DEF 14A of Collegium Pharmaceutical, Inc
Filed Apr 5, 2024 · FY20230001558370-24-004778
Board of Directors Overview
Board of Directors Overview
Board of Directors Overview
| | | | | | Collegium Board Committees | | | | | | Age | Director Since | Independent(1) | Total Current Public Company Boards | Audit | Nominating and Corporate Governance | Compensation | Compliance | | Michael Heffernan, R.Ph. | 59 | 2003 | | 4 | | | | | | Joseph Ciaffoni | 53 | 2018 | | 1 | | | | | | Rita Balice-Gordon, Ph.D. | 63 | 2020 | | 1 | | | | | | Garen Bohlin | 76 | 2015 | | 2 | | | | | | John Fallon, M.D. | 76 | 2016 | | 1 | | | | | | John Freund, M.D. | 70 | 2014 | | 3 | | | | | | Neil McFarlane | 51 | 2022 | | 2 | | | | | | Gwen Melincoff | 72 | 2017 | | 4 | | | | | | Gino Santini | 67 | 2012 | | 1 | | | | | | Meetings in 2023 | | Board: 5 | | | 8 | 1 | 3 | 4 |
Board of Directors Overview
| (1) Independence under Nasdaq criteria. |
Board of Directors Overview
| | Committee Chair | | Committee Member | | Board Chairman | | Lead Independent Director | | Audit Committee Financial Expert |
2023 Compensation Highlights
| • | Consistent with our pay-for-performance philosophy, in 2023 our executive compensation programs reflected a heavy emphasis on performance-based compensation, with the performance measures of our variable compensation components – our target annual cash incentive and long-term equity incentives – being primarily based on the achievement of our 2023 corporate performance goals and our relative total shareholder return. The graphs below show the mix of fixed versus variable compensation for our Chief Executive Officer and other named executive officers in 2023. Fixed compensation includes base salary and variable compensation includes annual cash incentives and long-term equity incentives (equity valued based on the grant date fair value in accordance with FASB ASC 718). |
Election of Directors
Election of Directors
Board Composition
Board Composition Our Board currently consists of nine members, each of whom is serving a term that will expire at the 2024 Annual Meeting of Shareholders. Upon the recommendation of the nominating and corporate governance committee, each of the following directors has been nominated for election at our 2024 Annual Meeting of Shareholders, and each has agreed to stand for election:
Board Composition
| • Michael Heffernan, R.Ph. | • John Freund, M.D. | | • Joseph Ciaffoni | • Neil McFarlane | | • Rita Balice-Gordon, Ph.D. | • Gwen Melincoff | | • Garen Bohlin | • Gino Santini | | • John Fallon, M.D. | |
Board Composition
If the director nominees are elected at the Annual Meeting, then each nominee will serve for a one-year term expiring at the 2025 Annual Meeting of Shareholders and until his or her successor is duly elected and qualified. Elected directors hold office until their death, resignation or removal, or their successors are duly elected and qualified. In accordance with our articles of incorporation and bylaws, our directors may fill existing vacancies on our Board (including vacancies resulting from an increase in the number of directors) by appointment. Pursuant to the Virginia Stock Corporation Act, the term of office of a director elected by our Board to fill a vacancy expires at the next shareholders’ meeting at which directors are elected. Vote Required Our directors are elected by a majority of the votes cast. Pursuant to our bylaws, a majority of votes cast means that if the votes cast “FOR” such nominee’s election exceed the votes cast “AGAINST” such nominee’s election, such nominee is elected. Abstentions and broker non-votes will not be counted as votes cast either “FOR” or “AGAINST” a director’s election and will have no impact on the outcome of the election of directors.
Board Composition
| | The Board of Directors recommends voting FOR the election of each director nominee. |
Board Composition
If a choice is specified on the proxy card by a shareholder, the shares will be voted as specified. If no contrary indication is made, proxies are to be voted “FOR” each of the nominees, or, if any such individual is not a candidate or is unable to serve as a director at the time of the election (which is not currently expected), proxies are to be voted “FOR” any nominee who is designated by our Board to fill the vacancy.
Nominees for Election
Nominees for Election The following table sets forth certain information, as of April 5, 2024, with respect to each of our director nominees.
Nominees for Election
| MICHAEL HEFFERNAN, R.PH. | | | | Age: 59 Director Since: 2003 | Committee Memberships: None | Other Public Directorships: Biohaven Ltd. Synlogic, Inc. Trevi Therapeutics, Inc. | | Mr. Heffernan has served as a member of our Board since October 2003 and served as our President and Chief Executive Officer from October 2003 to June 2018. Since then, Mr. Heffernan has served as a consultant to pharmaceutical and biotechnology companies, and in March 2019 founded Avenge Bio, a private biotechnology company developing an immunotherapy platform to treat solid tumors, where he has served as Chief Executive Officer since January 2022. Mr. Heffernan has over twenty-five years of experience in the pharmaceutical and related healthcare industries. He was previously the Founder, President and Chief Executive Officer of Onset Therapeutics, LLC, a dermatology-focused company that developed and commercialized products for the treatment of skin-related illnesses and was responsible for the spin-off of the business from the Company to create PreCision Dermatology, Inc. which was acquired by Valeant Pharmaceuticals International, Inc. Mr. Heffernan has held prior positions as Co-Founder, President and Chief Executive Officer of Clinical Studies Ltd., a pharmaceutical contract research organization that was sold to PhyMatrix Corp., and as President and Chief Executive Officer of PhyMatrix. Mr. Heffernan started his career at Eli Lilly and Company, where he served in numerous sales and marketing roles. Mr. Heffernan serves on the board of directors of Biohaven Ltd. (NSYE: BHVN) (2020 to present), Synlogic, Inc. (NASDAQ: SYBX) (2020 to present) and Trevi Therapeutics, Inc. (NASDAQ: TRVI) (2017 to present). Mr. Heffernan previously served on the board of directors of Akebia Therapeutics, Inc. (NASDAQ: AKBA), Keryx Biopharmaceuticals, Inc., a public pharmaceutical company prior to its merger with Akebia, Ocata Therapeutics, Inc. (NASDAQ: OCAT), Cornerstone Therapeutics Inc. (now known as Chiesi USA, Inc.) (NASDAQ: CRTX), and Veloxis Pharmaceuticals A/S, prior to its acquisition by Asahi Kasei. Mr. Heffernan is a current member of the boards of several privately held companies. Mr. Heffernan graduated from the University of Connecticut with a B.S. in Pharmacy in 1987 and is a Registered Pharmacist. | | | | Skills & Qualifications: We believe that Mr. Heffernan’s perspective and experience as a senior executive in the pharmaceutical industry, as well as the depth of his operations and board experience, provide him with the qualifications and skills to serve as a director. | | |
Nominees for Election
| : 2018 | | | | JOSEPH CIAFFONI | | | | Age: 53 Director Since: 2018 | Committee Memberships: None | Other Public Directorships: None | | Mr. Ciaffoni has served as our President and Chief Executive Officer, and a director, since July 2018. Mr. Ciaffoni joined us in May 2017 as Executive Vice President and Chief Operating Officer. Prior to joining us, he served as President, U.S. Branded Pharmaceuticals of Endo International plc. Before that, Mr. Ciaffoni held various positions of increasing responsibility at Biogen, including Senior Vice President, Global Specialty Medicines Group, Senior Vice President, U.S. Commercial and Vice President, U.S. Neurology Field Operations and Marketing. Prior to joining Biogen, he was Executive Vice President and Chief Operating Officer of Shionogi Inc. and President of Shionogi Pharmaceuticals. Mr. Ciaffoni also previously served as Vice President, Sales for Schering-Plough (now Merck) held several commercial leadership roles at Sanofi-Synthelabo (now Sanofi) and Novartis. Mr. Ciaffoni received a B.A. in Communications and an M.B.A. from Rutgers. | | | | Skills & Qualifications: We believe that Mr. Ciaffoni’s perspective and experience as a senior executive in the pharmaceutical industry, as well as the depth of his operations and board experience, provide him with the qualifications and skills to serve as a director. | | |
Nominees for Election
| : 2020 | | | | RITA BALICE-GORDON, PH.D. | | | | Age: 63 Director Since: 2020 | Committee Memberships: Nominating and Corporate Governance | Other Public Directorships: None | | Dr. Balice-Gordon has served as a member of our Board since September 2020. Dr. Balice-Gordon is the Chief Executive Officer of Muna Therapeutics (“Muna”), an early-stage biotech company focused on developing novel therapeutics for patients with neurodegenerative diseases, since July 2021. She was the founding Chief Scientific Officer of Muna from May 2020 to July 2021, and was an entrepreneur-in-residence at Novo Holdings / Novo Seeds from August 2020 through July 2021. Previously, Dr. Balice-Gordon served in senior leadership roles at Sanofi, Inc. (“Sanofi”) from May 2016 through May 2020, most recently as Global Head of Rare and Neurological Diseases. Prior to joining Sanofi, Dr. Balice-Gordon led the psychiatry and pain drug discovery portfolios as Vice President in the Neuroscience and Pain Research Unit at Pfizer, Inc. Earlier in her career, Dr. Balice-Gordon was Professor of Neuroscience and Chair of the Neuroscience Graduate Group at the University of Pennsylvania Perelman School of Medicine, where she currently holds an appointment as Adjunct Professor in the Department of Neuroscience. Dr. Balice-Gordon has authored more than 100 scientific papers, received numerous accolades for her work in the field of neuroscience, including election as a Fellow of the American Association for the Advancement of Science, and has chaired or served on many National Institutes of Health, national and international committees. She received her B.A. degree in Biological Sciences from Northwestern University, her Ph.D. in Neurobiology from the University of Texas at Austin and completed a postdoctoral fellowship at Washington University School of Medicine in St. Louis. | | | | Skills & Qualifications: We believe that Dr. Balice-Gordon’s scientific expertise and industry experience, including in the neurology and pain therapeutic areas, provide her with the qualifications and skills to serve as a director. | | |
