DEF 14A of ClearPoint Neuro, Inc., Apr 5, 2024

DEF 14A of ClearPoint Neuro, Inc.

Filed Apr 5, 2024 · FY20230001285550-24-000045

Open on EDGAR

  1. ELECTION OF DIRECTORS

    ELECTION OF DIRECTORS

  2. What is the structure of our Board?

    What is the structure of our Board? Pursuant to Delaware law and our governing documents, our business and affairs are managed under the direction of our Board. Our Board is our ultimate decision-making and oversight body, except with respect to matters reserved to the stockholders. The directors are charged with the responsibility of exercising their fiduciary duties to act in our best interest and the best interest of our stockholders. Our Board selects and oversees members of executive management who have the authority and responsibility for the conduct of the day-to-day operations of the business. The number of directors that constitutes our Board is fixed from time to time by a resolution adopted by the affirmative vote of a majority of the authorized number of directors at any regular or special meeting of our Board. On an annual basis, the Corporate Governance and Nominating Committee will consider the size and composition of our Board and report to our Board the results of its review and any recommendations for change. Currently, our Board is fixed at eight directors. Our directors stand for election at each annual meeting of the stockholders and serve on our Board until the next annual meeting of the stockholders and until a successor has been duly elected and qualified or until such director’s earlier death, resignation, disqualification or removal.

  3. How are nominees evaluated? What are the minimum qualifications?

    How are nominees evaluated? What are the minimum qualifications? The Corporate Governance and Nominating Committee is responsible for recommending to the Board the type of skills and qualifications required of directors, based on our needs from time to time. In evaluating candidates for director, the Corporate Governance and Nominating Committee may consider several factors, including relevant experience, education, independence, commitment, prominence and understanding of the Company’s business, as well as any other factors it deems relevant. The Board will nominate individuals to serve on our Board only from director candidates screened and approved by the Corporate Governance and Nominating Committee and recommended to the Board. The directors’ experiences, qualifications and skills that the Corporate Governance and Nominating Committee considered in their nomination are included in their individual biographies.

  4. What role does diversity play in the selection of members of our Board?

    What role does diversity play in the selection of members of our Board? In evaluating potential candidates for Board membership, the Corporate Governance and Nominating Committee considers, among other things, relevant experience, education, independence and commitment. Our Board will also consider diversity in their assessment of potential candidates, including diversity of personal background, professional experience, qualifications and skills. Our Board believes that diversity is important because various points of view contribute to richer discussion, better decision making, and a more effective Board. Among our eight nominees for election to the Board, three self-identify as women and two self-identify as individuals from underrepresented communities (meaning, an individual who self-identifies as Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian, or Alaska Native, or who self-identifies as a member of the LGBTQ+ community). Diversity Matrix. The following table summarizes certain self-identified characteristics of our directors, in accordance with Nasdaq Listing Rules 5605(f) and 5606. Each term used in the table has the meaning given to it in the rule and related instructions.

  5. What role does diversity play in the selection of members of our Board?

    | ClearPoint Neuro, Inc. Board Diversity Matrix as of April 5, 2024 | | | | | | Total Number of Directors | 8 | | | | | Part I: Gender Identity | Female | Male | Non-Binary | Did Not Disclose Gender | | Directors | 3 | 5 | 0 | 0 | | Part II: Demographic Background | | | | | | African American or Black | 0 | 0 | 0 | 0 | | Alaskan Native or Native American | 0 | 0 | 0 | 0 | | Asian | 1 | 0 | 0 | 0 | | Hispanic or Latinx | 0 | 0 | 0 | 0 | | Native Hawaiian or Pacific Islander | 0 | 0 | 0 | 0 | | White | 2 | 5 | 0 | 0 | | Two or More Races or Ethnicities | 0 | 0 | 0 | 0 | | LGBTQ+ | 1 | | | | | Did Not Disclose Demographic Background | 0 | | | |

  6. Who are the nominees this year?

    Who are the nominees this year? Upon the recommendation of the Corporate Governance and Nominating Committee, our Board has nominated the following eight persons to serve as directors: Joseph M. Burnett, R. John Fletcher, Lynnette C. Fallon, Pascal E.R. Girin, B. Kristine Johnson, Matthew B. Klein, Linda M. Liau and Timothy T. Richards. If elected, each nominee identified above will serve on our Board until the 2025 Annual Meeting of Stockholders or until his or her earlier death, resignation or removal. We anticipate that each of these nominees will be available for election, but if a situation arises in which he or she is unavailable, the proxy will be voted in accordance with the best judgment of the named proxies unless directed otherwise.

  7. What are the backgrounds and qualifications of this year’s nominees?

    What are the backgrounds and qualifications of this year’s nominees? Information about the following eight individuals nominated as directors is provided below.

