DEF 14A of Anixa Biosciences Inc
Filed Feb 8, 2024 · FY20230001493152-24-005470
How many votes are required to elect the Director Nominees as directors of the Company?
How many votes are required to elect the Director Nominees as directors of the Company? In the election of directors, the four persons receiving the highest number of affirmative votes at the Virtual Meeting will be elected. Only shares that are voted in favor of a particular nominee will be counted toward that nominee’s achievement of a plurality. Shares present at the Virtual Meeting that are not voted for a particular nominee or shares present by proxy where the stockholder properly withheld authority to vote for such nominee will not be counted toward that nominee’s achievement of a plurality.
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS The Board has nominated the Director Nominees to stand for election at the Virtual Meeting. Stockholders will be asked to elect each of the Director Nominees, each to hold office until the 2025 Annual Meeting of Stockholders or until his or her successor is elected and qualified. The enclosed proxy, if returned, and unless indicated to the contrary, will be voted for the election of each of the Director Nominees. We have been advised by each of the Director Nominees that he or she is willing to be named as a nominee and each is willing to serve, or continue to serve as a director if elected. If some unexpected occurrence should make necessary, in the discretion of the Board, the substitution of some other person for the nominees, it is the intention of the persons named in the proxy to vote for the election of such other persons as may be designated by the Board. Board Qualifications We believe that the collective skills, experiences and qualifications of our directors provide our Board with the expertise and experience necessary to advance the interests of our stockholders. In selecting directors, the Board considers candidates that possess qualifications and expertise that will enhance the composition of the Board, including the considerations set forth below. The considerations set forth below are not meant as minimum qualifications, but rather as guidelines in weighing all of a candidate’s qualifications and expertise. In addition to the individual attributes of each of our current directors described below, we believe that our directors should have the highest professional and personal ethics and values, consistent with our longstanding values and standards. They should have broad experience at the policy-making level in business, exhibit commitment to enhancing stockholder value and have sufficient time to carry out their duties and to provide insight and practical wisdom based on their past experience. Director Nominees Our Board currently consists of four directors, Dr. Amit Kumar, Dr. Arnold Baskies, Emily Gottschalk, and Lewis H. Titterton, Jr. At the Virtual Meeting, four directors are to be elected (Dr. Amit Kumar, Dr. Arnold Baskies, Emily Gottschalk, and Lewis H. Titterton, Jr.), each to serve until the next Annual Meeting of Stockholders and until his or her successor shall be elected and shall qualify. Each of the current directors that has determined to stand for reelection at the Virtual Meeting has been nominated for reelection to the Board. All of the Director Nominees are available for election as members of the Board. If for any reason a Director Nominee becomes unavailable for election, the proxies solicited by the Board will be voted for a substitute nominee selected by the Board. The following sets forth the biographical background information for all of our Director Nominees: Dr. Kumar has served as our Chief Executive Officer since July 2017, as a director of the Company since November 2012 and as Chairman of the Board since August 2016. From July 2017 until April 2022, he served as President and from June 2015 until August 2016, he served as Vice Chairman of the Board. Dr. Kumar served as a strategic advisor to the Company from September 2012 until July 2017. He has been Executive Chairman of the board of directors of Anixa Diagnostics Corporation, a wholly-owned subsidiary of the Company since June 2015. Upon his appointment as Executive Chairman, Dr. Kumar resigned from his position as the Chief Executive Officer of Geo Fossil Fuels LLC, an energy company, which he had held since December 2010. From September 2001 to June 2010, he was President and Chief Executive Officer of CombiMatrix Corporation, a NASDAQ listed biotechnology company, and also served as director from September 2000 to June 2012. He was Vice President of Life Sciences of Acacia Research Corporation, a publicly traded investment company, from July 2000 to August 2007 and also served as a director from January 2003 to August 2007. Dr. Kumar served as Chairman of the board of directors of Ascent Solar Technologies, Inc., a publicly-held solar energy company, from June 2007 to September 2022. He served as a director of Aeolus Pharmaceuticals, Inc., a publicly traded biotechnology company, from June 2004 to June 2018. Dr. Kumar served as Chairman of Actym Therapeutics, a private biotechnology company until January 2023. Dr. Kumar served on the board of the American Cancer Society from 2016 to 2022. Dr. Kumar holds an A.B. in Chemistry from Occidental College. After graduate studies at Stanford University and Caltech, he received his Ph.D. from Caltech and completed his post-doctoral training at Harvard University. He has experience in technology driven startups, both at the board of directors and operating levels, in a broad variety of areas including finance, acquisitions, research and development, and marketing, and, as described above, has served as a director and/or officer of various publicly traded companies.
