DEF 14A of XBiotech Inc.
Filed Jul 7, 2025 · FY20240001193125-25-156276
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS Our Board of Directors currently consists of six directors. The current terms of the directors will expire upon conclusion of the Annual General Meeting, or, if sooner, until the director’s death, resignation or removal. There are five nominees for director for the new term commencing immediately after the Annual General Meeting, consisting of three incumbent directors (Mr. Simard, Dr. Kündig and Mr. Rademaker) and two new nominees (Dr. Troy and Mr. Soffer). Proxies may not be voted for a greater number of persons than the number of nominees named in this proxy statement. Each director to be elected and qualified will hold office until the next annual meeting of shareholders and until his or her successor is elected, or, if sooner, until the director’s death, resignation or removal. Notwithstanding the foregoing, directors are elected by a plurality of the votes of the holders of shares present in person or represented by proxy and entitled to vote on the election of directors if the number of eligible nominees standing for election at any meeting of the shareholders exceeds the number of directors to be elected. The five nominees receiving the highest number of affirmative votes will be elected. The Company invites and encourages all directors and nominees for director to attend the annual meeting of shareholders. All of the Company’s directors at the time of the 2024 Annual General Meeting were in attendance either in person or via teleconference. Current Board and Nominees The Nominating and Corporate Governance Committee seeks to assemble a Board that, as a whole, possesses the appropriate balance of professional and industry knowledge, financial expertise and high-level management experience necessary to oversee and direct the Company’s business. To that end, the members of the Nominating and Corporate Governance Committee, together with the other independent directors of the Board, have identified and evaluated nominees in the broader context of the Board’s overall composition, with the goal of recruiting members who complement and strengthen the skills of other members and who also exhibit integrity, collegiality, sound business judgment and other qualities that the Nominating and Corporate Governance Committee members and independent directors of the Board view as critical to effective functioning of the Board. The brief biographies below include information, as of the date of this proxy statement, regarding the specific and particular experience, qualifications, attributes or skills of each director or nominee that led the members of the Nominating and Corporate Governance Committee and the other independent directors of the Board to conclude that the person should serve as a director as of the date of this proxy statement. However, each of the members of the Nominating and Corporate Governance Committee and independent directors of the Board may have a variety of reasons why he believes a particular person would be an appropriate nominee or director for the Board, and these views may differ from the views of other members.
ELECTION OF DIRECTORS
| Name | Age | Position Held With the Company | | John Simard | 63 | Founder, President, Chief Executive Officer & Chairman | | Jan-Paul Waldin, Esq. | 76 | Lead Director | | Peter Libby, M.D. | 78 | Director | | Tak W. Mak, Ph.D. | 78 | Director | | Thomas Kündig, M.D. | 62 | Director(1) | | Craig Rademaker | 60 | Director(1) | | Tevi D. Troy, M.A., Ph.D. | 58 | Director Nominee | | David Soffer, B.Sc. DMD | 60 | Director Nominee |
ELECTION OF DIRECTORS
| (1) Dr. Kündig and Mr. Rademaker were appointed to the Board on June 24, 2025 to serve until the 2025 annual meeting of shareholders of the Company, where they are being nominated for election by our shareholders. |
ELECTION OF DIRECTORS
John Simard, Chairman of the Board, founded XBiotech Inc. in 2005 and has served as its President and Chief Executive Officer and Chairman of the Board since that time. Prior to XBiotech, he was founder and Chief Executive Officer of CTL ImmunoTherapies Corp., a developer of therapeutic vaccines to treat cancer and chronic infectious disease; he also founded AlleCure Corp., of Valencia, California, a developer of allergy treatments and immune modulating therapies. In 2001, AlleCure and CTL ImmunoTherapies merged to form MannKind Corp., where Mr. Simard served as Corporate Vice President and a board member. Mr. Simard holds a degree in Biochemistry from the University of Saskatchewan and attended graduate studies in Medical Biophysics/Immunology at the University of Toronto. He has over 240 issued and pending patents related to cancer therapy, therapeutic vaccines and therapeutic antibodies, as well as a substantial number of peer-reviewed scientific publications and the textbook “Immune Response Genes.” Our Board of Directors believes that Mr. Simard’s qualifications to serve as a director include his extensive executive leadership experience, his role as founder of the company, his many years of service on our Board of Directors and as our Chief Executive Officer, and extensive knowledge of our company and industry. Jan-Paul Waldin, Esq. has served on our Board of Directors since February 2018 and was appointed Lead Director in 2019. Mr. Waldin is a lawyer in Ontario, Canada and is a member of the Law Society of Upper Canada. He has been the principal of Waldin Barristers, a boutique civil litigation and advisory firm in Toronto, Canada, since January, 1981. Mr. Waldin practices trial and appellate advocacy principally in the area of complex corporate commercial litigation. He has acted as lead counsel in all levels of court in Ontario and Canada, including the Supreme Court of Canada, the Federal Court of Canada, the Ontario Court of Appeal, the Ontario Superior Court of Justice and before Canadian federal and provincial administrative tribunals. Mr. Waldin’s counsel and strategic advice is regularly sought by both publicly traded and closely held companies based in Canada, the European Union and the United States in connection with regulatory and administrative law matters, structuring shareholder relations and contentious corporate transactions. He has held directorships in private and multinational companies, principally in the manufacturing, aviation and pharmaceutical industries. A graduate of the University of Toronto and Osgoode Hall Law School, Mr. Waldin was called to the Ontario bar in 1976 and served his articles of clerkship under the late Mr. Justice Archie Campbell at the Policy Development Branch of the Ministry of the Attorney General for Ontario. He was Law Clerk to the Honourable Willard Z. Estey, then Chief Justice of the High Court of Justice of Ontario. Mr. Waldin was selected to serve on our Board of Directors based on his knowledge and experience with publicly traded companies and corporate law. Due to these qualifications, the Board has elected him to serve as Chairman of the Nominating and Corporate Governance Committee. Peter Libby, M.D., has served on our Board of Directors since July 2019. Dr. Libby has been a cardiovascular medicine specialist at Brigham and Women’s Hospital (BWH) Since October 1990. He became a full professor in March 1996 and since December 1998 has been the Mallinckrodt Professor of Medicine at Harvard Medical School (HMS). Dr. Libby received his medical degree from the University of California, San Diego School of Medicine. He completed a residency in internal medicine and a fellowship in cardiovascular disease at Peter Bent Brigham Hospital (now BWH). He also completed a research fellowship in cellular physiology at HMS. Dr. Libby is board certified in internal medicine and cardiovascular disease. The author of over 500 original peer-reviewed publications, over 580 reviews, chapters and other publications, Dr. Libby also serves as an editor of the leading textbook of cardiovascular medicine. Dr. Libby’s clinical and research interests include vascular biology, atherosclerosis and preventive cardiology. The research laboratory that Dr. Libby directs studies the messengers created by the body that may produce arterial plaque and blockages, as well as normal and abnormal function of smooth muscle and endothelial cells. Dr. Libby is perennially named a top cardiologist. His research has received funding from the American Heart Association and National Institutes of Health. Dr. Libby has received research recognitions on four continents including the highest research awards from the American Heart Association and American College of Cardiology, the Gold Medal of the European Society of Cardiology, the Anitchkow award from the European Atherosclerosis Society, The Ernst Jung Gold Medal for Medicine, and the Earl Benditt award for vascular biology. Mr. Libby was selected to serve on our Board based on his extensive knowledge and experience in cardiovascular medicine, a field in which he is regarded as one of the top key opinion leaders. He has also pioneered groundbreaking research, published in 2018, that demonstrates that a crucial mechanism behind heart attacks and stroke may involve inflammation of the type that is targeted by certain of the Company’s key drug discovery, development and commercialization activities. Tak W. Mak, Ph.D., was appointed to the Company’s Board of Directors on December 24, 2024. Dr. Mak is a world-renowned scientist who serves as a professor in the Departments of Medical Biophysics and Immunology at the University of Toronto and has been inducted into the Canadian Medical Hall of Fame. In 1984, he identified and cloned the T cell receptor, which advanced basic and applied fields of immunology and opened the door for the development of modern immunotherapies. In 1993, Dr. Mak launched the Amgen Research Institute in Toronto, firmly establishing Toronto as one of the world’s leading centers of biomedical research. Dr. Mak’s work led to medical innovation that changed the foundation of oncology – identification of the immune checkpoint inhibitor CTLA-4, has become one of the most important therapeutic targets in oncology today. Dr. Mak cofounded Agios Pharmaceuticals, a cellular metabolism-focused biotechnology company that has developed multiple FDA-approved cancer treatments. The Cancer Research Institute awarded Dr. Mak the 2023 William B. Coley Award for Distinguished Research in Basic and Tumor Immunology, which is the CRI’s highest scientific honor. Dr. Thomas Kündig, M.D., was appointed to the Company’s Board of Directors on June 24, 2025. Dr. Kündig is a distinguished leader in academic medicine, currently serving as Director of the Department of Dermatology at the University Hospital Zurich (USZ) and Full Professor of Dermatology and Allergology at the University of Zurich. With over three decades of experience spanning clinical care, translational research, and institutional leadership, he brings a unique blend of scientific rigor, operational excellence, and strategic vision. Dr. Kündig’s career is marked by pioneering contributions to immunodermatology, particularly in the development of intralymphatic immunotherapy (ILIT), which has significantly reduced treatment durations for allergy patients. His research group has also advanced preclinical models for cancer immunotherapy and allergen-specific monoclonal antibodies. As a department head, Dr. Kündig has overseen substantial resources and complex clinical operations, leading initiatives in patient-centered care, including the integration of self-help programs to enhance health literacy. His leadership has positioned USZ’s dermatology clinic as a national and international reference center, reflecting his ability to elevate institutional performance and reputation.