Nominees for Election
| : 2015 | | | | GAREN BOHLIN | | | | Age: 76 Director Since: 2015 | Committee Memberships: Audit (Chair); Compensation | Other Public Directorships: Karyopharm Therapeutics, Inc. | | Mr. Bohlin has served as a member of our Board since January 2015. Mr. Bohlin has almost 30 years of experience serving in executive roles at several biotechnology companies, including Constellation Pharmaceuticals, Inc., where he served as an Executive Vice President from January 2010 to his retirement in April 2012. Prior to that, Mr. Bohlin served as Chief Operating Officer at Sirtris Pharmaceuticals, Inc. (“Sirtris”), which was acquired by GlaxoSmithKline plc. Prior to joining Sirtris, Mr. Bohlin served as President and Chief Executive Officer of Syntonix Pharmaceuticals, Inc. (“Syntonix”), which was acquired by Biogen Idec. Prior to Syntonix, Mr. Bohlin spent 14 years in executive management at Genetics Institute, Inc. (“Genetics Institute”), which was acquired by Wyeth. Prior to Mr. Bohlin’s tenure at Genetics Institute, he was a partner at Arthur Andersen & Co., where he spent 13 years. Mr. Bohlin has served on the board of directors of several companies. Mr. Bohlin currently serves on the board of directors of Karyopharm Therapeutics, Inc. (NASDAQ GS: KPTI) (2013 to present) and Curadel Surgical Innovations, Inc, a privately held company (2020 to present). Previously, he served on the board of directors of Acusphere, Inc. (OTC: ACUS) (2005 to 2015), Tetraphase Pharmaceuticals, Inc. (NASDAQ: TTPH) (2010 to 2020), Proteon Therapeutics, Inc. (NASDAQ: PRTO) (2014 to 2020) and several other publicly traded and privately held biotechnology companies. Mr. Bohlin graduated from the University of Illinois with a B.S. in Accounting and Finance in 1970. | | | | Skills & Qualifications: We believe that Mr. Bohlin’s perspective and experience as a senior executive in our industry, as well as his board and audit committee experience with publicly traded and privately held biotechnology companies, provide him with the qualifications and skills to serve as a director. | | |
Nominees for Election
| : 2016 | | | | JOHN FALLON, M.D. | | | | Age: 76 Director Since: 2016 | Committee Memberships: Nominating and Corporate Governance Committee (Chair); Compliance | Other Public Directorships: None | | Dr. Fallon has served as a member of our Board since June 2016. Dr. Fallon served as Senior Vice President and Chief Physician Executive at Blue Cross Blue Shield of Massachusetts (“BCBS”), a health insurance company, from 2004 through 2015. Prior to his role at BCBS, Dr. Fallon served as Chief Executive Officer for clinical affairs at the State University of New York Downstate Medical Center, including University Hospital of Brooklyn and the clinical faculty practice plan. His professional experience also includes the Partners Healthcare System, where he was Chairman of the physician network. Dr. Fallon was also the Chief Executive Officer of Charter Professional Services Corporation and the founder and Chief Executive Officer of North Shore Health System, a large physician-hospital organization in Massachusetts. Dr. Fallon was formerly the Chairman of the board of directors of NEHI (Network for Excellence in Health Innovation). In the past, he also served as a member the board of directors of Insulet Corporation (NASDAQ: PODD) (2012 to 2021), a medical devices company; AMAG Pharmaceuticals, Inc. (NASDAQ: AMAG) (2014 to 2020), a specialty pharmaceutical company; Exact Sciences Corporation (NASDAQ: EXAS) (2016 to 2019), a molecular diagnostics company, as well as several not-for-profit boards, including: Alliance for Healthcare Improvement, Massachusetts Health Quality Partners, Massachusetts E-Health Collaborative and Neighborhood Health Plan. He also co-chaired, with the Massachusetts Secretary of Health and Human Services, the Massachusetts Patient Centered Medical Home Initiative. Dr. Fallon practiced internal medicine for more than 20 years, fulfilled his residency at Boston City Hospital, and is Board Certified in Internal Medicine. He received a B.A. from the College of the Holy Cross, an MBA from the University of South Florida and a Doctor of Medicine from Tufts University School of Medicine. | | | | Skills & Qualifications: We believe that Dr. Fallon’s perspective and experience as an executive and board member in the life sciences industry, as well as his strong medical and scientific background, provide him with the qualifications and skills to serve as a director. | | |
Nominees for Election
| : 2014 | | | | JOHN FREUND, M.D. | | | | Age: 70 Director Since: 2014 | Committee Memberships: Compensation (Chair); Audit | Other Public Directorships: Sutro Biopharma, Inc. SI-Bone, Inc. | | Dr. Freund has served as a member of our Board since February 2014. Dr. Freund co-founded Skyline Ventures (“Skyline”), a venture capital firm, in 1997 and has served as Managing Director at Skyline since its founding. Prior to joining Skyline, Dr. Freund served as Managing Director in the private equity group of Chancellor Capital Management, LLC. In 1995, Dr. Freund co-founded Intuitive Surgical, Inc. and served on its board of directors until 2000. From 1988 to 1994, Dr. Freund served in various positions at Acuson Corporation (“Acuson”), most recently as Executive Vice President. Prior to joining Acuson, Dr. Freund was a General Partner of Morgan Stanley Venture Partners from 1987 to 1988. From 1982 to 1988, Dr. Freund worked at Morgan Stanley & Co., where he co-founded the Healthcare Group in the Corporate Finance Department in 1983. In 2016, Dr. Freund co-founded and was Chief Executive Officer of Arixa Pharmaceuticals, an antibiotic company, which was acquired by Pfizer in 2020. Dr. Freund currently serves on the board of directors of Sutro Biopharma, Inc. (NASDAQ: STRO) (2014 to present), and SI-Bone, Inc. (NASDAQ: SIBN) (2013 to present). Dr. Freund also serves on the board of directors of fourteen U.S. registered investment funds managed by The Capital Group Companies. He previously served on the board of directors of several publicly traded companies, including, Proteon Therapeutics, Inc. (NASDAQ: PRTO) (2014 to 2020), Tetraphase Pharmaceuticals, Inc. (NASDAQ: TTPH) (2012 to 2020), XenoPort, Inc. (NASDAQ: XNPT) (1999 to 2016), where he was Chairman, Concert Pharmaceuticals, Inc. (NASDAQ: CNCE) (2014 to 2015), MAP Pharmaceuticals, Inc. (NASDAQ: MAPP) (2004 to 2011), and MAKO Surgical Corp. (NASDAQ: MAKO) (2008 to 2013). Dr. Freund is a member of the Advisory Board for the Harvard Business School Healthcare Initiative. Dr. Freund graduated from Harvard College with a B.A. in History in 1975, received an M.D. from Harvard Medical School in 1980 and an M.B.A. from Harvard Business School in 1982. | | | | Skills & Qualifications: We believe that Dr. Freund’s extensive finance and investment experience, his experience as an executive, and his service on the board of directors of numerous public and privately held companies in our industry provide him with the qualifications and skills to serve as a director. | | |
Nominees for Election
| : 2022 | | | | NEIL MCFARLANE | | | | Age: 51 Director Since: 2022 | Committee Memberships: Audit | Other Public Directorships: Zevra Therapeutics, Inc. | | Mr. McFarlane has served as a member of our Board since April 2022. Since September 2023, Mr. McFarlane has served as President and Chief Executive Officer of Zevra Therapeutics, Inc. (NASDAQ: ZRVA), a clinical stage rare disease therapeutics company, where he also sits on the board of directors. Previously, Mr. McFarlane provided consulting services for biotechnology, pharmaceutical, and financial services companies between November 2021 and September 2023. Mr. McFarlane served as the Chief Executive Officer and a member of the board of directors of Adamas Pharmaceuticals, Inc. from September 2019 until its acquisition by Supernus Pharmaceuticals, Inc in November 2021. From May 2019 to September 2019, Mr. McFarlane provided consulting services for biotechnology, pharmaceutical, and financial services companies. From August 2016 to May 2019, Mr. McFarlane served as the Chief Operating Officer of Retrophin, Inc., now known as Travere Therapeutics, Inc., where he was responsible for overseeing the operations of Retrophin. From 2011 to 2016 Mr. McFarlane served as Vice President of UCB, Inc. (“UCB”). He served as Vice President and General Manager of UCB’s U.S. Immunology Business Unit and as Vice President for the Global Bone Business Unit in collaboration with Amgen Inc. Prior to his positions at UCB, Mr. McFarlane held positions of increasing responsibility with Genzyme Corporation (“Genzyme”) and Sangstat Medical Corporation prior to its acquisition by Genzyme. Mr. McFarlane served as an officer and enlisted soldier in the United States Army Reserves and received his B.S. and M.S. in Nursing from the University of Florida. | | | | Skills & Qualifications: We believe that Mr. McFarlane’s over 20 years of global biopharmaceutical experience and his service on the board of directors of public and privately held companies in our industry provide him with the qualifications and skills to serve as a director. | | |
Nominees for Election