ELECTION OF DIRECTORS
Dr. Baskies has served on our Board since September 2018. He previously served as a director of the Company from August 2016 until September 2017. Dr. Baskies is a surgical oncologist affiliated with Virtua Health Systems in southern New Jersey, where he specializes in surgical oncology and general surgery, and is Clinical Professor of Surgery at Rowan School of Medicine. He trained at Boston University Medical Center and the Surgery Branch of the National Cancer Institute where his early research involved evaluating the immune status of patients with cancer, and immunotherapy treatment. He has extensive experience in all facets of general surgical and surgical oncologic problems, with special interests in the treatment of breast cancer, gastrointestinal cancers, thyroid cancer, melanoma, and parathyroid disease, and is a co-investigator in several national studies dealing with breast cancer prevention. Dr. Baskies has served as a director of Baudax Bio, Inc., a publicly-held drug development company, since August 2020. He served as Chairman of the New Jersey Governor’s Task Force on Early Detection, Prevention and Treatment of Cancer, having created and chaired the cancer control plan for the state from 2000-2016, and is a member of numerous societies, including the Society of Surgical Oncology, the American Society of Breast Surgeons, the American Society of Clinical Oncology, and the American College of Surgeons. Dr. Baskies has been involved with the American Cancer Society for 43 years. He was awarded the Society’s Silver Chalice Award in 1998 and the Society’s St. George National Award in 2009. He has held leadership positions at many levels of the organization, including service as the first board scientific officer for the American Cancer Society Board of Directors in 2015, and was the chief medical officer and Chairman of the Board of Directors of the former Eastern Division of the American Cancer Society. In 2017, he served as the Chairman of the National Board of Directors of the American Cancer Society. He helped develop the current guidelines for breast cancer screening and colon cancer screening which are used on a daily basis in the United States and internationally. He chairs the Global Cancer Control Advisory Council for the society, the St. Baldrick’s Foundation/ACS Alliance, and currently serves on the Global Breast Cancer Initiative of the World Health Organization. He has helped set the standards for cancer care accreditation through his involvement with the Commission on Cancer and the National Accreditation Program for Breast Centers. He currently serves on the Executive Committees, standards development and quality improvement and technology committees of both organizations. He is also a member of the Executive Committee and a Vice President of the Israel Cancer Research Fund. He received a medical degree from Boston University School of Medicine in 1975 where he was awarded the Itabashi Cancer Research Prize, and a bachelor of arts degree, summa cum laude, from Boston University College of Liberal Arts in 1971. Ms. Gottschalk has served on our Board since October 2019. She is an experienced marketer with over 30 years of developing products for the consumer marketplace. She has been the Chief Executive Officer of The Garr Group, Inc. since 1997, a diverse entertainment and new product development company that she founded that sells entertainment and general merchandise to the mass, specialty and on-line market. The Garr Group identifies “white space” opportunities in the marketplace and defines and develops products that uniquely touch consumers’ lives. The Garr Group is equally focused on brick and mortar, on-line and emerging distribution channels. Previously, she was Marketing Director of Zany Brainy, a children’s educational toy store that she helped launch. Since 1997, Ms. Gottschalk’s companies have produced over 150 million CD’s/DVD’s to the US retail market, developed a proprietary Android tablet called “RealPad, by AARP” with Intel and has created private label brands across the home, sporting goods and electronics market. She is a graduate of Cornell University’s School of Hotel Administration and serves on the board of several philanthropic organizations. Mr. Titterton has served as a director of the Company since July 2017, and as Lead Independent Director since July 2018. He previously served as a director of the Company from August 2010 through August 2016 and July 1999 through January 2003, as the Chairman of the board from July 2012 through August 2016, and interim Chief Executive Officer from August 2012 until September 2012. He has served on the board of directors of ParkerVision, Inc., a publicly traded wireless technology company, since June 2023 and he previously served from September 2018 to April 2019. His background is in high technology with an emphasis on health care and he was the Chairman of the board of directors of NYMED, Inc., a diversified health services company, from 1989 until October 2018. Mr. Titterton founded MedE America, Inc. in 1986 and was Chief Executive Officer of Management and Planning Services, Inc. from 1978 to 1986. He holds an MBA from the State University of New York at Albany, and a B.A. degree from Cornell University. Mr. Titterton has been involved with our Company as a director or investor for over twenty years. Mr. Titterton also has substantial experience with advising on the strategic development of technology companies and over forty years of experience in various aspects of the technology industry. We believe that our Director Nominees represent a desirable mix of backgrounds, skills, experiences, genders and members of underrepresented communities. Below are some of the specific experiences, qualifications, attributes or skills of each Director Nominee in addition to the biographical information provided above that led to the conclusion that each person should serve as one of our directors in light of our business and structure: Dr. Kumar is an experienced research scientist and entrepreneur, and has experience in technology driven startups, both at the board and operating levels, in a broad variety of areas including finance, acquisitions, R&D, and marketing, and has served as a director and officer of other publicly traded companies. Dr. Baskies is an experienced surgical oncologist who has previously served as the Chairman of the National Board of Directors of the American Cancer Society. Ms. Gottschalk is an experienced executive and marketer and has started and run companies selling products to the consumer market. Mr. Titterton has been involved with our Company as a director or investor for over twenty years. Mr. Titterton also has substantial experience with advising on the strategic development of technology companies and over forty years of experience in various aspects of the technology industry. In addition to the foregoing, we believe that each of the Director Nominees that is nominated for reelection is well-qualified to serve as a member of our Board due to their prior experience and work with and on our Board. Required Vote In the election of directors, the four persons receiving the highest number of affirmative votes cast at the Virtual Meeting will be elected. Recommendation of the Board THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” ELECTION OF EACH OF THE NOMINEES FOR DIRECTOR. Current Directors and Executive Officers as of the Date of this Proxy Statement Listed below are the names of the current directors and executive officers of the Company, their ages and positions held as of the Record Date and biographies if not disclosed above:
ELECTION OF DIRECTORS
| Name | Age | Position with the Company | Director and/or Executive Officer Since | | Dr. Amit Kumar | 59 | Chairman of the Board and Chief Executive Officer | 2012 | | Dr. Arnold Baskies | 74 | Director | 2018 | | Emily Gottschalk | 63 | Director | 2019 | | Lewis H. Titterton, Jr. | 79 | Lead Independent Director | 2017 | | Michael J. Catelani | 57 | President, Chief Operating Officer and Chief Financial Officer | 2016 |