ELECTION OF DIRECTORS
Dr. Kündig’s governance experience includes board roles in the Swiss Society for Dermatology & Venereology and the European Dermatology Forum. As well, he is a recipient of the Swiss Technology Award and the Georg-Friedrich Götz Prize. Prof. Kündig has an M.D. from the University of Zürich. Craig Rademaker was appointed to the Company’s Board of Directors on June 24, 2025. Mr. Rademaker is presently responsible for capital markets activities for Hillcore Group, a leading independent Canadian investment firm focused on life sciences, logistics, industrial and energy sectors among others. Hillcore has offices in Vancouver, Edmonton, Calgary, and Toronto and employs more than 7,500 employees and assets valued in excess of $5 billion. Mr. Rademaker has over 25 years’ experience in the financial industry, covering a multitude of areas and industries, both private and public. These include institutional and retail brokerage, principal trading, equity and debt raising, mergers and acquisitions advice and venture capital as a facilitator and principal investor. Mr. Rademaker started his career in venture capital at the age of 16, working in his father’s firm in Vancouver, B.C. At 23 Mr. Rademaker began working on trade desk and was quickly promoted the underwriting group, managing an international trade desk with focus on trading volatility and market making for public companies. During his underwriting years, Mr. Rademaker was responsible for multiple initial public offerings, reverse take overs and mergers related to US, Canadian and international exchanges. After approximately 15-20 years in underwriting, Mr. Rademaker transitioned to become a capital markets leader at a Canadian private equity firm and opened a Canadian office for a European trust company group. Mr. Rademaker’ focus has evolved towards helping companies and investors build risk mitigating strategies, align competing interests and perfect capital stocks. Mr. Rademaker has a B.Sc. degree in economics from Simon Fraser University. The Hon. Tevi D. Troy, M.A., Ph.D., is a Senior Fellow at the Ronald Reagan Institute, Senior Scholar at the Straus Center at Yeshiva University, former Deputy Secretary of Health and Human Services, White House aide and a best-selling author on presidential history. Dr. Troy is former Deputy Secretary of the U.S. Department of Health and Human Services, the chief operating officer of the largest civilian department in the federal government, with a budget of $716 billion and over 67,000 employees. Dr. Troy has extensive White House experience, serving in several high-level positions, culminating in his service as Deputy Assistant and then Acting Assistant to the President for Domestic Policy. Dr. Troy has held high-level positions on Capitol Hill as well, serving as Policy Director for Senator John Ashcroft, Senior Domestic Policy Adviser and later Domestic Policy Director for the House Policy Committee. In addition to governmental work and health care expertise, Dr. Troy has written over 400 published articles for The New York Times, The Wall Street Journal, The Washington Post, Politico, The Atlantic, and many other publications. He is a frequent television and radio analyst, and has appeared on CNN, C-SPAN, Fox News, and The NewsHour, among other outlets. Dr. Troy has a B.S. in Industrial and Labor Relations from Cornell University and an M.A and Ph.D. in American Civilization from the University of Texas at Austin. Dr. David Soffer, B.Sc. DMD, has a distinguished background in both science and healthcare. After earning a Bachelor of Science in Biochemistry from the University of Saskatchewan, Dr. Soffer was a researcher at the Weizmann Institute in Rehovot, Israel, where his work on autoimmune disorders led to a published study in the European Journal of Immunology entitled “Factors Outside the Major Histocompatibility Complex Influence Susceptibility to Acquired Autoimmune Encephalomyelitis.” Following his scientific work, Dr. Soffer pursued dentistry, graduating with a Doctor of Dental Medicine (DMD) from the University of Saskatchewan in 1996. Over the next two decades, he practiced dentistry in rural Canada, where he owned and operated clinics. He also founded a hospital dentistry program to treat pediatric patients under general anesthesia, enhancing access to care in underserved communities. Dr. Soffer continues to practice dentistry and serve outlying communities that require specialized care. Beyond his clinical work, Dr. Soffer is an active trader in the stock market. Drawing on his analytical background and commitment to fairness, he looks to contribute to broader discussions on equity and transparency, aiming to amplify the voices and concerns of retail investors in an increasingly complex biotechnology sector.
