DEF 14A of iBio, Inc.
Filed Oct 26, 2023 · FY20230001420720-23-000060
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS The Board of Directors currently consists of six (6) directors and is divided into three classes. In accordance with the Company’s Corporate Governance Guidelines, Directors cannot be nominated for re-election if they will be 75 years of age or older on the date of the applicable annual meeting, absent a waiver by the Nominating and Corporate Governance Committee and the full Board of Directors. The Board of Directors believes imposing a mandatory retirement age is an effective way to ensure director refreshment. Each class serves for a term ending at the third annual meeting of stockholders following the election of such class, with the terms of office of the respective classes expiring in successive years. Directors in Class III will stand for election this year at the 2023 Annual Meeting, directors in Class I will stand for election at the 2024 Annual Meeting and directors in Class II will stand for election at the 2025 Annual Meeting of Stockholders (the “2025 Annual Meeting”). The terms of office of directors in Class I and Class II do not expire until the 2024 Annual Meeting and 2025 Annual Meeting, respectively. Vacancies on the Board of Directors may be filled only by a majority of the remaining directors, even if such directors do not constitute a quorum. A director elected by the Board of Directors to fill a vacancy in a class, including vacancies created by an increase in the number of directors, shall serve for the remainder of the full term of that class and until the director’s successor is duly elected and qualified. At the 2023 Annual Meeting, our stockholders will consider and vote upon the election of the two (2) Class III nominees: William Clark and Gary Sender, to continue to serve as Class III directors. If re-elected, these nominees will serve for a term ending at our 2026 annual meeting of stockholders. Our Board of Directors believes that all of our current directors, including the two (2) nominees for election, possess, among other attributes, personal and professional integrity, good judgment, a high level of ability, diversity of viewpoint and business acumen. Each nominee has agreed to serve if elected and we have no reason to believe that any nominee will be unable to serve if elected. If any nominee becomes unavailable for election as a result of an unexpected occurrence, proxies will be voted FOR the election of a substitute nominee proposed by our Board of Directors or for election of only the remaining nominee. Unless authority to do so is withheld, shares represented by executed proxies will be voted FOR the election of each of the director nominees. Proxies cannot be voted for a greater number of persons than the number of nominees standing for election. Since two (2) directors are to be elected at the 2023 Annual Meeting, the two (2) nominees for director who receive the highest number of affirmative votes for election will be elected as Class III directors. Cumulating votes is not permitted in connection with the election of directors. The name, age, class, title, years of service, principal occupation, business experience and certain other information for each Class III director nominee is set forth below.
Nominees to the Board of Directors
Nominees to the Board of Directors Each of the Class III director nominees and their age, position with our Company and the expiration of their respective term on the Board of Directors (assuming they are re-elected at the 2023 Annual Meeting) are provided in the table below and in the additional biographical descriptions set forth in the text below the table.
Nominees to the Board of Directors
| Name of Director Nominee | Age | Position | Director Since | Term Expires | | William D. Clark | 55 | Class III Director | August 2021 | 2026 | | Gary Sender | 61 | Class III Director | October 2020 | 2026 |
Class III Directors
Class III Directors William D. Clark was appointed as a member of our Board of Directors in August 2021 and has served as Chairperson of the Board since November 1, 2022. He also currently serves on the Audit Committee and Nominating and Corporate Governance Committee. Mr. Clark has more than 30 years of biotechnology and pharmaceutical experience, with a focus on business development, commercialization, strategic planning, and general management. From 2011 until 2022, he served as the President and Chief Executive Officer of Nasdaq-listed biopharmaceutical company, Genocea Biosciences, Inc. (“Genocea”). In that role, among other accomplishments, he executed Genocea’s successful strategic pivot from infectious disease to immuno-oncology. Prior to joining Genocea, Mr. Clark was Chief Business Officer at Vanda Pharmaceuticals Inc. (“Vanda”), a company he co-founded in 2004. There, he played central roles in completing the company’s 2006 Nasdaq initial public offering and its 2009 out-licensing deal with Novartis Pharma AG, from which Vanda received an upfront payment of $200 million, plus contingent additional future milestone payments totaling up to $265 million. Previously, he was a Principal at Care Capital, LLC, a venture capital firm investing in biopharmaceutical companies. Earlier in his career, he spent 10 years at SmithKline Beecham Corporation (now part of GlaxoSmithKline plc) in a variety of business development roles. Mr. Clark holds an MBA from The Wharton School at the University of Pennsylvania and a BA from Harvard University. We believe Mr. Clark brings extensive knowledge of the pharmaceutical and biotech industries to the Board of Directors. Gary Sender was appointed as a member of our Board of Directors in October 2020 and served as the Lead Independent Director of the Board of Directors from December 2021 until November 10, 2022, when the Board of Directors approved removing the role of Lead Independent Director after the appointment of Mr. Clark as the Chairperson of the Board. Mr. Sender currently serves as the Chair of the Audit Committee of the Board of Directors and as a member of our Compensation Committee. Mr. Sender is a senior executive and board member with more than 25 years of financial leadership experience at both large, multi-national pharmaceutical and early-stage biotechnology companies. In March 2021, Mr. Sender retired as the Chief Financial Officer of Nabriva Therapeutics plc, a commercial-stage publicly traded biopharmaceutical company engaged in the commercialization and development of innovative anti-infective agents to treat serious infections. He held that position since May 2016. Prior to joining Nabriva, Mr. Sender was Executive Vice President and Chief Financial Officer of Synergy Pharmaceuticals Inc. from November 2015 to April 2016. Prior to joining Synergy, from August 2009 to June 2015, Mr. Sender served as Senior Vice President of Finance of Shire Plc’s (“Shire”), a biopharmaceutical company since acquired by Takeda Pharmaceutical Company Limited supporting its Specialty Pharmaceuticals business and subsequently its Global Commercial businesses. Prior to joining Shire, Mr. Sender served as the Chief Financial Officer of Tengion, Inc., a regenerative medicine company, from August 2004 to July 2009. Mr. Sender also spent over 15 years in several leadership roles within Merck & Co. Inc., a publicly traded pharmaceutical company. Mr. Sender currently serves on the board of directors of Schrodinger, Inc. and is the chair of their audit and compensation committees. Mr. Sender also serves on the board of directors of Harmony Biosciences and is the chair of their audit committee and is a member on their compensation committee. Mr. Sender serves on the boards of Elucida Oncology and Gennao Bio — both privately held biotechnology firms. He is the chair of the audit committee of Elucida and chairs both the audit and compensation committees of Gennao. Mr. Sender received a B.S. in Finance from Boston University and an M.B.A. from Carnegie-Mellon University. Mr. Sender is qualified to serve on publicly traded boards of directors because of his extensive finance and life sciences industry experience, board experience as well as his demonstrated business acumen. Mr. Sender is qualified as an “audit committee financial expert” as defined in Regulation S-K Item 407(d)(5)(ii). Mr. Sender’s experience as a board member and financial executive of both public and private companies in the life sciences industry and his management experience is valuable to the Board of Directors and the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH OF THE TWO NOMINEES LISTED ABOVE AS CLASS III DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH OF THE TWO NOMINEES LISTED ABOVE AS CLASS III DIRECTORS
Continuing Directors
Continuing Directors The directors who are serving terms that end following the 2023 Annual Meeting and their ages, position, length of service on the Board of Directors and the expiration of their respective terms are provided in the table below and in the additional biographical descriptions set forth in the text below the table.
