DEF 14A of DiaMedica Therapeutics Inc.
Filed Apr 4, 2024 · FY20230001437749-24-010985
VOTING PROPOSAL ONE—ELECTION OF DIRECTORS
VOTING PROPOSAL ONE—ELECTION OF DIRECTORS
Board Size and Structure
Board Size and Structure Our Articles provide that the Board of Directors will consist of at least three members. The Board of Directors has fixed the number of directors at seven. The Board of Directors currently consists of seven directors. Each director is elected annually by the shareholders and serves for a term that will end at the next annual general meeting of shareholders.
Information about Current Directors and Board Nominees
Information about Current Directors and Board Nominees The Board of Directors has nominated the following seven individuals to serve as our directors until the next annual general meeting of shareholders or until their respective successors are elected and qualified. All of the nominees named below are current members of the Board of Directors. The following table sets forth as of March 25, 2024 the name, age and position of each current director and each individual who has been nominated by the Board of Directors to serve as a director of our company:
Information about Current Directors and Board Nominees
| Name | Age | Position | | Michael Giuffre, M.D.(1)(2)(3) | 68 | Director | | Richard Kuntz, M.D., M.Sc.(1) | 66 | Director | | Tanya Lewis(1)(2) | 53 | Director | | James Parsons(1)(2)(4) | 58 | Director | | Rick Pauls | 52 | President and Chief Executive Officer, Director | | Richard Pilnik(1)(3)(4) | 67 | Chairman of the Board | | Charles Semba, M.D.(1)(2)(4) | 64 | Director |
Information about Current Directors and Board Nominees
| (1) Independent Director |
Information about Current Directors and Board Nominees
| (2) Member of the Compensation Committee |
Information about Current Directors and Board Nominees
| (3) Member of the Nominating and Corporate Governance Committee |
Information about Current Directors and Board Nominees
| (4) Member of the Audit Committee |
Information about Current Directors and Board Nominees
The principal occupations and recent employment history of each of our directors are set forth below.
Additional Information about Current Directors and Board Nominees
Additional Information about Current Directors and Board Nominees The following paragraphs provide information about each current director and nominee for director, including all positions held, principal occupation and business experience for the past five years, and the names of other publicly-held companies of which the director or nominee currently serves as a director or has served as a director during the past five years. We believe that all of our directors and nominees display personal and professional integrity; satisfactory levels of education and/or business experience; broad-based business acumen; an appropriate level of understanding of our business and its industry and other industries relevant to our business; the ability and willingness to devote adequate time to the work of the Board of Directors and its committees; a fit of skills and personality with those of our other directors that helps build a board that is effective, collegial and responsive to the needs of our company; strategic thinking and a willingness to share ideas; a diversity of experiences, expertise and background; and the ability to represent the interests of all of our shareholders. The information presented below regarding each director and nominee also sets forth specific experience, qualifications, attributes and skills that led the Board of Directors to the conclusion that such individual should serve as a director in light of our business and structure. Michael Giuffre, M.D. has served as a member of the Board of Directors since August 2010. Since July 2009, Dr. Giuffre has served as a Clinical Professor of Cardiac Sciences and Pediatrics at the University of Calgary and has had an extensive portfolio of clinical practice, cardiovascular research and university teaching. Dr. Giuffre is actively involved in health care delivery, medical leadership and in the biotechnology business sector. From 2012 to October 2019, Dr. Giuffre served as Chief Scientific Officer and President of FoodChek Laboratory, a global developer and provider of proprietary rapid and accurate food safety tests for the detection of foodborne and environmental pathogens and other microorganisms, and also as a member of the board of directors of FoodChek Systems Inc. From November 2017 to October 2019, he served as FoodChek Systems Inc.’s Chairman of the Board. Dr. Giuffre previously served on the board of directors of the Canadian Medical Association (CMA), Unicef Canada, the Alberta Medical Association (AMA), Can-Cal Resources Ltd, Vacci-Test Corporation, IC2E International Inc., MedMira Inc. and Brightsquid Dental, Inc. Dr. Giuffre has received a Certified and Registered Appointment and a Distinguished Fellow appointment by the American Academy of Cardiology. In 2005, he was awarded Physician of the Year by the Calgary Medical Society and in 2017 was “Mentor of the Year” for the Royal College of Physicians and Surgeons of Canada. Dr. Giuffre was also a former President of the AMA and the Calgary and Area Physicians Association and also a past representative to the board of the Calgary Health Region. Dr. Giuffre holds a Bachelor of Science in cellular and microbial biology, a Ph.D. candidacy in molecular virology, an M.D. and an M.B.A. He is Canadian Royal College board certified FRCPS in specialties that include Pediatrics and Pediatric Cardiology and has a subspecialty in Pediatric Cardiac Electrophysiology. Dr. Giuffre is currently a member of the board of directors of Avenue Living (AL) Asset Management, a private real estate company in Alberta, Canada and its affiliates, AL Real Estate Opportunity Trust and AgriSelect Trust. Dr. Giuffre is currently a resident of Alberta, Canada. We believe that Dr. Giuffre’s medical experience, including as a practicing physician and professor, enable him to make valuable contributions to the Board of Directors. Richard Kuntz, M.D., M.Sc. has served as a member of our board of directors since May 2023. Dr. Kuntz recently retired from Medtronic plc (NYSE:MDT) where he was the Chief Medical Officer & Scientific Officer and a member of the Executive Committee. Prior to that, he served as Senior Vice President and President, Neuromodulation of Medtronic from October 2005 to August 2009. Before joining Medtronic, he was the founder and Chief Scientific Officer of the Harvard Clinical Research Institute in Boston. He also served as an Associate Professor of Medicine at Harvard Medical School, Chief of the Division of Clinical Biometrics, and as an Interventional Cardiologist in the division of cardiovascular diseases at the Brigham and Women’s Hospital in Boston. In addition, he served as a founding Governor of the Patient Centered Outcomes Research Institute (PCORI), as part of the US Affordable Care Act. He also served as an advisor to multiple national and regional committees, in the National Academy of Medicine and National Institutes of Health (NIH). He is presently serving as a working group member of NIH’s Helping to End Addiction Long-term® (HEAL) program. Dr. Kuntz serves as a member of the board of directors of ZimVie Inc. and IDENTIV, INC., which are Nasdaq listed companies. Dr. Kuntz has directed numerous multicenter clinical trials and has authored more than 250 original publications. His major interests are traditional and alternative clinical trial design and biostatistics. Dr. Kuntz graduated from Miami University and received his medical degree from Case Western Reserve University School of Medicine. He completed his residency and chief residency in internal medicine at the University of Texas Southwestern Medical School, Parkland Hospital, Dallas, and then completed fellowships in cardiovascular diseases and interventional cardiology at the Beth Israel Hospital and Harvard Medical School, Boston. Dr. Kuntz received his Master of Science in biostatistics from the Harvard T.H. Chan School of Public Health. We believe that Dr. Kuntz’ experience in the pharmaceutical industry, particularly his demonstrated leadership skills relating to medical advancements in neurology and his deep expertise in stroke treatments, enable him to make valuable contributions to the Board of Directors. Tanya Lewis has served as a member of the Board of Directors since March 1, 2023. Ms. Lewis has served as the Chief Development Operations Officer at Replimune Group, Inc., a Nasdaq listed clinical-stage biotechnology company, since May 2021, and beginning in April 2024, will transition from providing her functional expertise in a full-time position to an advisory capacity. Ms. Lewis served as Executive Vice President, Chief Regulatory Officer and Quality Officer at Karyopharm Therapeutics Inc., a pharmaceutical company, from November 2019 to May 2021, and previously served as Senior Vice President, Regulatory and Quality Affairs from November 2018 to November 2019. Ms. Lewis is also a former director of Karyopharm Therapeutics Inc. Prior to joining Karyopharm Therapeutics Inc., Ms. Lewis served as Vice President, Regulatory and Quality Affairs for Syros Pharmaceuticals, Inc., a pharmaceutical company, from January 2017 to July 2018. Prior to joining Syros Pharmaceuticals, Ms. Lewis served as Vice President, Regulatory Affairs and Quality Assurance for Idera Pharmaceuticals, Inc., a pharmaceutical company, from October 2015 to December 2016. Before joining Idera Pharmaceuticals, Ms. Lewis served as Vice President, Regulatory Affairs for Tesaro, Inc., a pharmaceutical company, from October 2011 to June 2015 and prior to that served in various roles at Millennium Pharmaceuticals. Inc. Ms. Lewis holds a Bachelor of Science degree in Biology from Northeastern University and a Master of Science degree in Regulatory Affairs and Health Policy from Massachusetts College of Pharmacy and Allied Health Science.