APPROVAL OF THE XBIOTECH INC. 2025 EQUITY INCENTIVE PLAN
APPROVAL OF THE XBIOTECH INC. 2025 EQUITY INCENTIVE PLAN The XBiotech, Inc. 2025 Equity Incentive Plan (the “2025 Plan”) replaces the 2015 Equity Incentive Plan (the “2015 Plan”), which expired in accordance with its terms in April 2025. The 2025 Plan is a comprehensive incentive compensation plan that provides for various types of equity-based compensation, including stock options, stock appreciation rights, restricted stock awards, restricted stock units (“RSUs”), and performance share awards. The purpose of the 2025 Plan is to promote the interests of the Company by (i) providing directors, officers, employees and consultants of the Company or any of its subsidiaries or other persons as the Board may approve with greater incentive to further develop and promote the business and financial success of the Company; (ii) aligning the interests of participants with those of Company shareholders and (iii) assisting the Company in attracting, retaining and motivating its directors, officers and employees. Reasons to Vote for this Proposal Each year, the Board and our management review our overall compensation strategy and determine the allocations of cash and equity compensation in light of our pay for performance philosophy. We believe that equity compensation is critical in motivating key employees and that it effectively aligns employee compensation with stockholder interests. If the 2025 Plan is not approved and we are unable to grant equity compensation in the future, we may need to consider other compensation alternatives, such as increasing cash compensation, and we believe we would be at a disadvantage if we could not use stock-based awards covering a meaningful number of shares to recruit and retain key talent in this competitive market for human capital. The initial share reserve under the 2025 Plan is 3,000,000 shares of the Company’s common stock (“Common Shares”), plus any Common Shares subject to outstanding awards under the 2015 Plan that are forfeited, repurchased or otherwise would have been returned to the 2015 Plan’s share reserve. Based on current hiring and retention needs, we expect that the 2025 Plan’s share reserve will be sufficient to grant awards for the next three years. We also committed to effectively managing our share reserves for equity compensation while minimizing stockholder dilution. Responsible Features of the 2025 Plan The 2025 Plan includes a number of provisions that are designed to protect our stockholders’ interests and to reflect corporate governance best practices, including:
APPROVAL OF THE XBIOTECH INC. 2025 EQUITY INCENTIVE PLAN
| • | Stockholder approval required for additional shares. The 2025 Plan does not contain an annual “evergreen” provision that provides for automatic increases of shares on an ongoing basis. The 2025 Plan instead authorizes a fixed number of Common Shares, and stockholder approval is required for any increase in the number of shares. |
APPROVAL OF THE XBIOTECH INC. 2025 EQUITY INCENTIVE PLAN
| • | Reasonable compensation limits. The 2025 Plan provides that the maximum number of Common Shares subject to awards granted during a single fiscal year to any non-employee director, together with any cash fees paid to such director during the fiscal year, may not exceed a total value of $750,000 (calculating the value of any awards based on the grant date fair value for financial reporting purposes). |
APPROVAL OF THE XBIOTECH INC. 2025 EQUITY INCENTIVE PLAN
| • | No repricings. The 2025 Plan expressly prohibits the repricing of equity awards without prior stockholder approval. |
APPROVAL OF THE XBIOTECH INC. 2025 EQUITY INCENTIVE PLAN
| • | No payment of dividends prior to the vesting of an award. The 2025 Plan provides that, prior to the vesting and, if applicable, settlement of any restricted stock award or restricted stock unit award, participants shall not be entitled to receive dividends paid or payable with respect to any Common Shares subject to the award. |
APPROVAL OF THE XBIOTECH INC. 2025 EQUITY INCENTIVE PLAN
| • | Clawback provisions. Awards under the 2025 Plan will be subject to forfeiture, cancellation, reimbursement or recoupment to the extent provided in any applicable clawback policy adopted by the Company or otherwise required pursuant to applicable law. |
APPROVAL OF THE XBIOTECH INC. 2025 EQUITY INCENTIVE PLAN
| • | No reload options. The 2025 Plan expressly prohibits options with automatic “reload” rights. |
APPROVAL OF THE XBIOTECH INC. 2025 EQUITY INCENTIVE PLAN
Material Terms of the 2025 Plan The description of the 2025 Plan set forth below is qualified in its entirety by reference to the applicable provisions of the plan document, which is attached as Annex A to this proxy statement. Shares Subject to the Plan. The aggregate number of shares of common stock (“Common Shares”) that may be issued pursuant to awards granted under the 2025 Plan will equal 3,000,000 Common Shares plus the number of Common Shares subject to outstanding share awards under the 2015 Plan that (i) are not issued because such stock award or any portion thereof expires or otherwise terminates without all of the shares covered by such stock award having been issued, (ii) are not issued because such stock award or any portion thereof is settled in cash, (iii) are forfeited back to or repurchased by the Company because of the failure to meet a contingency or condition required for the vesting of such Common Shares, or (iv) are withheld or used to pay the exercise price of a stock award or to satisfy the tax withholding obligations related to a stock award, which number of Common Shares may not exceed 8,382,681 Common Shares. The number of shares of common stock that may be issued pursuant to incentive stock options under the 2025 Plan is also limited to 8,382,681 Common Shares. Shares of common stock available for distribution under the 2025 Plan may consist, in whole or in part, of authorized and unissued shares, treasury shares or shares reacquired by the Company in any manner. The closing price of our common stock on NASDAQ on June 27, 2025 was $2.80. If any award (or portion thereof) expires or terminates without having been exercised in full or is forfeited to or repurchased by the Company, the number of Common Shares subject to such award will again be available for issuance under the 2025 Plan. Common Shares used to pay the exercise price of an award or to satisfy the tax withholding obligations related to an award will become available for future grant under the 2025 Plan. To the extent an award under the 2025 Plan is paid out in cash rather than Common Shares, such cash payment will not result in a reduction in the number of Common Shares available for issuance under the 2025 Plan. Eligibility. Participation in the 2025 Plan is limited to employees, directors and consultants of the Company and its subsidiaries (“Eligible Persons”). As of June 27, 2025, there were 5 non-employee directors, approximately 91 employees, and approximately 15 consultants of the Company that would be eligible for grants under the 2025 Plan. Adjustments. In the event that any dividend or other distribution (whether in the form of cash, Common Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Common Shares or other securities of the Company, or other change in the corporate structure of the Company affecting the Common Shares occurs, the Board, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under the 2025 Plan, will adjust the number and class of Common Shares that may be delivered under the 2025 Plan and/or the number, class, and price of Common Shares covered by each outstanding award. Administration. The 2025 Plan is administered by the Board, which pursuant to the terms of such Plan has delegated certain of its administrative authority and functions to the Company’s Compensation Committee. The Board has also delegated the authority to grant options (subject to certain limitations) to the Company’s chief executive officer, who is deemed to constitute a committee under the terms of the 2025 Plan. The Board has retained the authority to concurrently administer the 2025 Plan with any committee and may, at any time, reassume some or all of the powers previously delegated. The Board has the authority to determine all questions arising out of the 2025 Plan and any award granted pursuant to the 2025 Plan, which interpretations and determinations will be conclusive and binding on the Company and all other affected persons. Recoupment. All awards granted under the 2025 Plan shall be subject to recoupment in accordance with the XBiotech, Inc. Clawback Policy (as may be amended and/or restated from time to time) and any other clawback policy that the Company is required to adopt pursuant to the listing standards of any stock exchange on which the Company’s securities are listed or as is otherwise required by other applicable law. In addition, an Award Agreement may contain such other clawback, recovery or recoupment provisions as the Board determines necessary or appropriate, including but not limited to a reacquisition right in respect of previously acquired Common Shares. Non-employee director compensation limit. The 2025 Plan provides that the maximum number of shares of common stock subject to awards granted during a single fiscal year to any non-employee director, together with any cash fees paid to such director during the fiscal year, may not exceed a total value of $750,000 (calculating the value of any awards based on the grant date fair value for financial reporting purposes). Limitations on Transfer. Unless the Board expressly provides otherwise in the Award Agreement, an award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the participant, only by the participant. Merger or Change in Control. In the event of a merger or change of control, as defined in the 2025 Plan, an outstanding award may, at the determination of the Board (i) be assumed or substantially equivalent award substituted by the acquiring or succeeding corporation; (ii) be terminated upon or immediately prior to the merger or change of control (with or without payment or receipt of any consideration); (iii) vest and become exercisable, realizable or payable, or applicable restrictions lapse prior to or upon consummation of the merger or change of control; (iv) (A) be terminated in exchange for an amount of cash and/or property, if any, equal to the amount that would have been attained upon the exercise of such award or realization of the participant’s rights as of the date of the occurrence of the transaction or (B) be replaced with other rights or property selected by the Board in its sole discretion; or (iv) any combination of the foregoing. If a successor corporation does not assume or provide a substitute for an outstanding award, such award shall fully vest and the participant shall have the right to exercise all of his or her outstanding Options and SARs and all restrictions on Restricted Share Awards and RSU Awards will lapse, and, with respect to awards subject to performance-based vesting, all performance goals or other vesting criteria will be deemed achieved at 100% of target levels and all other terms and conditions met. Suspension, Termination or Amendment. The 2025 Plan will become effective on the date it is approved by the Company’s shareholders, and will continue in effect for a term of ten years from the date adopted by the Board, unless terminated earlier by the Board. Subject to any limitations imposed by the 2025 Plan, the Board has the right at any time and from time to time to suspend, amend or terminate the 2025 Plan in any manner without consent or approval from participants or shareholders. No such suspension, amendment or termination shall materially prejudice the rights of any participant under any outstanding award without the participant’s consent. The full powers of the Board as provided for in the 2025 Plan will survive the termination of the 2025 Plan until all awards have been exercised or settled in full or have otherwise expired.