Continuing Directors
| Name of Director | Age | Position | Director Since | Term Expires | | Class I Directors | | | | | | General (Ret.) James T. Hill | 77 | Class I Director | August 2008 | 2024 | | Evert Schimmelpennink | 51 | Class I Director | April 2019 | 2024 | | Class II Directors | | | | | | Dr. Linda W. Armstrong | 60 | Class II Director | October 2020 | 2025 | | Dr. Alexandra Kropotova | 51 | Class II Director | October 2020 | 2025 |
Class I Directors
Class I Directors General (Ret.) James T. Hill has served as a member of our Board of Directors since we became a publicly traded company in August 2008 and was appointed the Presiding Director of the Board of Directors in October 2020, a position that he held until December 2021 when we appointed a Lead Independent Director. He currently serves as the Chair of the Compensation Committee of the Board of Directors. He was the commander of United States Southern Command from 2002 until his retirement in 2004. In this role he led all U.S. military forces and operations in Central America, South America and the Caribbean, working directly with U.S. Ambassadors, foreign heads of state, key Washington decision-makers, foreign senior military and civilian leaders in implementing United States policy. General Hill is the founder of the J.T. Hill Group, a consulting organization specializing in strategic leadership and international security. We believe that General Hill’s experience in developing strategic plans and his insights regarding the conduct of business affairs in Central and South America is a key resource for us and enables him to make valuable contributions to the Company. Evert Schimmelpennink was appointed as a member of our Board of Directors in June 2021 and currently serves as the Chair of the Nominating and Corporate Governance Committee and as a member of the Science and Technology Committee. Mr. Schimmelpennink has close to 25 years of biotech and pharmaceutical experience and brings a proven track record in successfully building and scaling public and private biopharmaceutical companies, securing funding around captivating strategies, and creating patient and shareholder value. Mr. Schimmelpennink currently serves as the Chief Executive Officer and President of Lenz Therapeutics, Inc. a position he has held since March 4, 2021. Previously, from August 2017 to October 2020 he was the CEO of publicly listed Pfenex Inc., which he led through a turnaround and its first FDA approval resulting in an acquisition by Ligand Pharmaceuticals Inc. in late 2020. From November 13, 2019 until its sale, Mr. Schimmelpennink also served as the acting Principal Financial Officer and Principal Accounting Officer of Pfenex Inc. From October 2015 to July 2017, Mr. Schimmelpennink was CEO of privately held Alvotech, where he led the company through a critical growth phase, and aligned R&D, manufacturing and commercial capabilities across a portfolio of monoclonal antibodies. Prior to that, he held senior positions at Pfizer Inc. and Hospira, Inc. within their global specialty injectables businesses, as well as Synthon BV. In addition to serving on the board of directors of Lenz Therapeutics, Mr. Schimmelpennink serves on the board of directors of Pipeline Therapeutics, Inc. Mr. Schimmelpennink earned a M.Sc. in bioprocess engineering from the University of Wageningen in the Netherlands and a Business Degree from the Arnhem Business School. Mr. Schimmelpennink brings extensive knowledge of the pharmaceutical and biotech industries as a result of his service in senior corporate positions in many medical companies.
Class II Directors
Class II Directors Dr. Linda W. Armstrong was appointed as a member of the Board of Directors in October 2020 and is the Chair of our Science and Technology Committee of the Board of Directors and a member of the Compensation Committee of the Board of Directors. Dr. Armstrong is an accomplished biopharmaceutical executive with more than 20 years of experience in respiratory diseases and therapeutics. Since November 2022, she has served as the Head of US Corporate Responsibility and President of the US Novartis Foundation. Prior to her current role, she served as the Global Head of the Respiratory Development Unit at Novartis starting in November 2016, where she was responsible for the development of therapies to treat patients with respiratory and allergic conditions. Dr. Armstrong served in a variety of roles at Novartis since 2007, including the Head of Clinical Development & Medical Affairs, Cell and Gene Therapy and Global Head of Patient Safety. Prior to joining Novartis between 2001-2007, she served as Medical Safety Director and subsequently as Senior Director, Medical Affairs at Pfizer, Inc. Dr. Armstrong also served as Group Director, Respiratory Diseases at the Schering Plough Research Institute. As a Board-Certified Pulmonologist and Internist, Dr. Armstrong served on the faculty of New York University Medical Center prior to joining Schering-Plough. She received her medical degree from Yale University School of Medicine, New Haven, Connecticut and her Bachelor’s Degree from Harvard University, Cambridge, Massachusetts. We believe Dr. Armstrong’s experience and knowledge as a medical professional and her experience in various leadership roles in successful pharmaceutical companies and biologics is valuable to the Board of Directors and the Company. Dr. Alexandra Kropotova was appointed as a member of our Board of Directors in October 2020 and currently serves as a member of the Nominating and Corporate Governance Committee and the Science and Technology Committee of the Board of Directors. Dr. Kropotova is a biopharmaceutical executive with expertise in all phases of global clinical development, translational medicine and medical affairs. Currently, Dr. Kropotova is Executive Vice President and Chief Medical Officer at SAb Biotherapeutics, a publicly traded biopharmaceutical company, leading the strategy, direction, and execution of the company’s portfolio of innovative polyclonal antibody assets. Prior to SAb Biotherapeutics, she has served as Vice President, Global Specialty R&D, Respiratory & Inflammation Therapeutic Area at Teva Pharmaceuticals, where she led the design and execution of global clinical development programs, the majority of which are biologic candidates for pulmonary, chronic inflammatory or autoimmune indications. Prior to joining Teva, between 2007-2016, Dr. Kropotova served in various roles at Sanofi, including Vice President, Strategy & Strategic Planning Head, North American Medical Affairs; Associate Vice President and subsequently Vice President, Immuno-Inflammation, Global R&D; and Senior Medical Director, Respiratory, Allergy & Anti-Infectives. Prior to joining Sanofi, she served in various roles at Pfizer Inc. from 2002-2007, most recently as Director & Head of Global Clinical Respiratory and Analgesics. Dr. Kropotova received her Master of Business Administration Degree from Ohio University Graduate School of Business, Athens, Ohio, and her Medical Degree in Internal Medicine from the Vladivostok State Medical University, Vladivostok, Russia. We believe Dr. Kropotova’s experience and knowledge as a medical professional and biologics development experience across multiple therapeutic areas along with her experience in various leadership roles in successful pharmaceutical companies, is valuable to the Board of Directors and the Company.
Family Relationships
Family Relationships There are no family relationships among any of our directors or executive officers.
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION Compensation for our non-employee directors had historically consisted of a grant of stock options vesting over a three-year period and additional cash compensation. In December 2022, following a review by the independent consultant to the Compensation Committee, we adopted a non-employee director compensation policy described below. Directors who are also our employees receive no additional compensation for their services as directors.
Director Compensation Table
Director Compensation Table The following table sets forth information regarding the compensation earned for service on our Board of Directors by our non-employee directors during the year ended June 30, 2023.
Director Compensation Table
| | | | | | (f) | | | | | | | | | Change in | | | | | | | | | Pension Value | | | | | | | | (e) | and | | | | | (b) | | | Non-Equity | Nonqualified | | | | | Fees Earned | (c) | (d) | Incentive | Deferred | (g) | | | | or Paid | Stock | Option | Plan | Compensation | All Other | (h) | | | in Cash | Awards | Awards(1) (2) | Compensation | Earnings | Compensation | Total | | (a) Name | ($) | ($) | ($) | ($) | ($) | ($) | ($) | | General (Ret.) James T. Hill | $55,000 | $— | $— | $— | $— | $— | $55,000 | | Dr. Linda W. Armstrong | $63,500 | $— | $— | $— | $— | $— | $63,500 | | Dr. Alexandra Kropotova | $52,500 | $— | $— | $— | $— | $— | $52,500 | | Gary L. Sender | $71,413 | $— | $— | $— | $— | $— | $71,413 | | Evert B. Schimmelpennink | $57,500 | $— | $— | $— | $— | $— | $57,500 | | William Clark | $73,008 | $— | $— | $— | $— | $— | $73,008 | | Total | $372,921 | $— | $— | $— | $— | $— | $372,921 |
Director Compensation Table
| (1) No stock options were awarded to directors during Fiscal Year 2023. |
Director Compensation Table
| (2) The aggregate number of stock options (post reverse split effected in October 2022) outstanding for each non-employee director was as follows as of June 30, 2023: Gen. Hill 7,830 (7,830 vested), Dr. Armstrong 8,360 (7,915 vested), Dr. Kropotova 8,360 (7,915 vested), Mr. Sender 8,360 (7,915 vested), Mr. Schimmelpennink 8,360 (7,026 vested) and Mr. Clark 8,360 (6,804 vested). |
Non-Employee Director Compensation Policy
Non-Employee Director Compensation Policy Under this policy, we pay each of our non-employee directors a cash retainer for service on the Board of Directors and for service on each committee on which the director is a member. The chair of each committee receives an additional cash retainer for such service. These retainers are payable in arrears in four equal quarterly installments on the last day of each quarter, provided that the amount of such payment will be prorated for any portion of such quarter that the director is not serving on the Board of Directors. The cash retainers to be paid to non-employee Directors for service on the Board of Directors and for service on each committee of the Board, effective as of December 8, 2022, is as follows:
Non-Employee Director Compensation Policy
| | Member | Chair | | | Annual | Annual | | | Service | Service | | | Retainer | Retainer | | Board | $40,000 | $35,000 | | Audit Committee | $8,250 | $20,000 | | Compensation Committee | $6,000 | $15,000 | | Nominating and Corporate Governance Committee | $5,000 | $10,000 | | Science and Technology Committee | $8,250 | $17,500 |
Non-Employee Director Compensation Policy
Upon initial election to the Board, each new non-employee director receives a one-time grant of an option to purchase 4,000 shares of Common Stock vesting over 36 months. In addition, on the date of each annual meeting of stockholders, with the exception of the annual meeting of stockholders that occurred in 2022, each non-employee director that continues to serve as a non-employee director receives options to purchase shares of Common Stock. After the 2023 Annual Meeting, we intend to issue to each continuing non-employee director options, under the 2020 Plan, to purchase 10,000 shares of Common Stock vesting 1/12th per month with full vesting, if not fully vested at such time, on the date of our next annual meeting of stockholders. Directors have been and will continue to be reimbursed for expenses directly related to their activities as directors, including attendance at Board of Directors and committee meetings.