Additional Information about Current Directors and Board Nominees
We believe that Ms. Lewis’s experience in the pharmaceutical industry, particularly in drug development and commercial planning for specialty biopharmaceuticals, enable her to make valuable contributions to the Board of Directors. James Parsons has served as a member of the Board of Directors since October 2015. Previously, Mr. Parsons served as our Vice President of Finance from October 2010 until May 2014. Mr. Parsons served as Chief Financial Officer and Corporate Secretary of Trillium Therapeutics Inc., a Nasdaq-listed immuno-oncology company, from August 2011 until its acquisition by Pfizer in November 2021, at which time he became employed by Pfizer Canada ULC until March 2022. Mr. Parsons serves as a member of the board of directors and serves as chair of both the nominating and corporate governance committee and audit committee of Sernova Corp., which is listed on the TSX and is a member of the board of Oncolytics Biotech Inc., a Nasdaq/TSX listed company. Mr. Parsons has been a Chief Financial Officer in the life sciences industry since 2000 with experience in therapeutics, diagnostics and devices. Mr. Parsons has a Master of Accounting degree from the University of Waterloo and is a Chartered Professional Accountant and Chartered Accountant. Mr. Parsons is a resident of Ontario, Canada. We believe that Mr. Parsons’ financial experience, including his history and knowledge of our company, enable him to make valuable contributions to the Board of Directors. Rick Pauls was appointed our President and Chief Executive Officer in January 2010. Mr. Pauls has served as a member of the Board of Directors since April 2005 and the Chairman of the Board from April 2008 to July 2014. Prior to joining DiaMedica, Mr. Pauls was the Co-Founder and Managing Director of CentreStone Ventures Inc., a life sciences venture capital fund, from February 2002 until January 2010. Mr. Pauls was an analyst for Centara Corporation, another early stage venture capital fund, from January 2000 until January 2002. From June 1997 until November 1999, Mr. Pauls worked for General Motors Acceptation Corporation specializing in asset-backed securitization and structured finance. Mr. Pauls previously served as an independent member of the board of directors of LED Medical Diagnostics, Inc. Mr. Pauls received his Bachelor of Arts in Economics from the University of Manitoba and his MBA in Finance from the University of North Dakota. Mr. Pauls is a resident of Minnesota, USA. We believe that Mr. Pauls’s experience in the biopharmaceutical industry as an executive and investor and his extensive knowledge of all aspects of our company, business, industry, and day-to-day operations as a result of his role as our President and Chief Executive Officer enable him to make valuable contributions to the Board of Directors. In addition, as a result of his role as President and Chief Executive Officer, Mr. Pauls provides unique insight into our future strategies, opportunities and challenges, and serves as the unifying element between the leadership and strategic direction provided by the Board of Directors and the implementation of our business strategies by management. Richard Pilnik has served as a member of the Board of Directors since May 2009. Mr. Pilnik has served as our Chairman of the Board since July 2014. Mr. Pilnik has served as the President and member of the board of directors of Vigor Medical Services, Inc., a medical device company, since May 2017 and served as its President from May 2017 to October 2021. From December 2015 to November 2017, he served as a member of the board of directors of Chiltern International Limited, a private leading mid-tier Clinical Research Organization, and was Chairman of the Board from April 2016 to November 2017. Mr. Pilnik has a 30-year career in healthcare at Eli Lilly and Company, a pharmaceutical company, and Quintiles Transnational Corp., a global pioneer in pharmaceutical services. From April 2009 to June 2014, he served as Executive Vice President and President of Quintiles Commercial Solutions, an outsourcing business to over 70 pharma and biotech companies. Prior to that, he spent 25 years at Eli Lilly and Company where he held several leadership positions, most recently as Group Vice President and Chief Marketing Officer from May 2006 to July 2008. He was directly responsible for commercial strategy, market research, new product planning and the medical marketing interaction. From December 2000 to May 2006, Mr. Pilnik served as President of Eli Lilly Europe, Middle East and Africa and the Commonwealth of Independent States, a regional organization of former Soviet Republics, and oversaw 50 countries and positioned Eli Lilly as the fastest growing pharmaceutical company in the region. Mr. Pilnik also held several marketing and sales management positions in the United States, Europe and Latin America. Mr. Pilnik currently serves on the board of directors of Lumanity, a privately-held pharma services company, WCG-Copernicus, a privately-held clinical services company, Vigor Medical Systems, Inc., a privately-held medical device company, and BIAL Farma, a privately-held Portuguese pharmaceutical company. Mr. Pilnik is an Emeritus Board Member of Duke University Fuqua School of Business. Mr. Pilnik previously served on the board of directors of Elan Pharmaceuticals, Chiltern International, the largest mid-size Clinical Research Organization, and Certara, L.P., a private biotech company focused on drug development modeling and biosimulation. Mr. Pilnik holds a Bachelor of Arts in Economics from Duke University and an MBA from the Kellogg School of Management at Northwestern University. Mr. Pilnik is a resident of Florida, USA. We believe that Mr. Pilnik’s deep experience in the industry and his history and knowledge of our company enable him to make valuable contributions to the Board of Directors. Charles Semba, M.D. has served as a member of the Board of Directors since July 2021. Dr. Semba has over 20 years of drug-development experience in public and venture-funded biotechnology companies. Since June 2020, Dr. Semba has served as the Chief Medical Officer of Eluminex Biosciences, an ophthalmology-focused biotechnology company. From June 2016 to March 2020, Dr. Semba served as the Chief Medical Officer of Graybug Vision, Inc., a clinical-stage biopharmaceutical company focused on developing transformative medicines for the treatment of chronic diseases of the retina and optic nerve, and from June 2014 to June 2016, Dr. Semba served as the Chief Medical Officer of ForSight VISION5 (acquired by Allergan), a company focused on developing non-invasive products that replace eye drops and provide sustained therapy for major eye diseases, including glaucoma, dry eye, and allergy. Prior to his work at ForSight VISION5, Dr. Semba held senior positions at biopharmaceutical companies including Genentech (a Roche company) and Shire (acquired by Takeda). Additionally, since 1992, Dr. Semba has served as an adjunct professor of vascular and interventional radiology at the Stanford University School of Medicine. Dr. Semba holds a Bachelor of Arts in Chemistry from Carleton College and an M.D. from the University of Minnesota Medical School and is a recognized expert in endovascular therapy, thrombolysis, mechanical thrombectomy, and endovascular surgery. Dr. Semba is currently a resident of California, USA. We believe that Dr. Semba’s experience in the biotechnology and biopharmaceutical industries, particularly in drug development and clinical-stage companies, enable him to make valuable contributions to the Board of Directors.