  8. What are the backgrounds and qualifications of this year’s nominees?

    | Director Nominees | Age | | Joseph M. Burnett | 47 | | R. John Fletcher | 78 | | Lynnette C. Fallon | 64 | | Pascal E.R. Girin | 64 | | B. Kristine Johnson | 72 | | Matthew B. Klein | 52 | | Linda M. Liau | 57 | | Timothy T. Richards | 66 |

  9. What are the backgrounds and qualifications of this year’s nominees?

    Joseph M. Burnett joined us as President and Chief Executive Officer and became a member of our Board of Directors in November 2017. Before joining our Company, Mr. Burnett served as Vice President and General Manager of Neuro Diagnostics and Therapy at Philips, a publicly-traded global health technology company, since March 2016. Prior to serving in such role, Mr. Burnett was the Senior Vice President and Business Leader of Image Guided Therapy Devices at Philips and General Manager of Volcano Corporation (a Philips company) from February 2015 to March 2016. Before joining Philips, Mr. Burnett worked for Volcano Corporation, where he served in various positions from November 2004 to February 2015, most recently as Executive Vice President and General Manager of its Coronary & Systems Business Unit. Prior to joining Volcano Corporation, Mr. Burnett served as an R&D Engineer and Product Manager at Guidant Corporation from August 1999 to November 2004 and worked as a Bio-Medical Engineering Researcher at Duke University from May 1998 to May 1999. Mr. Burnett holds an MBA from The Fuqua School of Business at Duke University and a B.S.E. degree in Bio-Medical Engineering from Duke University. As our Chief Executive Officer, and as a result of his substantial leadership experience and expertise in the medical device industry and neurology, we believe Mr. Burnett offers a unique understanding of our business and industry that is invaluable to our Board. R. John Fletcher joined our Board in May 2017 and currently serves as Chairman of our Board. Mr. Fletcher founded Fletcher Spaght in 1983 where, as Managing Partner emeritus, he remains active in both the consulting practice and venture capital activities, with analytical insights and creative solutions derived from his years of experience with clients, portfolio companies and the investment community. Mr. Fletcher works across Fletcher Spaght’s practice groups, with a focus on healthcare. He has particular interests in devices, specifically in cardiology, cardiac surgery, and orthopedics, as well as in biopharma and healthcare IT. Prior to founding Fletcher Spaght, Mr. Fletcher was a Senior Manager at The Boston Consulting Group, advising a broad range of companies in healthcare and high technology industries. Mr. Fletcher serves on the Boards of Directors of KORU Medical Systems (Nasdaq: KRMD), Vyant Bio, Inc. (Nasdaq: VYNT), Metabolon and OptiNose, Inc. (Nasdaq:OPTN), and served on the Board of Directors of Spectranetics until it was acquired by Philips in August 2017. He serves on the Board of Advisors of Beth Israel Deaconess Medical Center and the Whitehead Institute at MIT. Mr. Fletcher received his MBA from Southern Illinois University, and a BBA in Marketing from George Washington University. He was an Instructor for courses in international business and a Ph.D. Candidate at the Wharton School of the University of Pennsylvania. He served as a Captain and jet pilot in the U.S. Air Force and continues to be active in aviation. We believe Mr. Fletcher brings strategic insight, leadership and a wealth of experience in healthcare to our Board. He has experience as a director on several publicly traded company Boards. Mr. Fletcher was named 2018 Director of the Year by The National Association of Corporate Directors (NACD) for his work leading to the turnaround at Spectranetics, as well as his contributions leading the success of other companies. Lynnette C. Fallon joined our Board in July 2021. Ms. Fallon is Executive Vice President, HR/Legal, General Counsel and Secretary of Axcelis Technologies, Inc. (Nasdaq: ACLS), a provider of equipment and service solutions for the semiconductor manufacturing industry, with locations in 8 countries. Ms. Fallon has held her current position since May 2005, having initially joined Axcelis in 2001 as a Senior Vice President and General Counsel. As a member of Axcelis’ executive team for more than 20 years, Ms. Fallon has been involved with business development, financial and tax management, investor relations, public offerings, M&A, risk management, executive compensation, and all aspects of international corporate compliance. Before joining Axcelis, Ms. Fallon worked at the Boston law firm of Palmer & Dodge LLP as a partner from 1992 to 2001, prior to which she was an associate since 1987. During her more than 10 years at Palmer & Dodge, Ms. Fallon’s work was primarily for clients in the biotech industry. She was head of Palmer & Dodge’s business law department for the three years prior to joining Axcelis. Ms. Fallon’s M&A and financial transaction experience began in 1984 at a Wall Street boutique firm, doing tax-driven LBOs, venture capital and private equity transactions. She holds a J.D., cum laude, from the School of Law at Boston University and a B.A. with departmental and general honors, Phi Beta Kappa, from Vassar College. We believe that Ms. Fallon is qualified to serve on our Board given her extensive business and leadership experience and her legal expertise. Pascal E.R. Girin joined our Board in September 2014. Mr. Girin possesses over two decades of management and executive experience in the field of medical technology. Since September 2016, Mr. Girin has served as President and CEO of Balt SAS, a private company specializing in the treatment of neurovascular diseases, where he was recruited to lead the company’s global expansion. Mr. Girin served as Executive Vice President and Chief Operating Officer of Wright Medical Technology, Inc. from November 2012 until October 2015, at which time the company successfully merged with Tornier N.V. and formed Wright Medical Group N.V. Prior to joining Wright Medical, Mr. Girin served as President and Chief Executive Officer of Keystone Dental Inc. from February 2011 to June 2012, at which time the company successfully merged with Southern Implants Inc. From October 2010 to February 2011, Mr. Girin served as Executive Vice President and Chief Operating Officer of Keystone Dental Inc. From July 2010 to September 2010, Mr. Girin served as Chief Operating Officer of ev3 Inc. following its acquisition by a wholly owned subsidiary of Covidien Group S.a.r.l. Prior to that time, Mr. Girin served as Executive Vice President and Chief Operating Officer of ev3 Inc. from January 2010 to July 2010, as Executive Vice President and President, Worldwide Neurovascular and International of ev3 Neurovascular Inc. from July 2008 to January 2010, as Senior Vice President and President, International of ev3 International from July 2005 to July 2008, and as General Manager, Europe of ev3 Inc. from September 2003 to July 2005. From September 1998 to August 2003, Mr. Girin served in various capacities at BioScience Europe Baxter Healthcare Corporation, most recently as Vice President. Mr. Girin received an engineering education at the French Ecole des Mines. From November 2010 until November 2, 2012, Mr. Girin had served as a director of Tornier N.V., a publicly traded global medical device company, as well as a member of its Nominating, Corporate Governance and Compliance Committees. With nearly three decades of experience as an executive and director in the medical device industry, both in the U.S. and in Europe, we believe Mr. Girin brings invaluable industry experience and leadership qualities to our Board, as well as insight into international markets. B. Kristine Johnson joined our Board in September 2019. Ms. Johnson served as President and General Partner of Affinity Capital Management, a venture capital firm that invested primarily in seed and early-stage health care companies in the U.S for fourteen years. Prior to working for Affinity Capital Management, Ms. Johnson was employed for seventeen years at Medtronic, Inc., a manufacturer of cardiac pacemakers, neurological and spinal devices and other medical