Impact of a Reverse Stock Split If Implemented
| ● | the number of shares reserved for issuance pursuant to any outstanding equity awards and any maximum number of shares with respect to which equity awards may be granted will be reduced proportionately based on the final Reverse Stock Split Ratio. |
Impact of a Reverse Stock Split If Implemented
| | Estimated Number of | | | | | Shares of Common Stock | Estimated Number of | Estimated Number of | | | Before Reverse Stock Split | Shares of Common | Shares of Common | | | and Before Authorized | Stock After Reverse | Stock After Reverse | | | Share Decrease | Stock Split on a 1-for-5 basis | Stock Split on a 1-for-20 basis | | Authorized Common Stock | 275,000,000 | 275,000,000 | 275,000,000 | | Shares of Common Stock issued and outstanding | 28,089,899 | 5,617,980 | 1,404,495 | | Shares of Common Stock issuable under outstanding options, Preferred Stock and RSUs or reserved for issuance under existing plans, excluding the 2023 Plan | 965,527 | 193,105 | 48,276 | | Shares of Common Stock authorized but unissued (Authorized Common Shares minus issued and outstanding shares, shares issuable upon outstanding options and RSUs and shares reserved for issuance under existing incentive plans) | 245,944,574 | 269,188,915 | 273,547,229 |
Material U.S. Federal Income Tax Considerations Related to the Reverse Stock Split
| ● | a former citizen or long-term resident of the United States subject to Section 877 or 877A of the Code. |
Interests of Directors and Executive Officers
Interests of Directors and Executive Officers Our directors and executive officers have no substantial interests, directly or indirectly, in the matters set forth in this proposal except to the extent of their ownership of shares of our Common Stock.
APPROVAL OF THE IBIO, INC. 2023 OMNIBUS INCENTIVE PLAN
APPROVAL OF THE IBIO, INC. 2023 OMNIBUS INCENTIVE PLAN The Board of Directors believes that stock-based incentive awards play an important role in the success of the Company by encouraging and enabling the employees, officers, non-employee directors and consultants of the Company and its subsidiaries upon whose judgment, initiative and efforts the Company largely depends for the successful conduct of its business to acquire a proprietary interest in the Company. The Board of Directors believes that providing such persons with a direct stake in the Company assures a closer identification of the interests of such individuals with those of the Company and its stockholders, thereby stimulating their efforts on the Company’s behalf and strengthening their desire to remain with the Company. The Board of Directors has approved, subject to stockholder approval, the iBio, Inc. 2023 Omnibus Incentive Plan (the “2023 Plan”), which will be the successor to the iBio, Inc. 2020 Omnibus Equity Incentive Plan, as amended (the “2020 Plan”). Once the 2023 Plan becomes effective, all outstanding awards under the 2020 Plan will remain outstanding, but no further grants will be made under the 2020 Plan. The Compensation Committee worked with FW Cook, our independent compensation consultant, to ensure the 2023 Plan upholds good governance practices and appropriate plan terms and provisions to support iBio’s business strategy and align the interests of our employees and directors with those of our stockholders. The principal provisions of the 2023 Plan are summarized below and the 2023 Plan is attached hereto as Appendix B. The following discussion is qualified in its entirety by reference to the 2023 Plan. As of June 30, 2023, there were stock options to acquire 276,524 shares of Common Stock outstanding under the 2020 Plan, with a weighted average exercise price of $17.73 and a weighted average remaining term of 8.6 years. In addition, as of June 30, 2023, there were 247,898 unvested restricted stock unit awards with time-based vesting under the 2020 Plan. As of June 30, 2023, there were 537,666 shares of Common Stock available for future awards under the 2020 Plan. As of June 30, 2023, there were stock options to acquire 15,954 shares of Common Stock outstanding under the 2018 Plan, with a weighted average exercise price of $44.37 and a weighted average remaining term of 6.5 years. As of June 30, 2023, there were 0 shares of Common Stock available for future awards under the 2018 Plan.
Summary of the Material Features of the 2023 Plan
| ● | The award of stock options (both incentive and non-qualified options), stock appreciation rights, restricted stock, restricted stock units, unrestricted stock, cash-based awards, and dividend equivalent rights is permitted; |
Summary of the Material Features of the 2023 Plan
| ● | Stock options and stock appreciation rights will not be repriced in any manner without stockholder approval; |
Summary of the Material Features of the 2023 Plan
| ● | Any dividends and dividend equivalent rights payable with respect to any equity award are subject to the same vesting provisions as the underlying award; |
Share Usage and Key Data
| Share Element | FY2021 | FY2022 | FY2023 | | Stock Options Granted | 209,600 | 313,568 | 307,863 | | Full-Value Awards Granted | 25,840 | 4,229 | 833,192 | | Total Awards Granted (1) | 235,440 | 317,797 | 1,141,055 | | Weighted average common shares outstanding during the fiscal year | 7,925,000 | 8,721,000 | 12,245,000 | | Annual Burn Rate | 2.97% | 3.64% | 9.32% | | Three-Year Average Burn Rate (2) | | 5.31% | |
Share Usage and Key Data
| (1) Total Awards Granted represents the sum of Stock Options Granted and Full-Value Awards Granted. |
New Plan Benefits
| (3) No stock options were awarded to directors during Fiscal Year 2023. However, during Fiscal Year 2024, we do anticipate issuing to each of our non-employee directors options to purchase 10,000 shares of Common Stock pursuant to our 2020 Plan. |
Interests of Directors and Executive Officers
Interests of Directors and Executive Officers Our directors and executive officers have substantial interests, directly or indirectly, in the matters set forth in this proposal since they will be eligible to receive awards under the 2023 Plan.