APPROVAL OF THE XBIOTECH INC. 2025 EQUITY INCENTIVE PLAN
Types of Awards Available for Grant under the 2025 Plan. The plan administrator has the authority to grant the following types of awards under the 2025 Plan. All awards shall be evidenced by an award agreement and shall be subject to such conditions not inconsistent with the 2025 Plan as may be reflected in the award agreement.
APPROVAL OF THE XBIOTECH INC. 2025 EQUITY INCENTIVE PLAN
| • | Stock Options. Options under the 2025 Plan can take the form of both incentive stock options (“ISOs”), under which favorable tax treatment will be afforded the holder if certain conditions are met (see |
APPROVAL OF THE XBIOTECH INC. 2025 EQUITY INCENTIVE PLAN
| “Federal Income Tax Consequences”) and options not intended to qualify as ISOs (“NQSOs”). The exercise price under both ISOs and NQSOs shall be at least 100% (or 110% in the case of an ISO granted to a participant who owns 10% or more of the total voting power of all classes of the Company’s shares) of the fair market value of the Common Share on the date of grant. An option does not convey any rights of a shareholder to the participant until the underlying shares have been issued. Only Eligible Persons who are employees of the Company or its parent or subsidiaries may be granted ISOs. The Board may impose such limitations or conditions on the exercise or vesting of any option as it deems appropriate. Each Award Agreement will provide that the Option granted thereunder may be exercised by notice signed by the participant and accompanied by full payment for the Common Shares being purchased or by other means, including without limitation electronic means via on-line arrangements, as the Board may from time to time approve and allow. Acceptable form of consideration for payment of the exercise price may include: (i) cash or check (ii) tendering to the Company Common Shares already owned by the participant, and registered in his or her name, having a fair market value equal to the option price, (iii) a broker-assisted cashless exercise arrangement; (iv) net exercise; (v) such other consideration and method of payment permissible under applicable law; or (vi) by any combination of any of the foregoing payment methods. In no event may an option be exercised more than ten years (five years in the case of a participant who owns Common Shares possessing more than 10% of the total combined voting power of class of shares of the Company) after the grant date or after the expiration of the option. |
APPROVAL OF THE XBIOTECH INC. 2025 EQUITY INCENTIVE PLAN
| • | Stock Appreciation Rights. Awards under the 2025 Plan may also be in the form of stock appreciation rights (“SARs”), which are generally intended to give a participant the right to receive the difference between the fair market value per Common Share on the date of exercise over the exercise price, subject to the terms, conditions and vesting requirements imposed by the Board and set forth in the Award Agreement evidencing the SAR award. The exercise under each SAR will be determined by the Board by reference to the fair market price(s) of the Common Shares on the primary Stock Exchange for which most trading of the Common Shares occurs, generally by reference to the closing market price of the Common Shares, provided that such price may not be less than 100% of the Fair Market Value Price per Common Share on the date of grant. To exercise a SAR, the participant must provide written notice of exercise to the Company in compliance with the provisions of the Award Agreement. No SAR shall be exercisable after the expiration of ten years from the date of its grant or such shorter period specified in the Award Agreement. The appreciation distribution in respect of a SAR shall be paid in Common Shares, in cash, in any combination of the two or in any other form of consideration, as determined by the Board and set forth in the Award Agreement. |
APPROVAL OF THE XBIOTECH INC. 2025 EQUITY INCENTIVE PLAN
| • | Restricted Share Awards. The Board may grant Common Shares which are subject to restrictions on transferability as established by the Board and set forth in the Award Agreement evidencing such Restricted Share Award. A Restricted Share Award may be awarded in consideration for (i) cash, check, bank draft or money order payable to the Company; (ii) past services actually rendered to the Company or an Affiliate; or (iii) any other form of legal consideration that may be acceptable to the Board, in its sole discretion, and permissible under applicable law. Common Shares subject to a Restricted Share Award may be subject to forfeiture to or repurchase by the Company in accordance with a vesting schedule or other restrictions to be determined by the Board as specified in the Award Agreement. The Board, in its discretion, may accelerate the time at which any vesting conditions or other restrictions will lapse or be removed. Except as otherwise provided in the Award Agreement, a participant holding a Restricted Share Award may exercise full voting rights with respect to the Common Shares subject to the award prior to the vesting of the award, but shall not be entitled to receive all dividends and distributions paid with respect to such Common Shares prior to the vesting of the award. Except as otherwise provided in the 2025 Plan, Common Shares subject to the Restricted Share Award will be held in escrow and released after such Common Shares vest or the restrictions lapse or at such other time as determined by the Board. |
APPROVAL OF THE XBIOTECH INC. 2025 EQUITY INCENTIVE PLAN
| • | Restricted Share Units. Awards under the 2025 Plan may be in the form of RSUs, which represent the right to receive Common Shares (or its cash equivalent or combination thereof) at a designated time in the future, subject to participant’s satisfaction of the restrictions and conditions to vesting established by the Board and set forth in the Award Agreement evidencing the RSU Award. At the time of grant of a RSU Award, the Board will determine the consideration, if any, to be paid by the participant upon delivery of each Common Share subject to the RSU Award. The consideration to be paid (if any) by the participant for each Common Share subject to a Restricted Share Unit Award may be paid in any form of legal consideration that may be acceptable to the Board of Directors in its sole discretion and permissible under applicable law. A participant may be credited with dividend equivalents, which at the discretion of the Board, may be converted into additional common shares covered by the RSU Award. Since RSUs are not actual ownership interests in the underlying Common Shares, a participant holding an RSU Award is not entitled to voting, dividend or other shareholder rights unless or until the RSUs vest, are settled and the Common Shares thereunder are transferred to the participant. Except as otherwise provided in the Award Agreement, the RSU Award (or vested portion thereof) shall be settled upon the participant’s satisfaction of the applicable vesting criteria. |
APPROVAL OF THE XBIOTECH INC. 2025 EQUITY INCENTIVE PLAN
| • | Performance Share Awards. The Board shall determine the terms and conditions applicable to a Performance Share Award, including the performance period, the performance objectives or other vesting provisions (including, without limitation, continued status as an Eligible Person). Performance objectives may be based upon the achievement of Company-wide, divisional, business unit or individual goals. After the applicable performance period has ended, a participant will be entitled to receive a payout of the number of Common Shares subject to the Performance Share Award earned over the performance period, to be determined as a function of the extent to which the corresponding performance objectives or other vesting provisions have been achieved. The Board, in its sole discretion, may reduce or waive any performance objectives or other vesting provisions for such Common Shares subject to the Performance Share Award. A vested Performance Share Award may be settled in Common Shares, its cash equivalent, or in any combination thereof, as determined by the Board and contained in the Award Agreement. |
APPROVAL OF THE XBIOTECH INC. 2025 EQUITY INCENTIVE PLAN
