639,750 | | Fred B. Craves, Ph.D. | 65,000 | 306,125 | — | 371,125 | | James M. Daly | 57,500 | 306,125 | — | 363,625 | | Keith R. Gollust(4) | 31,250 | — | — | 31,250 | | Richard S. Levy, M.D. | 62,500 | 306,125 | — | 368,625 | | David Milligan, Ph.D.(4) | 30,000 | — | — | 30,000 | | Paul A. Friedman, M.D. | 10,625 | — | — | 10,625 |
Non-Employee Director Compensation Program
| (1) Consists of the annual retainer fee for service as a member of the Board of Directors or any Board committee. For further information concerning such fees, see the section above entitled “—Annual Cash Compensation.” The amount under “All Other Compensation” reflects fees for consultations concerning drug development and regulatory matters. |
Non-Employee Director Compensation Program
| (2) At our 2023 Annual Meeting of Stockholders, Mr. Bate, Dr. Craves, Mr. Daly, and Dr. Levy each received an award of 1,198 RSUs, and Mr. Baker and Dr. Cheong each received an award of 2,398 RSUs. The amounts in this column represent the grant date fair value of the RSUs granted to applicable director in our fiscal year 2023 computed in accordance with FASB ASC Topic 718. See our discussion of “Stock-Based Compensation” under Notes 2 and 8 to our audited consolidated financial statements included in the Annual Report for a discussion of all assumptions made by us in determining the grant date fair values of our equity awards. See also our discussion of stock-based compensation under Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” of the Annual Report. |
Non-Employee Director Compensation Program
| (3) The following table shows the total number of outstanding and vested stock options and RSUs as of December 31, 2023, the last day of our fiscal year, that have been issued as director compensation to our current non-employee directors. |
Non-Employee Director Compensation Program
| Name | # of Stock Options Outstanding | # of Stock Options Vested | # of RSUs Outstanding | | Julian Baker | — | — | 2,396 | | Kenneth M. Bate | 77,959 | 77,959 | 1,198 | | Raymond Cheong, Ph.D./M.D. | — | — | 2,396 | | Fred B. Craves, Ph.D. | 77,959 | 77,959 | 1,198 | | James M. Daly | 47,959 | 47,959 | 1,198 | | Richard S. Levy, M.D. | 55,470 | 55,470 | 1,198 |
Non-Employee Director Compensation Program
| (4) Resigned from the Board on June 15, 2023. |
Non-Employee Director Compensation Program
| 2024 PROXY STATEMENT | 47 |
Non-Employee Director Compensation Program
Report of the Compensation Committee of the Board of Directors The Compensation Committee of our Board of Directors has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K, which appears elsewhere in this proxy statement, with our management. Based on this review and discussion, the Compensation Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in our proxy statement and incorporated by reference in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. MEMBERS OF THE COMPENSATION COMMITTEE: Richard S. Levy, M.D. (Chairman) Kenneth M. Bate Fred B. Craves, Ph.D. Raymond Cheong, Ph.D./M.D. EQUITY COMPENSATION PLAN INFORMATION The following table provides certain aggregate information with respect to all of our equity compensation plans in effect as of December 31, 2023:
Non-Employee Director Compensation Program
| Plan Category | (a) Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | (b) Weighted Average Exercise Price of Outstanding Options, Warrants and Rights | (c) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in column (a)) | | Equity Compensation Plans Approved by Security Holders (1) | 2,329,873 | $78.91 | 711,054 | | Equity Compensation Plans Not Approved by Security Holders (2) | 25,906 | $172.39 | 193,392 | | Total | 2,355,779 | $79.94 | 904,446 |
Non-Employee Director Compensation Program
| (1) These shares relate to those authorized under our Amended 2015 Stock Plan, as amended at the 2021 Annual Meeting of Stockholders. |
Non-Employee Director Compensation Program
| (2) These shares relate to those authorized under our 2023 Inducement Plan, which was adopted by the Board of Directors on September 8th, 2023 without shareholder approval in connection with Nasdaq Listing Rule 5635(c)(4). |
Non-Employee Director Compensation Program
DELINQUENT SECTION 16(a) REPORTS The members of our Board of Directors, our executive officers, and persons who beneficially own more than ten percent of our outstanding common stock are subject to the reporting requirements of Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which require them to file reports with respect to their beneficial ownership of our common stock and their transactions in our common stock. Based upon (i) the copies of Section 16 reports which we received from such persons for their 2023 year transactions in our common stock and their common stock holdings, and (ii) written representation that no other reports were required, we believe that all reporting requirements under Section 16 for such year were met in a timely manner by our directors, executive officers and greater than ten percent beneficial owners.