Executive Transitions
Executive Transitions On December 1, 2022, Mr. Thomas F. Isett, our former CEO resigned. Pursuant to his separation agreement with the Company, Mr. Isett resigned as CEO of the Company effective December 1, 2022, and remained an employee of the Company until December 31, 2022. In addition to severance benefits set forth in his employment agreement, in consideration for Mr. Isett agreeing to provide assistance through March 31, 2023 in connection with the sale of the contract development and manufacturing organization or its assets, the Company agreed to extend Mr. Isett’s eligibility to earn 200,000 restrictive stock units (“RSUs”) previously awarded to him contingent upon execution of a definitive agreement for the sale of the CDMO, LLC by March 31, 2023, which contingency was not met and accordingly the awards were forfeited. On December 2, 2022, during the interim period, the Board approved the creation of the office of the Chief Executive Officer, whereby Mr. Robert Lutz, the Company’s then Chief Financial and Business Officer and Mr. Martin Brenner, the Company’s then Chief Scientific Officer filled such role. On January 11, 2023, Mr. Lutz provided the Company notice of his resignation from the Company, effective February 10, 2023. Upon his resignation, an RSU grant of 100,057 shares of Common Stock subject to his continued employment through the earlier of (i) July 1, 2023, or (ii) the successful achievement of the Company’s 2023 objectives, as defined by the Board of Directors was forfeited. On January 20, 2023, Dr. Brenner was appointed as the Company’s Interim CEO. To support retention during a period of transition within the executive team, on November 11, 2022, Dr. Brenner received an RSU grant of 95,348 shares of Common Stock subject to his continued employment through the earlier of (i) July 1, 2023, or (ii) the successful achievement of the Company’s 2023 objectives, as defined by the Board of Directors. In connection with his appointment as Interim CEO, on January 20, 2023, Dr. Brenner was granted 130,000 RSUs that vest pro rata over twelve months, subject to Dr. Brenner serving as the Company’s Interim CEO (the “Interim CEO RSUs”). Dr. Brenner also received a monthly stipend of $7,500 for service as Interim CEO. On June 22, 2023, Dr. Brenner was appointed as permanent CEO. In connection with his appointment, his monthly stipend was converted into base salary. In addition, upon appointment as the Company’s permanent CEO, 75,833 of the Interim CEO RSUs terminated because Dr. Brenner was no longer serving as Interim CEO. Thus, he was granted 75,833 RSUs eligible to vest pro rata over a seven-month period, subject to continued employment. On January 23, 2023, Mr. Duran, who was serving as the Company’s VP of Financial Planning and Analysis, accepted an offer letter from the Company (the “Duran Offer Letter”) to serve as the Company’s Interim CFO, effective as of February 13, 2023. Upon his appointment to the position of Interim Chief Financial Officer, Mr. Duran’s base salary was increased from $300,000 to a base salary of $350,000, he became eligible for a discretionary incentive bonus with a target of 40% of his annual base salary and he was granted a $140,000 special incentive bonus (40% of his fiscal year 2023 annualized salary) in exchange for his agreement to continue employment with the Company through the earlier of: (a) July 1, 2023, or (b) the successful achievement of the Company’s 2023 objectives, as defined by the Board of Directors minus any retention bonus he is paid during the fiscal year 2023. Before his appointment as the Company’s Interim Chief Financial Officer, Mr. Duran became eligible to receive a retention bonus of $70,000 in exchange for his agreement to continue employment with the Company through March 31, 2023. On June 22, 2023, Mr. Duran was appointed as permanent CFO; there were no associated compensation changes. On March 31, 2023, Dr. Brenner was granted 50,000 RSUs and Mr. Duran was granted 37,500 RSUs, in each case for retention purposes in connection with the executive transitions.
Say on Pay and Compensation Roadmap
| | Fiscal 2021 | Fiscal 2022 | Fiscal 2023 | | CEO Contract | Updated CEO employment agreement removed legacy obligations; in partial consideration and as a part of a market-based pay program, CEO received an increased salary level, an option grant (in fiscal 2021), and a performance-based restricted stock unit grant (in fiscal 2022) | CEO is party to a market-based employment contract without legacy contractual obligations and will participate in annual cycle equity grants | Former CEO’s employment contract terminated with his resignation; new permanent CEO employment contract aligns with those of other Company executives and market practice | | Annual Incentive Plan | Annual incentive plan includes goal-driven framework for determining payout | Annual cash incentive plan is formulaic, with pre-defined goals and payout levels | Annual cash incentive plan continues to be pre-determined to align with our FY23 strategic priorities |
Say on Pay and Compensation Roadmap
| Equity Grant Process | Developed process for determining equity awards | Implemented formal equity grant process; NEOs received first annual cycle equity awards | NEOs continue to receive annual cycle equity awards in the form of stock options | | Recoupment Policy | Adoption of a recoupment policy within the 2020 Plan | Recoupment policy within the 2020 Plan | Maintained existing policy and will adopt Dodd-Frank-compliant policy within necessary time period | | Pay Disclosure | Expanded Compensation Discussion & Analysis Disclosure | Detailed Compensation Discussion & Analysis of Company’s pay program | Continued to provide fulsome disclosure regarding our executive pay program |
Independent Consultant; Peer Group and Benchmarking
Independent Consultant; Peer Group and Benchmarking The Compensation Committee has the authority to directly retain the services of independent consultants and other experts to assist in fulfilling its responsibilities. In August 2020, the Compensation Committee engaged FW Cook as its independent advisor to review our executive compensation programs and to assess our executive officers’ base salaries, incentive opportunities, target and actual total cash, long-term incentive value and total direct compensation from a competitive standpoint. For fiscal 2023, the Compensation Committee assessed the independence of FW Cook pursuant to SEC rules and the corporate governance rules of the NYSE and concluded that no conflict of interest exists that would prevent FW Cook from independently advising the Compensation Committee. In January 2022, FW Cook assisted the Compensation Committee in selecting a peer group of 16 companies for purposes of benchmarking the fiscal year 2023 executive compensation program. The companies included in the peer group are in the pharmaceutical, biotechnology or life sciences industry, had a market cap within a targeted range of our market cap, had common business characteristics with us, and are our business and/or labor market competitors. At the time the peer group was approved, we had a market cap positioned at the 28th percentile of the peer group (based on peer market cap at time of analysis). The approved peer group consisted of the following companies:
Independent Consultant; Peer Group and Benchmarking
| Agenus | Dyadic | NightHawk Biosciences | | Alanos Therapeutics | Dynavax | Savara | | Arcturus Therapeutics | Karyopharm | Sorrento Therapeutics | | CEL-SCI | MediciNova | Sutro Biopharma | | Corbus | Morphic | Y-mAbs Therapeutics | | CytomX Therapeutics | | |
Independent Consultant; Peer Group and Benchmarking
Arcus Biosciences, ChemoCentryx and Novavax were removed from the prior peer group as they were no longer size-relevant; and, Alaunos Therapeutics was added due to its similar business focus, size-relevance, and use as a peer by our investors. The Compensation Committee uses the peer group compensation data as one of several factors in determining appropriate compensation parameters for base salary, variable cash compensation and equity-based, long-term incentives. The Compensation Committee’s executive compensation decisions are made on a case-by-case basis, and specific benchmark results do not, in and of themselves, determine individual target compensation decisions.
Annual Cash Incentive Bonuses
Annual Cash Incentive Bonuses The Compensation Committee believes that performance-based cash incentive bonuses play an important role in providing incentives to executives to achieve annual corporate goals. Fiscal 2023 reflected the continuation of a formulaic plan. The target annual incentive bonuses in fiscal 2023 were as follows in the table below. The bonus target percentages for Dr. Brenner and Mr. Duran were set in connection with the negotiation of their employment agreements during fiscal 2021 and fiscal 2023, respectively, and were pro-rated for the portion of the year they served the Company in their various roles. Mr. Isett’s bonus target percentage was unchanged from fiscal 2021 and was pro-rated for the portion of the year he served the Company. Mr. Lutz was not eligible for the FY23 bonus payment due to his resignation in February 2023. Actual bonuses were determined based on the Compensation Committee’s assessment of performance. The performance goals for our named executive officers were established by our Compensation Committee. Bonuses for fiscal 2023 were subject to a formulaic framework with the following categories and weightings: sale of the contract development and manufacturing organization or its assets (30%), maintain liquidity (20%), develop pipeline (20%), develop platform (10%), and validate the pipeline/platform (20%). We have not disclosed the specific performance goals because we believe this disclosure would reveal confidential strategic objectives and information that is not otherwise publicly disclosed by us and would result in competitive harm to us. The strategic measures were designed to be “stretch” goals that were achievable with what we believe represented an elevated level of effort and performance. Payouts could be earned at up to 150% of target, based on actual performance. Final payouts for the NEOs were approved at 60% of target as described in the below table:
Annual Cash Incentive Bonuses
| | | | FY23 | FY23 | | | | FY23 | Target | Actual | | | | Bonus Target | Bonus | Bonus | | | FY23 | (as % of | Annualized | (Pro-rated) | | | Base Salary | Base Salary) | ($) | ($) | | Dr. Martin B. Brenner | $507,150 | 40% | $202,860 | $110,916 | | Felipe Duran | $350,000 | 40% | $140,000 | $73,100 | | Thomas F. Isett | $650,000 | 60% | $402,000 | $117,000 | | Robert Lutz | $437,750 | 40% | $175,100 | $— |
Annual Cash Incentive Bonuses
In connection with his appointment as interim CFO, Mr. Duran was also granted a $140,000 special incentive bonus (40% of his fiscal year 2023 annualized salary) subject to his continued employment with the Company through the earlier of: (a) July 1, 2023, or (b) the successful achievement of the Company’s 2023 objectives, as defined by the Board of Directors minus any retention bonus he was paid during the fiscal year 2023. Before his appointment as the Company’s interim CFO, Mr. Duran became eligible to receive a retention bonus of $70,000 subject to his continued employment with the Company through March 31, 2023.