| : 2017 | | | | GWEN MELINCOFF | | | | Age: 72 Director Since: 2017 | Committee Memberships: Nominating and Corporate Governance | Other Public Directorships: Gain Therapeutics Protalix Biotherapeutics, Inc. Soleno Therapeutics | | Ms. Melincoff has served as a member of our Board since August 2017. Ms. Melincoff has over 25 years of leadership experience in the biotechnology and pharmaceutical industries. Ms. Melincoff is currently managing director at Gemini Advisors LLC, a biopharmaceutical consultancy (since 2013) and an advisor to Verge Genomics, a startup drug discovery company (since 2016). From August 2014 to September 2016, she served as Vice President of Business Development at BTG International Inc., a specialist medical products company; she also served as an advisor to Phase 1 Ventures, a startup accelerator from 2015 through 2018. From September 2004 to December 2013, Ms. Melincoff was Senior Vice President of Business Development at Shire Plc (acquired by Takeda). In addition, from 2010 to 2013, she led the Shire Strategic Investment Group, the venture capital arm of Shire Plc. Prior to joining Shire Plc, Ms. Melincoff held managerial and business development positions at various pharmaceutical companies, including Adolor Corporation, Sterling Drug and NanoSystems (a subsidiary of Eastman Kodak). Ms. Melincoff currently serves on the board of Gain Therapeutics (NASDAQ: GANX), Protalix BioTherapeutics, Inc. (NYSE: PLX) and Soleno Therapeutics (NASDAQ: SLNO). Previously, she served as a board member or observer on the boards of Tobira Therapeutics (acquired by Allergan), DBV Technologies, AM Pharma, ArmaGen Technologies, Promethera Biosciences, Naurex Inc. (acquired by Allergan), Kamada Ltd. (NASDAQ: KMDA), Photocure ASA and Enterome. Ms. Melincoff holds a B.S. in Biology from The George Washington University and an M.S. in Management and Health Care Administration from Pennsylvania State University. Ms. Melincoff has also attained the designation of Certified Licensing Professional (CLP™). Ms. Melincoff was named one of the “Top Women in Biotech 2013” by Fierce Biotech as well as being named to the Powerlist 100 of Corporate Venture Capital in 2012 and 2013. | | | | Skills & Qualifications: We believe that Ms. Melincoff’s extensive experience in business development and general management in the life sciences industry and her valuable experience in corporate governance and acquisitions provide her with the qualifications and skills to serve as a director. | | |
Nominees for Election
| : 2012 | | | | GINO SANTINI | | | | Age: 67 Director Since: 2012 | Committee Memberships: Compliance (Chair); Compensation | Other Public Directorships: None | | Mr. Santini has served as a member of our Board since July 2012 and has served as our lead independent director since May 2015. Since December 2010, Mr. Santini has been a senior advisor providing financing and business consulting services to venture capital, pharmaceutical and biotechnology companies. Previously, Mr. Santini held various positions at Eli Lilly and Company (“Lilly”) from 1983 until his retirement from Lilly in December 2010, most recently as Senior Vice President of Corporate Strategy and Business Development, a position he held since 2007. Mr. Santini also served as a member of Lilly’s Executive Committee from January 2004 to his retirement and as President of U.S. Operations. He joined Lilly in 1983 as a financial planning associate in Italy. Mr. Santini currently serves as a member of the board of directors of several privately held companies. Previously, Mr. Santini served on the board of directors of Intercept Pharmaceuticals, Inc. (NASDAQ: ICPT) (2015 to 2023), as well as Horizon Therapeutics plc (NASDAQ: HZNP) (2012 to 2023), Allena Pharmaceuticals, Inc. (NASDAQ: ALNA) (2012 to 2022), AMAG Pharmaceuticals Inc. (NASDAQ: AMAG) (2012 to 2020), Vitae Pharmaceuticals, Inc. (NASDAQ GS: VTAE) (2014 to 2016) and Sorin S.p.A., a company traded on the Italian Stock Exchange (2012 to 2015). He graduated from the University of Bologna, Italy with a B.S. in Mechanical Engineering in 1981 and received an M.B.A. from the Simon School of Business at the University of Rochester in 1983. | | | | Skills & Qualifications: We believe that Mr. Santini’s perspective and experience as a senior executive at Lilly, as well as his extensive domestic and international commercial, corporate strategy, business development and transaction experience, provide him with the qualifications and skills to serve as a director. | | |
Director Nomination Process
Director Nomination Process
Identification and Evaluation of Nominees for Directors
Identification and Evaluation of Nominees for Directors Our nominating and corporate governance committee is of the view that the continuing service of qualified incumbents promotes stability and continuity in the board room, contributing to our Board’s ability to work as a collective body, while providing us the benefit of the familiarity and insight into our affairs that our directors have accumulated during their tenure. Accordingly, our nominating and corporate governance committee recommends to our Board the re-nomination of incumbent directors for election who continue to satisfy our nominating and corporate governance committee’s criteria for membership on our Board, whom our nominating and corporate governance committee believes continue to make important contributions to our Board and who consent to continue their service on our Board. Consistent with this policy, in considering candidates for election at our annual meeting of shareholders, the nominating and corporate governance committee will first determine the incumbent directors whose terms expire at the upcoming meeting and who consent to continue their service on our Board. If our nominating and corporate governance 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 there exist no reasons, including considerations relating to the composition and functional needs of our Board as a whole, why in our nominating and corporate governance committee’s view the incumbent should not be re-nominated, the nominating and corporate governance committee will, absent special circumstances, propose the incumbent director for nomination by our Board for re-election at our annual meeting of shareholders. If any member of our Board does not wish to continue in service or if our Board decides not to re-nominate a member for re-election, the nominating and corporate governance committee will identify a new nominee that meets the nominating and corporate governance committee’s criteria for membership on our Board. The committee may, in its sole discretion, solicit recommendations for nominees from persons that the nominating and corporate governance committee believes are likely to be familiar with qualified candidates. These persons may include members of our Board, including members of the nominating and corporate governance committee, and our management team. The nominating and corporate governance committee may, in its sole discretion, determine to engage a professional search firm to assist in identifying qualified candidates. If a search firm is engaged, the nominating and corporate governance committee will set its fees and scope of engagement. The nominating and corporate governance committee may, in its sole discretion, solicit the views of the Chief Executive Officer, other members of our senior management and other members of our Board regarding the qualifications and suitability of candidates to be nominated as directors. The nominating and corporate governance committee may, in its sole discretion, designate one or more of its members (or the entire nominating and corporate governance committee) or other members of our Board to interview any proposed candidate. Based on all available information and relevant considerations, the nominating and corporate governance committee will select a candidate who, in the view of the committee, is most suited for membership on our Board. The nominating and corporate governance committee has utilized professional search firms to identify candidates to serve on our Board, including, most recently, the identification of Neil McFarlane. In making its selection of director nominees, the nominating and corporate governance committee evaluates any candidates proposed by shareholders under criteria similar to the evaluation of other candidates and in accordance with our bylaws and as is otherwise required pursuant to the Securities Exchange Act of 1934 (the “Exchange Act”). However, the nominating and corporate governance committee may consider, as one of the factors in its evaluation of shareholder-recommended nominees, the size and duration of the ownership by the recommending shareholder or shareholder group in our capital stock. The nominating and corporate governance committee may also consider the extent to which the recommending shareholder intends to continue holding its interest in the Company, including, in the case of nominees recommended for election at an annual meeting of shareholders, whether the recommending shareholder intends to continue holding its interest at least through the time of such annual meeting. Shareholders wishing to suggest a candidate for director must write to our Corporate Secretary in accordance with our procedures detailed in the section below entitled “Shareholder Communications with Our Board.” Shareholder nominations should be made according to the procedures detailed in the section below entitled “Shareholder Proposals and Director Nominations for 2025 Annual Meeting of Shareholders.” Such submissions must state the nominee’s name and address, together with information with respect to the shareholder or group of shareholders making the recommendation, including the number of shares of common stock owned by such shareholder or group of shareholders, as well as other information required by our bylaws. We may require any proposed nominee to furnish such other information as we may reasonably require to determine the eligibility of such proposed nominee to serve as an independent director or that could be material to a reasonable shareholder’s understanding of the independence, or lack thereof, of such proposed nominee.
Compensation of Non-Employee Directors
Compensation of Non-Employee Directors Our Board, upon recommendation of the compensation committee, sets our non-employee director compensation policy.