Shares Available and Outstanding Equity Awards
Shares Available and Outstanding Equity Awards While the use of long-term incentives in the form of equity awards is an important part of our compensation program, we are mindful of our responsibility to our shareholders to exercise judgment in the granting of equity awards. In setting the number of shares available for issuance under the Amended 2019 Plan, the Board and Compensation Committee considered shares remaining available under the current plan, total outstanding equity awards, and how long the remaining shares available under the current plan are expected to last. To facilitate approval of the Plan Amendment, set forth below under “—Potential Dilution” is information about our common shares that may be issued under our equity compensation plans as of March 25, 2024.
Why You Should Vote in Favor of our Say-on-Pay Vote
| What We Do: | What We Don’t Do: | | ● Emphasize pay for performance | ● No guaranteed salary increases or bonuses | | ● Structure our executive compensation so a significant portion of pay is at risk | ● No repricing of stock options unless approved by shareholders | | ● Maintain competitive pay packages | ● No liberal share counting under our equity plan | | ● Structure our executive compensation so a significant portion is paid in equity | ● No hedging or pledging of DiaMedica securities | | ● Maintain a clawback policy | ● No perquisites |
Board Leadership Structure
Board Leadership Structure Under our Corporate Governance Guidelines, the Board of Directors may select from its members a Chairman of the Board. The office of Chairman of the Board and the office of President and Chief Executive Officer may be held by one person. The Board of Directors believes it is best not to have a fixed policy on this issue and that it should be free to make this determination based on what it believes is best in light of current circumstances. The Board of Directors, acting as a group or through the Nominating and Corporate Governance Committee, will periodically review the leadership structure of the Board of Directors to assess whether it is appropriate given the specific characteristics and circumstances of DiaMedica. However, the Board of Directors does strongly endorse the concept of independent directors being in a position of leadership. If at any time, the Chief Executive Officer and Chairman of the Board are the same, the Board of Directors shall elect an independent director to serve as the lead director. The lead director will have the following duties and responsibilities in addition to such other duties and responsibilities as may be determined by the Board of Directors from time to time.
Board Leadership Structure
| ● | chairing the executive sessions of the independent directors and calling meetings of the independent directors; |
Board Leadership Structure
| ● | determining the agenda for the executive sessions of the independent directors and participating with the Chairman of the Board in establishing the agenda for Board meetings; |
Board Leadership Structure
| ● | coordinating feedback among the independent directors and the Chief Executive Officer; |
Board Leadership Structure
| ● | overseeing the development of appropriate responses to communications from shareholders and other interested persons addressed to the independent directors as a group; |
Board Leadership Structure
| ● | on behalf of the independent directors, retaining legal counsel or other advisors as they deem appropriate in the conduct of their duties and responsibilities; and |
Board Leadership Structure
| ● | performing such other duties as the Board of Directors deems appropriate from time to time. |
Board Leadership Structure
Mr. Pilnik currently serves as Chairman of the Board and Rick Pauls currently serves as President and Chief Executive Officer. We currently believe this leadership structure is in the best interests of DiaMedica and our shareholders and strikes the appropriate balance between the President and Chief Executive Officer’s responsibility for the strategic direction, day-to-day leadership and performance of our company and the Chairman of our Board’s responsibility to guide overall strategic direction of our company and provide oversight of our corporate governance and guidance to our President and Chief Executive Officer and to set the agenda for and preside over board meetings. We recognize that different leadership structures may be appropriate for companies in different situations and believe that no one structure is suitable for all companies. We believe that our company is well served by this leadership structure. We anticipate that the Board of Directors will periodically review our leadership structure and may make such changes in the future as it deems appropriate. Under our Corporate Governance Guidelines, our independent directors will meet with no company management present during a portion of or after Board meetings on a regular basis but not fewer than two times per year. After each such executive session, and as otherwise necessary, our Chairman of the Board provides our Chief Executive Officer with any actionable feedback from our independent directors. The Board of Directors met six times in executive session during the fiscal year ended December 31, 2023.
Compensation Committee
| ● | recommending and leading a process for the determination of non-employee director compensation. |
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION
Non-Employee Director Compensation Program
Non-Employee Director Compensation Program Overview. Our non-employee directors currently consist of Michael Giuffre, M.D., Richard Kuntz, M.D., M.Sc., Tanya Lewis, James Parsons, Richard Pilnik, and Charles Semba, M.D. We use a combination of cash and long-term equity-based incentive compensation in the form of annual stock option grants and either deferred stock units or restricted stock units in lieu of cash retainers to attract and retain qualified candidates to serve on the Board of Directors. In setting non-employee director compensation, we follow the process and procedures described under “Corporate Governance—Compensation Committee—Processes and Procedures for the Determination of Director Compensation.” On May 18, 2023, the Board approved, upon recommendation of the Compensation Committee, the following changes to the Non-Employee Director Compensation Program:
Non-Employee Director Compensation Program
| ● | A $500 increase in the annual cash retainer for members of the Nominating and Corporate Governance Committee and a $250 increase in the annual cash retainer for the Chair of the Nominating and Corporate Governance Committee; |
Non-Employee Director Compensation Program
| ● | An increase in the annual equity award for non-employee directors from 0.05% to 0.06% of our outstanding shares; and |
Non-Employee Director Compensation Program
| ● | An increase in the initial equity award to non-employee directors from 0.10% to 0.12% of our outstanding shares. |
Non-Employee Director Compensation Program
In recommending these changes, the Compensation Committee consulted with its independent compensation consultant, Alpine Rewards, LLC, and reviewed a competitive analysis prepared by Alpine Rewards that used the same peer group as used in reviewing our executive compensation program. Cash Retainers. The following table sets forth the annual cash retainers paid to our non-employee directors during fiscal 2023:
Non-Employee Director Compensation Program
| Description | Annual Cash Retainer January 1, 2023 - May 17, 2023 | Annual Cash Retainer Effective May 18, 2023 | | Board Member | $40,000 | $40,000 | | Chairman of the Board | 30,000 | 30,000 | | Audit Committee Chair | 15,000 | 15,000 | | Audit Committee Member (Excluding Chair) | 7,500 | 7,500 | | Compensation Committee Chair | 10,000 | 10,000 | | Compensation Committee Member (Excluding Chair) | 5,000 | 5,000 | | Nominating and Corporate Governance Committee Chair | 7,500 | 8,000 | | Nominating and Corporate Governance Committee Member (Excluding Chair) | 3,750 | 4,000 |
Non-Employee Director Compensation Program
Annual Stock Options. Under the amended Non-Employee Director Compensation Program, each non-employee director is granted a stock option to purchase a number of common shares equal to 0.06% of our outstanding shares and the Chairman of the Board is granted an additional stock option to purchase a number of common shares equal to 0.02% of our outstanding shares, in each case rounding down to the nearest whole share. These annual stock options are granted effective as of June 1st each year. All of these stock options have a term of 10 years, a per share exercise price equal to 100% of the fair market value of a common share on the date of grant and vest and become exercisable in four as nearly equal as possible quarterly installments over one year, and in each case so long as the non-employee director is a director of DiaMedica as of such date. Accordingly, on June 1, 2023, Messrs. Pilnik, Giuffre and Parsons, and Dr. Semba each received an option to purchase 16,968 common shares at an exercise price equal to $2.73 per share and Mr. Pilnik as Chairman of the Board received an additional 5,387 common shares at an exercise price equal to $2.73 per share. These options expire on May 31, 2033 and vest in four nearly equal quarterly installments over one year, subject to continued service. Our Non-Employee Director Compensation Program also provides that each new non-employee director will be granted a stock option to purchase a number of common shares equal to 0.12% of our outstanding shares, rounding down to the nearest whole share, effective as of the new director’s first day as a director. This initial equity award is in lieu of an annual equity award for the first year of service. This initial stock option has a term of 10 years, a per share exercise price equal to 100% of the fair market value of a common share on the