  10. What are the backgrounds and qualifications of this year’s nominees?

    products, serving most recently as Senior Vice President and Chief Administrative Officer from 1998 to 1999. Her experience at Medtronic also includes service as President of the Vascular business and President of the Tachyarrhythmia Management business, among other roles. Ms. Johnson is Board Chair of Atricure, Inc. (Nasdaq: ATRC) and also serves on the Board of Directors of Paragon28, Inc. (NYSE: FNA). She was previously lead director of the Piper Sandler Board and was recognized in 2018 by NACD for excellence in the boardroom. Ms. Johnson earned a bachelor’s degree, summa cum laude, from St. Olaf College. She is also a recipient of the college’s Distinguished Alumni Award. We believe that Ms. Johnson’s extensive experience with health care companies and her leadership experience qualify her to serve on our Board. Matthew B. Klein joined our Board in April 2020. Dr. Klein serves as the Chief Executive Officer and President of PTC Therapeutics, Inc., or “PTC”. Dr. Klein joined PTC in October 2019 as Global Head Gene and Mitochondrial Therapies, became Chief Development Officer in April 2020, assumed the role of Chief Operating Officer in January 2022, and became Chief Executive Officer and President in March 2023. Prior to joining PTC, Dr. Klein was Chief Executive Officer and a Director of BioElectron Technology Corporation, or “BioElectron,” from 2018 to 2019. Dr. Klein served as the Chief Medical Officer of BioElectron from 2013 to 2019 and was Senior Vice President, Clinical Science at BioElectron from 2012 to 2013. Dr. Klein has a B.A. from the University of Pennsylvania, an M.D. from Yale University School of Medicine and an M.S. in epidemiology from the University of Washington School of Public Health. We believe that Dr. Klein is qualified to serve on our Board because of his medical background, leadership experience and gene therapy and biopharmaceutical industry expertise. Linda M. Liau joined our Board in November 2021. She is Professor and W. Eugene Stern Chair of the Department of Neurosurgery at the David Geffen School of Medicine at UCLA. She is also the Co-Director of the UCLA Brain Tumor Center and Principal Investigator and Director of the NCI-designated UCLA Brain Tumor SPORE (Specialized Program of Research Excellence). Dr. Liau has authored over 200 peer-reviewed research articles and is internationally recognized for her achievements in understanding the immunology of malignant brain tumors and pioneering the use of dendritic cell-based vaccines for glioblastoma. Clinically, she has developed novel ways to map brain function during awake brain tumor surgeries using functional MRI (fMRI) correlates and specializes in surgery for brain tumors in eloquent areas. Dr. Liau received her B.S. and B.A. degrees from Brown University. She earned her M.D. degree from Stanford University and a Ph.D. in Neuroscience from UCLA. After completing her residency and fellowship training in neurosurgery at UCLA, she joined the faculty at the UCLA School of Medicine. While practicing, she earned an MBA from the UCLA Anderson School of Management. We believe that Dr. Liau’s expertise in neurosurgery and her vast leadership experience qualify her to serve on our Board. Timothy T. Richards joined our Board in March 2014. Mr. Richards serves as the Chief Business Officer at Jana Care, a venture capital funded company focused on chronic kidney and heart disease testing and monitoring. Prior to joining Jana Care, Mr. Richards was Chief Commercial Officer for YourBio Health (formerly Seventh Sense BioSystems, Inc.), and former President of Facet Technologies, LLC, a privately held supplier to major diagnostic companies. Additionally, Mr. Richards held executive-level positions within the Covidien organization, first as U.S. President of the Patient Care & Safety Products business unit and subsequently as President of VNUS Medical Technologies following its acquisition by Covidien in 2009. From October 2003 through October 2008, Mr. Richards served as Senior Vice President, Chief Marketing Officer and a member of the Executive Board of B. Braun Medical, Inc. Before joining B. Braun Medical, he held a number of progressive leadership positions throughout the U.S. and in Asia with Becton Dickinson and Company. We believe Mr. Richards brings to our Board extensive leadership experience and expertise in general management, manufacturing and R&D operations, commercial management and strategy in relevant markets and technologies.