2023 Non-Employee Director Compensation Policy
2023 Non-Employee Director Compensation Policy Our non-employee director policy, which was in effect throughout 2023, is provided below:
2023 Non-Employee Director Compensation Policy
| Annual Compensation | | Additional Annual Cash Retainers(1) | | | | | Cash Retainer | $50,000(1) | | | Chair | Member | | Restricted Stock Units | $225,000(2) | Chairman | $60,000 | | | | | | Lead Independent Director | $25,000 | | | | | | Committees | | | | | | | Audit | | $20,000 | $10,000 | | | | Compensation | | $18,000 | $9,000 | | | | Nominating and Corporate Governance | | $10,000 | $5,000 | | | | Compliance | | $18,000 | $9,000 |
2023 Non-Employee Director Compensation Policy
| (1) Cash retainers were paid in quarterly installments, subject to the director’s continued service on the board. |
2023 Non-Employee Director Compensation Policy
| (2) On the date of each annual meeting of shareholders, each non-employee director was granted restricted stock units of the Company, with the number of such units determined by dividing $225,000 by the average closing price of our common stock for the 30-day period ending on the trading day immediately prior to the date of grant. New directors who joined after the Company’s annual meeting of shareholders for the applicable year, but six or more months before the next annual meeting, were entitled to receive a full annual grant amount at the time of joining. New directors who joined after the annual meeting, but less than six months before the next annual meeting, were entitled to receive 50% of the annual grant amount. All such grants vest upon the first anniversary of the date of grant. |
2023 Non-Employee Director Compensation Policy
In addition to the foregoing annual compensation, upon joining the Board, each non-employee director was entitled to receive restricted stock units of the Company, with the number of such units determined by dividing $225,000 by the average closing price of our common stock for the 30-day period ending on the trading day immediately prior to the date of grant. Such initial grant vests in full one year from the date of grant, subject to continued service to the Company. Our non-employee directors are also subject to stock ownership guidelines, as described in the section entitled “Compensation Discussion and Analysis – Other Policies and Practices.”
2024 Non-Employee Director Compensation Policy
2024 Non-Employee Director Compensation Policy In February 2024, our compensation committee reviewed our non-employee director compensation policy with our independent compensation consultant and recommended certain changes be made to the policy to better align with market practices. Our updated non-employee compensation policy, approved by the Board and as in effect for the 2024 fiscal year, is provided below:
2024 Non-Employee Director Compensation Policy
| Annual Compensation | | Additional Annual Cash Retainers(1) | | | | | Cash Retainer | $50,000(1) | | | Chair | Member | | Restricted Stock Units | $275,000(2) | Chairman | $60,000 | | | | | | Lead Independent Director | $25,000 | | | | | | Committees | | | | | | | Audit | | $20,000 | $10,000 | | | | Compensation | | $20,000 | $10,000 | | | | Nominating and Corporate Governance | | $10,000 | $5,000 | | | | Compliance | | $18,000 | $9,000 |
2024 Non-Employee Director Compensation Policy
| (1) Cash retainers are paid in quarterly installments, subject to the director’s continued service on the board. |
2024 Non-Employee Director Compensation Policy
| (2) On the date of each annual meeting of shareholders, each non-employee director is granted restricted stock units of the Company, with the number of such units determined by dividing $275,000 by the average closing price of our common stock for the 30-day period ending on the trading day immediately prior to the date of grant. New directors who join after the Company’s annual meeting of shareholders for the applicable year, but six or more months before the next annual meeting, will also receive a full annual grant amount at the time of joining. New directors who join after the annual meeting, but less than six months before the next annual meeting, will receive 50% of the annual grant amount. All such grants vest upon the first anniversary of the date of grant. |
2024 Non-Employee Director Compensation Policy
In addition to the foregoing annual compensation, upon joining the Board, each new non-employee director will receive restricted stock units of the Company, with the number of such units determined by dividing $275,000 by the average closing price of our common stock for the 30-day period ending on the trading day immediately prior to the date of grant. Such initial grant vests in full one year from the date of grant, subject to continued service to the Company.
2023 Non-Employee Director Compensation
2023 Non-Employee Director Compensation The following table sets forth in summary form information concerning the compensation that we paid or awarded for services rendered during the fiscal year ended December 31, 2023 to our independent, non-employee directors.
2023 Non-Employee Director Compensation
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Total ($) | | Rita Balice-Gordon, Ph.D. | 55,000 | 220,614 | 275,614 | | Garen Bohlin | 79,000 | 220,614 | 299,614 | | John Fallon, M.D. | 69,000 | 220,614 | 289,614 | | John Freund, M.D. | 78,000 | 220,614 | 298,614 | | Michael Heffernan, R.Ph. | 110,000 | 220,614 | 330,614 | | Neil McFarlane | 60,000 | 220,614 | 280,614 | | Gwen Melincoff | 55,000 | 220,614 | 275,614 | | Gino Santini | 102,000 | 220,614 | 322,614 |
2023 Non-Employee Director Compensation
| (1) Amounts represent the grant date fair value of stock awards granted during 2023, as calculated in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, Compensation — Stock Compensation. See Note 17, “Stock-based Compensation,” to our audited financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 for assumptions used in calculating this amount. The grant date fair value of stock awards granted during 2023 for each non-employee director was $22.53. The aggregate number of shares underlying stock awards that were outstanding and held by each non-employee director as of December 31, 2023 were as follows: for Dr. Balice-Gordon: 14,819; Mr. Bohlin: 42,522; Dr. Fallon: 9,792; Dr. Freund: 42,522; Mr. Heffernan: 9,792; Mr. McFarlane: 41,672; Ms. Melincoff: 32,581; and Mr. Santini: 42,522. The aggregate number of shares underlying stock options that were outstanding and held by each non-employee director as of December 31, 2023 were as follows: Dr. Balice-Gordon: 10,055 (all of which were exercisable); Mr. Bohlin: 79,553 (all of which were exercisable); Dr. Fallon: 56,868 (all of which were exercisable); Dr. Freund: 65,568 (all of which were exercisable); Mr. Heffernan: 158,095 (all of which were exercisable); Mr. McFarlane: none; Ms. Melincoff: 47,082 (all of which were exercisable); and Mr. Santini: 65,568 (all of which were exercisable). |
Employee Engagement
Employee Engagement We conduct an employee engagement survey called the Collegium COLLective survey to inform us of areas where we are excelling as well as opportunities for improvement. The survey covers topics including management, teamwork, work-life balance, compensation and benefits, and diversity, equity, and inclusion. Based on results of the 2023 Collegium COLLective survey, we received an engagement score of 89%, which is 15% above the Pharma Benchmark, and 11% higher than our previous score. It was also the largest year-over-year increase in our engagement since we began our internal survey in 2017. Overall, our scores are consistently at or above the Pharma Benchmark in all areas. Our Focus ACTion Team, or FACT team, is a cross-functional team that reviews the Collegium COLLective survey results and takes a holistic approach to identifying areas of opportunity for additional engagement. Focus areas for the FACT team in 2023 included Recognition, Communication, Employee Experience and Total Rewards (benefits).
Environmental Impact
| JOSEPH CIAFFONI | ● See “Proposal 1: Election of Directors” above for information regarding Mr. Ciaffoni. | | Executive Vice President and Chief Executive Officer | | | Age: 53 | | | Joined Collegium: 2017 | | | COLLEEN TUPPER | ● Ms. Tupper joined us in May 2021 as Executive Vice President and Chief Financial Officer. ● Prior to joining us, Ms. Tupper most recently served as Chief Financial Officer, U.S. Business Unit as well as a member of the U.S. Business Unit Executive Leadership Team and the Global Finance Leadership Team at Takeda from January 2019 to April 2021. Prior to that role, Ms. Tupper held several roles of increasing responsibility at Shire Pharmaceuticals (acquired by Takeda in 2019) including Vice President, U.S. Commercial Finance; Vice President, Finance Integration Lead; and Vice President, Head of Finance Global Neuroscience and Ophthalmics. Earlier in her career, Ms. Tupper served in various finance and accounting roles at both Shire Pharmaceuticals and Antigenics (now Agenus). ● Ms. Tupper received a B.S. in Accounting from Franklin Pierce University. | | Executive Vice President and Chief Financial Officer | | | Age: 48 | | | Joined Collegium: 2021 | |
Environmental Impact
| SHIRLEY KUHLMANN | ● Ms. Kuhlmann joined us in March 2018 as Executive Vice President, General Counsel and Secretary and has also served as Chief Administrative Officer since March 2022. ● Prior to joining us, Ms. Kuhlmann was an attorney in the Health Sciences Group of Pepper Hamilton LLP, a law firm headquartered in Philadelphia, PA. Ms. Kuhlmann began her career at Pepper Hamilton in 2007 as an Associate and was elected a Partner of the firm in 2016. While with Pepper Hamilton, she advised private and public companies on a range of commercial and transactional matters, including securities offerings, mergers and acquisitions and other financing transactions. ● Ms. Kuhlmann received a B.A. in Economics and Political Science from Columbia University and a J.D. from the Emory University School of Law. | | Executive Vice President, Chief Administrative Officer, General Counsel & Secretary | | | Age: 40 | | | Joined Collegium: 2018 | | | SCOTT DREYER | ● Mr. Dreyer was appointed as our Executive Vice President and Chief Commercial Officer in July 2018. ● Mr. Dreyer joined us in January 2018 as Senior Vice President of Sales, Marketing, Commercial Capabilities and Training. He has over 25 years of commercial experience across sales, marketing, commercial operations and strategic planning, all within the biopharma industry. Most recently, Mr. Dreyer was Senior Vice President, Marketing and Commercial Operations for The Medicines Company. Prior to joining The Medicines Company, he was Vice President and Chief Marketing Officer - US at Biogen. Prior to Biogen, Mr. Dreyer held various commercial leadership positions of increasing responsibility at Merck & Co., including Vice President - U.S. Hospital and Oncology Sales and Commercial Operations; Vice President - U.S. Primary Care Sales; Executive Director U.S. Regional Marketing Leader – Neuroscience; Executive Director Customer Marketing and Solutions; Sr. Director of Strategic Planning; and Director of Cardiovascular Marketing. ● Mr. Dreyer received a B.S. in Biology from Messiah College. | | Executive Vice President and Chief Commercial Officer | | | Age: 52 | | | Joined Collegium: 2018 | | | THOMAS SMITH, M.D. | ● Dr. Smith has served as our Chief Medical Officer since March 2022 following the acquisition of BioDelivery Sciences International, Inc. ● Dr. Smith has more than 25 years of experience in a variety of leadership roles at various major pharmaceutical companies, including serving as the Chief Medical Officer for BDSI from July 2018 until March 2022, Charleston Laboratories from January 2017 to July 2018, Ameritox and Mallinckrodt Pharmaceuticals. Prior to these roles, Dr. Smith served in scientific, medical and clinical leadership roles at Abbott Laboratories, Teva Pharmaceuticals and Kendle International. He is a member of several medical and scientific societies, including the American Medical Association and the American Academy of Family Physicians. ● Dr. Smith earned his M.D. from the Indiana University School of Medicine and a B.S. from Purdue University. | | Executive Vice President and Chief Medical Officer | | | Age: 63 | | | Joined Collegium: 2022 | |
Overview of Our Executive Compensation Program
| • | Link a significant portion of executive pay with performance and the achievement of our annual and long-term strategic goals; |
Overview of Our Executive Compensation Program
| • | Align our executives’ interests with those of our shareholders through equity compensation; |
Role of the Independent Compensation Consultant
Role of the Independent Compensation Consultant Our compensation committee believes that independent advice is critical in developing the Company’s executive compensation programs. The compensation committee was advised by Alpine Rewards, LLC (“Alpine Rewards”), an independent compensation consultant, during the year ended December 31, 2023. Alpine Rewards provides guidance to the compensation committee on trends in executive and non-employee director compensation, the development of specific executive compensation programs and the composition of the Company’s compensation peer group. Alpine Rewards also engages in other matters as needed and as directed solely by our compensation committee. The Company pays the cost for Alpine Rewards’ services. However, the compensation committee retains the sole authority to direct, terminate or engage Alpine Rewards’ services. Alpine Rewards provided other advisory services to us in 2023, but the fees for those services did not exceed $120,000 during the fiscal year ended December 31, 2023. Alpine Rewards reports directly to the compensation committee. Our compensation committee assesses its compensation consultants’ independence annually and, in accordance with applicable SEC and Nasdaq rules, confirmed that Alpine Rewards’ work or relationships did not raise any conflicts of interest, and that Alpine Rewards remains independent under applicable rules.