date of grant and vests and becomes exercisable in 12 as nearly equal as possible quarterly installments over three years, and in each case so long as the non-employee director is a director of DiaMedica as of such date. On March 1, 2023, Ms. Lewis received an option to purchase 26,443 common shares at an exercise price equal to $1.77 per share. Ms. Lewis’s option grant was made prior to the May 18, 2023 changes to our Non-Employee Director Compensation Program, and therefore, reflected 0.10% of our outstanding common shares as of March 1, 2023. On June 1, 2023, Ms. Lewis received an additional option to purchase 7,493 common shares at an exercise price equal to $2.73 per share to bring her total option grant to reflect 0.12% of our outstanding common shares as of her start date, March 1, 2023. On May 30, 2023, Dr. Kuntz received an option to purchase 32,320 common shares at an exercise price equal to $2.81 per share. Dr. Kuntz’s option grant was after the May 18, 2023 changes to our Non-Employee Director Compensation Program, and therefore, represented 0.12% of our outstanding common shares as of May 30, 2023. Deferred Stock Units or Restricted Stock Units in Lieu of Annual Cash Retainers. We provide our non-employee directors the opportunity to elect to receive DSUs or RSUs in lieu of up to 100% of their annual cash retainers payable for services to be rendered as a non-employee director, chairman and chair or member of any board committee. Effective as of the first trading day of each year, each of our non-employee directors who elected to receive DSUs or RSUs in lieu of all or a portion of such director’s annual cash retainers, will be granted DSU or RSU awards under the 2019 Plan or any other shareholder-approved plan covering that number of shares as determined based on the following formula (rounding down to the nearest whole share):
Non-Employee Director Compensation Program
| ● | the aggregate dollar amount of the elected portion of the annual cash retainers that otherwise would have been payable to the non-employee director for services to be rendered as a non-employee director, Chairman of the Board and Chair or member of any Board committee during the year (or transition or other period, if applicable) based on such director’s Board committee memberships and Chair positions as of the date of grant, divided by |
Non-Employee Director Compensation Program
| ● | the 10-trading day average closing sale price of our common shares, as reported by The Nasdaq Capital Market, and as determined on the third (3rd) trading day prior to the anticipated grant date of the award. |
Non-Employee Director Compensation Program
Such DSU and RSU awards vest in four as nearly equal as possible quarterly installments, on March 31, June 30, September 30 and December 31, (or prorated from the first date as a director in the case of new directors) in each case so long as the non-employee director is a director of DiaMedica as of such date. DSU awards are settled following a separation from service by such director and RSU awards are settled immediately upon vesting or, if earlier, the death of the director. If a non-employee director who elected to receive a DSU or RSU award in lieu of all or a portion of such director’s annual cash retainers is no longer a director of DiaMedica before such director’s interest in all of the shares underlying the DSU or RSU award have vested, the director will forfeit his or her rights to receive all of such unvested shares on the day his or her status as a director of DiaMedica terminates. However, shares underlying the DSU or RSU award corresponding to the elected cash retainers for such quarter in which the director’s status changed will vest ratably for such quarter based on the number of days of service as a director of DiaMedica during such quarter. If a non-employee director of DiaMedica who elected to receive a DSU or RSU award in lieu of his or her annual cash retainers becomes entitled to receive an increased or additional annual cash retainer during the year, the director will receive such increased or additional annual cash retainer in cash until the director makes his or her election for the following year. Conversely, if a non-employee director of DiaMedica who elected to receive a DSU or RSU award in lieu of such director’s annual cash retainers experiences a change in committee membership or Chair positions during the year, such that the aggregate amount of annual cash retainers for the year to which the director is entitled is less than the aggregate amount used to calculate the director’s most recent DSU or RSU award, the director will forfeit effective as of such change his or her rights to receive the corresponding portion of the shares underlying such DSU or RSU award; provided, however, that in the event the director elected to receive only a portion of his or her cash retainers in the form of a DSU or RSU award, the amount of cash retainers to be received will be reduced first. In addition, in the event shares underlying the DSU or RSU award are forfeited, the vesting of the DSU or RSU award will be revised accordingly as of the date of such change.
Director Compensation Table
Director Compensation Table The table below provides summary information concerning the compensation of each individual who served as a director of our company during the fiscal year ended December 31, 2023, other than Rick Pauls, our President and Chief Executive Officer, who was not compensated separately for serving on the Board of Directors during fiscal 2023. His compensation during fiscal 2023 for serving as an executive officer of our company is set forth under “Executive Compensation—Summary Compensation Table.”
Director Compensation Table
| Name | Fees Earned or Paid in Cash(1) | Option Awards(2)(3) | Stock Awards(4)(5) | All Other Compensation(6) | Total | | Amy Burroughs(7) | $13,697 | $24,194 | $— | $— | $37,891 | | Michael Giuffre, M.D. | 53,750 | 37,175 | — | — | 90,925 | | Richard Kuntz, M.D.(8) | 23,333 | 72,684 | — | — | 96,017 | | Tanya Lewis(9) | 37,500 | 54,350 | — | — | 91,850 | | James Parsons | 60,000 | 37,175 | — | — | 97,175 | | Richard Pilnik | 85,000 | 48,978 | — | — | 133,978 | | Charles Semba, M.D. | 52,500 | 37,175 | — | — | 89,675 |
Director Compensation Table
| (1) The following directors elected to receive DSUs or RSUs in exchange for all or part of their cash retainers: Ms. Burroughs ($9,530 was paid in the form of 6,439 DSUs); Dr. Giuffre ($53,750 was paid in the form of 35,130 DSUs); Mr. Pilnik ($85,000 was paid in the form of 55,555 DSUs); and Dr. Semba ($26,250 was paid in the form of 17,156 RSUs). |
Director Compensation Table
| (2) Amounts reflect the grant date fair value for option awards granted to each non-employee director computed in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718, other than in the case of Ms. Burroughs who did not receive an annual option award. The amount for Ms. Burroughs reflects the incremental fair value expense associated with the modification of her outstanding stock options to accelerate the vesting of her unvested options and extend the post-termination exercise period of her options in connection with her resignation as a director. |
Director Compensation Table
| (3) The following current and former directors held the following option awards as of December 31, 2023: Ms. Burroughs (32,008 options); Dr. Giuffre (90,839 options); Dr. Kuntz (32,320 options); Ms. Lewis (33,936 options); Mr. Parsons (90,839 options); Mr. Pilnik (144,435 options); and Dr. Semba (48,976 options). |
Director Compensation Table
| (4) Represents the difference between the grant date fair value of the DSUs or RSUs received by the director and the amount of cash retainers forfeited in lieu of such DSUs or RSUs, if such amount is positive. For 2023, the amount is negative since in the case of each director, the grant date fair value of the DSUs or RSUs received was less than amount of cash retainers forfeited since the grant date fair value per share of the DSUs and RSUs was $1.48, compared to the 10-trading day average stock price of $1.53 used to convert the dollar amount of retainers forfeited into a number of DSUs or RSUs. |
Director Compensation Table
| (5) The following current and former directors held the following stock awards (all in the form of DSUs) as of December 31, 2023: Ms. Burroughs (0); Dr. Giuffre (69,105); Dr. Kuntz (0); Ms. Lewis (0); Mr. Parsons (36,259); Mr. Pilnik (106,792); and Dr. Semba (0). |
Director Compensation Table
| (6) We do not provide perquisite and other personal benefits to our non-employee directors. |
Director Compensation Table
| (7) Ms. Burroughs resigned from the Board of Directors effective March 1, 2023, but her DSU award was vested through May 17, 2023, the date of the 2023 Annual General and Special Meeting of Shareholders. |
Director Compensation Table
| (8) Dr. Kuntz joined the Board of Directors effective May 30, 2023. |
Director Compensation Table
| (9) Ms. Lewis joined the Board of Directors effective March 1, 2023. |
Use of Market Data
Use of Market Data We strive to compensate our executive officers competitively relative to other companies that are similar to us from a market capitalization, revenue, number of employees and clinical development perspective. To ensure reasonableness and competitiveness of our executive compensation packages relative to our peer companies, the Compensation Committee evaluates our peer group with the aid of our independent compensation consultant and with input from management. The peer group used to help determine 2023 compensation was prepared by Alpine Rewards, LLC, our independent compensation consultant. For 2023, Alpine Rewards, LLC recommended increasing our peer company group from 15 to 20 and consisted of the following 20 other companies in the same industry and with similar characteristics from a market capitalization, revenue, number of employees and clinical development perspective.