ELECTION OF DIRECTORS
Mr. Catelani has served as our President since April 2022, as our Chief Operating Officer since July 2017 and as our Chief Financial Officer since November 2016. Mr. Catelani is a seasoned executive with over 30 years of experience in finance and operations. From October 2012 to July 2017, he served as a contract Chief Financial Officer to a number of established privately held businesses in the biotechnology field. He served on the board of directors of PRC Clinical, a privately held clinical research organization, from January 2015 to July 2017. In July 2006, he co-founded Tacere Therapeutics, Inc., a privately held biotechnology company, and served as its Chairman, President and Chief Financial Officer until its sale in October 2012. While at Tacere, Mr. Catelani was instrumental in establishing and managing a $150 million drug development collaboration with Pfizer, Inc. Prior to Tacere, he served on the Board of Directors and was the Chief Financial Officer of Benitec Biopharma Limited, at the time an Australian Securities Exchange-listed biotechnology company. Prior to Benitec, Mr. Catelani served as Vice President and Chief Financial Officer at Axon Instruments, Inc., a U.S. corporation publicly traded on the Australian Securities Exchange that was a leading designer and manufacturer of instrumentation and software systems for biotechnology and diagnostics research. Prior to Axon, he served as the Vice President of Finance for Media Arts Group, Inc., an NYSE-listed branded consumer products company. Mr. Catelani has also worked with several early-stage start-up companies in multiple industries, including biotechnology, cleantech and retail, in advisory and management roles. Mr. Catelani began his professional career at Ernst & Young and is a CPA (Inactive). He holds a B.S. degree in Accounting from California State University, Sacramento and an MBA from the University of California, Davis. Except for Dr. Kumar, Dr. Baskies, and Mr. Titterton, none of our current directors or executive officers has served as a director of another public company within the past five years. To the best of the Company’s knowledge, there are no arrangements or understandings between any director, Director Nominee or executive officer and any other person pursuant to which any person was selected as a director, Director Nominee or executive officer. There are no family relationships between any of the Company’s directors, Director Nominees or executive officers. To the Company’s knowledge there have been no material legal proceedings as described in Item 103 of Regulation S-K or Item 401(f) of Regulation S-K during the last ten years that are material to an evaluation of the ability or integrity of any of the Company’s directors, Director Nominees or executive officers or in which any of the Company’s directors, Director Nominees or executive officers are adverse, or have a material interest adverse, to the Company. Board of Directors and Corporate Governance General Our Board oversees the activities of our management in the handling of the business and affairs of our company. Our common stock trades on the NASDAQ Capital Markets and we are subject to listing requirements which include the requirement that our Board be comprised of a majority of “independent” directors. Dr. Arnold Baskies, Emily Gottschalk, and Lewis H. Titterton, Jr. (our Lead Independent Director) currently meet the definition of “independent” as defined by the SEC. The Board of Directors has separately designated audit, nominating and compensation committees. Our Chairman, Dr. Amit Kumar, is an employee of the Company and as such does not qualify as an “independent” director. Committees of the Board On July 9, 2015, the Board established an audit committee (the “Audit Committee”), compensation committee (the “Compensation Committee”) and nominating and corporate governance committee (the “Nominating Committee”). Each committee has a charter which will be reviewed on an annual basis by the members of such committee. A current copy of each committee charter is available to stockholders on the Company’s website at http://ir.anixa.com/committee-charters. Audit Committee We have a separately-designated standing Audit Committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Nasdaq Listing Rules. The audit committee will be at all times composed of exclusively independent directors who are “financially literate,” meaning they are able to read and understand fundamental financial statements, including the Company’s balance sheet, income statement and cash flow statement. In addition, the committee will have at least one member who qualifies as an “audit committee financial expert” as defined in rules and regulations of the SEC. The principal duties and responsibilities of the Company’s audit committee are to appoint the Company’s independent auditors, oversee the quality and integrity of the Company’s financial reporting and the audit of the Company’s financial statements by its independent auditors and in fulfilling its obligations, the Company’s audit committee will review with the Company’s management and independent auditors the scope and result of the annual audit, the auditors’ independence and the Company’s accounting policies. The audit committee will be required to report regularly to the Board to discuss any issues that arise with respect to the quality or integrity of the Company’s financial statements, its compliance with legal or regulatory requirements and the performance and independence of the Company’s independent auditors. Audit Committee Report Review with Management. The Audit Committee has reviewed and discussed our audited financial statements with management. Review and Discussions with Independent Auditors. The Audit Committee discussed with the Auditor the matters required to be discussed by Statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1, AU section 380), as adopted by the Public Company Accounting Oversight Board (“PCAOB”) in Rule 3200T. The Audit Committee also received written disclosures and the letter from the Auditor required by applicable requirements of the PCAOB regarding the Auditor’s communications with the Audit Committee concerning independence and has discussed with the Auditor their independence. Conclusion. Based on the review and discussions referred to above, the Audit Committee determined to include our audited financial statements in our Annual Report on Form 10-K for fiscal year 2023, for filing with the SEC. The members of the Audit Committee are Lewis H. Titterton, Jr. (Chairman), Dr. Arnold Baskies and Emily Gottschalk. Our Board has determined that Mr. Titterton qualifies as an Audit Committee financial expert as defined by SEC rules, based on his education, experience and background. Please see Mr. Titterton’s biographical information above for a description of his relevant experience. Compensation Committee The Compensation Committee will be at all times composed of exclusively independent directors. Among other functions, the Compensation Committee will oversee the compensation of the Company’s chief executive officer and other executive officers and senior management, including plans and programs relating to cash compensation, incentive compensation, equity-based awards and other benefits and perquisites and administers any such plans or programs as required by the terms thereof. The Compensation Committee has the authority to directly engage, at our expense, any compensation consultants or other advisers as it deems necessary to carry out its responsibilities in determining the amount and form of employee, executive and director compensation. The members of the compensation committee are Lewis H. Titterton, Jr. (Chairman), Dr. Arnold Baskies and Emily Gottschalk.