Non-Employee Director Compensation Program
| 48 | |
Non-Employee Director Compensation Program
Other than compensation arrangements for our named executive officers and directors, and except as disclosed below, there have been no transaction or series of similar transactions, since January 1, 2023, to which we were a party or will be a party, in which:
Non-Employee Director Compensation Program
| • | the amounts involved exceeded or will exceed the lesser of $120,000 or one percent of the average of our total assets at year-end; and |
Non-Employee Director Compensation Program
| • | any of our directors, executive officers or holders of more than 5% of our capital stock, or any member of the immediate family of the foregoing persons, had or will have a direct or indirect material interest. |
Non-Employee Director Compensation Program
Waiver Under 2017 Securities Purchase Agreement Julian Baker and Raymond Cheong, Ph.D./M.D., who are members of the Board of Directors, are affiliated with Baker Bros. Advisors LP and its related funds (collectively, “Baker Bros.”). Mr. Baker is a managing member of the general partner of Baker Bros. Advisors LP and Dr. Cheong is a Managing Director at Baker Brothers Investments. Baker Bros. is a beneficial owner of more than 5% of our capital stock. In connection with the appointment of Mr. Baker and Dr. Cheong to the Board, Baker Bros. waived rights under that certain Securities Purchase Agreement, dated June 20, 2017, by and among certain funds affiliated with Baker Bros. Advisors LP (the “Baker Bros. Funds” or “BBA Investors”) and the other investors party thereto (the “2017 SPA”), as amended by Amendments No. 1 and 2 (collectively, the “SPA”), to designate a director to the Board while Mr. Baker or Dr. Cheong are on the Board or to appoint a Board observer subject the SPA, while Mr. Baker or Dr. Cheong are on the Board or serving as a Board observer. August 7, 2023 Registration Rights Agreement On August 7, 2023, pursuant to the terms of the SPA, the Company entered into a registration rights agreement with the BBA Investors in the form attached to the 2017 SPA (the “Registration Rights Agreement”), which provides for certain resale registration rights with respect to shares of the Company’s common stock (including shares of common stock issuable upon the conversion of any securities of the Company) that are now held or are hereafter acquired by the BBA Investors (the “Registrable Securities”). In satisfaction of the Company’s obligations under the Registration Rights Agreement, and following request by the BBA Investors, the Company filed a resale prospectus supplement, dated August 8, 2023, to the prospectus that forms a part of the Company’s effective Registration Statement on Form S-3ASR (the “Resale Prospectus”) registering for resale up to 3,914,910 shares of our common stock currently owned or that may be acquired upon the conversion of securities beneficially owned by the BBA Investors. The Company is obligated under the Registration Rights Agreement to register additional Registrable Securities acquired by the BBA Investors, so the Company may be required to file additional supplements to the Resale Prospectus in the future to increase the number of shares that are covered thereby. The Company is obligated to use its reasonable best efforts to maintain the effectiveness of the Resale Prospectus (or any other appropriate subsequent form registering the Registrable Securities) until the earlier of such time that (i) all Registrable Securities covered by the Resale Prospectus have been sold or may be sold freely without limitations or restrictions as to volume or manner of sale pursuant to Rule 144 of the Securities Act, or (ii) all Registrable Securities covered by the Resale Prospectus otherwise cease to be considered Registrable Securities pursuant to the terms of the Registration Rights Agreement. Under the Registration Rights Agreement, the BBA Investors have the right to one underwritten public offering per calendar year, but no more than three underwritten public offerings in total, to effect the sale or distribution of their Registrable Securities, subject to specified exceptions, conditions and limitations. The rights of the BBA Investors concerning Registrable Securities under the Registration Rights Agreement will continue in effect for up to ten years following the date of the Registration Rights Agreement.