Executive Compensation Philosophy and Strategy
| • | Mission and Performance Focused. Our executive compensation programs provide our executives with incentives to achieve the near- and long-term objectives of our business. All our executive incentive compensation programs are tied directly, and meaningfully, to our Company’s performance. None of our corporate goals entail or anticipate growth in the opioid market, and each of our corporate goals that pertain to product sales is consistent with our goal of being the leader in responsible pain management. |
Executive Compensation Philosophy and Strategy
| • | Competitive Within Our Industry. We strive to ensure the total value of our compensation package is fully competitive within our industry and is consistent with our performance. We benchmark our executive compensation programs against a peer group of biopharmaceutical companies that are of similar size and complexity, and that are representative of the companies with which we compete for talent. |
Executive Compensation Philosophy and Strategy
| • | Balanced for Short-Term and Long-Term Performance. We structure our executive compensation programs to emphasize the importance of achieving short-term goals while building and sustaining a foundation for long-term success. Striking the right balance between short-term and long-term incentives is a critical component of our risk management strategy, for which our Board has oversight responsibility. |
Executive Compensation Philosophy and Strategy
| • | Shareholder Aligned. Every Collegium employee has a vested interest in our Company’s long-term success through participation in our equity compensation programs. To reinforce this alignment with our shareholders, we strongly encourage stock ownership through our equity-based compensation programs as well as through formal stock ownership guidelines for the executive officers and non-executive directors. For our named executive officers, who set and lead the future strategic direction of our Company, we ensure that a significant portion of their total compensation is delivered in the form of equity to maintain alignment between their interests and those of our shareholders. To further reinforce our shareholder alignment philosophy, our performance share unit program uses annual and three-year relative total shareholder return as its performance measure. |
Base Salary, Annual Cash Incentive, and Long-Term Equity Incentive
Base Salary, Annual Cash Incentive, and Long-Term Equity Incentive We strive to recognize the efforts involved in managing our business by compensating our named executive officers for the demands and risks associated with our business through three core elements that are designed to reward performance in a simple and straightforward manner:
Base Salary, Annual Cash Incentive, and Long-Term Equity Incentive
| • | Base Salary; |
Base Salary, Annual Cash Incentive, and Long-Term Equity Incentive
| • | Annual Cash Incentives; and |
Base Salary, Annual Cash Incentive, and Long-Term Equity Incentive
| • | Long-Term Equity Incentives. |
Base Salary, Annual Cash Incentive, and Long-Term Equity Incentive
Each component of our executive compensation program has different purposes and key characteristics; when combined, we believe that the components of our executive compensation program align with our executive compensation philosophy and objectives described above to enable us to attract, motivate and retain a strong and capable leadership team.
Base Salary, Annual Cash Incentive, and Long-Term Equity Incentive
| Base Salary | Annual Cash Incentives | Long-Term Equity Incentives | | • Provides fixed level of compensation for performing essential daily elements of role • Reviewed annually and adjusted, as appropriate, to reflect skills and experience, level of responsibility, scope of complexity of role, and competitive market dynamics | • Designed to reward performance against corporate objectives that are aligned with creation of shareholder value through operational execution within the fiscal year • Sized as a percentage of base salary • Earned and paid annually in cash | • Motivates executive officers to achieve our corporate objectives by linking compensation to creation of long-term shareholder value • Comprised of restricted stock units and performance share units • Restricted stock units vest in installments over 4 years and performance share units vest, if earned, annually and over the 3-year performance period |
Base Salary, Annual Cash Incentive, and Long-Term Equity Incentive
The long-term equity incentive component of our executive compensation program is comprised of restricted stock units (“RSUs”) and performance share units (“PSUs”). The graphs below illustrate the mix of equity awards for 2023 (and again in 2024). The RSU component of the long-term equity program incentivizes our named executive officers to contribute to value creation, with the advantage that RSUs retain value in the face of stock price volatility common to growing pharmaceutical companies, yet continue to have direct shareholder alignment. The RSUs have a service-based vesting period that reinforces our focus on long-term, sustainable growth and serves as a key retention tool. Prior to 2024, the vesting period was four years. The compensation committee approved three-year vesting beginning in 2024 to align with broader market practices. The PSU component of the long-term equity program also incentivizes our named executive officers to contribute to value creation and rewards superior stock price performance aligned with our pay for performance philosophy. PSUs are earned based on the relative ranking of our total shareholder return (“TSR”) over one- and three-year measurement periods versus the TSR of the S&P Pharmaceutical Select Industry Index.
2023 Compensation Mix at Target
2023 Compensation Mix at Target Our compensation mix is structured to ensure that a significant portion of the total compensation opportunity for our named executive officers is directly related to our performance and other factors that influence shareholder value. The graphs below show the mix of fixed versus variable compensation for our Chief Executive Officer and other named executive officers in 2023. Fixed compensation includes base salary and variable compensation includes annual cash incentives and long-term equity incentives (equity valued based on the grant date fair value in accordance with FASB ASC 718). We also believe our executive compensation should be structured to appropriately balance cash compensation with equity-based compensation. The graphs below show the mix of cash-based versus equity-based compensation for our Chief Executive Officer and other named executive officers in 2023. Cash-based compensation includes base salary and annual cash incentives, and equity-based compensation includes long-term equity incentives (equity valued based on the grant date fair value in accordance with FASB ASC 718).
Peer Group Determination
Peer Group Determination Market practices are one of the considerations taken into account by our compensation committee when determining executive compensation levels and compensation program design. In evaluating market practices, we do not target a specific market percentile, nor do we seek to duplicate any particular market practice. Rather, we review external market practices as a reference point to assist us in developing programs designed to attract, motivate, and retain a strong executive team. Our compensation committee uses a peer group to provide context for its executive compensation decision-making. Each year, the compensation committee’s independent compensation consultant reviews the external market landscape and evaluates the composition of our peer group for appropriateness. Our compensation committee reviews the information provided from internal sources as well as the information provided by our independent compensation consultant to select our peer group based on comparable biopharmaceutical companies that approximate:
Peer Group Determination
| • | our scope of business, including revenues, scope of commercial operations, and market capitalization; |
Peer Group Determination
| • | our employee base; and |
Peer Group Determination
| • | the pool of talent for which we compete. |
Peer Group Determination
When determining the 2023 peer group, our compensation committee considered biopharmaceutical companies headquartered in the United States (or focused on United States operations) that are of similar size to the Company in terms of market capitalization, revenues and commercial expansion, and number of employees. At the time our 2023 peer group was selected in September 2022, our market capitalization was at approximately the 38th percentile of the peer group, our revenue was at approximately the 47th percentile of the peer group and our number of employees was at approximately the 22nd percentile of our peer group. For each of the companies in our peer group, where available, we analyze the company’s Compensation Discussion and Analysis, Summary Compensation Table and other data publicly filed during the prior and current year to identify the executives at such companies whose positions are comparable to those held by our executive officers. We then compile and analyze the data for each comparable position. We also supplement the data for our peer group with published compensation surveys where appropriate. The peer group for determining our 2023 compensation decisions consisted of the following companies:
Peer Group Determination
| ACADIA Pharmaceuticals, Inc. | Corcept Therapeutics, Inc. | Ironwood Pharmaceuticals, Inc. | | Amarin Corporation PLC | Eagle Pharmaceuticals, Inc. | Pacira BioSciences, Inc. | | Amphastar Pharmaceuticals, Inc. | Enanta Pharmaceuticals | Supernus Pharmaceuticals, Inc. | | ANI Pharmaceuticals, Inc. | Harmony Biosciences Holdings, Inc. | Travere Therapeutics, Inc. | | Anika Therapeutics, Inc. | Heron Therapeutics, Inc. | Vanda Pharmaceuticals Inc. | | Cara Therapeutics, Inc. | Intercept Pharmaceuticals, Inc. | |
Peer Group Determination
For 2023, the compensation committee removed Akebia Therapeutics, Inc. as it no longer fit with the peer criteria, and BioDelivery Sciences International, Inc., Flexion Therapeutics, Inc., and Radius Health, Inc. due to acquisitions and added Amarin Corporation PLC, Cara Therapeutics, Inc. and Harmony Biosciences Holdings, Inc. due to overall fit relative to the peer criteria.