ELECTION OF DIRECTORS
Compensation Committee Processes and Procedures. The Compensation Committee meets at least two times per year and with greater frequency, if necessary. The agenda for each meeting is usually developed by the Chair of the Compensation Committee, in consultation with management. The Compensation Committee meets regularly in executive session. However, from time to time, various members of management and other employees as well as outside advisors or consultants may be invited by the Compensation Committee to make presentations, to provide financial or other background information or advice or to otherwise participate in Compensation Committee meetings. The Chief Executive Officer may negotiate the terms of his or her compensation with the Compensation Committee, but the Chief Executive Officer does not participate in, and is not present during, deliberations or determinations of the Compensation Committee regarding his compensation or individual performance objectives. The charter of the Compensation Committee grants the Compensation Committee full access to all books, records, facilities and personnel of the Company. In addition, under its charter, the Compensation Committee has the authority to obtain, at the expense of the Company, advice and assistance from internal and external legal, accounting or other advisers and other external resources that the Compensation Committee considers necessary or appropriate in the performance of its duties. The Compensation Committee has direct responsibility for the oversight of the work of any advisers engaged for the purpose of advising the Compensation Committee. In particular, the Compensation Committee has the sole authority to retain compensation consultants to assist in its evaluation of executive and director compensation, including the authority to approve the consultant’s reasonable fees and other retention terms. Under its charter, to the extent required by SEC and Nasdaq rules, the Compensation Committee may select, or receive advice from, a compensation consultant, legal counsel or other adviser to the Compensation Committee, other than in-house legal counsel and certain other types of advisers, only after taking into consideration six factors, prescribed by the SEC and Nasdaq, that bear upon the adviser’s independence; however, there is no requirement that any adviser be independent. The Compensation Committee generally holds one or more meetings during the fourth quarter of the calendar year to discuss and make recommendations to the Board for annual compensation adjustments, annual bonuses, annual equity awards, and new corporate performance objectives for directors and employees. The Compensation Committee also considers matters related to individual compensation, such as compensation for new executive hires, as well as high-level strategic issues, such as the efficacy of the Company’s compensation strategy, potential modifications to that strategy and new trends, plans or approaches to compensation, at various meetings throughout the year. Generally, the Compensation Committee’s process comprises two related elements: the determination of compensation levels and the establishment of performance objectives for the current year. For executives other than the Chief Executive Officer, the Compensation Committee solicits and considers evaluations and recommendations submitted to the Compensation Committee by the Chief Executive Officer. In the case of the Chief Executive Officer, the evaluation of his performance is conducted by the Compensation Committee, which determines recommendations to the Board regarding any adjustments to his compensation as well as awards to be granted. As a pre-revenue biotechnology company, with a business model that conserves funds by collaborating with third parties to develop its technologies, there is no single financial performance measure that is used when considering annual compensation for executives and directors. For all executives and directors as part of its deliberations, the Compensation Committee may review and consider, as appropriate, the progress of development of the Company’s various technologies, as well as materials such as financial reports and projections, operational data, cash position, operating cash flows, operating expenses, tax and accounting information, tally sheets that set forth the total compensation that may become payable to executives in various hypothetical scenarios, executive and director stock ownership information, company stock performance data, analyses of historical executive compensation levels and current Company-wide compensation levels, compensation data from comparative companies, compensation surveys, and recommendations of any compensation consultant, if applicable. Nominating and Corporate Governance Committee The Nominating Committee will be at all times composed of exclusively independent directors. The principal duties and responsibilities of the Nominating Committee are to identify qualified individuals to become board members, recommend to the Board individuals to be designated as nominees for election as directors at the annual meetings of stockholders, and develop and recommend to the Board the Company’s corporate governance guidelines. In selecting directors, the Nominating Committee will consider candidates that possess qualifications and expertise that will enhance the composition of the Board, including the considerations set forth below. The considerations set forth below are not meant as minimum qualifications, but rather as guidelines in weighing all of a candidate’s qualifications and expertise.