  11. DIRECTOR COMPENSATION

    DIRECTOR COMPENSATION The following table and accompanying footnotes set forth information with respect to the compensation of our non-employee directors in 2023.

  12. DIRECTOR COMPENSATION

    | Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) (1) | All Other Compensation ($) | Total ($) | | R. John Fletcher | 92,622(2) | 134,994(3) | — | 227,616 | | Lynnette C. Fallon | 67,500 | 134,994(3) | — | 202,494 | | Pascal E.R. Girin | 57,660(4) | 134,994(3) | — | 192,654 | | B. Kristine Johnson | 55,000 | 134,994(3) | — | 189,994 | | Matthew B. Klein | 40,000 | 134,994(3) | — | 174,994 | | Linda M. Liau | 47,500 | 134,994(3) | — | 182,494 | | Timothy T. Richards | 59,757(5) | 134,994(3) | — | 194,751 |

  13. DIRECTOR COMPENSATION

    ______________________ (1)These amounts do not represent cash compensation paid to the named individuals. These non-cash amounts represent the aggregate grant date fair value of the restricted stock units as computed in accordance with the FASB Accounting Standards Board's ("FASB") Accounting Standards Codification ("ASC") Topic 718. For a discussion of the assumptions made in the valuation of the awards, see the discussion under “Management’s Discussion and Analysis of Financial Condition and Results of Operations–Critical Accounting Estimates–Share-Based Compensation” and Note 2 to the audited financial statements included our Annual Report on Form 10-K for the year ended December 31, 2023. (2)Under our Non-Employee Director Compensation Plan, Mr. Fletcher elected to receive 3,486 shares of our common stock in lieu of cash fees totaling $23,247. (3)Represents the grant date fair value of restricted stock units awarded following our 2023 Annual Meeting of Stockholders, of 17,153 shares. (4)Under our Non-Employee Director Compensation Plan, Mr. Girin elected to receive 4,335 shares of our common stock in lieu of cash fees totaling $28,910. (5)Under our Non-Employee Director Compensation Plan, Mr. Richards elected to receive 6,730 shares of our common stock in lieu of cash fees totaling $44,882.

  14. How is executive compensation determined?

    How is executive compensation determined? The compensation of our named executive officers is designed to tie a significant percentage of an executive’s compensation to the attainment of financial and other performance measures that the Board believes promote the creation of long-term stockholder value and position the Company for long-term success. As described more fully in the “Executive Compensation” section of the Proxy Statement, the mix of fixed and performance-based compensation, the terms of long-term incentive awards and the terms of executives’ employment agreements are designed to enable the Company to attract, motivate and retain key executives crucial to our long-term success while, at the same time, creating a close relationship between performance and compensation. The Compensation Committee and the Board believe that the design of the current compensation practices, and hence the compensation awarded to our named executive officers under the current compensation practices, fulfills this objective. The Compensation Committee, with support from our external compensation consultant, develops and administers our executive compensation program. The Compensation Committee bases compensation on scope of responsibility, market data from peer companies, and individual performance. The Compensation Committee considers an executive officer’s scope of duties and responsibilities to establish a compensation scheme that is both competitive and equitable, and promotes the executive officer’s long term engagement and high performance. Each year, the Compensation Committee, with support from our external compensation consultant, identifies a group of peer companies comparable in size, organizational structure, and complexity, and considers such market compensation when setting each component of compensation for our executive officers. The Compensation Committee also considers each individual executive officer’s contribution towards the Company’s annual performance plan goals which are set in advance and approved by our Board.

  15. Award Grants

    (1) In May 2023, in connection with their reelection as directors by our stockholders at the 2023 Annual Meeting, our non-employee directors were awarded 17,153 restricted stock units pursuant to the terms of the Amended and Restated Non-Employee Director Compensation Plan. Additional information regarding 2023 grants to non-employee directors is found in the “Director Compensation” section. (2) During 2023, we issued for director fees earned an aggregate of 15,905 shares of our common stock to non-employee directors who elected, under the terms of the Amended and Restated Non-Employee Director Compensation Plan, to receive all or part of his or her director fees in shares of our common stock in lieu of cash. Future Award Grants. Each of our non-employee directors, if reelected by our stockholders at future Annual Meetings, will continue to receive an equity grant valued at $135,000 in the form of a restricted stock unit award. In addition, our non-employee directors may continue, at their discretion and subject to annual elections, to receive all or part of their director fees in shares of our common stock. The granting of equity-based awards to executives and employees under the Amended Plan is at the discretion of the Compensation Committee. The Compensation Committee has not yet determined any additional awards that will be granted under the Amended Plan. As such, we cannot determine the number of shares of common stock or the dollar value that will in the future be received by or allocated to any participant in the Amended Plan.