Use of Market Data
| Abeona Therapeutics Inc. | Aceragen, Inc. | Annovis Bio, Inc. | | Applied Therapeutics, Inc. | Athira Pharma, Inc. | BioCardia, Inc. | | Brainstorm Cell Therapeutics Inc. | Clene Inc. | Galectin Therapeutics Inc. | | GlycoMimetics, Inc. | Hepion Pharmaceuticals, Inc. | Immunic, Inc. | | Lipocine Inc. | Matinas BioPharma Holdings, Inc. | MediciNova, Inc. | | Satsuma Pharmaceuticals, Inc. | Soleno Therapeutics, Inc. | Spruce BioSciences, Inc. | | Tracon Pharmaceuticals, Inc. | Zynerba Pharmaceuticals, Inc. | |
Use of Market Data
Data from this peer group, therefore, was considered in the compensation benchmarking process as one input in helping us determine appropriate pay levels.
Elements of Our Executive Compensation Program
| Element | Key Characteristics | Purpose | Key 2023 Changes | | Base Salary (Fixed, Cash) | A fixed amount, paid in cash periodically throughout the year and reviewed annually and, if appropriate, adjusted. | Provides a source of fixed income that is market competitive and reflects scope and responsibility of the position held. | Our CEO received a base salary increase of 8%, our CFO received a base salary increase of 5%, our SVP, Clinical received a base salary increase of 3%, and our former CMO received a base salary increase of 10%, in each case to move their salaries closer toward our target positioning in our peer group. | | Short-Term Incentive (STI) (Variable, Cash) | A variable, short-term element of compensation that is payable in cash based on achievement of key pre-established annual corporate objectives, and for certain executives, individual goals. | Motivates and rewards our executives for achievement of annual corporate and other objectives. | The target incentive percentage under our short-term incentive plan for 2023 was 50% of base salary for our CEO, 40% of base salary for our CFO, 35% of base salary for our SVP, Clinical and 40% of base salary for our former CMO, which were all unchanged from last year. | | Long-Term Incentives (LTI) (Variable, Equity-Based Awards) | A variable, long-term element of compensation that is provided in the form of time-vested stock option awards. | Aligns the interests of our executives with our shareholders; encourages our executives to focus on our long-term performance; promotes retention; and encourages significant share ownership. | Our named executive officers received stock option awards, with 25% vesting on the one-year anniversary of the grant date and the remaining 75% vesting in 12 quarterly installments thereafter. | | Retirement Benefits | A defined contribution retirement plan with a discretionary company match. | Provides an opportunity for employees to save and prepare financially for retirement. | No changes. |
Elements of Our Executive Compensation Program
We describe each key element of our executive compensation program in more detail in the following pages, along with the compensation decisions made in 2023. The compensation paid to our named executive officers is governed, in part, by written employment agreements with them, which are described below under “—Employment Agreements.” The named executive officers also have termination and change in control benefits as set forth in their respective employment agreements. See “—Post-Termination Severance and Change in Control Arrangements.”
Annual Short-Term Incentive Compensation
Annual Short-Term Incentive Compensation In addition to base compensation, we provide our named executive officers the opportunity to earn short-term incentive (STI) compensation based on the achievement of certain annual corporate and individual performance goals. Our STI program directly aligns the interests of our executive officers and shareholders by providing an incentive for the achievement of key corporate and individual performance objectives that are critical to the success of our company and linking a significant portion of each executive’s annual compensation to the achievement of such objectives. Under the 2023 STI program, each named executive officer had a target incentive percentage that was a percentage of their base salary.
Annual Short-Term Incentive Compensation
| Name | Percentage of Base Salary | | Rick Pauls | 50% | | Scott Kellen | 40% | | Julie Daves | 35% | | Kirsten Gruis, M.D. | 40% |
Annual Short-Term Incentive Compensation
2023 STI payouts were based primarily on corporate objectives, which had a 75% weighting, and to a lesser extent, individual objectives, which had a 25% weighting. The corporate objectives related to our ReMEDy2 trial, the Phase 1C study and raising additional capital and were determined by the Compensation Committee to have been achieved at 70% of target. The individual objectives varied by executive and related to our ReMEDy2 trial, manufacturing, developing people and organization, accounting and financial reporting, commercial and partnering activities. The individual objectives were determined by the Compensation Committee to have been achieved at 80% of target for our CEO, 70% of target for our CFO and 84% of target for SVP, Clinical. Our former CMO did not receive any 2023 STI payout. The following sets forth each executive’s target bonus opportunity and actual STI payout for 2023:
Annual Short-Term Incentive Compensation
| Officer Name and Position | 2023 Base Salary | Target Incentive Percentage of Base Salary | Target Bonus Opportunity | 2023 Actual Payout | | Rick Pauls | $573,000 | 50% | $286,500 | $239,958 | | Scott Kellen | 357,000 | 40% | 142,000 | 116,025 | | Julie Daves | 309,000 | 35% | 108,150 | 91,657 | | Kirsten Gruis, M.D. | 418,000 | 40% | 167,200 | — |
Long-Term Equity-Based Incentive Compensation
Long-Term Equity-Based Incentive Compensation The long-term equity-based incentive compensation component consists of stock options granted under the DiaMedica Therapeutics Inc. Amended and Restated 2019 Omnibus Incentive Plan. Long-term equity-based incentives are intended to comprise a significant portion of each executive’s compensation package, consistent with our executive compensation objective to align the interests of our executives with the interests of our shareholders. The Compensation Committee believes that options effectively incentivize executives to maximize company performance over the long-term, as the value of awards is directly tied to an appreciation in the value of our common shares. Stock options also provide an effective retention mechanism because of vesting provisions. An important objective of our long-term equity-based incentive program is to strengthen the relationship between the long-term value of our common shares and the potential financial gain for our executives. Stock options provide recipients with the opportunity to purchase our common shares at a price fixed on the grant date regardless of future market price. Because stock options become valuable only if the share price increases above the exercise price and the option holder remains employed during the period required for the option to vest, they provide an incentive for an executive to remain employed. In addition, stock options link a portion of an executive’s compensation to the interests of our shareholders by providing an incentive to achieve corporate goals and increase the market price of our common shares over time. The table below sets forth the stock options that we granted to our named executive officers in 2023, which options vest with respect to 25% of the underlying common shares on the one-year anniversary of the grant date, and with respect to the remaining 75% of the underlying common shares in 12 as nearly equal as possible quarterly installments commencing after the one-year anniversary of the grant date:
Long-Term Equity-Based Incentive Compensation
| Name | Grant Date | Grant Date Fair Value | Number of Shares Underlying Options | Exercise Price | | Rick Pauls | 06/01/23 | $396,553 | 181,000 | $2.73 | | Scott Kellen | 06/01/23 | 146,790 | 67,000 | 2.73 | | Julie Daves | 06/01/23 | 118,309 | 54,000 | 2.73 | | Kirsten Gruis, M.D. | 06/01/23 | 146,790 | 67,000 | 2.73 |
Long-Term Equity-Based Incentive Compensation
The number of stock options granted to our executives was determined based on a percent of company analysis as opposed to a value analysis.