Long-Term Equity Incentives
Long-Term Equity Incentives Our primary long-term incentive compensation vehicle is stock options; however, as discussed further below, in fiscal 2023 we made grants of time-based RSUs in connection with the executive transitions. The number of equity awards granted is based on the executive’s position, the executive’s performance in the prior year (if applicable), the Company’s overall performance, the executive’s potential for continued sustained contributions to our success, and competitive market information. Based on market data provided by FW Cook, the Compensation Committee considers the equity grant levels of the peer group, including awards granted as a percent of outstanding shares when recommending equity awards for executive officers. We grant options based on our belief that they naturally align executives with the creation of stockholder value and are the best long-term incentive vehicle to retain and promote our Company culture. The option grants made in fiscal 2023 vest 25% on the first anniversary of the grant date, and quarterly thereafter over the next three years. The Compensation Committee believes that stock options are inherently performance-based, incentivize employees to make decisions that support long-term success, and are appropriate and advantageous for the following additional reasons:
Long-Term Equity Incentives
| ● | Value is only realized if the stock price increases, thereby aligning the interests of executives with those of stockholders. |
Long-Term Equity Incentives
| ● | Stock options have greater downside risk than full-value awards, as they do not provide any value to the holder if the stock price declines below the exercise price (determined as of the date of grant). |
Long-Term Equity Incentives
| ● | The ten-year term of options gives executives the opportunity to realize value over a long period of time, which promotes long-term thinking and value creation. |
Long-Term Equity Incentives
| ● | Stock options are well understood and help attract and retain employees who contribute to the Company. |
Long-Term Equity Incentives
On November 11, 2022, Dr. Brenner received 95,348 RSUs that were eligible to vest, subject to continued employment, on the earlier of (i) July 1, 2023, or (ii) the successful achievement of the Company’s 2023 objectives, as defined by the Board of Directors. In connection with his appointment as the Company’s Interim CEO, on January 20, 2023, Dr. Brenner was granted 130,000 RSUs, which vest pro rata over a twelve-month period, subject to Dr. Brenner’s continued service as Interim CEO. Upon appointment as the Company’s permanent CEO, 75,833 of the Interim CEO RSUs terminated because Dr. Brenner was no longer serving as Interim CEO. In consideration of the foregoing, Dr. Brenner was granted 75,833 RSUs that vest pro rata over a seven-month period, subject to continued employment. On November 11, 2022, Mr. Lutz received 100,057 RSUs that were eligible to vest, subject to continued employment, on the earlier of (i) July 1, 2023, or (ii) the successful achievement of the Company’s 2023 objectives, as defined by the Board of Directors. These RSUs terminated due to his resignation in February 2023. On March 31, 2023, Dr. Brenner was granted 50,000 RSUs and Mr. Duran was granted 37,500 RSUs, in each case for retention purposes. All of the annual cycle equity grants in fiscal 2023 were made in time-based stock options.
PAY VERSUS PERFORMANCE
PAY VERSUS PERFORMANCE The table below shows compensation actually paid (as defined by the SEC in Item 402(v) of Regulation S-K) for our executives and our financial performance for the years shown in the table. For purposes of this discussion, our CEO is also referred to as our principal executive officer or “PEO” and our other Named Executive Officers are referred to as our “Non-PEO NEOs.” We are permitted to report as a “smaller reporting company” as defined under the U.S. federal securities laws. Accordingly, we have not included a tabular list of financial performance measures, and the table below does not include a column for a “Company-Selected Measure” as defined in Item 402(v) of Regulation S-K. For further information regarding our compensation philosophy and how we seek to align executive compensation with the Company’s performance, refer to “Executive Compensation” and “Compensation Discussion.”
PAY VERSUS PERFORMANCE
| | | | | | | | Value of | | | | | | | | | | Initial Fixed | | | | | | | | Average | | $100 | | | | | | | | Summary | Average | Investment | | | | | | | | Compensation | Compensation | Based on | | | | Summary Compensation Table | | Compensation Actually Paid to | | Table Total for | Actually Paid | Total | | | Fiscal | Total for PEO ($)(1)(2) | | PEO ($)(1)(3) | | Non-PEO | to Non-PEO | Shareholder | Net Income | | Year | PEO - Isett | PEO - Brenner | PEO - Isett | PEO - Brenner | NEOs(1)(2) | NEOs(1)(3) | Return(4) | ($ Millions)(5) | | 2023 | $1,670,498 | $1,069,174 | $189,265 | $629,453 | $630,739 | $336,310 | $1.62 | $(65.01) | | 2022 | $3,068,714 | $— | $(2,143,039) | $— | $1,247,056 | $151,787 | $17.48 | $(50.30) |
PAY VERSUS PERFORMANCE
(1)PEOs/NEOs included in these columns reflect the following individuals:
PAY VERSUS PERFORMANCE
| Fiscal Year | PEO | Non-PEO NEOs | | 2023 | Thomas F. Isett, Martin B. Brenner | Felipe Duran, Thomas F. Isett, Rob Lutz | | 2022 | Thomas F. Isett | Robert Lutz, Martin B. Brenner |
PAY VERSUS PERFORMANCE
| (2) Amounts reflect Summary Compensation Table Total Pay for our PEOs/NEOs for each corresponding year. |
PAY VERSUS PERFORMANCE
| (3) The following tables illustrates the adjustments to the Summary Compensation Table Total Pay for our PEOs, as well as the average for our other NEOs, to determine “compensation actually paid”, as computed in accordance with Item 402(v). Amounts do not reflect actual compensation earned by or paid to our NEOs during the applicable year. |
PAY VERSUS PERFORMANCE
| Reconciliation of Summary Compensation Table Total to Compensation Actually Paid for PEO | PEO (Isett) Fiscal Year June 30, 2023 ($) | PEO (Brenner) Fiscal Year June 30, 2023 ($) | PEO (Isett) Fiscal Year June 30, 2022 ($) | | Summary Compensation Table Total | $1,670,498 | $1,069,174 | $3,068,714 | | Minus: Grant Date Fair Value of Option and Stock Awards Granted in Fiscal Year | $698,047 | $491,863 | $2,012,464 | | Plus: Fair Value at Fiscal Year-End of Outstanding and Unvested Option and Stock Awards Granted in Fiscal Year | $— | $84,071 | $348,762 | | Plus: Change in Fair Value of Outstanding and Unvested Option and Stock Awards Granted in Prior Fiscal Years | $— | $(130,477) | $(2,717,457) | | Plus: Fair Value at Vesting of Option and Stock Awards Granted in Fiscal Year That Vested During Fiscal Year | $— | $138,720 | $209,736 | | Plus: Change in Fair Value as of Vesting Date of Option and Stock Awards Granted in Prior Fiscal Years For Which Applicable Vesting Conditions Were Satisfied During Fiscal Year | $(164,861) | $(40,172) | $(1,040,329) | | Plus: Fair Value as of Prior Fiscal Year-End of Option and Stock Awards Granted in Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year | $(618,325) | $- | $— | | Plus: Value of Dividends or Other Earnings Paid on Option and Stock Awards Not Otherwise Reflected in Total Compensation | $— | $— | $— | | Compensation Actually Paid | $189,265 | $629,453 | $(2,143,038) |
PAY VERSUS PERFORMANCE
| | Fiscal Year | Fiscal Year | | Reconciliation of Average Summary Compensation Table Total to Average Compensation Actually Paid for Non-PEO NEOs | June 30, 2023 ($) | June 30, 2022 ($) | | Summary Compensation Table Total | $630,739 | $1,247,056 | | Minus: Grant Date Fair Value of Option and Stock Awards Granted in Fiscal Year | $214,302 | $649,618 | | Plus: Fair Value at Fiscal Year-End of Outstanding and Unvested Option and Stock Awards Granted in Fiscal Year | $11,779 | $138,691 | | Plus: Change in Fair Value of Outstanding and Unvested Option and Stock Awards Granted in Prior Fiscal Years | $(6,842) | $(409,756) | | Plus: Fair Value at Vesting of Option and Stock Awards Granted in Fiscal Year That Vested During Fiscal Year | $2,859 | $— | | Plus: Change in Fair Value as of Vesting Date of Option and Stock Awards Granted in Prior Fiscal Years For Which Applicable Vesting Conditions Were Satisfied During Fiscal Year | $(11,524) | $(174,586) | | Plus: Fair Value as of Prior Fiscal Year-End of Option and Stock Awards Granted in Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year | $(76,399) | $— | | Plus: Value of Dividends or Other Earnings Paid on Option and Stock Awards Not Otherwise Reflected in Total Compensation | $— | $— | | Compensation Actually Paid | $336,310 | $151,787 |
PAY VERSUS PERFORMANCE
For purposes of the above adjustments, the fair value of equity awards on the applicable date were determined in accordance with FASB’s ASC Topic 718, using valuation methodologies that are generally consistent with those used to determine the grant-date fair value for accounting purposes. For more information, please see the notes to our financial statements in our Annual Report on Form 10-K and the footnotes to the Summary Compensation Table of this proxy statement.