Our Practices
| • | Annual Performance Reviews. Our Chief Executive Officer conducts and presents an assessment of our corporate performance and the performance reviews of the other named executive officers to the compensation committee after the end of each fiscal year. In reviewing and determining the compensation of each named executive officer, the compensation committee also considers individual factors, such as potential for future contributions to our growth, industry experience and retention concerns. |
Our Practices
| • | Peer and Industry Data. Our compensation committee considers peer and industry data provided by its independent compensation consultant, currently Alpine Rewards, as a reference in setting base salaries and target cash compensation, determining appropriate levels and mix of equity compensation and determining the type and portion of compensation tied to performance goals. |
2023 Target Annual Cash Incentives, Performance Goals, and Awards Earned
2023 Target Annual Cash Incentives, Performance Goals, and Awards Earned Each named executive officer has a target annual cash incentive amount, which is expressed as a percentage of his or her salary. This target is set forth in each named executive officer’s employment agreement and evaluated by our compensation committee annually based upon a review of the peer and industry data provided by the committee’s compensation consultant. In 2023, our compensation committee determined annual cash incentive targets for the named executive officers as shown below, which represented no change from the annual cash incentive targets for 2022. Our compensation committee provides annual cash incentives in order to align our named executive officers’ compensation with Company performance and the creation of shareholder value by providing a significant percentage of performance-based compensation relative to total compensation.
2023 Target Annual Cash Incentives, Performance Goals, and Awards Earned
| Named Executive Officer | 2022 Annual Cash Incentive Target (% of Base Salary) | 2023 Annual Cash Incentive Target (% of Base Salary) | | Joseph Ciaffoni | 75% | 75% | | Colleen Tupper | 50% | 50% | | Shirley Kuhlmann | 50% | 50% | | Scott Dreyer | 50% | 50% | | Thomas Smith, M.D. | 50% | 50% |
2023 Target Annual Cash Incentives, Performance Goals, and Awards Earned
For purposes of determining 2023 annual cash incentives, the compensation committee reviews performance versus our key annual performance objectives. The following represents a summary of our corporate performance categories and goals, achievements with respect to each category, respective relative weightings assigned to each category, and actual ratings determined based on performance during 2023.
2023 Target Annual Cash Incentives, Performance Goals, and Awards Earned
| | Corporate Category | 2023 Goal | 2023 Performance | Relative Weighting | 2023 Achievement Rating | | FINANCIAL GOALS | Total Net Revenue | Net Revenue of $593.3M | Net Revenue of $566.8M | 35.0% | 27.2% | | | Non-GAAP Adjusted EBITDA(1) | Non-GAAP Adjusted EBITDA of $380.1M | Non-GAAP Adjusted EBITDA of $367.0M | 20.0% | 16.6% | | OPERATIONAL GOALS | Business Development(2) | Complete at least 1 BD transaction meeting certain criteria | Did not complete a BD transaction despite market evaluation | 25.0% | 16.2% | | | Development of Real World Evidence Supporting our Pain Portfolio | Generate real-world evidence relating to Belbuca and/or Xtampza ER, and secure presentations and/or publications of such data | Completed, and exceeded, the targeted data generation and dissemination | 10.0% | 15.0% | | | ESG | Meet retention goals and enhance diversity, equity, and inclusion within our organization (as measured through engagement survey) | Exceeded targeted goals | 10.0% | 15.0% | | | Total: | | | | 90% |
2023 Target Annual Cash Incentives, Performance Goals, and Awards Earned
| (1) Adjusted EBITDA represents GAAP net income (loss) adjusted to exclude interest expense, interest income, the benefit from or provision for income taxes, depreciation, amortization, stock-based compensation, and other adjustments to reflect changes that occur in our business but do not represent ongoing operations. |
2023 Target Annual Cash Incentives, Performance Goals, and Awards Earned
| (2) Although a business development transaction was not completed in 2023, the compensation committee determined to apply a partial achievement to this goal in recognition of the substantial efforts of the Company’s executive officers in 2023 towards achievement of a business development transaction. |
2023 Target Annual Cash Incentives, Performance Goals, and Awards Earned
Our compensation committee evaluated our performance against our 2023 corporate goals in early 2024, established a percentage rating for each goal based on the extent to which the goal was achieved and then determined an overall corporate rating based on the cumulative weightings of the ratings for all the goals. The compensation committee reviewed its assessment of the Company’s achievement of 2023 corporate goals with our Board. The overall percentage rating as indicated above was 90%. Actual annual cash incentive payouts represent the product of the target annual incentive (as a percentage of base salary), the corporate performance multiplier (equal to the achievement of the corporate performance goals), and the individual performance multiplier (as determined by the compensation committee, upon recommendation of the chief executive officer for other executive officers). The individual performance multiplier is based on achievement of individual performance goals which are aligned to, and in support of, our corporate performance goals. This approach is intended to closely align cash incentive payouts with the achievement of our corporate goals, while considering individual performance. The actual amounts, paid to our named executive officers in February 2024, for annual performance in 2023 as described above, are set forth in the following table:
2023 Target Annual Cash Incentives, Performance Goals, and Awards Earned
| Named Executive Officer | Base Salary ($) | Annual Cash Incentive Target (% of Base Salary) | Corporate Performance Multiplier | Individual Performance Multiplier | Actual Annual Cash Incentive Payout ($) | | Joseph Ciaffoni | 825,000 | 75% | 90% | 110% | 612,563 | | Colleen Tupper | 489,000 | 50% | 90% | 125% | 275,063 | | Shirley Kuhlmann | 495,000 | 50% | 90% | 125% | 278,438 | | Scott Dreyer | 465,000 | 50% | 90% | 100% | 209,250 | | Thomas Smith, M.D. | 453,000 | 50% | 90% | 110% | 224,235 |
Long-Term Equity Incentives
Long-Term Equity Incentives As part of the annual compensation review process, after reviewing the achievement of 2022 corporate goals for the prior fiscal year, as well as individual performance goals for our named executive officers, our compensation committee granted long-term equity awards in February 2023 to each of our then-serving named executive officers. The 2023 long-term equity incentive awards for each named executive officer were comprised of a combination of RSUs and PSUs. Our compensation committee sought to reward the executive team’s performance in 2022, incentivize continued performance in 2023 and align equity compensation with peer practices. To do so, the compensation committee, in consultation with Alpine Rewards, first determined the value of each named executive officer’s long-term equity incentive award by reference to these factors, and then allocated the total value of such award between two equity instruments, RSUs and PSUs, to derive the number of RSUs and number of PSUs comprising each award. The compensation committee determined that the total value of each award should be allocated among RSUs and PSUs as follows: 50% each for Mr. Ciaffoni, and 70% and 30%, respectively, for the other executive officers. The actual 2023 long-term equity incentive awards granted in 2023 were as set forth below.
Long-Term Equity Incentives
| | RSUs | PSUs (at Target) | Total Equity Units | | Named Executive Officer | (#) | (#) | (#) | | Joseph Ciaffoni | 117,500 | 117,500 | 235,000 | | Colleen Tupper | 45,045 | 19,305 | 64,350 | | Shirley Kuhlmann | 48,125 | 20,625 | 68,750 | | Scott Dreyer | 44,275 | 18,975 | 63,250 | | Thomas Smith, M.D. | 31,185 | 13,365 | 44,550 |
Long-Term Equity Incentives
The 2023 PSU awards have performance criteria related to the relative ranking of the total shareholder return (“TSR”) of the Company’s common stock in 2023, 2024, 2025 and the cumulative three-year performance period (2023-2025) return relative to the TSR of peer companies within the S&P Pharmaceutical Select Industry Index, where each annual segment is weighted 20% and the cumulative three-year performance is weighted 40%. TSR is measured based on the 30-day average stock price on the first day of each period compared to the 30-day average stock price on the last day of each period. The PSUs subject to the annual performance criteria vest annually, subject to the satisfaction of the performance criteria and the executive’s continued employment through the vesting date. The cumulative PSUs will vest following the three-year performance period, subject to the satisfaction of the performance criteria and the executive’s continued employment through the vesting date. PSUs may vest in a range between 0% and 200%, based on actual performance, and no shares will be issued if the minimum applicable performance metric is not achieved. In February 2024, the compensation committee reviewed the performance of the 2023 performance segments of the 2021 PSU award, 2022 PSU award and 2023 PSU award, and the cumulative segment of the 2021 PSU award. TSR performance for the 2023 performance segment was at the 73.53 percentile for the 2021 PSU award, the 78.05 percentile for the 2022 PSU award, and 86.49 percentile for the 2023 PSU award, resulting in award payouts at 147.06%, 156.10% and 172.97% of target, respectively, for each award for the 2023 segment. TSR performance for the cumulative 2021-2023 segment of the 2021 PSU award was at the 82.35 percentile, resulting in an award payout of 164.71% of target. The following table shows the number of shares earned and vested for each of our named executive officers for the 2021 PSU award.