  16. Summary Compensation Table – Years Ended December 31, 2023 and 2022

    Summary Compensation Table – Years Ended December 31, 2023 and 2022 The following table shows the compensation awarded or paid to, or earned by, Joseph M. Burnett, our Chief Executive Officer, Danilo D’Alessandro, our Chief Financial Officer, and Jeremy L. Stigall, our Chief Business Officer, for the years ended December 31, 2023 and 2022. We refer to these executive officers as our “named executive officers.”

  17. Summary Compensation Table – Years Ended December 31, 2023 and 2022

    | Named Executive Officer | Year | Salary ($) | Stock Awards ($)(1) | Option Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(3) | All Other Compensation ($)(4) | Total ($) | | Joseph M. Burnett | 2023 | 517,692 | 959,996 | 232,225 | 273,000 | 12,424 | 1,995,337 | | Chief Executive Officer | 2022 | 493,755 | 800,001 | 409,601 | 354,375 | 72,410 | 2,130,142 | | Danilo D’Alessandro | 2023 | 339,375 | 379,995 | 91,727 | 107,494 | 12,388 | 930,979 | | Chief Financial Officer | 2022 | 321,207 | 267,005 | 136,646 | 138,206 | 55,309 | 918,373 | | Jeremy L. Stigall | 2023 | 300,000 | 359,996 | 85,842 | 84,000 | 8,656 | 838,494 | | Chief Business Officer | 2022 | 255,812 | 249,993 | 102,743 | 99,225 | 43,963 | 751,736 |

  18. Summary Compensation Table – Years Ended December 31, 2023 and 2022

    ______________________ (1)These amounts do not represent cash compensation paid to the named individual. These non-cash amounts represent the aggregate grant date fair value of the restricted stock awards and restricted stock units as computed in accordance with FASB Accounting Standards Board's ("FASB") Accounting Standards Codification ("ASC") Topic 718. For a discussion of the assumptions made in the valuation of the awards, see the discussion under “Management’s Discussion and Analysis of Financial Condition and Results of Operations–Critical Accounting Estimates–Share-Based Compensation” and Note 2 to the audited financial statements included our Annual Report on Form 10-K for the year ended December 31, 2023. (2)These amounts do not represent cash compensation paid to the named individual. These non-cash amounts represent the aggregate grant date fair value of the option awards as computed in accordance with the SEC’s Staff Accounting Bulletin 107. For a discussion of the assumptions made in the valuation of the awards, see the discussion under “Management’s Discussion and Analysis of Financial Condition and Results of Operations–Critical Accounting Estimates–Share-Based Compensation” and Note 2 to the audited financial statements included our Annual Report on Form 10-K for the year ended December 31, 2023. (3)These amounts represent bonuses earned in each respective fiscal year, and paid in the first quarter of the subsequent fiscal year. (4)These amounts consist of: (i) the group life and disability premiums that we paid; (ii) matching contributions we paid to the individual’s 401(k) plan that we sponsor; and (iii) one time payout of accrued paid time off balances in 2022.

  19. Summary Compensation Table – Years Ended December 31, 2023 and 2022

    | NEO | Payout of Accrued Paid Time Off ($) | 401(k) Plan Company Matching Contributions ($) | Other Compensation ($) | Total for 2022 ($) | | Joseph M. Burnett | 62,870 | 9,150 | 390 | 72,410 | | Danilo D' Alessandro | 45,769 | 9,150 | 390 | 55,309 | | Jeremy L. Stigall | 37,308 | 6,265 | 390 | 43,963 |