ELECTION OF DIRECTORS
| ● | Candidates should be individuals of personal integrity and ethical character. | | ● | Candidates should have background, achievements, and experience that will enhance our Board. This may come from experience in areas important to our business, substantial accomplishments or prior or current associations with institutions noted for their excellence. | | ● | Candidates should have demonstrated leadership ability, the intelligence and ability to make independent analytical inquiries and the ability to exercise sound business judgment. | | ● | Candidates should be free from conflicts that would impair their ability to discharge the fiduciary duties owed as a director to the Company and its stockholders, and we will consider directors’ independence from our management and stockholders. | | ● | Candidates should have, and be prepared to devote, adequate time and energy to the Board and its committees to ensure the diligent performance of their duties, including by attending meetings of the Board and its committees. | | ● | Due consideration will be given to the Board’s overall balance of diversity of perspectives, backgrounds and experiences, as well as age, gender, ethnicity and underrepresented communities. | | ● | Consideration will also be given to relevant legal and regulatory requirements. |
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We are of the view that the continuing service of qualified incumbents promotes stability and continuity in the board room, contributing to the Board’s ability to work as a collective body, while giving us the benefit of the familiarity and insight into our affairs that our directors accumulate during their tenure. Accordingly, the process of the Nominating Committee for identifying nominees for directors will reflect our practice of generally re-nominating incumbent directors who continue to satisfy the Board’s criteria for membership on the Board, whom the Nominating Committee believes continue to make important contributions and who consent to continue their service on the Board. If the Nominating Committee determines that an incumbent director consenting to re-nomination continues to be qualified and has satisfactorily performed his or her duties as director during the preceding term, and that there exist no reasons, including considerations relating to the composition and functional needs of the Board as a whole, why in the Nominating Committee’s view the incumbent should not be re-nominated, the Nominating Committee will, absent special circumstances, generally propose the incumbent director for re-election. Although we do not have a formal policy regarding the consideration of diversity in identifying and evaluating potential director candidates, the Nominating Committee will take into account the personal characteristics (gender, ethnicity, age and underrepresented communities), skills and experience, qualifications and background of current and prospective directors’ diversity as one factor in identifying and evaluating potential director candidates, so that the Board, as a whole, will possess what the nominating and corporate governance committee believes are appropriate skills, talent, expertise and backgrounds necessary to oversee our Company’s business. If the incumbent directors are not nominated for re-election or if there is otherwise a vacancy on the Board, the Nominating Committee may solicit recommendations for nominees from persons that the Nominating Committee believes are likely to be familiar with qualified candidates, including from members of the Board and management. While the Nominating Committee may also engage a professional search firm to assist in identifying qualified candidates, the Nominating Committee did not engage any third party to identify or evaluate or assist in identifying or evaluating the Director Nominees. We do not have a policy with regard to the consideration of director candidates recommended by stockholders. Due to the size of our Company and Board, the Nominating Committee does not believe that such a policy is necessary. Depending on its level of familiarity with the candidates, the Nominating Committee may choose to interview certain candidates that it believes may possess qualifications and expertise required for membership on the Board. It may also gather such other information it deems appropriate to develop a well-rounded view of the candidate. Based on reports from those interviews or from Board members with personal knowledge and experience with a candidate, and on all other available information and relevant considerations, the Nominating Committee will select and nominate candidates who, in its view, are most suited for membership on the Board. The members of the nominating and corporate governance committee are Dr. Arnold Baskies (Chairman), Lewis H. Titterton, Jr., and Emily Gottschalk. Board Leadership Structure and Role in Risk Oversight Our Board currently consists of four directors. On July 26, 2018, the independent members of the Board appointed Mr. Titterton as the lead independent director. The lead independent director’s responsibilities include presiding at meetings of the Board at which the Chairman of the Board (who also serves as Chief Executive Officer of the Company) is not present, including executive sessions of the independent directors, and serving as a liaison between the Chairman of the Board and the independent directors. The independent directors are able to meet independently with the Company’s independent registered public accounting firm without management to discuss the Company’s financial statements and related audits. Therefore, while the Board has appointed a lead independent director, to the extent the composition of the Board changes in the future, the Board may reevaluate the role or necessity for a lead independent director. We have determined that this structure is appropriate given the size of the Company and our operations. Management is responsible for the day-to-day management of risks the Company faces, while the Board as a whole has ultimate responsibility for the Company’s oversight of risk management. Our Board takes an enterprise-wide approach to risk oversight, designed to support the achievement of organizational objectives, including strategic objectives, to improve long-term organizational performance and enhance stockholder value. A fundamental part of risk oversight is not only understanding the risks a Company faces and what steps management is taking to manage those risks, but also understanding what level of risk is appropriate for the Company. As a critical part of this risk management oversight role, our Board encourages full and open communication between management and the Board. Our Board regularly reviews material strategic, operational, financial, compensation and compliance risks with management. In addition, our management team regularly reports to the full Board regarding their areas of responsibility and a component of these reports is risk within the area of responsibility and the steps management has taken to monitor and control such exposures. Additional review or reporting on risk is conducted as needed or as requested by our Board. Attendance There were three meetings, exclusive of action by unanimous written consent, of the Board held during fiscal year 2023. Dr. Kumar, Dr. Baskies, Mr. Titterton, and Ms. Gottschalk attended all of the aggregate number of meetings of the Board that they were eligible to attend. There were six meetings, exclusive of action by unanimous written consent, of the Audit Committee held during fiscal year 2023. Each of the committee members attended all of the meetings of the Audit Committee that they were eligible to attend. There were four meetings, exclusive of action by unanimous written consent, of the Compensation Committee held during fiscal year 2023. Each of the committee members attended all of the meetings of the Compensation Committee that they were eligible to attend. There were two meetings, exclusive of action by unanimous written consent, of the Nominating Committee held during fiscal year 2023. Each of the committee members attended all of the meetings of the Nominating Committee that they were eligible to attend. All members of our Board who then were serving as directors and were director nominees at that time attended our 2023 annual meeting of stockholders. We encourage our directors to attend the annual meeting of stockholders. Code of Ethics We have adopted a formal code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions. We will provide a copy of our code of ethics to any person without charge, upon request. For a copy of our code of ethics write to Secretary, Anixa Biosciences, Inc., 3150 Almaden Expressway, Suite 250, San Jose, California 95118. A current copy of our code of ethics is also available on our website at http://ir.anixa.com/governance-docs. Section 16(a) Beneficial Ownership Reporting Compliance