Long-Term Equity Incentives
| | Total PSUs Granted | 2021 Segment (20%) | 2021 Segment Earned* | 2022 Segment (20%) | 2022 Segment Earned* | 2023 Segment (20%) | 2023 Segment Earned* | Cumulative Three-Year Period Segment (40%) | Cumulative Three-Year Period Segment Earned* | | Named Executive Officer | (#) | (#) | (#) | (#) | (#) | (#) | (#) | (#) | (#) | | Joseph Ciaffoni | 105,000 | 21,000 | 24,570 | 21,000 | 31,784 | 21,000 | 30,883 | 42,000 | 69,178 | | Colleen Tupper | 18,000 | 3,600 | 4,212 | 3,600 | 5,449 | 3,600 | 5,294 | 7,200 | 11,859 | | Shirley Kuhlmann | 19,440 | 3,888 | 4,549 | 3,888 | 5,884 | 3,888 | 5,718 | 7,776 | 12,808 | | Scott Dreyer | 19,620 | 3,924 | 4,591 | 3,924 | 5,939 | 3,924 | 5,771 | 7,848 | 12,926 | | Thomas Smith, M.D. (1) | — | — | — | — | — | — | — | — | — |
Long-Term Equity Incentives
| (1) Dr. Smith joined the Company on March 23, 2022 and does not hold any 2021 PSUs. |
Long-Term Equity Incentives
The following table shows the numbers of shares earned and vested for each of our named executive officers for the 2022 PSU award.
Long-Term Equity Incentives
| | Total PSUs Granted | 2022 Segment (20%) | 2022 Segment Earned* | 2023 Segment (20%) | 2023 Segment Earned* | | Named Executive Officer | (#) | (#) | (#) | (#) | (#) | | Joseph Ciaffoni | 125,000 | 25,000 | 39,535 | 25,000 | 39,025 | | Colleen Tupper | 22,500 | 4,500 | 7,116 | 4,500 | 7,025 | | Shirley Kuhlmann | 24,300 | 4,860 | 7,686 | 4,860 | 7,586 | | Scott Dreyer | 22,500 | 4,500 | 7,116 | 4,500 | 7,025 | | Thomas Smith, M.D. (1) | – | — | — | — | — |
Long-Term Equity Incentives
| (1) Dr. Smith joined the Company on March 23, 2022 and does not hold any 2022 PSUs. |
Long-Term Equity Incentives
* Number of shares rounded to nearest whole share. The following table shows the numbers of shares earned and vested for each of our named executive officers for the 2023 PSU award.
Long-Term Equity Incentives
| | Total PSUs Granted | 2023 Segment (20%) | 2023 Segment Earned* | | Named Executive Officer | (#) | (#) | (#) | | Joseph Ciaffoni | 117,500 | 23,500 | 40,648 | | Colleen Tupper | 19,305 | 3,861 | 6,678 | | Shirley Kuhlmann | 20,625 | 4,125 | 7,135 | | Scott Dreyer | 18,975 | 3,795 | 6,564 | | Thomas Smith, M.D. | 13,365 | 2,673 | 4,623 |
Long-Term Equity Incentives
* Number of shares rounded to nearest whole share.
Employment Agreements
Employment Agreements The Company has entered into employment agreements with each of its named executive officers. These employment agreements outline the base salary, annual cash incentive, and long-term equity incentive components of our executive compensation program, as well as the impact of termination and change of control on the executive compensation programs in which our named executive officers participate.
Summary Compensation Table
Summary Compensation Table The following table shows the annual compensation paid to or earned by our named executive officers, for the fiscal years ended December 31, 2023, 2022 and 2021:
Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) (1) | Non-Equity Incentive Plan Compensation ($) (2) | All Other Compensation ($) (3) | Total ($) | | Joseph Ciaffoni | 2023 | 817,038 | — | 7,691,315 | 612,563 | 22,008 | 9,142,924 | | President and Chief Executive Officer | 2022 | 751,846 | — | 5,231,750 | 914,288 | 19,646 | 6,917,530 | | | 2021 | 712,754 | — | 6,214,320 | 369,400 | 17,861 | 7,314,335 | | Colleen Tupper | 2023 | 485,574 | — | 1,952,212 | 275,063 | 22,008 | 2,734,857 | | Executive Vice President and Chief Financial Officer | 2022 | 458,089 | — | 1,470,615 | 371,762 | 18,438 | 2,318,904 | | | 2021 | 259,327 | 250,000(4) | 1,668,336 | 106,300 | 15,612 | 2,299,575 | | Shirley Kuhlmann | 2023 | 490,412 | — | 2,085,696 | 278,438 | 19,601 | 2,874,147 | | Executive Vice President, Chief Administrative Officer, General Counsel & Secretary | 2022 | 455,011 | — | 1,588,264 | 369,263 | 18,624 | 2,431,162 | | | 2021 | 429,723 | — | 1,774,172 | 174,200 | 16,181 | 2,394,276 | | Scott Dreyer | 2023 | 462,281 | — | 1,918,841 | 209,250 | 22,008 | 2,612,380 | | Executive Vice President and Chief Commercial Officer | 2022 | 440,265 | — | 1,470,615 | 285,542 | 20,770 | 2,217,192 | | | 2021 | 418,635 | — | 1,790,600 | 154,500 | 17,861 | 2,381,596 | | Thomas Smith, M.D. | 2023 | 451,428 | — | 1,351,531 | 224,235 | 17,608 | 2,044,802 | | Executive Vice President and Chief Medical Officer | 2022 | 318,615 | — | — | 281,220 | 682 | 600,517 | | | 2021 | — | — | — | — | — | — |
Summary Compensation Table
| (1) The amounts reflect the aggregate grant date fair value of stock awards computed in accordance with FASB ASC Topic 718. Assumptions used in the calculation of these amounts are described in Note 17, “Stock-based Compensation,” to our audited financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. |
Summary Compensation Table
| (2) Amounts represent the annual cash incentive payments earned by our named executive officers, for the years ended December 31, 2023, 2022 and 2021, respectively, pursuant to the achievement of certain company and individual performance objectives for those years. Please see the descriptions of the annual cash incentives in the section entitled “Compensation Discussion and Analysis — 2023 Executive Compensation of Our Named Executive Officers.” |
Summary Compensation Table
| (3) This amount reflects our contributions to our life/disability insurance plan, 401(k) Plan, and HSA contributions on behalf of each named executive officer. Our contributions to our 401(k) Plan on behalf of certain NEOs in 2023 that exceeded $10,000 were as follows: for Mr. Ciaffoni: $16,500; Ms. Tupper: $16,500; Ms. Kuhlmann: $14,093; Mr. Dreyer: $16,500; and Dr. Smith: $16,500. |
Summary Compensation Table
| (4) Ms. Tupper received this one-time lump sum signing bonus of $250,000 in connection with the terms of her employment agreement in 2021. |
Grants of Plan-Based Awards
Grants of Plan-Based Awards The following table presents plan-based awards made to each of the named executive officers during 2023.