  20. Payments Upon Termination or Change of Control

    Payments Upon Termination or Change of Control Termination Payments. In the event we terminate the employment of Mr. Burnett without cause, if Mr. Burnett terminates his employment for good reason, or if there is a termination upon expiration, as those terms are defined in his employment agreement, as amended, then he will be entitled to receive: (i) any base salary and bonus compensation earned but unpaid as of the termination date; (ii) an amount equal to his annual base salary in effect on the termination date; (iii) an amount equal to his average bonus for the previous two years; (iv) $18,000; and (v) any unreimbursed business expenses to which he is entitled as of the termination date. In addition, if we terminate Mr. Burnett’s employment without cause, Mr. Burnett terminates his employment for good reason, or there is a termination upon expiration (as defined in the employment agreement, as amended), (i) any unvested stock options and restricted stock previously granted to him prior to the effective date of the employment agreement, as amended, will become fully vested on the termination date and, in the case of stock options, will be exercisable until the earlier of three years after the termination date or the final expiration date provided for in the applicable award agreement; and (ii) any unvested stock options and restricted stock granted to him on or after the effective date of the employment agreement, as amended, scheduled to vest within the twelve (12) month period following the termination date will become fully vested on the termination date and, in the case of stock options, will be exercisable until the earlier of one year after the termination date or the final expiration date provided for in the applicable award agreement. Mr. D’Alessandro’s employment agreement provides that if we terminate his employment without cause, if Mr. D’Alessandro terminates his employment for good reason, or if there is a termination upon expiration, as those terms are defined in the employment agreement, as amended, then he will be entitled to receive: (i) any base salary and bonus compensation earned but unpaid as of the termination date; (ii) an amount equal to his base salary in effect on the termination date; (iii) an amount equal to his average bonus for the previous two years, if any; (iv) $18,000; and (v) any unreimbursed business expenses to which he is entitled as of the termination date. In addition if we terminate the employment of Mr. D’Alessandro without cause, Mr. D’Alessandro terminates his employment for good reason, or there is a termination upon expiration (as defined in the employment agreement, as amended), (i) any unvested stock options and restricted stock previously granted to him prior to the effective date of the employment agreement, as amended, will become fully vested on the termination date and, in the case of stock options, will be exercisable until the earlier of three years after the termination date or the final expiration date provided for in the applicable award agreement; and (ii) any unvested stock options and restricted stock granted to him on or after the effective date of the employment agreement, as amended, scheduled to vest within the twelve (12) month period following the termination date will become fully vested on the termination date and, in the case of stock options, will be exercisable until the earlier of one year after the termination date or the final expiration date provided for in the applicable award agreement. Mr. Stigall’s employment agreement provides that if we terminate his employment without cause, if Mr. Stigall terminates his employment for good reason, or if there is a termination upon expiration, as those terms are defined in the employment agreement, as amended, then he will be entitled to receive: (i) any base salary and bonus compensation earned but unpaid as of the termination date; (ii) an amount equal to his base salary in effect on the termination date; (iii) an amount equal to his average bonus for the previous two years, if any; (iv) $18,000; and (v) any unreimbursed business expenses to which he is entitled as of the termination date. In addition if we terminate the employment of Mr. Stigall without cause, Mr. Stigall terminates his employment for good reason, or there is a termination upon expiration (as defined in the employment agreement, as amended), (i) any unvested stock options and restricted stock previously granted to him prior to the effective date of the employment agreement, as amended, will become fully vested on the termination date and, in the case of stock options, will be exercisable until the earlier of three years after the termination date or the final expiration date provided for in the applicable award agreement; and (ii) any unvested stock options and restricted stock granted to him on or after the effective date of the employment agreement, as amended, scheduled to vest within the twelve (12) month period following the termination date will become fully vested on the termination date and, in the case of stock options, will be exercisable until the earlier of one year after the termination date or the final expiration date provided for in the applicable award agreement. Change of Control Payments. Upon a change of control, as such term is defined in Mr. Burnett’s employment agreement, any unvested stock options and restricted stock previously granted to Mr. Burnett will become fully vested. In addition, if we terminate Mr. Burnett’s employment without cause, or if he terminates his employment for good reason, in either case within two months prior to or within 12 months following the change of control, then Mr. Burnett will be entitled to receive a lump sum payment equal to the sum of: (i) two times his annual base salary in effect on the termination date; (ii) two times the average of his two highest bonuses paid in the previous three years; (iii) $18,000; (iv) any portion of base salary and bonus compensation earned but unpaid as of the termination date; and (v) reimbursement of business expenses he incurred as of the termination date. Upon a change of control, as such term is defined in Mr. D’Alessandro’s employment agreement, any unvested stock options and restricted stock previously granted to Mr. D’Alessandro will become fully vested. In addition, if the Company terminates Mr. D’Alessandro’s employment without cause, or if he terminates his employment for good reason, in either case within two months prior to or within 12 months following the change of control, then Mr. D’Alessandro will be entitled to receive a lump sum payment equal to the sum of: (i) any portion of base salary and bonus compensation earned but unpaid as of the termination date; (ii) two times his annual base salary in effect on the termination date; (iii) two times the average of his two highest bonuses paid in the previous three years; (iv) $18,000; and (v) reimbursement of business expenses he incurred as of the termination date. Upon a change of control, as such term is defined in Mr. Stigall’s employment agreement, any unvested stock options and restricted stock previously granted to Mr. Stigall will become fully vested. In addition, if the Company terminates Mr. Stigall’s employment without cause, or if he terminates his employment for good reason, in either case within two months prior to or within 12 months following the change of control, then Mr. Stigall will be entitled to receive a lump sum payment equal to the sum of: (i) any portion of base salary and bonus compensation earned but unpaid as of the termination date; (ii) two times his annual base salary in effect on the termination date; (iii) two times the average of his two highest bonuses paid in the previous three years; (iv) $18,000; and (v) reimbursement of business expenses he incurred as of the termination date.

  21. Payments Upon Termination or Change of Control

    Non-Competition; Non-Solicitation; Confidentiality; Assignment of Inventions. In connection with their compensatory contracts, each named executive officer also entered into a confidentiality agreement and non-compete agreement, which agreements impose on the executive customary restrictive covenants prohibiting the disclosure of our confidential information, requiring the executive to assign us any invention discovered in the scope of his employment, prohibiting him from competing with us during the term of his employment and for one year following the termination of his employment (subject to unenforceability of post-employment restrictive covenants in California), and prohibiting him from soliciting our employees, consultants and contractors during the term of his employment and, for certain executive officers, for a period of time following the termination of his employment.

  22. Outstanding Equity Awards at December 31, 2023

    Outstanding Equity Awards at December 31, 2023 The table below sets forth information regarding the outstanding equity awards held by our named executive officers at December 31, 2023.