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Section 16(a) of the Exchange Act requires our directors, executive officers and ten percent stockholders to file initial reports of ownership and reports of changes in ownership of our Common Stock with the SEC. Directors, executive officers and ten percent stockholders are also required to furnish us with copies of all Section 16(a) forms that they file. Based upon a review of these filings, we believe that all required Section 16(a) fillings were made on a timely basis during fiscal year 2023. Insider Trading Policy The Company has adopted an insider trading policy governing the purchase, sale, and/or other dispositions of the Company’s securities by directors, officers and employees. The policy is designed to promote compliance with insider trading laws, rules and regulations, and any listing standards applicable to the Company. Employee, Officer and Director Hedging We do not have any practices or policies regarding the ability of employees (including officers) or directors of the Company, or any of their designees, to purchase financial instruments (including prepaid variable forward contracts, equity swaps, collars, and exchange funds), or otherwise engage in transactions, that hedge or offset, or are designed to hedge or offset, any decrease in the market value of our equity securities (i) granted to the employee or director by the Company as part of the compensation of the employee or director; or (ii) held, directly or indirectly, by the employee or director. Transactions with Related Persons Aside from compensation arrangements with executive officers described below, there are no other transactions entered into by the Company with related persons. Related Person Transaction Approval Policy While we have no written policy regarding approval of transactions between us and a related person, our Board, as matter of appropriate corporate governance, reviews and approves all such transactions, to the extent required by applicable rules and regulations. Generally, management would present to the Board for approval at the next regularly scheduled Board meeting any related person transactions proposed to be entered into by us. The Board may approve the transaction if it is deemed to be in the best interests of our stockholders and the Company. Executive Compensation The following table sets forth certain information for the fiscal years ended October 31, 2023 and 2022, with respect to compensation awarded to, earned by or paid to our Chairman of the Board and Chief Executive Officer and our President, Chief Operating Officer and Chief Financial Officer (the “Named Executive Officers”). No other executive officer received total compensation in excess of $100,000 during fiscal year 2023 or 2022. SUMMARY COMPENSATION TABLE
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| Name and Principal Position | Year | Salary ($) | Bonus ($) | Option Awards ($) (1) | All Other Compensation ($) (2) | Total Compensation ($) | | Dr. Amit Kumar | 2023 | $720,331 | $500,000 | $2,354,100 | $65,220 | $3,639,651 | | Chairman of the Board and Chief Executive Officer | 2022 | $630,593 | $400,000 | $1,088,000 | $40,440 | $2,159,033 | | Michael J. Catelani | 2023 | $488,826 | $300,000 | $1,177,050 | $- | $1,965,876 | | President, Chief Operating Officer and Chief Financial Officer | 2022 | $400,958 | $150,000 | $1,297,600 | $- | $1,848,558 |
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| (1) These amounts have been calculated in accordance with Accounting Standards Codification (“ASC”) 718. A discussion of assumptions used in valuation of option awards may be found in Note 2 to our Consolidated Financial Statements for fiscal year ended October 31, 2023, included in our Annual Report on Form 10-K. These amounts reflect our accounting expense for these stock options and do not correspond to the actual value that may be recognized by our Named Executive Officers. | | (2) These amounts reflect the sum of the incremental cost to us of all perquisites and personal benefits, which consisted of compensation for use of a home office and reimbursement of medical insurance benefits for Dr. Kumar. |
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Employment Agreements We have not entered into employment agreements with either of our named executive officers. Each of Dr. Kumar and Mr. Catelani are engaged as at-will employees of the Company. Stock Options Outstanding Stock Option Awards The following table sets forth certain information with respect to unexercised stock options held by the Named Executive Officers outstanding on October 31, 2023:
ELECTION OF DIRECTORS
| OUTSTANDING OPTION AWARDS | | | | | | Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Un-Exercisable | Option Exercise Price ($) | Option Expiration Date | | Time-based Option Awards | | | | | | Dr. Amit Kumar | 200,000 | | $2.92 | 2/18/2026 | | | 600,000 | | $3.70 | 5/8/2028 | | | 500,000 | | $3.70 | 5/8/2028 | | | 520,000 | | $3.84 | 12/12/2029 | | | 972,222(1) | 27,778(1) | $2.83 | 12/23/2030 | | | 402,778(2) | 97,222(2) | $4.02 | 6/1/2031 | | | 500,000(3) | 1,500,000(3) | $4.02 | 6/1/2031 | | | 277,778(4) | 222,222(4) | $2.74 | 3/10/2032 | | | 194,444(6) | 505,556(6) | $4.19 | 1/3/2033 | | Michael J. Catelani | 50,000 | | $4.85 | 11/15/2026 | | | 200,000 | | $0.96 | 7/6/2027 | | | 500,000 | | $3.70 | 5/8/2028 | | | 100,000 | | $3.84 | 12/12/2029 | | | 97,222(1) | 2,778(1) | $2.83 | 12/23/2030 | | | 80,556(2) | 19,444(2) | $4.02 | 6/1/2031 | | | 25,000(3) | 75,000(3) | $4.02 | 6/1/2031 | | | 277,778(4) | 222,222(4) | $2.74 | 3/10/2032 | | | 52,778(5) | 47,222(5) | $2.52 | 4/14/2032 | | | 97,222(6) | 252,778(6) | $4.19 | 1/3/2033 |
ELECTION OF DIRECTORS
| (1) Options vested and became exercisable in 36 consecutive monthly installments, beginning December 31, 2020 and continuing through November 30, 2023. | | (2) Options vest and become exercisable in 36 consecutive monthly installments, beginning June 30, 2021 and continuing through May 31, 2024. | | (3) Options shall vest as follows: (i) 25% of the granted options vest if during any 5 trading day period the average closing stock price of the Company’s Common Stock is at least $5.00, (ii) 25% of the granted options vest if during any 5 trading day period the average closing stock price of the Company’s Common Stock is at least $6.00, (iii) 25% of the granted options vest if during any 5 trading day period the average closing stock price of the Company’s Common Stock is at least $7.00, and (iv) 25% of the granted options vest if during any 5 trading day period the average closing stock price of the Company’s Common Stock is at least $8.00. | | (4) Options vest and become exercisable in 36 consecutive monthly installments, beginning March 31, 2022 and continuing through February 28, 2025. | | (5) Options vest and become exercisable in 36 consecutive monthly installments, beginning April 30, 2022 and continuing through March 31, 2025. | | (6) Options vest and become exercisable in 36 consecutive monthly installments, beginning January 31, 2024 and continuing through December 31, 2027. |
ELECTION OF DIRECTORS
Stock Option Grants The following table summarizes stock option grants during fiscal year 2023.