Summary of U.S. Federal Income Tax Consequences The following discussion of the United States federal income tax consequences of the 2025 Plan is intended to be a summary of the applicable federal law as currently in effect. Foreign, state and local tax consequences may differ and laws may be amended or interpreted differently during the term of the 2025 Plan or of stock awards granted under the 2025 Plan. Because the federal income tax rules governing stock awards and related payments are complex and subject to frequent change, participants are advised to consult their individual tax advisors. Non-Statutory Stock Options. The grant of a non-statutory stock option will not result in the recognition of taxable income by the participant or in a deduction for the Company. Upon exercise, the participant will recognize ordinary income in an amount equal to the excess of the fair market value of the shares of common stock purchased over the exercise price, and generally, the Company is entitled to a tax deduction for the amount of the income recognized by the participant. If the participant later sells any of the shares acquired upon exercise of the non-statutory stock option, any gain or loss recognized will be capital gain or loss (long-term or short-term, depending upon the holding period for the shares sold). Certain additional rules apply if the exercise price is paid in shares previously owned by the participant. Incentive Stock Options. Incentive stock options granted under the 2025 Plan are intended to be eligible for the favorable federal income tax treatment accorded “incentive stock options” under Section 422 of the Internal Revenue Code. There generally are no federal income tax consequences to the participant or the Company upon the grant or exercise of an incentive stock option. However, the excess of the fair market value of the shares of common stock on the date of exercise over the exercise price will result in an adjustment to taxable income for purposes of the alternative minimum tax. If the participant holds stock acquired through exercise of an incentive stock option for at least two years from the date on which the option is granted and at least one year from the date on which the shares are transferred to the participant upon exercise of the option, any gain or loss on a disposition of the shares will be a long-term capital gain or loss. Generally, if the participant disposes of the stock before the expiration of either of these holding periods (a “disqualifying disposition”), then at the time of disposition the participant will realize taxable ordinary income equal to the lesser of (i) the excess of the stock’s fair market value on the date of exercise over the exercise price, or (ii) the participant’s actual gain, if any, on the disposition. The participant may also have additional gain or loss upon the disqualifying disposition, which will be capital gain or loss (long-term or short-term, depending upon the holding period for the shares). To the extent the participant recognizes ordinary income by reason of a disqualifying disposition, the Company will generally be entitled to a corresponding deduction for the tax year in which the disqualifying disposition occurs. Stock Appreciation Rights. The grant of a stock appreciation right will generally not result in the recognition of taxable income by the participant or in a deduction for the Company. Upon exercise, the participant will recognize ordinary income in an amount equal to the then fair market value of the shares of common stock or cash distributed to the participant. The Company is entitled to a tax deduction equal to the amount of such income. Gain or loss upon a subsequent sale of any shares received by the participant will generally be taxed as capital gain or loss (long-term or short-term, depending upon the holding period for the shares sold). Other Awards. A participant who is granted restricted shares, restricted share units, performance shares or other stock-based awards will generally not be taxed at the time of grant of the award, unless in the case of restricted shares, the participant makes a Section 83(b) election under the Internal Revenue Code to be taxed at the time the shares are awarded. Upon the payment of shares with respect to units or upon the lapse of restrictions on transferability or the lapse of risk of forfeiture with respect to restricted share awards, the participant will be taxed at ordinary income tax rates on the then fair market value of the shares. The Company is required to withhold tax on the amount of income recognized and the Company will generally be allowed a tax deduction on the amount of the income recognized. Upon subsequent disposition of the shares, the participant will realize capital gain or loss (long-term or short-term, depending upon the holding period for the shares sold). Section 162(m). Section 162(m) of the Internal Revenue Code generally limits the tax deduction a publicly-traded corporation can take for annual compensation paid to a “covered employee” to $1 million, which includes the Company’s named executive officers.. Section 409A. Certain grants made under the 2025 Plan may constitute deferred compensation for purposes of Section 409A of the Code. If the requirements of Section 409A are not satisfied for these awards, the participant may be subject to a 20% additional tax, in addition to ordinary income tax, at the time the award becomes vested, plus interest. Section 280G. Sections 280G and 4999 of the Code provide that executive officers and directors, stockholders who hold significant equity interests, and certain other service providers may be subject to significant additional taxes if they receive payments or benefits that exceed certain prescribed limits in connection with a change of control of a company, and that the company (or a successor) may forfeit a deduction on the amounts subject to this additional tax. Equity Compensation Plan Information Please see the section entitled “Equity Compensation Plan Information” in this proxy statement for additional information regarding the outstanding awards under the Company’s 2005 Incentive Stock Option Plan and 2015 Equity Incentive Plan. No additional awards may be granted under the Company’s 2005 Incentive Stock Option Plan and 2015 Equity Incentive Plan. New Plan Benefits Future awards under the 2025 Plan are granted in the discretion of the Board or the Compensation Committee thereof, and therefore are not currently determinable. Required Vote The affirmative vote of the holders of a majority of the shares present in person or represented by proxy and entitled to vote at the annual meeting will be required to approve the 2025 Plan. Abstentions will be counted toward the tabulation of votes on proposals presented to the shareholders and will have the same effect as negative votes. Broker non-votes (if any) are counted toward a quorum, but are not counted for any purpose in determining whether the 2025 Plan has been approved.
Summary Compensation Table for Fiscal Years 2024 and 2023
Summary Compensation Table for Fiscal Years 2024 and 2023
Summary Compensation Table for Fiscal Years 2024 and 2023
| Name and Principal Position | Year | Salary ($) | Option Awards ($)(1) | Bonus($)(2) | All Other Compensation($)(3) | Total ($) | | John Simard, President & Chief Executive Officer | 2024 | 1,205,083 | — | 5,030,000 | 10,498 | 6,245,581 | | | 2023 | 1,065,440 | — | 4,480,000 | 11,041 | 5,556,481 | | Sushma Shivaswamy, Ph.D. Chief Scientific Officer | 2024 | 450,000 | — | 197,047 | 10,498 | 657,572 | | | 2023 | 445,190 | 270,509 | — | 4,800 | 720,499 | | Angela Hu, Director of Finance | 2024 | 200,000 | — | 80,000 | 5,419 | 285,419 | | | 2023 | 193,333 | 81,153 | — | 4,800 | 279,286 |
Summary Compensation Table for Fiscal Years 2024 and 2023
| (1) In accordance with SEC rules, this column reflects the aggregate grant date fair value of the option awards granted during 2024 and 2023, as applicable, computed in accordance with Financial Accounting Standard |
Summary Compensation Table for Fiscal Years 2024 and 2023
| Board ASC Topic 718 (“ASC 718”) for stock-based compensation transactions. Assumptions used in the calculation of these amounts are included in Note 2 to the Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2024. These amounts do not reflect the actual economic value that will be realized by the Named Executive Officer upon the vesting of the stock options, the exercise of the stock options, or the sale of the common stock underlying such stock options. |
Summary Compensation Table for Fiscal Years 2024 and 2023
| (2) Amounts shown represent discretionary performance bonuses earned for 2024 and 2023. Mr. Simard was granted a cash bonus of $5,030,000 in 2024 and $4,480,000 in 2023, which was paid in the second quarter of 2024 and 2023, respectively. |
Summary Compensation Table for Fiscal Years 2024 and 2023
| (3) Amounts shown represent premiums for health and life insurance as well as short and long-term disability insurance paid by us on behalf of the Named Executive Officers. All of these benefits are provided to the Named Executive Officers on the same terms as provided to all of our regular full-time employees in the United States. |
Summary Compensation Table for Fiscal Years 2024 and 2023
Outstanding Equity Awards at Fiscal Year End The following table shows for the fiscal year ended December 31, 2024, certain information regarding outstanding equity awards at fiscal year-end for the Named Executive Officers.