  23. Outstanding Equity Awards at December 31, 2023

    | | Option Awards | | | | Stock Awards | | | Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares of Stock that have not vested (#) | Market Value of Shares of Stock that have not vested ($) | | Joseph M. Burnett | 350,000(1) | — | $2.50 | November 7, 2027 | — | — | | | 74,404(2) | — | $3.47 | August 15, 2029 | — | — | | | 52,356(3) | — | $3.24 | July 9, 2030 | — | — | | | 17,626(4) | 11,751(4) | $16.71 | August 20, 2031 | 5,875(5) | 39,891(5) | | | 9,349(6) | 37,394(6) | $11.41 | June 10, 2032 | 56,091(7) | 380,858(7) | | | —(8) | 39,506(8) | $8.10 | March 6, 2033 | 118,518(9) | 804,737(9) | | Danilo D’Alessandro | 75,000(10) | — | $5.80 | September 29, 2030 | — | — | | | 7,050(4) | 4,700(4) | $16.71 | August 20, 2031 | 2,350(5) | 15,957(5) | | | 3,120(6) | 12,480(6) | $11.41 | June 10, 2032 | 18,721(7) | 127,116(7) | | | —(8) | 15,637(8) | $8.10 | March 6, 2033 | 46,913(9) | 318,539(9) | | Jeremy L. Stigall | 3,525(4) | 2,350(4) | $16.71 | August 20, 2031 | 1,175(5) | 7,978(5) | | | 2,337(6) | 9,349(6) | $11.41 | June 10, 2032 | 5,070(11) | 34,425(11) | | | —(8) | 14,814(8) | $8.10 | March 6, 2033 | 14,022(7) | 95,209(7) | | | | | | | 44,444(9) | 301,775(9) |

  24. Outstanding Equity Awards at December 31, 2023

    ______________________ (1)One third of the shares subject to this option vested on the first anniversary of the grant date, November 7, 2018. The remaining two-thirds of the shares vested ratably in 8 equal quarterly installments beginning in the first quarter following the first anniversary of the grant date. (2)The shares subject to this option vested as follows: (i) 20% of the total shares on August 15, 2020; (ii) 40% of the total shares on August 15, 2021; and (iii) 40% of the total shares on August 15, 2022. (3)The shares subject to this option vested as follows: (i) 20% of the total shares on July 9, 2021; (ii) 40% of the total shares on July 9, 2022; and (iii) 40% of the total shares on July 9, 2023. (4)The shares subject to this option vested, or will vest, as follows: (i) 20% of the total shares on August 20, 2022; (ii) 40% of the total shares on August 20, 2023; and (iii) 40% of the total shares on August 20, 2024. (5)The shares subject to this restricted stock grant vested, or will vest, as follows: (i) 20% of the total shares on August 20, 2022; (ii) 40% of the total shares on August 20, 2023; and (iii) 40% of the total shares on August 20, 2024. (6)The shares subject to this option vested, or will vest, as follows: (i) 20% of the total shares on June 10, 2023; (ii) 40% of the total shares on June 10, 2024; and (iii) 40% of the total shares on June 10, 2025. (7)The shares subject to this restricted stock grant vested, or will vest, as follows: (i) 20% of the total shares on June 10, 2023; (ii) 40% of the total shares on June 10, 2024; and (iii) 40% of the total shares on June 10, 2025. (8)The shares subject to this option will vest as follows: (i) 20% of the total shares on March 6, 2024; (ii) 40% of the total shares on March 6, 2025; and (iii) 40% of the total shares on March 6, 2026. (9)The shares subject to this restricted stock unit grant will vest as follows: (i) 20% of the total shares on March 6, 2024; (ii) 40% of the total shares on March 6, 2025; and (iii) 40% of the total shares on March 6, 2026. (10)The shares subject to this option vested as follows: (i) one-third of the total shares on September 29, 2021; (ii) one-third of the total shares on September 29, 2022; and (iii) one-third of the total shares on September 29, 2023. (11)The shares subject to this restricted stock grant vested, or will vest, as follows: (i) 20% of the total shares on February 22, 2023; (ii) 40% of the total shares on February 22, 2024; and (iii) 40% of the total shares on February 22, 2025.

  25. Option Exercises

    Option Exercises None of our named executive officers exercised stock options in 2023.

  26. PAY VERSUS PERFORMANCE

    PAY VERSUS PERFORMANCE

  27. PAY VERSUS PERFORMANCE

    | Year | Summary Compensation Table total for PEO ($) (1)(2) | Compensation Actually Paid to PEO ($) (1)(3) | Average Summary Compensation Table Total for Non-PEO Named Executive Officers ($) (1)(2) | Average Compensation Actually Paid to Non-PEO Named Executive Officers ($) (1)(3) | Value of Initial Fixed $100 Investment Based On Total Shareholder Return ($) | Net Income (Loss) ($ thousands) (4) | | 2023 | 1,995,337 | 1,460,479 | 884,737 | 654,045 | 42.73 | (22,089) | | 2022 | 2,130,142 | 1,933,980 | 835,055 | 652,882 | 53.30 | (16,435) | | 2021 | 1,468,476 | 986,376 | 592,501 | 378,216 | 70.61 | (14,410) |