Employment Agreements
Employment Agreements We typically enter into employment agreements with our executive officers, which provide for an annual base salary, subject to periodic reviews, incentive based compensation, equity-based compensation and benefits, in each case as determined by the Board of Directors (or a committee thereof) from time to time. The agreements contain standard confidentiality, non-competition, non-solicitation and assignment of intellectual property provisions. The agreements also contain standard severance and change in control provisions which are described under “—Post-Termination Severance and Change in Control Arrangements.” Consulting Agreement with Kirsten Gruis, M.D. In September 2023, we entered into a consulting agreement with Dr. Kirsten Gruis in order to implement an orderly transition of her responsibilities and projects following her resignation. Under this agreement, Dr. Gruis agreed to provide consulting services for nine months in exchange for a monthly consulting fee of $33,500. We also entered into a separation agreement with Dr. Gruis pursuant to which she agreed to provide a general release of claims against us and our subsidiaries. The separation agreement also includes customary non-disparagement and confidentiality obligations.
Post Termination Severance and Change in Control Arrangements
Post Termination Severance and Change in Control Arrangements Severance Arrangements. Under the terms of the employment agreements with our executive officers, if we terminate the executive’s employment without “cause”, the executive will be entitled to: (i) salary continuation payments for 12 months in the case of Mr. Pauls and nine months in the case of each of the other executives, (ii) Consolidated Omnibus Budget Reconciliation Act (COBRA) premium reimbursement during the salary continuation period, (iii) a pro rata portion of the executive’s target annual bonus for the year of termination, and (iv) immediate acceleration of the executive’s equity awards. These severance benefits are subject to the executive executing a separation agreement and release of claims. “Cause” is defined in the employment agreements as: (i) gross negligence or willful failure to perform the executive’s duties and responsibilities to DiaMedica; (ii) commission of any act of fraud, theft, embezzlement, financial dishonesty or any other willful misconduct that has caused or is reasonably expected to result in injury to DiaMedica; (iii) conviction of, or pleading guilty or nolo contendere to, any felony or a lesser crime involving dishonesty or moral turpitude; (iv) material breach by the executive of any of their obligations under the agreement or any written agreement or covenant with DiaMedica, including the policies adopted from time to time by DiaMedica applicable to all executives, that has not been cured within 30 days of notice of such breach; or (v) we terminate the employment of the executive in connection with a liquidation, dissolution or winding down of DiaMedica. We believe that the form and amount of these severance benefits are fair and reasonable to both DiaMedica and our executives. The Compensation Committee reviews our severance arrangements periodically to ensure that they remain necessary and appropriate. Change in Control Arrangements. To encourage continuity, stability and retention when considering the potential disruptive impact of an actual or potential corporate transaction, we have established change in control arrangements, including provisions in the 2019 Plan and executive employment agreements. These arrangements are designed to incentivize our executives to remain with our company in the event of a change in control or potential change in control. Under the terms of the 2019 Plan, subject to the terms of the applicable award agreement or an individual agreement between DiaMedica and a participant, upon a change in control, the Board of Directors may, in its discretion, determine whether some or all outstanding options and stock appreciation rights shall become exercisable in full or in part, whether the restriction period and performance period applicable to some or all outstanding restricted stock awards and restricted stock unit awards shall lapse in full or in part and whether the performance measures applicable to some or all outstanding awards shall be deemed to be satisfied. The Board of Directors may further require that shares of stock of the corporation resulting from such a change in control, or a parent corporation thereof, be substituted for some or all of our common shares subject to an outstanding award and that any outstanding awards, in whole or in part, be surrendered to us by the holder, to be immediately cancelled by us, in exchange for a cash payment, shares of capital stock of the corporation resulting from or succeeding us or a combination of both cash and such shares of stock. Under the terms of the employment agreements, if we terminate the executive’s employment without “cause” or the executive terminates their employment with “good reason” in connection with or within 12 months after a “change in control,” the executive will be entitled to: (i) salary continuation payments for 18 months in the case of Mr. Pauls and 12 months in the case of each of the other executives, (ii) COBRA premium reimbursement during the salary continuation period, (iii) a pro rata portion of their target annual bonus for the year of termination, and (iv) immediate acceleration of their equity awards. These severance benefits are subject to the executive executing a separation agreement and release of claims. “Good reason” is defined in the employment agreements as the executive’s resignation within 30 days following the expiration of any cure period following the occurrence of one or more of the following, without the executive’s express written consent: (i) a material reduction of the executive’s duties, authority, reporting level, or responsibilities, relative to their duties, authority, reporting level, or responsibilities in effect immediately prior to such change in control; (ii) a material reduction in the executive’s base compensation; or (iii) DiaMedica’s requiring of the executive to change the principal location at which the executive is to perform services by more than 50 miles. “Change in control” is defined in the employment agreements as the occurrence of any of the following: (i) the acquisition, other than from us, by any individual, entity or group of beneficial ownership of 50% or more of either our then outstanding common shares or the combined voting power of our then outstanding voting securities entitled to vote generally in the election of directors; (ii) the consummation of a reorganization, merger or consolidation of DiaMedica, in each case, with respect to which all or substantially all of the individuals and entities who were the respective beneficial owners of our common shares and voting securities immediately prior to such reorganization, merger or consolidation do not, following such reorganization, merger or consolidation, beneficially own, directly or indirectly, more than 50% of, respectively, of then outstanding common shares and the combined voting power of then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such reorganization, merger or consolidation; or (iii) the sale or other disposition of all or substantially all of our assets. We believe these change in control arrangements are an important part of our executive compensation program in part because they mitigate some of the risk for executives working in a smaller company where there is a meaningful risk that DiaMedica may be acquired. Change in control benefits are intended to attract and retain qualified executives who, absent these arrangements and in anticipation of a possible change in control of our company, might consider seeking employment alternatives to be less risky than remaining with our company through the transaction. We believe that the form and amount of these change in control benefits are fair and reasonable to both our company and our executives. The Compensation Committee periodically reviews our change in control arrangements to ensure that they remain necessary and appropriate.
Summary Compensation Table
Summary Compensation Table The table below provides summary information concerning all compensation awarded to, earned by or paid to our named executive officers during our 2023 and 2022 fiscal years. Mr. Pauls is also a director of DiaMedica but did not receive any compensation related to his role as a director.
Summary Compensation Table
| Name and Principal Position | Year | Salary | Bonus(1) | Option Awards(2) | Non- Equity Incentive Plan Compen- sation(3) | All Other Compen- sation(4) | Total | | Rick Pauls | 2023 | $562,000 | $— | $396,553 | $239,958 | $16,650 | $1,215,161 | | President and Chief Executive Officer | 2022 | 522,796 | — | 343,819 | 198,342 | 15,650 | 1,080,607 | | Scott Kellen | 2023 | 352,750 | — | 146,790 | 116,025 | 16,650 | 632,215 | | Chief Financial Officer and Secretary | 2022 | 329,392 | — | 116,549 | 101,983 | 15,650 | 563,574 | | Julie Daves(5) | 2023 | 306,754 | — | 118,309 | 91,657 | 16,650 | 533,370 | | SVP, Clinical Development Operations | | | | | | | | | Kirsten Gruis, M.D. (6) | 2023 | 298,643 | — | 146,790 | — | 150,650 | 596,083 | | Former Chief Medical Officer | 2022 | 364,167 | — | 487,789 | 137,085 | 15,650 | 1,004,691 |
Summary Compensation Table
| (1) We generally do not pay discretionary bonuses. |
Summary Compensation Table
| (2) Amounts reflect the full grant-date fair value of stock options granted during the applicable year computed in accordance with ASC Topic 718, rather than the amounts paid to or realized by the named individual. The grant date fair value is determined based on our Black-Scholes option pricing model. The table below sets forth the specific assumptions used in the valuation of each such option award: |
Summary Compensation Table
| Grant Date | Grant Date Fair Value Per Share | Risk Free Interest Rate | Expected Life (in years) | Expected Volatility | Expected Dividend Yield | | 06/01/2022 | $1.94 | 2.93% | 5.6 | 102.86% | — | | 01/03/2022 | $1.94 | 2.93% | 5.6 | 102.86% | — | | 07/28/2021 | $3.05 | 1.41% | 5.5 | 103.67% | — |
Summary Compensation Table
There can be no assurance that unvested awards will vest and, absent vesting and exercise, no value will be realized by the executive for the award.