Summary Compensation Table for Fiscal Years 2024 and 2023
| Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | | John Simard | 03/31/2016(1) | 48,125 | | $9.45 | 3/30/2026 | | | 06/19/2017(2) | 61,516 | | $4.24 | 6/19/2027 | | | 06/19/2018(3) | 110,740 | | $4.44 | 6/18/2028 | | | 06/27/2019(4) | 150,000 | | $7.45 | 6/26/2029 | | | 12/06/2019(5) | 500,000 | | $11.12 | 12/5/2029 | | Sushma Shivaswamy | 6/19/2017(6) | 50,000 | | $4.24 | 06/19/2027 | | | 11/20/2017(7) | 150,000 | | $4.13 | 11/19/2027 | | | 01/04/2019(8) | 15,000 | | $5.26 | 01/03/2029 | | | 11/06/2019(9) | 100,000 | | $10.36 | 11/05/2029 | | | 11/19/2021(10) | 100,000 | | $12.67 | 11/18/2031 | | | 02/10/2023(11) | 75,000 | 25,000 | $3.84 | 02/09/2033 | | Angela Hu | 04/01/2015(12) | 4,500 | | $19.00 | 04/01/2025 | | | 01/04/2019(13) | 5,000 | | $5.26 | 01/03/2029 | | | 11/06/2019(14) | 10,000 | | $10.36 | 11/05/2029 | | | 11/19/2021(15) | 10,000 | | $12.64 | 11/18/2031 | | | 02/10/2023(16) | 22,500 | 7,500 | $3.84 | 02/09/2033 |
Summary Compensation Table for Fiscal Years 2024 and 2023
| (1) Fully vested as of March 31, 2019. |
Summary Compensation Table for Fiscal Years 2024 and 2023
| (2) Fully vested as of June 19, 2020. |
Summary Compensation Table for Fiscal Years 2024 and 2023
| (3) Fully vested as of June 19, 2021. |
Summary Compensation Table for Fiscal Years 2024 and 2023
| (4) Fully vested as of June 27, 2022. |
Summary Compensation Table for Fiscal Years 2024 and 2023
| (5) Fully vested as of December 6, 2020. |
Summary Compensation Table for Fiscal Years 2024 and 2023
| (6) Fully vested as of June 19, 2020. |
Summary Compensation Table for Fiscal Years 2024 and 2023
| (7) Fully vested as of November 20, 2020. |
Summary Compensation Table for Fiscal Years 2024 and 2023
| (8) Fully vested as of January 4, 2021. |
Summary Compensation Table for Fiscal Years 2024 and 2023
| (9) Fully vested as of November 6, 2022. |
Summary Compensation Table for Fiscal Years 2024 and 2023
| (10) Fully vested as of November 19, 2023. |
Summary Compensation Table for Fiscal Years 2024 and 2023
| (11) The options vest at the rate of one-fourth of the total number of shares subject to the option over two years with the initial vesting event on August 10, 2023. |
Summary Compensation Table for Fiscal Years 2024 and 2023
| (12) Fully vested as of April 1, 2019. Expired in accordance to its terms as of April 1, 2025. |
Summary Compensation Table for Fiscal Years 2024 and 2023
| (13) Fully vested as of January 4, 2021. |
Summary Compensation Table for Fiscal Years 2024 and 2023
| (14) Fully vested as of November 06, 2022. |
Summary Compensation Table for Fiscal Years 2024 and 2023
| (15) Fully vested as of November 19, 2023. |
Summary Compensation Table for Fiscal Years 2024 and 2023
| (16) The options vest at the rate of one-fourth of the total number of shares subject to the option over two years with the initial vesting event on August 10, 2023. |
Summary Compensation Table for Fiscal Years 2024 and 2023
Employment Agreements with Named Executive Officers All of our Named Executive Officers have or had employment agreements and/or offer letters with us that provide that their employment is at will and may be terminated at any time by the executive or by us with or without cause and without notice. The employment agreements provide for certain base salary, target bonus and severance payments to our Named Executive Officers as follows: Employment Agreement with John Simard. We entered into an employment agreement and change of control agreement with John Simard, our Chief Executive Officer and President on March 22, 2005. The employment agreement is for an indefinite term. Mr. Simard’s current annual base salary is $1,250,000 per year, and he is eligible for an annual incentive cash payment of up to 35% of his base salary, subject to the achievement of short-term and long-term business performance objectives as well as personal performance objectives, as established from time to time by the board or Compensation Committee. The employment agreement contains customary non-competition and non-solicitation provisions which apply for a period of six months after Mr. Simard’s employment is terminated for any reason. In addition, Mr. Simard agrees that all intellectual property developed by him during the term of his employment agreement shall be our property. If Mr. Simard is terminated without cause, if he resigns for good reason or if there is a change in control, he is entitled to certain severance benefits. Mr. Simard may voluntarily resign for any reason by providing us with three months prior notice. We may elect to waive all or a portion of such notice by paying to Mr. Simard his base salary that he would have earned if he had remained employed by us for the full duration of such notice period. If Mr. Simard terminates his employment within 12 months after a “change of control” for “good reason” or if he is terminated without cause, we will make a lump sum payment to him equal to twelve month of his base salary, plus other sum owed to him for arrears of salary, vacation pay and, if awarded, his performance bonus, subject to his prior resignation as a director. Additionally, if Mr. Simard terminates his employment within 12 months after a change of control or for good reason, all unvested stock options held by him will immediately vest on such termination and will survive and be exercisable by Mr. Simard, along with his vested options, in accordance with the terms of the option agreements. To the extent permitted by applicable law, we will provide health, medical, dental and other insurance benefits to Mr. Simard for a period of one year after his termination date. Offer Letters with Other Named Executive Officers. There are no employment agreements for Dr. Shivaswamy or Ms. Hu. We entered into an offer letter with Dr. Shivaswamy upon her hiring, which originally provided that she was paid an annual base salary of $70,000 per year as well as granted stock options. Dr. Shivaswamy’s current base salary is $450,000 and from time to time she receives option grants as approved by the Board of Directors or Compensation Committee. We entered into a written employment arrangement with Ms. Hu, pursuant to which she received a base salary of USD$200,000 and from time to time she receives option grants as approved by the Board of Directors or Compensation Committee. None of the Named Executive Officers’ employment agreements or offer letters provide for the gross up of any excise taxes imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”). If any of the payments under the employment agreements or offer letters would constitute a “parachute payment” within the meaning of Section 280G of the Code, subject to the excise tax imposed by Section 4999 of the Code, the employment agreements and offer letters provide for a best-after tax analysis with respect to such payments, under which the executive will receive whichever of the following two alternative forms of payment would result in the executive officer’s receipt, on an after-tax basis, of the greater amount of the transaction payment notwithstanding that all or some portion of the transaction payment may be subject to the excise tax: (i) payment in full of the entire amount of the transaction payment, or (ii) payment of only a part of the transaction payment so that the executive receives the largest payment possible without the imposition of the excise tax. Equity Compensation Plans and Other Benefits Plans 2005 Incentive Stock Option Plan (the “2005 Plan”). Our Board of Directors adopted and our shareholders approved the 2005 Plan on November 11, 2005 for eligible employees, directors and consultants. The 2005 Plan automatically terminated on November 11, 2015, but any awards granted prior to such termination remain outstanding in accordance with their terms. As of December 31, 2024, awards with respect to 15,000 common shares remained outstanding under the 2005 Plan. 2015 Equity Incentive Plan, as amended (the “2015 Plan”). The 2015 Plan was originally adopted by the Board of Directors on April 1, 2015, and approved by the Company’s shareholders on March 13, 2015, and was subsequently amended in each of 2016, 2019 and 2020 to increase the number of common shares that may be awarded under the 2015 Plan. The 2015 Plan automatically terminated on April 1, 2025. No further awards may be granted under the 2015 Plan, but any awards granted prior to such termination remain outstanding in accordance with their terms. As of December 31, 2024, awards with respect to 4,316,585 common shares were outstanding under the 2015 Plan. 401(k) Plan. All of our full-time employees in the United States, including our Named Executive Officers, are eligible to participate in our 401(k) plan, which is a retirement savings defined contribution plan established in accordance with Section 401(a) of the Code. Pursuant to our 401(k) plan, employees may elect to defer their eligible compensation into the plan on a pre-tax basis, up to the statutorily prescribed annual limit of $23,000 in 2024 (additional salary deferrals not to exceed $7,500 are available to those employees 50 years of age or older) and to have the amount of this reduction contributed to our 401(k) plan. In general, eligible compensation for purposes of the 401(k) plan includes an employee’s wages, salaries, fees for professional services and other amounts received for personal services actually rendered in the course of employment with us to the extent the amounts are includible in gross income, and subject to certain adjustments and exclusions required under the Code. The 401(k) plan currently does not offer the ability to invest in our securities. Potential Payments Upon Termination or Change in Control Pursuant to his employment agreement, Mr. Simard is eligible to receive severance and change in control benefits under the terms of his employment agreement described above under “– Employment Agreements with Named Executive Officers.”