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| GRANTS OF OPTION AWARDS | | | | | | Name | Grant Date | Number of Securities Underlying Unexercised Options (#) | Exercise Price of Option Awards ($) | Grant Date Fair Value ($)(1) | | Time-based Option Awards | | | | | | Dr. Amit Kumar | 1/3/2023 | 700,000 | $4.19 | $2,354,100 | | Michael J. Catelani | 1/3/2023 | 350,000 | $4.19 | $1,177,050 |
ELECTION OF DIRECTORS
| (1) These amounts have been calculated in accordance with ASC 718. A discussion of assumptions used in valuation of option awards may be found in Note 2 to our Consolidated Financial Statements for fiscal year ended October 31, 2023, included in our Annual Report on Form 10-K. These amounts reflect our accounting expense for these stock options and restricted stock awards and do not correspond to the actual value that may be recognized by our Named Executive Officers. |
ELECTION OF DIRECTORS
Stock Option Exercises During the year ended October 31, 2023, Dr. Kumar exercised 40,000 stock options on a cashless basis resulting in the issuance of 11,625 shares of common stock for a total value of $42,200. Stock Awards There are currently no outstanding restricted stock awards. Timing of Equity Awards The Board and Compensation Committee grant awards without regard to the share price or the timing of the release of material nonpublic information and do not time grants for the purpose of affecting the value of executive compensation. Accordingly, it is our policy that our management team makes a good faith effort to advise the Board and Compensation Committee whenever it is aware that material nonpublic information is planned to be released to the public in close proximity to the grant of equity awards. Potential Payments upon Termination or Change in Control Dr. Amit Kumar The time-based and performance-based options granted Dr. Kumar pursuant to our 2010 Share Incentive Plan and our 2018 Share Incentive Plan (collectively the “Share Plans”) provide for the vesting of the unvested portion of his options to be accelerated and such accelerated options to become immediately exercisable upon a change in control as defined below. The intrinsic value of the options that would be accelerated would be $102,500, which was calculated based on the excess of our closing share price on October 31, 2023 and each option’s exercise price, multiplied by the number of options that would be accelerated for each grant. Michael J. Catelani The time-based and performance-based options granted Mr. Catelani pursuant to our Share Plans provide for the vesting of the unvested portion of his options to be accelerated and such accelerated options to become immediately exercisable upon a change in control as defined below. The intrinsic value of the options that would be accelerated would be $124,472, which was calculated based on the excess of our closing share price on October 31, 2023 and each option’s exercise price, multiplied by the number of options that would be accelerated for each grant. Change in Control Under our 2010 Share Incentive Plan and our 2018 Share Incentive Plan, “change in control” means:
ELECTION OF DIRECTORS
| ● | Change in Ownership: A change in ownership of the Company occurs on the date that any one person, or more than one person acting as a group, acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of the Company, excluding the acquisition of additional stock by a person or more than one person acting as a group who is considered to own more than 50% of the total fair market value or total voting power of the stock of the Company. | | ● | Change in Effective Control: A change in effective control of the Company occurs on the date that either: |
ELECTION OF DIRECTORS
| ○ | any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Company possessing 30% or more of the total voting power of the stock of the Company; or |
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| ○ | a majority of the members of the Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of the appointment or election; provided, that this paragraph will apply only to the Company if no other corporation is a majority shareholder. |
ELECTION OF DIRECTORS
| ● | Change in Ownership of Substantial Assets: A change in the ownership of a substantial portion of the Company’s assets occurs on the date that any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than 40% of the total gross fair market value of the assets of the Company immediately before such acquisition or acquisitions. For this purpose, “gross fair market value” means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets. |
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It is the intent that this definition be construed consistent with the definition of “Change of Control” as defined under Code Section 409A and the applicable treasury regulations, as amended from time to time. Pay Versus Performance The following Pay Versus Performance information presents the compensation of our Named Executive Officers (“NEOs”) disclosed in the Summary Compensation Table as well as Compensation Actually Paid (“CAP”) to our NEOs and certain performance measures prepared in accordance with Item 402(v) of SEC Regulations S-K as of October 31, 2023. As discussed further below, the CAP amounts do not necessarily represent actual compensation earned or realized by our NEOs in a given year. The Compensation Committee did not consider the Pay Versus Performance information in 2023 in making its compensation decisions for our NEOs. For additional information about our performance-based pay philosophy and how the Compensation Committee aligns executive compensation with our performance, refer to the “Compensation Committee Processes and Procedures” section above.