Non-Employee Director Compensation Program
| 2024 PROXY STATEMENT | 49 |
Non-Employee Director Compensation Program
The foregoing description of the Registration Rights Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Registration Rights Agreement, which is incorporated by reference as an exhibit to our Annual Report on Form 10-K for the year ended December 31, 2023. September 2023 Public Offering On September 28, 2023, the Company entered into an underwriting agreement related to the public offering (the “Offering”) of 1,248,098 shares of common stock at a price to the public of $151.69 per share and prefunded warrants to purchase 2,048,098 shares of common stock (the “Prefunded Warrants”) at a price to the public of $151.6899 per warrant. The Prefunded Warrants are exercisable at any time on a 1-for-1 basis at an exercise price of $0.0001 per share into common stock, subject to certain limitations and have no expiration date. The Offering closed on October 3, 2023. Pursuant to the Offering, the BBA Investors purchased 1,648,098 Prefunded Warrants in the aggregate at the offering price of $151.6899 per warrant, for aggregate consideration of approximately $250.0 million. In addition, funds related to Avoro Life Sciences Fund LLC (“Avoro”), an owner in excess of 5% of our capital stock, purchased 400,000 Prefunded Warrants from the underwriters at the public offering price for aggregate consideration of approximately $60.7 million. March 2024 Public Offering On March 18, 2024, the Company entered into an underwriting agreement related to the public offering (the “2024 Offering”) of 1,096,153 shares of common stock at a price to the public of $260.00 per share and Pre-Funded Warrants to purchase 1,557,692 shares of common stock at a price to the public of $259.9999 per warrant. The Offering closed on March 21, 2024, and the underwriters’ option to purchase additional shares closed on April 2, 2024. Pursuant to the 2024 Offering, the BBA Investors purchased 1,057,692 Prefunded Warrants in the aggregate at the offering price of $259.9999 per warrant, for aggregate consideration of approximately $275.0 million. In addition, funds related to Avoro purchased 500,000 Prefunded Warrants from the underwriters at the public offering price for aggregate consideration of approximately $130.0 million. Indemnification Agreements We have entered into indemnification agreements with each of our directors and executive officers and certain other key employees. The indemnification agreements provide that we will indemnify each of our directors, executive officers and such other key employees against any and all expenses incurred by that director, executive officer, or other key employee because of his or her status as one of our directors, executive officers, or other key employees, to the fullest extent permitted by Delaware law, our restated certificate of incorporation and our amended and restated bylaws. In addition, the indemnification agreements provide that, to the fullest extent permitted by Delaware law, we will advance all expenses incurred by our directors, executive officers and other key employees in connection with a legal proceeding. Policy for Approval of Related Person Transactions Pursuant to the written charter of our Audit Committee, the Audit Committee is responsible for reviewing and approving, prior to our entry into any such transaction, all transactions in which we are a participant and in which any of the following persons has or will have a direct or indirect material interest:
Non-Employee Director Compensation Program
| • | our executive officers; |
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| • | our directors; |
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| • | the beneficial owners of more than 5% of our securities; |
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| • | the immediate family members of any of the foregoing persons; and |
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| • | any other persons whom the Board of Directors determines may be considered related persons. |
Non-Employee Director Compensation Program
For purposes of these procedures, “immediate family members” means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, and any person (other than a tenant or employee) sharing the household with the executive officer, director or 5% beneficial owner. In reviewing and approving such transactions, the Audit Committee shall obtain, or shall direct our management to obtain on its behalf, all information that the committee believes to be relevant and important to a review of the transaction prior to its approval. Following receipt of the necessary information, a discussion shall be held of the relevant factors if deemed to be necessary by the committee prior to approval. If a discussion is not deemed to be necessary, approval may be given by written consent of the committee. This approval authority may also be delegated to the chairman of the Audit Committee in some circumstances. No related person transaction shall be entered into prior to the completion of these procedures. The Audit Committee or its chairman, as the case may be, shall approve only those related person transactions that are determined to be in, or not inconsistent with, the best interests of the Company and our stockholders, taking into account all available facts and circumstances as the committee or the chairman determines in good faith to be necessary. These facts and circumstances will typically include, but not be limited to, the benefits of the transaction to our company; the impact on a director’s independence in the event that the related person is a director, an immediate family member of a director or an entity in which a director is a partner, stockholder or executive officer; the availability of other sources for comparable products or services; the terms of the transaction; and the terms of comparable transactions that would be available to unrelated third parties or to employees generally. No member of the Audit Committee shall participate in any review, consideration or approval of any related person transaction with respect to which the member or any of his or her immediate family members is the related person.