Summary Compensation Table for Fiscal Years 2024 and 2023
Additionally, with respect to awards under the 2015 Plan, in the event of a merger or change of control, as defined in the 2015 Plan, an outstanding award may, at the determination of the Board (i) be assumed or substantially equivalent award substituted by the acquiring or succeeding corporation; (ii) be terminated upon or immediately prior to the merger or change of control (with or without payment or receipt of any consideration); (iii) vest and become exercisable, realizable or payable, or applicable restrictions lapse prior to or upon consummation of the merger or change of control; or (iv) any combination of the foregoing. If a successor corporation does not assume or provide a substitute for an outstanding award, such award shall fully vest and the participant shall have the right to exercise all of his or her outstanding Options and SARs and all restrictions on Restricted Share Awards and RSU Awards will lapse, and, with respect to awards subject to performance-based vesting, all performance goals or other vesting criteria will be deemed achieved at 100% of target levels and all other terms and conditions met. Equity Compensation Plan Information The following table provides information as of December 31, 2024, with respect to shares of our common stock that may be issued under our existing equity compensation plans:
Summary Compensation Table for Fiscal Years 2024 and 2023
| | (a) | (b) | (c) | | Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | | Equity compensation plans approved by shareholders: | | | | | 2005 Incentive Stock Option Plan | 15,000(1) | $15.00 | — (2) | | 2015 Equity Incentive Plan | 4,316,585(1) | $8.87 | 1,971,634(3) | | Equity compensation plans not approved by shareholders: | | | | | None | — | — | — |
Summary Compensation Table for Fiscal Years 2024 and 2023
| (1) All shares issuable upon exercise of options. |
Summary Compensation Table for Fiscal Years 2024 and 2023
| (2) The 2005 Incentive Stock Option Plan expired in November 2015. |
Summary Compensation Table for Fiscal Years 2024 and 2023
| (3) The 2015 Equity Incentive Plan expired on April 1, 2025. No awards may be granted under the 2015 Plan following its expiration. |
Summary Compensation Table for Fiscal Years 2024 and 2023
For more information about the 2005 Incentive Stock Option Plan and the 2015 Equity Incentive Plan, please refer to the section above entitled “– Equity Compensation Plans and Other Benefit Plans”, as well as Note 7 to the Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2024.
CEO PAY RATIO
CEO PAY RATIO Item 402(u) of the SEC’s Regulation S-K requires disclosure of the ratio of the annual total compensation of the Company’s CEO to the Company’s median employee’s annual total compensation. The ratio disclosed below is a reasonable estimate calculated in a manner consistent with Item 402(u).
PAY VERSUS PERFORMANCE
PAY VERSUS PERFORMANCE As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid and certain financial performance of our company.
PAY VERSUS PERFORMANCE
| Year | Summary Compensation Table Total for Principal Executive Officer (“PEO”) (1) | Compensation Actually Paid to PEO | Average Summary Compensation Table Total for Non-PEO Named Executive Officers (“NEOs”) (2) | Average Compensation Actually Paid to Non-PEO NEOs (3) | Value of Initial Fixed $100 Investment Based On Total Shareholder Return (“TSR”) (4) | Net Income (Loss) (millions) (5) | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | | 2024 | 6,245,581 | 6,245,581 | 471,495 | 471,495 | 2.25 | (38.53) | | 2023 | 5,556,481 | 5,556,481 | 499,893 | 324,062 | 13.96 | (24.56) | | 2022 | 4,670,934 | 4,670,934 | 356,748 | 356,748 | (68.64) | (32.90) |
PAY VERSUS PERFORMANCE
| (1) The dollar amounts reported in column (b) are the amounts of total compensation reported for Mr. Simard (our Chief Executive Officer) for each corresponding year in the “Total” column of the Summary Compensation Table. Refer to “Executive Compensation – Summary Compensation Table.” |
PAY VERSUS PERFORMANCE
| (2) The dollar amounts reported in column (d) represent the average of the amounts reported for our company’s named executive officers as a group (excluding Mr. Simard) in the “Total” column of the Summary Compensation Table in each applicable year. The names of each of the named executive officers (excluding Mr. Simard) included for purposes of calculating the average amounts in each applicable year are as follows: for 2023 and 2024 Dr. Shivaswamy and Ms. Hu and for 2022, Dr. Shivaswamy and Ms. Queena Han. |
PAY VERSUS PERFORMANCE
| (3) The dollar amounts reported in column (e) represent the average amount of “compensation actually paid” to the named executive officers as a group (excluding Mr. Simard), as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual average amount of compensation earned by or paid to the named executive officers as a group (excluding Mr. Simard) during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to average total compensation for the named executive officers as a group (excluding Mr. Simard) for each year to determine the compensation actually paid: |
PAY VERSUS PERFORMANCE
| Year | Average Reported Summary Compensation Table Total for Non-PEO NEOs ($) | Average Reported Value of Equity Awards ($) | Average Compensation Actually Paid to Non-PEO NEOs ($) | | 2024 | 471,495 | — | 471,495 | | 2023 | 499,893 | (175,831) | 324,062 | | 2022 | 356,748 | — | 356,748 |
PAY VERSUS PERFORMANCE
| (4) Cumulative TSR is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between our company’s share price at the end and the beginning of the measurement period by our company’s share price at the beginning of the measurement period. |
PAY VERSUS PERFORMANCE
| (5) The dollar amounts reported represent the amount of net income (loss) reflected in our consolidated audited financial statements for the applicable year. |
Analysis of the Information Presented in the Pay Versus Performance Table
Analysis of the Information Presented in the Pay Versus Performance Table We generally seek to incentivize long-term performance, and therefore do not specifically align our performance measures with “compensation actually paid” (as computed in accordance with Item 402(v) of Regulation S-K) for a particular year. In accordance with Item 402(v) of Regulation S-K, we are providing the following descriptions of the relationships between information presented in the Pay Versus Performance table. Compensation Actually Paid and Net Income (Loss) Our business model includes discovery and development of drug candidates for potential sale prior to marketing authorization. Revenues are thus periodic. Our company has historically looked to value creation of is pipeline of assets rather than to net income (loss) as a performance measure for our executive compensation program. In 2024 and 2023, our net loss increased due to the expansion and initiation of new clinical trials and other research and development activities. Compensation actually paid for our principal executive officer and non-PEO named executive officers increased in 2024 and 2023. Compensation Actually Paid and Cumulative TSR The compensation actually paid to our principal executive officer and non-PEO named executive officers during the periods presented are related to performance measures with respect to the potential transactional value and market potential with our pipeline of drug candidates. To align executive compensation with performance, we employ several measures, but they are generally not financial performance measures, such as TSR. For compensation we consider both stock options and discretionary cash bonuses as an essential part of our executive incentive and retention program. Stock options only generate value if the market price of our common stock increases and the executive officer remains employed with us during the vesting period and align our executive officers’ interests with those of our shareholders. Discretionary cash bonuses provide strong incentive and retention value and is generally less costly to the Company in the long term than stock based compensation. In 2024 and 2023, both our TSR decreased in 2024 and the compensation actually paid for our principal executive officer and non-PEO named executive officers increased in 2024 and 2023.
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION We compensate non-employee members of the Board of Directors through both cash fees and annual equity grants under our 2015 Plan, which grants are made at the fair market value of our common stock at the time of grant. Directors who are also employees do not receive cash or equity compensation in addition to compensation they receive for their service as our employees. Both non-employee and employee members of the Board of Directors are reimbursed as necessary for travel, lodging and other reasonable expenses incurred while attending Board of Directors or committee meetings. The following table shows for the fiscal year ended December 31, 2024 certain information with respect to the compensation of all non-employee directors of the Company. Because John Simard serves as Chief Executive Officer of the Company, he does not receive compensation for his services as Chairman of the Board.