Summary Compensation Table
| (3) Amounts reported represent awards earned for that year under our annual short-term incentive plan but paid during the following year. See “—Executive Compensation Overview—Annual Short-Term Incentive Compensation.” |
Summary Compensation Table
| (4) The amounts shown in the “All Other Compensation” column for fiscal 2023 include the following with respect to each named executive officer: |
Summary Compensation Table
| Name | 401(k) Match | Health Savings Account Contribution | Consulting Services | Total | | Rick Pauls | $13,200 | $3,450 | $— | $16,650 | | Scott Kellen | 13,200 | 3,450 | — | 16,650 | | Julie Daves | 13,200 | 3,450 | — | 16,650 | | Kirsten Gruis, M.D. . | 13,200 | 3,450 | 134,000 | 150,650 |
Summary Compensation Table
| (5) Ms. Daves was not a named executive officer for 2022. |
Summary Compensation Table
| (6) Dr. Gruis resigned effective as of August 31, 2023. The base salary for Dr. Gruis includes a payment of $29,475 for accrued paid-time off. |
Outstanding Equity Awards at Fiscal Year-End
Outstanding Equity Awards at Fiscal Year-End The following table presents for each named executive officer information regarding outstanding equity awards held as of December 31, 2023.
Outstanding Equity Awards at Fiscal Year-End
| | Option Awards(1) | | | | | Stock Awards | | | | Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price | | Option Expiration Date(2) | Number of Shares or Units of Stock That Have Not Vested(3) (#) | Market Value of Shares or Units of Stock That Have Not Vested(4) ($) | | | Rick Pauls | | | | | | | | | | Stock Options | 67,500 | — | (CAD$) | 3.00 | 12/01/2025 | | | | | | 42,500 | — | (CAD$) | 5.20 | 11/28/2026 | | | | | | 42,500 | — | (CAD$) | 6.40 | 06/19/2027 | | | | | | 33,500 | — | (CAD$) | 11.20 | 04/17/2028 | | | | | | 264,000 | — | (US$) | 4.60 | 06/23/2029 | | | | | | 56,000 | — | (US$) | 4.64 | 05/31/2030 | | | | | | 98,438 | 76,563 | (US$) | 5.00 | 07/27/2031 | | | | | | 66,375 | 110,652 | (US$) | 2.45 | 05/31/2032 | | | | | | — | 181,000 | (US$) | 2.73 | 05/31/2033 | | | | | DSUs | | | | | | 1,749 | (US$) | 4,967 | | Scott Kellen | | | | | | | | | | Stock Options | 50,250 | — | (CAD$) | 11.20 | 04/17/2028 | | | | | | 99,750 | — | (US$) | 4.60 | 06/23/2029 | | | | | | 35,000 | — | (US$) | 4.64 | 05/31/2030 | | | | | | 33,750 | 26,250 | (US$) | 5.00 | 07/27/2031 | | | | | | 22,500 | 37,500 | (US$) | 2.45 | 05/31/2032 | | | | | | — | 67,000 | (US$) | 2.73 | 05/31/2033 | | | | | Julie Daves | | | | | | | | | | Stock Options | 61,250 | 78,750 | (US$) | 1.47 | 09/12/2032 | | | | | | — | 54,000 | (US$) | 2.73 | 05/31/2033 | | | | | Kirsten Gruis, M.D. | | | | | | | | | | Stock Options | 76,667 | 83,333 | (US$) | 3.88 | 01/02/2032 | | | | | | — | 67,000 | (US$) | 2.73 | 05/31/2033 | | | |
Outstanding Equity Awards at Fiscal Year-End
| (1) The stock options that remained unvested as of December 31, 2023 generally vest monthly or quarterly and may be accelerated under certain circumstances, including if the recipient’s employment or service relationship with our company is involuntarily terminated. |
Outstanding Equity Awards at Fiscal Year-End
| (2) All stock options have a 10-year term, but may terminate earlier if the recipient’s employment or service relationship with our company terminates. |
Outstanding Equity Awards at Fiscal Year-End
| (3) All DSU awards are settled after the holder’s employment or service relationship with our company terminates. |
Outstanding Equity Awards at Fiscal Year-End
| (4) The market value of DSU awards that have not been settled as of December 31, 2023 is based on the closing sale price of our common shares as reported by The Nasdaq Capital Market on December 29, 2023, the last trading day of 2023 ($2.84). |
Pay Versus Performance Disclosure
Pay Versus Performance Disclosure As required by Section 953(a) of the Dodd-Frank Act and Item 402(v) of SEC Regulation S-K, we are providing the following information about the relationship between “compensation actually paid” to our named executive officers, within the meaning of such rules, and certain financial performance measures of our company. The table below provides information regarding compensation actually paid to our CEO who is our principal executive officer (PEO), and compensation actually paid to our other non-PEO named executive officers, during each of the past two fiscal years, as well as total shareholder return and net income (loss) for each of the past two fiscal years.