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| 2024 PROXY STATEMENT | 51 |
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PROPOSAL 1: ELECTION OF DIRECTORS Our Board of Directors currently consists of nine members, classified into three classes as follows: Paul A. Friedman, M.D., Kenneth M. Bate and James M. Daly are the Class I directors with a term ending at the 2026 Annual Meeting of Stockholders; Bill Sibold, Rebecca Taub, M.D. and Fred B. Craves, Ph.D. are the Class II directors with a term ending at this year’s Annual Meeting; and Richard S. Levy, M.D., Julian Baker and Raymond Cheong, Ph.D./M.D. are the Class III directors with a term ending at the 2025 Annual Meeting of Stockholders. At each Annual Meeting of Stockholders, directors are elected for a full term of three years to succeed those directors whose terms are expiring. On April 23, 2024, our Nominating and Governance Committee nominated, and our Board thereafter approved Bill Sibold, Rebecca Taub, M.D. and Fred B. Craves, Ph.D. as Class II director nominees for election at the Annual Meeting for a term of three years to serve until the 2027 Annual Meeting of Stockholders, and until their respective successors have been elected and qualified, or until their earlier death, resignation, retirement or removal. Unless authority to vote for any of these nominees is withheld, the shares represented by a validly executed proxy will be voted FOR the election of Bill Sibold, Rebecca Taub, M.D. and Fred B. Craves, Ph.D. as directors. In the event that either nominee should become unable or unwilling to serve, the shares represented by a validly executed proxy will be voted for the election of such other person as the Board of Directors may recommend in his or her place, as the case may be, unless the Board of Directors chooses to reduce the number of directors serving on the Board of Directors. We have no reason to believe that any nominee will be unable or unwilling to serve as a director. Vote Required Directors are elected by a plurality of the affirmative votes cast by those shares deemed present in person or represented by proxy and entitled to vote at the Annual Meeting. The three nominees for director receiving the highest number of affirmative votes will be elected. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT OUR STOCKHOLDERS VOTE “FOR” THE ELECTION OF BILL SIBOLD, REBECCA TAUB, M.D. and FRED B. CRAVES, Ph.D. AS DIRECTORS, AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN ACCORDANCE WITH THE BOARD’S RECOMMENDATION UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY.
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The Audit Committee has appointed PricewaterhouseCoopers LLP, independent registered public accounting firm, to audit our financial statements for the fiscal year ending December 31, 2024. PricewaterhouseCoopers LLP audited our financial statements for the fiscal year ended December 31, 2023. The Board of Directors proposes that our stockholders ratify this appointment. In the event our stockholders do not ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm, the Audit Committee will reconsider its appointment. We do not expect a representative of PricewaterhouseCoopers LLP to be present at the Annual Meeting or to otherwise be available to make a statement or respond to questions. Accounting Fees and Services The following table summarizes the aggregate fees for professional services rendered to us by PricewaterhouseCoopers LLP for the years ended December 31, 2023 and December 31, 2022. The Audit Committee pre-approved all services fees described below.
Non-Employee Director Compensation Program
| | 2023 ($) | 2022 ($) | | Audit fees | 766,000 | 726,500 | | Audit-related fees | | — | | Tax fees | 233,000 | 45,000 | | All other fees | 3,000 | 3,000 | | Total | 1,002,000 | 774,500 |