Director Compensation for Fiscal Year 2024
Director Compensation for Fiscal Year 2024
Director Compensation for Fiscal Year 2024
| Name | Fees Earned or Paid in Cash ($) | Option Awards ($)(1)(2)(3) | All Other Compensation ($) | Total ($) | | W. Thorpe McKenzie | 90,915 | 130,595 | — | 221,510 | | Jan-Paul Waldin | 97,185 | 130,595 | — | 227,780 | | Peter Libby | 62,700 | 130,595 | — | 193,295 | | Donald H. MacAdam | 87,780 | 130,595 | — | 218,375 |
Director Compensation for Fiscal Year 2024
| (1) Amounts listed represent the aggregate grant date fair value amount computed as of the grant date of each option awarded during 2024 in accordance with ASC 718. Assumptions used in the calculation of these amounts are included in Note 2 to the Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2024. As required by SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. Our directors will only realize compensation to the extent the trading price of our common stock is greater than the exercise price of such stock options. As required by SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. |
Director Compensation for Fiscal Year 2024
| (2) Pursuant to the terms of their Board Member Agreements or other agreements with the Company. McKenzie, MacAdam, Waldin, and Libby were each granted 37,500 nonstatutory stock options under the Company’s 2015 Equity Incentive Plan, which options were granted at the closing sales price per share of the Company’s Common Stock on the date of issuance. All such options vest in two equal portions at six months and one year from the Grant Date and expire ten years from the Grant Date. |
Director Compensation for Fiscal Year 2024
| (3) The aggregate number of outstanding options held by McKenzie, Waldin, and Libby as of December 31, 2024 was 283,750, 181,250 and 118,750, respectively. Mr. MacAdam held 152,500 outstanding options as of December 31, 2024. |
Director Compensation for Fiscal Year 2024
Transactions with Related Parties Policies and Procedures for Related Party Transactions. As set forth in our Audit Committee charter, our Audit Committee is responsible for reviewing and approving, in accordance with the Company’s Related Party Transaction Policy, any proposed transaction between the Company and any related party as defined by applicable law, the SEC rules and the Nasdaq Rules, which consist of all transactions and series of similar transactions to which we were a party or will be a party and in which any of our directors, executive officers and holders of more than 5% of our voting securities and their respective affiliates has a direct or indirect material interest. As used in this section, the terms “related person” and “transaction” have the meanings set forth in Item 404(a) of Regulation S-K under the Securities Act. In the course of its review and approval of transactions with related persons, the Audit Committee considers:
Director Compensation for Fiscal Year 2024
| • | the nature of the related person’s interest in the transaction; |
Director Compensation for Fiscal Year 2024
| • | the material terms of the transaction, including the amount involved and the type of the transaction; |
Director Compensation for Fiscal Year 2024
| • | the importance of the transaction to the related person and to XBiotech; |
Director Compensation for Fiscal Year 2024
| • | whether the transaction would impair the judgment of a director or executive officer to act in our best interest and the best interest of our shareholders; and |
Director Compensation for Fiscal Year 2024
| • | any other matters the Audit Committee deems appropriate. |
Director Compensation for Fiscal Year 2024
Any member of the Audit Committee who is a related person with respect to a transaction under review will not be able to participate in the discussions or vote on the approval or ratification of the transaction, other than to provide all material information regarding the transaction, including information regarding the extent of the member’s interest in the transaction, to the Audit Committee. However, such a director may be counted in determining the presence of a quorum at a meeting of the committee that considers the transaction. Any material changes to the terms of, or any renewal of, any of these transactions will also require the same approval. If a related party transaction will be ongoing, the Audit Committee may establish guidelines or other parameters or conditions relating to our participation in the transaction. The Audit Committee may from time to time pre-approve types or categories of transactions by related persons but we have no such pre-approved types or categories of transactions at this time. Related Transactions. During the last two completed fiscal years, we have not been a party to any transaction or series of transactions in which the amount involved exceeds the lesser of $120,000 or 1% of the average of our total assets at year-end, in which any of our directors, executive officers, or holders of more than 5% of our shares, or an affiliate or immediate family member thereof, had or will have a direct or indirect material interest, other than compensation arrangements which are described under the sections of this proxy captioned “Director Compensation” and “Executive Compensation” and the previously disclosed Convertible Loan Agreement (the “Loan”) dated January 3, 2024 between the Company and Mr. Simard, our Chief Executive Officer and chairman of the Board of Directors. The Loan provides $10 million in funding for the construction of a new, state-of-the-art research and development facility at 5217 Winnebago Lane in Austin, Texas. The Loan is secured by the real estate and cash holdings of the Company, with interest to accrue at a simple rate equal to eight percent per year and interest-only payments to be made at six-month intervals after the Loan is funded. At Mr. Simard’s election, the balance may be converted to XBiotech stock at any time the Loan balance is outstanding at a fixed conversion price equal to the average Nasdaq Official Closing Price of the common stock (as reflected on Nasdaq.com) for the five trading days immediately preceding the signing of this Loan, which is $4.048 per share. The conversion feature is subject to a cap limiting the number of shares that could be converted under the Loan based on Mr. Simard’s total stock ownership in the Company at the time of conversion. The Loan also allows Mr. Simard to obtain immediate cash repayment of the Loan balance at his election one year after the Loan is funded or upon certain other conditions set forth in the Loan. On January 31, 2025, the Loan was terminated upon full repayment of the Loan in principle and interest by the Company. As a result, all conversion rights to XBiotech stock at $4.048 per share associated with the Loan were extinguished. Related Person Transaction Policy. We adopted a formal, written policy, which became effective as of February 2015, that our executive officers, directors (including director nominees), holders of more than 5% of any class of our voting securities, and any member of the immediate family of or any entities affiliated with any of the foregoing persons, are not permitted to enter into a related party transaction with us without the prior approval or, in the case of pending or ongoing related party transactions, ratification of our Audit Committee. For purposes of our policy, a related party transaction is a transaction, arrangement or relationship where we were, are or will be involved and in which a related party had, has or will have a direct or indirect material interest, other than transactions available to all of our employees. Indemnification Agreements. We have entered into indemnification agreements with our directors in addition to the indemnification provided for under the British Columbia Business Corporations Act (the “BCBCA”) and in our Articles. These agreements, among other things, require us to indemnify our directors for certain expenses, including attorneys’ fees, judgments, fines and settlement amounts incurred by a director in any action or proceeding arising out of their services as one of our directors or any other company or enterprise to which the person provides services at our request. We believe that these indemnification agreements are necessary to attract and retain qualified persons as directors. Requirements under the British Columbia Business Corporations Act. Pursuant to the BCBCA, directors and officers are required to act honestly and in good faith with a view to the best interests of the company. Under the BCBCA, subject to certain limited exceptions, a director who holds a disclosable interest in a material contract or transaction is not entitled to vote on any director’s resolution approving such contract or transaction. A director or senior officer, with certain exceptions, has a disclosable interest in a contract or transaction if: (a) the contract or transaction is material to the company; (b) the company has entered, or proposes to enter, into the contract or transaction; (c) either of the following applies to the director or senior officer: (i) the director or senior officer has a material interest in the contract or transaction; (ii) the director or senior officer is a director or senior officer of, or has a material interest in, a person who has a material interest in the contract or transaction.
COMMON SHARES SUBJECT TO PLAN
| 6.9 | The aggregate value of all compensation granted or paid, as applicable, in each case following the Effective Date, to any individual for service as an Outside Director with respect to any fiscal year, including Share Awards granted and cash fees paid by the Company to such Outside Director for his or her service as an Outside Director, will not exceed $750,000 in total value, calculating the value of any Share Awards based on the grant date fair value of such equity awards for financial reporting purposes. |