PAY VERSUS PERFORMANCE
| (4) Total Shareholder Return (TSR) represents the cumulative return on a fixed investment of $100 in the common stock of iBio, Inc., at the beginning of the measurement period. |
PAY VERSUS PERFORMANCE
| (5) The dollar amounts reported represent the net income reflected in the Company’s audited financial statements for the applicable year. |
Relationship between CAP vs. Cumulative TSR of Company and the Peer Group
Relationship between CAP vs. Cumulative TSR of Company and the Peer Group The following chart illustrates the relationship between CAP for our PEO and the average CAP for our Non-PEO NEOs against our TSR: All information provided above under the heading “Pay Versus Performance” will not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing, except to the extent the Company specifically incorporates such information by reference.
Summary Compensation Table
Summary Compensation Table The following table sets forth the information as to compensation paid to or earned by our executive officers during the years ended June 30, 2023 and 2022 whose total compensation did exceed $100,000. The persons listed in the following table are referred to herein as the “named executive officers.”
Summary Compensation Table
| | | | | | | Non-Equity | All | | | | Fiscal | | | Stock | Option | Incentive | Other | | | Name and Principal Position | Year | Salary | Bonus | Awards(1) | Award(s)(1) | Compensation (2) | Compensation | Total | | Martin B. Brenner (3) | 2023 | $457,553 | $250 | $316,359 | $175,504 | $110,916 | $8,592 | $1,069,174 | | Chief Executive Officer and Chief Scientific Officer | 2022 | $405,000 | $— | $— | $757,887 | $162,000 | $11,302 | $1,336,189 | | Felipe Duran (4) | 2023 | $318,765 | $140,250 | $78,000 | $75,216 | $73,100 | $14,329 | $699,660 | | Chief Financial Officer | | | | | | | | | | Thomas F. Isett (5) | 2023 | $325,000 | $— | $218,665 | $479,382 | $117,000 | $530,451 | $1,670,498 | | Former Executive Chairman, Former Chief Executive Officer, and Former President | 2022 | $650,000 | $— | $— | $2,012,464 | $390,000 | $16,250 | $3,068,714 | | Rob Lutz (6) | 2023 | $273,594 | $250 | $175,100 | $100,288 | $— | $12,586 | $561,818 | | Former Chief Financial and Business Officer | 2022 | $425,000 | $— | $— | $541,348 | $170,000 | $21,574 | $1,157,922 |
Summary Compensation Table
| (1) Reflects the aggregate grant date fair value computed in accordance with FASB ASC 718. The value assumption used in determining such amounts are described in Note 19 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended June 30, 2023. |
Summary Compensation Table
| (2) The amounts reported represent actual bonuses earned for performance during the applicable year by our named executive officers based upon the achievement of our corporate objectives for such year, as described under “Annual Cash Incentive Bonuses.” |
Summary Compensation Table
| (3) Dr. Brenner was appointed Chief Scientific Officer effective January 18, 2021 and Chief Executive Officer in June 2023. During fiscal year 2023, Dr. Brenner was paid a $250 anniversary bonus and earned an annual performance bonus of $110,916 which is estimated to be paid the first week of December 2023. All Other Compensation for 2023 includes $8,592 for Company contributions to a Company sponsored qualified retirement plan. In fiscal year 2022, Dr. Brenner received a $162,000 annual performance bonus paid in September 2022. All Other Compensation for 2022 includes $11,302 for Company contributions to a Company sponsored qualified retirement plan. |
Summary Compensation Table
| (4) Mr. Duran was appointed Chief Financial Officer in June 2023. Mr. Duran earned $140,000 in retention bonuses during fiscal year 2023, which were partially paid in fiscal year 2023 and partially paid in fiscal year 2024. Mr. Duran was also paid a $250 anniversary bonus in fiscal year 2023. Mr. Duran earned an annual performance bonus of $73,100 which is estimated to be paid the first week of December 2023. All Other Compensation for 2023 includes $14,329 for Company contributions to a Company sponsored qualified retirement plan. |
Summary Compensation Table
| (5) Mr. Isett resigned as CEO of the Company effective December 1, 2022 and remained an employee until December 31, 2022. Mr. Isett earned an annual performance bonus of $117,000 which is estimated to be paid the first week of December 2023. All Other Compensation for 2023 includes $520,001 of severance payments in accordance with a separation agreement and $10,450 for Company contributions to a Company sponsored qualified retirement plan. During fiscal year 2022, Mr. Isett received a fiscal year 2022 annual performance bonus of $390,000 paid in September 2022. All Other Compensation for 2022 includes $16,250 for Company contributions to a Company sponsored qualified retirement plan. |
Summary Compensation Table
| (6) Mr. Lutz resigned as CFBO of the Company effective February 10, 2023. During fiscal year 2023, Mr. Lutz’s received a $250 anniversary bonus. All Other Compensation includes $12,586 for Company contributions to a Company sponsored qualified retirement plan. During fiscal year 2022, Mr. Lutz received an annual performance bonus of |
Summary Compensation Table
| $170,000 paid in September 2022. All Other Compensation for 2022 includes $21,574 for Company contributions to a Company sponsored qualified retirement plan. Mr. Lutz resigned from the Company on February 10, 2023. |
Outstanding Equity Awards at Fiscal Year-End (June 30, 2023)
Outstanding Equity Awards at Fiscal Year-End (June 30, 2023) The following table provides information about the number of outstanding equity awards (post reverse split effected in October 2022) held by each of our named executive officers as of June 30, 2023:
Outstanding Equity Awards at Fiscal Year-End (June 30, 2023)
| | Number of | Number of | | | | | | | | securities | securities | | | | Number of | Market value | | | underlying | underlying | | | | shares or | of shares or | | | unexercised | unexercised | | Option | Option | units of stock | units of stock | | | options | options | Grant | Exercise | Expiration | that have | that have | | Name | exercisable | unexercisable | Date | Price | Date | not vested | not vested(5) | | Martin B. Brenner (1) | — | 20,000 | 1/18/21 | $36.75 | 1/18/31 | — | $— | | Martin B. Brenner (1) | 12,250 | 15,750 | 8/23/21 | $31.50 | 8/23/31 | — | $— | | Martin B. Brenner (1) | 11,250 | 16,750 | 8/29/22 | $7.00 | 8/29/32 | — | $— | | Martin B. Brenner (2) | — | — | 3/31/23 | $— | — | 37,500 | $22,875 | | Martin B. Brenner (3) | — | — | 6/26/23 | $— | — | 75,833 | $46,258 | | Felipe Duran (1) | 1,400 | 1,400 | 5/4/21 | $32.25 | 5/4/31 | — | $— | | Felipe Duran (4) | — | — | 5/4/21 | $— | — | 534 | $326 | | Felipe Duran (1) | 437 | 563 | 8/23/21 | $31.50 | 8/23/31 | — | $— | | Felipe Duran (1) | — | 12,000 | 8/29/22 | $7.00 | 8/29/31 | | $— | | Felipe Duran (2) | — | — | 3/31/23 | $— | — | 28,125 | $17,156 |
Outstanding Equity Awards at Fiscal Year-End (June 30, 2023)
| (1) The options vest twenty-five percent on the first anniversary of the grant dates and then pro-rata on a quarterly basis thereafter. |
Outstanding Equity Awards at Fiscal Year-End (June 30, 2023)
| (2) The RSUs vest quarterly over one year. |
Outstanding Equity Awards at Fiscal Year-End (June 30, 2023)
| (3) The RSUs vest monthly over seven months from the grant date. |
Outstanding Equity Awards at Fiscal Year-End (June 30, 2023)
| (4) The RSUs vest one third on each of the one, two and three year anniversary of the grant date. |
Outstanding Equity Awards at Fiscal Year-End (June 30, 2023)
| (5) Calculated by multiplying the closing price per share of the Company’s common stock on June 30, 2023, $0.61, by the number of shares. |
Employment Agreements