Pay Versus Performance Disclosure
| Year | Summary Compensation Table Total for PEO(1) | Compensation Actually Paid to PEO(2)(3) | Average Summary Compensation Table Total for Non-PEO NEOs(4) | Average Compensation actually Paid to Non-PEO NEOs(5)(6) | Value of Initial Fixed $100 Investment Based on Total Shareholder Return(7) | Net Income (Loss)(8) | | 2023 | $1,215,161 | $1,424,344 | $587,222 | $707,892 | $74 | $(19,423) | | 2022 | 1,080,607 | 534,244 | 784,132 | 507,196 | 41 | (13,676) |
Pay Versus Performance Disclosure
| (1) Amounts reported represent the Summary Compensation Table total for our CEO for each of the years presented. See “Executive Compensation – Summary Compensation Table.” |
Pay Versus Performance Disclosure
| (2) Amounts reported represent compensation actually paid to our CEO for each of the years presented. The dollar amounts in this column do not reflect the actual amount of compensation earned by or paid to our CEO during the applicable year. |
Pay Versus Performance Disclosure
| (3) Compensation actually paid to our PEO consists of the following amounts deducted from or added to the Summary Compensation Table total for our CEO for each of the years presented: |
Pay Versus Performance Disclosure
| | Rick Pauls | | Summary Compensation Table Total for 2023 | $1,215,161 | | Deduct: Stock awards(a) | — | | Deduct: Option awards(b) | (396,553) | | Add: Year-end value of equity awards granted during the year that are outstanding and unvested(c) | 387,114 | | Add: Change in fair value of equity awards granted in prior years that are outstanding and unvested(d) | 139,587 | | Add: Change in fair value of equity awards granted in prior years that vested during the year(e) | 79,035 | | Add: Value of dividend equivalents accrued on equity awards during the year | — | | Compensation Actually Paid for 2023 | 1,424,344 | | Summary Compensation Table Total for 2022 | $1,080,607 | | Deduct: Stock awards(a) | — | | Deduct: Option awards(b) | (343,819) | | Add: Year-end value of equity awards granted during the year that are outstanding and unvested(c) | 147,914 | | Add: Change in fair value of equity awards granted in prior years that are outstanding and unvested(d) | (266,518) | | Add: Change in fair value of equity awards granted in prior years that vested during the year(e) | (83,940) | | Add: Value of dividend equivalents accrued on equity awards during the year | — | | Compensation Actually Paid for 2022 | 534,244 |
Pay Versus Performance Disclosure
| (a) Represents the total of the amounts reported in the “Stock Awards” column in the Summary Compensation Table for the applicable year. |
Pay Versus Performance Disclosure
| (b) Represents the total of the amounts reported in the “Option Awards” column in the Summary Compensation Table for the applicable year. |
Pay Versus Performance Disclosure
| (c) Represents the year-end value of equity awards granted during the applicable year that are outstanding and unvested as of the end of such applicable year. |
Pay Versus Performance Disclosure
| (d) Represents the amount of change as of the end of the applicable year (from the end of the prior fiscal year) in fair value of any equity awards granted in prior years that are outstanding and unvested as of the end of such applicable year. |
Pay Versus Performance Disclosure
| (e) Represents the amount of change as of the vesting date (from the end of the prior fiscal year) in fair value of any equity awards granted in prior years that vested during the applicable year. |
Pay Versus Performance Disclosure
Since we do not have a pension plan, all of the foregoing adjustments are equity award adjustments for each applicable year and include the addition (or subtraction, as applicable) of the following: (i) the year-end fair value of any equity awards granted in the applicable year that are outstanding and unvested as of the end of such applicable year; (ii) the amount of change as of the end of the applicable year (from the end of the prior fiscal year) in fair value of any equity awards granted in prior years that are outstanding and unvested as of the end of such applicable year; (iii) for equity awards that are granted and vest in the same applicable year, the fair value as of the vesting date; (iv) for equity awards granted in prior years that vest in the applicable year, the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value; (v) for equity awards granted in prior years that are determined to fail to meet the applicable vesting conditions during the applicable year, a deduction for the amount equal to the fair value at the end of the prior fiscal year; and (vi) the dollar value of any dividends or other earnings paid on equity awards in the applicable year prior to the vesting date that are not otherwise reflected in the fair value of such award or included in any other component of total compensation for such applicable year. Adjustments as provided in clauses (iii) and (vi) are inapplicable for all of the years presented in the table. The valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. The value of option awards is based on the fair value as of the end of the covered year or change in fair value during the covered year, in each case based on our Black-Scholes option pricing model, the assumptions of which are described in Note 12 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023.
Pay Versus Performance Disclosure
| (4) Average Summary Compensation Table total for non-PEO named executive officers reflects the average Summary Compensation Table total for Mr. Kellen, Ms. Daves and Dr. Gruis for 2023 and for Mr. Kellen and Dr. Gruis for 2022. |
Pay Versus Performance Disclosure
| (5) The amounts in this column represent the average compensation actually paid to the non-PEO named executive officers for each of the years presented. The dollar amounts in this column do not reflect the actual amount of compensation earned by or paid to our non-PEO named executive officers during the applicable year. |
Pay Versus Performance Disclosure
| (6) Average compensation actually paid to our non-PEO named executive officers consists of the following amounts deducted from or added to the Summary Compensation Table total for each of the years presented: |
Pay Versus Performance Disclosure
| Average for Non-PEO Named Executive Officers | | | Summary Compensation Table Total for 2023 | $587,222 | | Deduct: Stock awards(a) | — | | Deduct: Option awards(b) | (137,296) | | Add: Year-end value of equity awards granted during the year that are outstanding and unvested(c) | 134,028 | | Add: Change in fair value of equity awards granted in prior years that are outstanding and unvested(d) | 81,901 | | Add: Change in fair value of equity awards granted in prior years that vested during the year(e) | 42,037 | | Add: Value of dividend equivalents accrued on equity awards during the year | — | | Compensation Actually Paid for 2023 | 707,892 | | Summary Compensation Table Total for 2022 | $784,132 | | Deduct: Stock awards(a) | — | | Deduct: Option awards(b) | (302,169) | | Add: Year-end value of equity awards granted during the year that are outstanding and unvested(c) | 75,730 | | Add: Change in fair value of equity awards granted in prior years that are outstanding and unvested(d) | (36,824) | | Add: Change in fair value of equity awards granted in prior years that vested during the year(e) | (13,673) | | Add: Value of dividend equivalents accrued on equity awards during the year | — | | Compensation Actually Paid for 2022 | 507,196 |
Pay Versus Performance Disclosure
| (a) Represents the total of the amounts reported in the “Stock Awards” column in the Summary Compensation Table for the applicable year. |
Pay Versus Performance Disclosure
| (b) Represents the total of the amounts reported in the “Option Awards” column in the Summary Compensation Table for the applicable year. |
Pay Versus Performance Disclosure
| (c) Represents the year-end value of equity awards granted during the applicable year that are outstanding and unvested as of the end of such applicable year. |
Pay Versus Performance Disclosure
| (d) Represents the amount of change as of the end of the applicable year (from the end of the prior fiscal year) in fair value of any equity awards granted in prior years that are outstanding and unvested as of the end of such applicable year. |
Pay Versus Performance Disclosure
| (e) Represents the amount of change as of the vesting date (from the end of the prior fiscal year) in fair value of any equity awards granted in prior years that vested during the applicable year. |
Pay Versus Performance Disclosure
Since we do not have a pension plan, all of the foregoing adjustments are equity award adjustments for each applicable year and include the addition (or subtraction, as applicable) of the following: (i) the year-end fair value of any equity awards granted in the applicable year that are outstanding and unvested as of the end of such applicable year; (ii) the amount of change as of the end of the applicable year (from the end of the prior fiscal year) in fair value of any equity awards granted in prior years that are outstanding and unvested as of the end of such applicable year; (iii) for equity awards that are granted and vest in the same applicable year, the fair value as of the vesting date; (iv) for equity awards granted in prior years that vest in the applicable year, the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value; (v) for equity awards granted in prior years that are determined to fail to meet the applicable vesting conditions during the applicable year, a deduction for the amount equal to the fair value at the end of the prior fiscal year; and (vi) the dollar value of any dividends or other earnings paid on equity awards in the applicable year prior to the vesting date that are not otherwise reflected in the fair value of such award or included in any other component of total compensation for such applicable year. Adjustments as provided in clauses (iii) and (vi) are inapplicable for all of the years presented in the table. The valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. The value of option awards is based on the fair value as of the end of the covered year or change in fair value during the covered year, in each case based on our Black-Scholes option pricing model, the assumptions of which are described in Note 12 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023.
Pay Versus Performance Disclosure
| (7) The total shareholder return is calculated by the difference between our common share price at the end of the measurement period by our common share price at the beginning of the measurement period. |
Pay Versus Performance Disclosure
| (8) Amounts reported represent the amount of net loss reflected in our audited consolidated financial statements for the applicable year and is presented in thousands. |
Pay Versus Performance Relationship
Pay Versus Performance Relationship In accordance with Item 402(v) of SEC Regulation S-K, we are providing the following descriptions of the relationships between information presented in the Pay versus Performance table above. The graphs below illustrate a high correlation between compensation actually paid to our NEOs and our cumulative total shareholder return (TSR) and a low correlation between compensation actually paid to our NEOs during 2022 and 2023 and our net loss during those years. As demonstrated by the following graph, the amount of compensation actually paid to our NEOs is aligned with our cumulative TSR over the two years presented in the table. The alignment of compensation actually paid with our cumulative TSR over the period presented is because a significant portion of the compensation actually paid to our NEOs is comprised of equity awards, the value of which is driven by our share price. The amount of compensation actually paid to our NEOs increased despite an increase in our net loss. This is a result of an increase in our stock price year over year, which increased the compensation actually paid to our NEOs, despite an increase in our net loss.