ELECTION OF DIRECTORS
| | Summary Compensation Table | Compensation Actually | Average Summary Compensation Table Total for | Average Compensation Actually Paid to | Value of Initial Fixed $100 Investment Based On (3): | | | Company | | Year | Total for PEO (1) | Paid to PEO (2) | Non-PEO NEOs (1) | Non-PEO NEOs (2) | TSR | Peer Group TSR | Net Loss (millions) (4) | Selected Measure (5) | | 2023 | $3,639,651 | $(2,620,710) | $1,965,876 | $134,096 | $66.25 | $53.07 | $9.9 | - | | 2022 | $2,159,033 | $4,767,747 | $1,848,558 | $3,213,741 | $117.40 | $65.81 | $13.8 | - |
ELECTION OF DIRECTORS
| (1) For each fiscal year presented, Dr. Kumar was our Principal Executive Officer (“PEO”) and Mr. Catelani was our only Non-PEO NEO. | | (2) The CAP amounts presented reflect the following adjustments to compensation reported within the Summary Compensation Table as required by the SEC: |
ELECTION OF DIRECTORS
| | 2023 | | 2022 | | | Adjustments to Summary Compensation Table amounts to CAP amounts | PEO ($) | Average Non-PEO NEOs ($) | PEO ($) | Average Non-PEO NEOs ($) | | Summary Compensation Table | $3,639,651 | $1,965,876 | $2,159,033 | $1,848,558 | | Grant Date FV of option awards granted in fiscal year | (2,354,100) | (1,177,050) | (1,088,000) | (1,297,600) | | FV at year-end of outstanding and unvested option awards granted in fiscal year | 1,013,134 | 506,567 | 1,843,723 | 2,229,667 | | Vesting date FV of awards granted in fiscal year and vested in fiscal year | 510,047 | 255,024 | 358,778 | 424,947 | | Change in FV of awards granted in prior years that are outstanding and unvested as of the end of the fiscal year | (4,284,013) | (926,354) | 2,335,311 | 133,389 | | Change in FV of awards granted in prior years and vested in fiscal year | (1,145,429) | (489,967) | (841,098) | (125,219) | | Total Compensation Actually Paid | $(2,620,710) | $134,096 | $4,767,747 | $3,213,741 |
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| (3) Total Shareholder Return (“TSR”) represents cumulative total shareholder return on a fixed investment of $100 in our common stock for the period beginning on the last trading day of the fiscal year ended October 31, 2021 through the last trading day of the applicable fiscal year. Peer Group TSR represents cumulative total shareholder return on a fixed investment of $100 in the S&P Biotechnology Select Industry Index for the period beginning on the last trading day of the fiscal year ended October 31, 2021 through the last trading day of the applicable fiscal year. | | (4) The dollar amounts reported represent the amount of net loss reflected in our audited financial statements for the applicable year. While we are a pre-revenue biotechnology company and no portion of NEO compensation is dependent upon our net loss, SEC rules require that net income/loss be presented as a performance measure in this table. |
ELECTION OF DIRECTORS
| (5) As a pre-revenue biotechnology company, we have implemented a business model that conserves funds by collaborating with third parties to develop our technologies. As a result, at this stage in our corporate life-cycle, there is no single financial performance measure that our Compensation Committee uses when considering annual compensation for our NEOs. Instead, the Compensation Committee focuses on a variety of factors including the progress of development of our various technologies, our level of operating expenses and our cash position. After discussion with our Compensation Committee, and given the relative weight that the Compensation Committee affords each of these factors and our unique business model, we have elected not to include a “Company-Selected Measure” at this time. We will continue to assess this decision in consultation with our Compensation Committee on a forward looking basis and will include a “Company-Selected Measure” when our Compensation Committee deems it appropriate. |
ELECTION OF DIRECTORS
Relationship between CAP and Performance Measures In accordance with Item 402(v) requirements, we are providing the following charts to describe the relationships between CAP to our NEOs and our financial performance, in each case presented in the charts below: 1) TSR of both the Company and our peer group and 2) Net Loss. Chart 1: Compensation Actually Paid versus TSR Chart 2: Compensation Actually Paid versus Net Loss
Director Compensation
Director Compensation On January 3, 2023, after a review of non-employee director compensation at comparable companies, the Board approved cash and equity compensation of directors. Commencing in January 2023, each non-employee director received cash compensation of $90,000 paid in four quarterly installments, and the grant of a 10 year nonqualified stock option to purchase 25,000 shares of common stock exercisable at $4.19, such option vesting monthly over a one year period. Our employee director, Dr. Amit Kumar, did not receive any additional compensation for services provided as a director during fiscal year 2023. The following table sets forth compensation of Lewis H. Titterton, Jr., Dr. Arnold Baskies, and Emily Gottschalk, our non-employee directors, during fiscal year 2023: DIRECTORS’ COMPENSATION
Director Compensation
| Name | Cash ($) | Option Awards ($) (1)(2) | Total Compensation ($) | | Lewis H. Titterton, Jr. | $87,500 | $81,850 | $169,350 | | Dr. Arnold Baskies | $87,500 | $81,850 | $169,350 | | Emily Gottschalk | $87,500 | $81,850 | $169,350 |
Director Compensation
| (1) These amounts have been calculated in accordance with ASC 718. A discussion of assumptions used in valuation of option awards may be found in Note 2 to our Consolidated Financial Statements for fiscal year ended October 31, 2023, included in our Annual Report on Form 10-K. These amounts reflect our accounting expense for these stock options and do not correspond to the actual value that may be recognized by our directors. | | (2) At October 31, 2023, Mr. Titterton, Dr. Baskies and Ms. Gottschalk held unexercised stock options to purchase 818,000, 313,000 and 230,000 shares respectively, of our common stock. |