Employment Agreements Employment Offer Letters, Severance and Change in Control Arrangements in Effect During Fiscal Year 2023 We have entered into employment agreements with our executive officers, the material terms of which are set forth below. Dr. Martin B. Brenner On December 23, 2020, the Company entered into an employment agreement with Dr. Martin Brenner to serve as the Company’s CSO, effective as of January 18, 2021. In addition to a base salary of $405,000 for serving as the Company’s CSO (which was increased as described below) and a discretionary incentive bonus with a target of 40% of his annual base salary while serving as Interim CEO. Dr. Brenner received a monthly cash stipend of $7,500 as part of Dr. Brenner serving as Interim CEO. Dr. Brenner was also granted RSUs to acquire 130,000 shares of the Company’s Common Stock, which RSUs shall vest pro rata over a twelve- month period, such vesting to terminate if Dr. Brenner is no longer the Company’s Interim CEO. The grant-date fair value of the RSUs totaled approximately $91,000. On November 11, 2022, Dr. Brenner also received a RSU grant of 95,348 shares of Common Stock in exchange for Dr. Brenner’s agreement to continue employment with the Company through July 1, 2023, whereby such RSUs will vest on the earlier of (i) July 1, 2023, or (ii) the successful achievement of the Company’s 2023 objectives, as defined by the Board of Directors. The Brenner Employment Agreement also provided for an initial grant of options to purchase 20,000 (post reverse split effected in October 2022) shares of our Common Stock (the “Brenner Option”) to Dr. Brenner pursuant to the 2020 Plan, with an exercise price at the fair market value on the date of grant, as determined by our Board of Directors. The Brenner Option vests ratably as follows: (1) 25% of the options granted will vest after one year of employment with the Company; and (2) after one year of employment with the Company, 6.25% of the options granted will vest for each additional three (3) months of employment, subject to the conditions of the 2020 Plan and the stock option grant agreement. Dr. Brenner will also be eligible for additional grants of equity compensation from time to time, in a similar manner to other similarly situated executives, subject to our grant policy and applicable approvals of grants. We also provide Dr. Brenner with directors’ and officers’ liability insurance. On June 26, 2023, the Board approved including as part of Dr. Brenner’s base salary for serving as permanent CEO the monthly cash stipend of $7,500 he was receiving while serving as Interim CEO, for an annual base salary of $507,150. In addition, upon appointment as the Company’s permanent CEO, 75,833 RSUs terminated because Dr. Brenner was no longer serving as Interim CEO. On June 26, 2023, Dr. Brenner was also granted RSUs to acquire 75,833 shares of the Company’s Common Stock, which RSUs shall vest pro rata over a seven-month period. The grant-date fair value of the RSUs totaled approximately $51,566. Felipe Duran On January 23, 2023, Mr. Duran accepted an offer letter from the Company for the Interim CFO (the “Duran Offer Letter”). Pursuant to the terms of the Duran Offer Letter, Mr. Duran will serve as the Company’s Interim CFO, effective as of February 13, 2023. Upon his appointment to the position of Interim CFO, Mr. Duran’s base salary will be increased from $300,000 to a base salary of $350,000, he will be eligible for a discretionary incentive bonus with a target of 40% of his annual base salary and he will be granted a $140,000 special incentive bonus (40% of his fiscal year 2023 annualized salary) in exchange for his agreement to continue employment with the Company through the earlier of: (a) July 1, 2023, or (b) the successful achievement of the Company’s 2023 objectives, as defined by the Board of Directors minus any retention bonus he is paid during the fiscal year 2023. Before his appointment as the Company’s Interim CFO, Mr. Duran became eligible to receive a retention bonus of $70,000 in exchange for Mr. Duran’s agreement to continue employment with the Company through March 31, 2023. Mr. Duran was appointed our permanent CFO in June 2023. We also provide Mr. Duran with directors’ and officers’ liability insurance. Brenner and Duran Employment Agreement Termination Provisions Each of Dr. Brenner’s and Mr. Duran’s employment is on an “at will” basis and may be terminated at any time by either of them or the Company. If either Dr. Brenner or Mr. Duran separate from employment for any reason or no reason, they are entitled to receive their accrued and unpaid base salary, any unreimbursed expenses and benefits accrued through the termination date. If the Company terminates their employment for reasons other than for “Cause” (as defined in their respective agreements), the Company is required to pay the accrued and unpaid base salary, any unreimbursed expenses and benefits accrued through the termination/separation date and provided, that the terminated employee executes and does not revoke a separation agreement in form acceptable to the Company, he will receive (1) an amount equal to his base salary for nine months, (2) a pro rata share of any bonus earned by him during the Company’s fiscal year in which he was terminated, within thirty (30) days of his execution of a separation agreement, and (3) payment of the full amount of all premiums for continued health benefits (including COBRA) under the Company’s health plans for a period of nine (9) months following the termination. If Dr. Brenner’s or Mr. Duran’s employment is terminated without Cause within twelve (12) months after a Change of Control (as defined in the Company’s equity incentive plan), (or in the case of Dr. Brenner, Dr. Brenner terminates his employment with us for “Good Reason”, as defined in his employment agreement), provided they execute and do not revoke a separation agreement in a form acceptable to the Company, they each will be entitled to receive: (1) an amount equal to their base salary for twelve months, (2) an amount equal to the target bonus for which they would have been eligible during the Company’s fiscal year in which they were terminated, within thirty (30) days of their execution of a separation agreement, (3) immediate vesting of 100% of any unvested time-vested equity awards held by them at such time, and (4) payment of the full amount of all premiums for continued health benefits (including COBRA) under the Company’s health plans for a period of twelve (12) months following the termination. Dr. Brenner and Mr. Duran each have agreed to assign to the Company all of their rights in any Inventions, including all Intellectual Property Rights (as such terms are defined in their agreements) that are made, conceived or reduced to practice, in whole or in part, alone or with others, by him during his employment with the Company and have agreed to certain non-compete and non-solicitation terms. Former Executive Officers Thomas F. Isett On April 30, 2021, we entered into a new employment agreement, dated as of April 30, 2021, with Thomas F. Isett, our CEO (the “New Employment Agreement”) in order to further enhance corporate governance and better align its compensation arrangements with current best practices. The New Employment Agreement, which was approved by our Compensation Committee, replaced in its entirety the Amended and Restated Executive Employment Agreement, dated as of April 21, 2020, by and between Mr. Isett and us (the “Prior Agreement”) and removed certain legacy contractual obligations, including an uncapped transaction bonus of 4.5% to be paid in connection with a Change of Control (as defined in the Prior Agreement), which were not viewed by our Compensation Committee as best governance practices or as being aligned with our goals.