  28. PAY VERSUS PERFORMANCE

    ______________________ (1)The NEOs included in these columns reflect the following:

  29. PAY VERSUS PERFORMANCE

    | Year | PEO | Non-PEO NEOs | | 2023 | Mr. Burnett | Mr. D'Alessandro and Mr. Stigall | | 2022 | Mr. Burnett | Mr. D'Alessandro and Mr. Stigall | | 2021 | Mr. Burnett | Mr. D'Alessandro and Mr. Piferi |

  30. PAY VERSUS PERFORMANCE

    (2)Amounts reflect the total compensation for our NEOs, as reported in the Summary Compensation Table for each applicable year. (3)In accordance with Item 402(v) requirements, the fair values of unvested and outstanding equity awards were remeasured as of the end of each fiscal year, and as of each vesting date, during the years displayed in the tables below. For a discussion of the assumptions made in the valuation at grant, see the discussion under “Management’s Discussion and Analysis of Financial Condition and Results of Operations–Critical Accounting Estimates–Share-Based Compensation” and Note 2 to the audited financial statements included our Annual Report on Form 10-K for the year ended December 31, 2023. For each fiscal year reflected, the "compensation actually paid" to the PEO and the average "compensation actually paid" to the non-PEO NEOs reflect the following adjustments made to the total compensation amounts reported in the Summary Compensation Table for each applicable fiscal year, computed in accordance with Item 402(v) of Regulation S-K.

  31. PAY VERSUS PERFORMANCE

    | | 2023 | 2022 | 2021 | | Summary Compensation Table Total for PEO | 1,995,337 | 2,130,142 | 1,468,476 | | Less: Grant Date Fair Value of Equity Awards | (1,192,211) | (1,209,602) | (506,010) | | Add: Year-End Fair Value of Awards Granted in the Applicable Year that are Outstanding and Unvested | 1,017,832 | 865,816 | 394,586 | | Add: Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards | (207,879) | (175,560) | (495,309) | | Add: Year over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | (152,600) | 323,184 | 124,633 | | Add: Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year | — | — | — | | Less: Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | — | — | — | | Add: Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation | — | — | — | | Compensation Actually Paid for PEO | 1,460,479 | 1,933,980 | 986,376 |

  32. PAY VERSUS PERFORMANCE

    | | 2023 | 2022 | 2021 | | Average of Summary Compensation Table Total for NEOs (other than PEO) | 884,737 | 835,055 | 592,501 | | Less: Grant Date Fair Value of Equity Awards | (458,781) | (378,194) | (139,143) | | Add: Year-End Fair Value of Awards Granted in the Applicable Year that are Outstanding and Unvested | 392,284 | 279,546 | 108,504 | | Add: Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards | (73,359) | (77,399) | (225,992) | | Add: Year over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | (90,836) | (6,126) | 42,346 | | Add: Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year | — | — | — | | Less: Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | — | — | — | | Add: Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation | — | — | — | | Average Compensation Actually Paid for NEOs (other than PEO) | 654,045 | 652,882 | 378,216 |

  33. PAY VERSUS PERFORMANCE

    (4)Amounts reflect the Company's net income as reported in our audited financial statements for the applicable year.

  34. Description of Relationship Between Compensation Actually Paid and Company Performance

    Description of Relationship Between Compensation Actually Paid and Company Performance We generally seek to incentivize long-term performance, and therefore do not specifically align our performance measures with “Compensation Actually Paid,” calculated in accordance with Item 402(v) of Regulation S-K, for a particular year. However, we believe the values reflected above for Compensation Actually Paid in each of the covered years demonstrate how the Compensation Committee structures our compensation program to prioritize “pay for performance.” The fluctuations in Compensation Actually Paid reflect (i) shifts in our stock performance over the covered years since a significant portion of the compensation paid to our NEOs is in the form of equity grants that include stock option grants, restricted stock, and restricted stock units subject to time-based vesting conditions only and (ii) attainment of pre-established goals under our annual bonus program. It is important to note that Compensation Actually Paid to our NEOs does not necessarily reflect the actual value that an executive will receive in the stated fiscal year as such value will depend on a variety of factors. For each year set forth in the Summary Compensation Table, such compensation for that year includes stock awards for the PEO and two NEOs that were associated with performance in the prior year. The following describes how each of the financial measures in the table above, across the period included, relate to the trends in Compensation Actually Paid to the PEO and the other NEOs: Total Shareholder Return (TSR): As demonstrated in the following graph, the amount of compensation actually paid to our PEO and the average amount of compensation actually paid to the Company’s NEOs as a group (excluding our PEO) is not generally correlated with the Company’s cumulative TSR over the three years presented in the “Pay Versus Performance Table” above. However, a portion of PEO and NEO compensation is in the form of stock options, which correlates such compensation to TSR. Net Income: The amount of compensation actually paid to our PEO and the average amount of compensation actually paid to the Company’s NEOs as a group (excluding our PEO) is not generally aligned with the Company’s net income over the three years presented in the “Pay Versus Performance” table above because we have incurred net losses since our inception. As such, we have not historically looked to net income (loss) as a performance measure for our executive compensation program. All information provided above under the “Pay Versus Performance” heading will not be deemed to be incorporated by reference in any filing of our Company under the Securities Act of 1933, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.

  35. Non-Employee Director Compensation Plan

    Non-Employee Director Compensation Plan See “How are our directors compensated?” in “Proposal No. 1 – Election of Directors.”