Employment Agreements
Pursuant to the terms of the New Employment Agreement, Mr. Isett served as our CEO for a term of two years, subject to extensions for one-year periods. Mr. Isett received an annual base salary of $650,000 and was eligible to receive a target bonus of 60% of his base salary based upon the Compensation Committee’s assessment of his performance and our performance during the prior fiscal year. In addition, pursuant to the terms of the New Employment Agreement, we issued Mr. Isett an award of nonqualified stock options to purchase 120,000 (post reverse split effected in October 2022) shares of the Common Stock (the “Option Shares”), which were issued pursuant to our 2020 Omnibus Equity Incentive Plan (the “Plan”). The Option Shares vest as follows: 25% of the Option Shares granted will vest on the one-year anniversary of the grant date and after the one-year anniversary of the grant date, 6.25% of the Option Shares will vest for each additional three (3) months of employment, subject to the conditions of the 2020 Plan and the stock option grant agreement. The New Employment Agreement also provided that the Compensation Committee would establish certain performance criteria and thereafter Mr. Isett would receive a grant of 200,000 (post reverse split effected in October 2022) performance RSUs, which would also vest subject to achievement of pre-defined performance criteria established by the Compensation Committee and set forth below. Mr. Isett was also entitled to continue to receive certain benefits that he is currently entitled to under the Prior Agreement (participation in our standard benefit plans, reimbursement for certain car expenses, continuing education expenses, directors and officers liability insurance, relocation expenses) in addition to up to a maximum of $500 per month for the cost of any life insurance policy procured by Mr. Isett while he remained employed by us and up to $2,000 per month toward the cost of any long term disability policy procured by Mr. Isett while he remain employed by us. Under the terms of the New Employment Agreement, if we and Mr. Isett mutually agree to terminate Mr. Isett’s employment, he was entitled to receive (i) accrued and unpaid base salary; (ii) any unreimbursed expenses; (iii) any earned but unpaid annual bonus from a prior fiscal year; and (iv) any amounts payable under any of our benefit plans in which Mr. Isett was a participant in accordance with applicable law and the terms of those plans (“Standard Termination Benefits”). Under the terms of the New Employment Agreement, if we terminated Mr. Isett’s employment without Cause (as defined in the New Employment Agreement), provided he executed and did not revoke a separation agreement in a form mutually acceptable to the parties, he was entitled to receive, in addition to the Standard Termination Benefits, (i) an amount equal his base salary for twenty-four (24) months; (ii) an amount equal to a pro rata share of his target bonus for the fiscal year in which his separation occurs; (iii) an amount equal to the target bonus for the twenty-four (24) month severance period; and (iv) provided that he elected continuation coverage for health insurance under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), we would pay the full cost of this benefit for up to eighteen (18) months or if he had not obtained alternative employer-provided health coverage by the end of the eighteen (18) month COBRA subsidy period, we would provide him with a lump sum cash payment equal to six times the monthly amount paid by us for the COBRA subsidy. Under the terms of the New Employment Agreement, if Mr. Isett’s employment was terminated by us without Cause within twelve (12) months after a “Change in Control,” as defined in the 2020 Plan, or if Mr. Isett terminated his employment with the Company for Good Reason (as defined in the New Employment Agreement) within twelve (12) months after a “Change of Control”, provided he executed and did not revoke a separation agreement in a form acceptable to the parties, he was entitled to receive in addition to the Standard Termination Benefits, (i) a lump sum payment equal to twenty-four (24) months of his then current base salary; (ii) an amount equal to a pro rata share of any target bonus for the fiscal year in which his separation occurs; (iii) vesting of any unvested time-based equity awards held by him at such time; (iv) an amount equal to two hundred percent (200%) of his target bonus for the year of employment termination; and (v) provided he elected continuation coverage for health insurance under COBRA, the Company would pay the full cost of this benefit for up to eighteen (18) months, and if he had not obtained alternative employer-provided health coverage by the end of the eighteen (18) month COBRA subsidy period, we would provide him with a lump sum cash payment equal to six (6) times the monthly amount paid by us for the COBRA subsidy. The New Employment Agreement also contains certain restrictive covenants including confidentiality provisions, a non-compete, non-disparagement and non-solicitation provisions as well as assignment of inventions. On December 1, 2022, Mr. Isett resigned as a member of the Board and relinquish his duties, rights and obligations as an officer and the CEO of the Company, effective immediately. In connection with Mr. Isett’s resignation, the Company entered into a separation agreement and general release with Mr. Isett effective December 1, 2022 (the “Separation Agreement”). Pursuant to the Separation Agreement, Mr. Isett resigned as CEO of the Company effective December 1, 2022, and remained an employee of the Company until December 31, 2022. The Separation Agreement provides that Mr. Isett will receive the severance benefits set forth in his New Employment Agreement, as previously disclosed by the Company, including (i) an amount equal to his current base salary in equal bi-monthly installments for twenty-four (24) months; (ii) an amount equal to a pro rata share of his target bonus for the current fiscal year; (iii) an amount equal to the target bonus in equal bi-monthly installments for the twenty-four (24) month severance period and (iv) provided that he elects continuation coverage for health insurance under COBRA, the Company will pay the full cost of this benefit for up to eighteen (18) months, or if he has not obtained alternative employer-provided health coverage by the end of the eighteen (18) month COBRA subsidy period, the Company will provide him with a lump sum cash payment equal to six (6) times the monthly amount paid by the Company for the COBRA subsidy (collectively, the “Severance Benefits”). Pursuant to the Separation Agreement, Mr. Isett agreed to, among other things, (i) provide reasonable assistance from time to time as the Company may request related to the sale of its contract development and manufacturing organization or its assets through March 31, 2023 in consideration for which the Company agreed to extend Mr. Isett’s eligibility to receive 200,000 restrictive stock units awarded contingent upon the execution of a definitive agreement for the sale of such assets; and (ii) provide reasonable assistance from time to time as the Company may request related to litigation, administrative proceedings, or any government investigations through December 2024. Non-compete and non-solicitation provisions as well as confidentiality and assignment of intellectual property obligations from prior agreements entered into between Mr. Isett and the Company continue to apply pursuant to such prior agreements. The Isett Agreement includes a general release of claims by Mr. Isett. Robert Lutz On February 15, 2021, we entered into an employment agreement (the “Lutz Employment Agreement”) with Robert Lutz to serve as our CFO. The Lutz Employment Agreement became effective on March 4, 2021 (the “Lutz Effective Date”).
Employment Agreements
Mr. Lutz was entitled to an annual base salary of $425,000. Mr. Lutz was eligible for a target bonus of 40% of the base salary paid to him during the prior fiscal year based upon the Compensation Committee’s assessment of his performance and the performance of the Company during the prior fiscal year. The Lutz Employment Agreement also provided for an initial grant of options to purchase 14,000 (post reverse split effected in October 2022) shares of the Company’s common stock (the “Lutz Option”) to Mr. Lutz pursuant to the 2020 Plan, as amended, with an exercise price at the fair market value on the date of grant, as determined by the Board of Directors. The Lutz Option vested as follows: (1) 25% of the options granted will vest after one year of employment with the Company; and (2) after one year of employment with the Company, 6.25% of the options granted vested for each additional three (3) months of employment, subject to the conditions of the 2020 Plan and the stock option grant agreement thereunder. Mr. Lutz also received an initial grant of 9,280 (post reverse split effected in October 2022) RSUs. Such RSUs vest in even increments on the first three anniversaries of the grant date, subject to the 2020 Plan and the RSU grant agreement. Mr. Lutz was also eligible for additional grants of equity compensation from time to time, in a similar manner to other similarly situated executives, subject to our grant policy and applicable approvals of grants. Mr. Lutz was eligible to participate in the Company’s benefit plans for which he was eligible as established from time to time by us for our executive employees, including the cost of medical and dental benefits provided to Mr. Lutz and his family as well as paid time off. We also provide Mr. Lutz with directors’ and officers’ liability insurance. Mr. Lutz’s employment was on an “at will” basis and could be terminated at any time by each of them or us. The termination provisions of Mr. Lutz’s employment agreement were similar to those of Dr. Brenner and Mr. Duran. Mr. Lutz agreed to assign to us all of his rights in any Inventions, including all Intellectual Property Rights (as such terms are defined in the employment agreements) that were made, conceived or reduced to practice, in whole or in part, alone or with others, by him during his employment with us and agreed to certain non-compete and non-solicitation terms. On January 11, 2023, Mr. Lutz resigned as our Chief Financial Officer effective on February 10, 2023.