Grants of Plan-Based Awards
| | | | Estimated Future Payouts | | | Estimated Future Payouts | | | All Other | | | | | | Under Non-Equity Incentive | | | Under Equity Incentive | | | Stock Awards: | Grant Date | | | | | Plan Awards (2) | | | Plan Awards (3) | | | Number of Shares | Fair Value of | | | | | Threshold | Target | Maximum | Threshold | Target | Maximum | of Stock or Units (4) | Stock Awards (5) | | Name | Grant Date | Approval Date (1) | ($) | ($) | ($) | (#) | (#) | (#) | (#) | ($) | | Joseph Ciaffoni | | | 448,594 | 618,750 | 1,098,281 | | | | | | | | 2/10/2023 | 2/9/2023 | | | | 11,750 | 23,500 | 47,000 | | 904,750 | | | 2/10/2023 | 2/9/2023 | | | | 11,750 | 23,500 | 47,000 | | 830,490 | | | 2/10/2023 | 2/9/2023 | | | | 11,750 | 23,500 | 47,000 | | 829,550 | | | 2/10/2023 | 2/9/2023 | | | | 23,500 | 47,000 | 94,000 | | 1,983,400 | | | 2/10/2023 | 2/9/2023 | | | | | | | 117,500 | 3,143,125 | | Colleen Tupper | | | 177,263 | 244,500 | 433,988 | | | | | | | | 2/10/2023 | 2/7/2023 | | | | 1,931 | 3,861 | 7,722 | | 148,649 | | | 2/10/2023 | 2/7/2023 | | | | 1,931 | 3,861 | 7,722 | | 136,448 | | | 2/10/2023 | 2/7/2023 | | | | 1,931 | 3,861 | 7,722 | | 136,293 | | | 2/10/2023 | 2/7/2023 | | | | 3,861 | 7,722 | 15,444 | | 325,868 | | | 2/10/2023 | 2/7/2023 | | | | | | | 45,045 | 1,204,954 | | Shirley Kuhlmann | | | 179,438 | 247,500 | 439,313 | | | | | | | | 2/10/2023 | 2/7/2023 | | | | 2,063 | 4,125 | 8,250 | | 158,813 | | | 2/10/2023 | 2/7/2023 | | | | 2,063 | 4,125 | 8,250 | | 145,778 | | | 2/10/2023 | 2/7/2023 | | | | 2,063 | 4,125 | 8,250 | | 145,613 | | | 2/10/2023 | 2/7/2023 | | | | 4,125 | 8,250 | 16,500 | | 348,150 | | | 2/10/2023 | 2/7/2023 | | | | | | | 48,125 | 1,287,344 | | Scott Dreyer | | | 168,563 | 232,500 | 412,688 | | | | | | | | 2/10/2023 | 2/7/2023 | | | | 1,898 | 3,795 | 7,590 | | 146,108 | | | 2/10/2023 | 2/7/2023 | | | | 1,898 | 3,795 | 7,590 | | 134,115 | | | 2/10/2023 | 2/7/2023 | | | | 1,898 | 3,795 | 7,590 | | 133,964 | | | 2/10/2023 | 2/7/2023 | | | | 3,795 | 7,590 | 15,180 | | 320,298 | | | 2/10/2023 | 2/7/2023 | | | | | | | 44,275 | 1,184,356 | | Thomas Smith, M.D. | | | 164,213 | 226,500 | 402,038 | | | | | | | | 2/10/2023 | 2/7/2023 | | | | 1,337 | 2,673 | 5,346 | | 102,911 | | | 2/10/2023 | 2/7/2023 | | | | 1,337 | 2,673 | 5,346 | | 94,464 | | | 2/10/2023 | 2/7/2023 | | | | 1,337 | 2,673 | 5,346 | | 94,357 | | | 2/10/2023 | 2/7/2023 | | | | 2,673 | 5,346 | 10,692 | | 225,601 | | | 2/10/2023 | 2/7/2023 | | | | | | | 31,185 | 834,199 |
Grants of Plan-Based Awards
| (1) The approval date represents the date the compensation committee and/or board of directors took action to grant equity awards to the NEOs and is disclosed to the extent it differs from the grant date. |
Grants of Plan-Based Awards
| (2) Consists of potential cash payments under our annual cash incentive program for executives for 2023. Actual cash incentive payments determined in February 2024 for 2023 performance are set forth in the Summary Compensation Table above under the column entitled “Non-Equity Incentive Plan Compensation” for 2023. The “threshold” payouts reflect the annual cash incentive payment that would have been due had each of the corporate goals been achieved at the minimum level. The “target” payouts reflect the annual cash incentive payment that would have been due had each of the corporate goals been achieved at the target level (100%). Finally, the “maximum” payouts reflect the annual cash incentive that would have been due had each of the corporate goals been achieved at the maximum level applicable to that goal. |
Grants of Plan-Based Awards
| (3) Consists of the minimum threshold, target, and maximum amounts that could vest pursuant to PSUs granted to executives under our annual long-term equity incentive program. |
Grants of Plan-Based Awards
| (4) Consists of stock awards for executives under our annual long-term equity incentive program for executives. |
Grants of Plan-Based Awards
| (5) Amounts reported reflect the aggregate grant date fair value of stock awards computed in accordance with FASB ASC 718. These amounts do not represent the actual amounts paid or realized by the named executive officer during 2023. Assumptions used in the calculation of these amounts are described in Note 17, “Stock-based Compensation,” to our audited financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. |
Outstanding Equity Awards at Fiscal Year-End
Outstanding Equity Awards at Fiscal Year-End The following table provides information regarding equity awards held by each of our named executive officers that were outstanding as of December 31, 2023. All our outstanding equity awards are governed by the Collegium Pharmaceutical, Inc. Amended and Restated 2014 Stock Incentive Plan. The market value of stock awards is based on the closing market price of our common stock of $30.78 per share on December 29, 2023, the last business day of the fiscal year ending December 31, 2023:
Outstanding Equity Awards at Fiscal Year-End
| | | Option Awards | | | | Stock Awards | | | | | Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | | Joseph Ciaffoni | 1/25/2018 | 50,000(1) | — | 24.35 | 1/25/2028 | — | — | — | — | | | 7/1/2018 | 41,418(1) | — | 23.85 | 7/1/2028 | — | — | — | — | | | 2/5/2020 | 11,250(1) | 5,625 | 21.34 | 2/5/2030 | 11,250(3) | 346,275 | — | — | | | 1/19/2021 | — | — | — | — | 152,561(4) | 4,695,828 | — | — | | | 2/10/2022 | — | — | — | — | 132,775(5) | 4,086,815 | 150,000(17) | 4,617,000 | | | 2/10/2023 | — | — | — | — | 158,148(6) | 4,867,795 | 188,000(18) | 5,786,640 | | Colleen Tupper | 5/24/2021 | — | — | — | — | 38,153(7) | 1,174,349 | — | — | | | 2/10/2022 | — | — | — | — | 46,400(8) | 1,428,192 | 27,000(17) | 831,060 | | | 2/10/2023 | — | — | — | — | 51,723(9) | 1,592,034 | 30,888(18) | 950,733 | | Shirley Kuhlmann | 4/4/2018 | 40,000(2) | — | 24.03 | 4/4/2028 | — | — | — | — | | | 2/5/2020 | 25,781(1) | 1,719 | 21.34 | 2/5/2030 | 6,188(3) | 190,467 | — | — | | | 1/19/2021 | — | — | — | — | 41,206(10) | 1,268,321 | — | — | | | 2/10/2022 | — | — | — | — | 50,111(11) | 1,542,417 | 29,160(17) | 897,545 | | | 2/10/2023 | — | — | — | — | 55,260(12) | 1,700,903 | 33,000(18) | 1,015,740 | | Scott Dreyer | 4/4/2018 | 75,000(2) | — | 24.03 | 4/4/2028 | — | — | — | — | | | 1/25/2019 | 17,600(1) | — | 15.90 | 1/25/2029 | — | — | — | — | | | 2/5/2020 | 19,921(1) | 1,329 | 21.34 | 2/5/2030 | 4,782(3) | 147,190 | — | — | | | 1/19/2021 | — | — | — | — | 41,587(13) | 1,280,048 | — | — | | | 2/10/2022 | — | — | — | — | 46,400(14) | 1,428,192 | 27,000(17) | 831,060 | | | 2/10/2023 | — | — | — | — | 50,839(15) | 1,564,824 | 30,360(18) | 934,481 | | Thomas Smith, M.D. | 2/10/2023 | — | — | — | — | 35,808(16) | 1,102,170 | 21,384(18) | 658,200 |
Outstanding Equity Awards at Fiscal Year-End
| (1) Represents time-based option awards that vest and become exercisable over the four-year period following the grant date, with 25% of the option becoming vested and exercisable on the first anniversary of the grant date and the remaining shares underlying the option vesting in quarterly installments over the remaining three years of the four-year period, generally subject to the executive's continued employment with the company on the applicable vesting date. |
Outstanding Equity Awards at Fiscal Year-End
| (2) Represents time-based option awards that vest and become exercisable over the four-year period following the grant date, with 25% of the option becoming vested and exercisable on the first anniversary of the grant date and the remaining shares underlying the option vesting in monthly installments over the remaining three years of the four-year period, generally subject to the executive's continued employment with the company on the applicable vesting date. |
Outstanding Equity Awards at Fiscal Year-End
| (3) Represents time-based restricted stock units that vest over the four-year period following the grant date, with 25% vesting on the first anniversary of the grant date and the balance vesting in equal annual installments (in each case, rounded up to the nearest whole share) over the remaining three years of the four-year period following the award date, generally subject to the executive's continued employment with the company on the applicable vesting date. |
Outstanding Equity Awards at Fiscal Year-End
| (4) Includes 52,500 time-based restricted stock units that vest over the four-year period following the grant date, with 25% vesting on the first anniversary of the grant date and the balance vesting in equal annual installments (in each case, rounded up to the nearest whole share) over the remaining three years of the four-year period following the award date and 100,061 performance share units for which relevant performance conditions were satisfied as of the fiscal year-end, but performance share units were subject to forfeiture conditions until vesting was determined by the compensation committee on February 6, 2024. |
Outstanding Equity Awards at Fiscal Year-End
| (5) Includes 93,750 time-based restricted stock units that vest over the four-year period following the grant date, with 25% vesting on the first anniversary of the grant date and the balance vesting in equal annual installments (in each case, rounded up to the nearest whole share) over the remaining three years of the four-year period following the award date and 39,025 performance share units for which relevant performance conditions were satisfied as of the fiscal year-end, but performance share units were subject to forfeiture conditions until vesting was determined by the compensation committee on February 6, 2024. |
Outstanding Equity Awards at Fiscal Year-End
| (6) Includes 117,500 time-based restricted stock units that vest over the four-year period following the grant date, with 25% vesting on the first anniversary of the grant date and the balance vesting in equal annual installments (in each case, rounded up to the nearest whole share) over the remaining three years of the four-year period following the award date and 40,648 performance share units for which relevant performance conditions were satisfied as of the fiscal year-end, but performance share units were subject to forfeiture conditions until vesting was determined by the compensation committee on February 6, 2024. |
Outstanding Equity Awards at Fiscal Year-End
| (7) Includes 21,000 time-based restricted stock units that vest over the four-year period following the grant date, with 25% vesting on the first anniversary of the grant date and the balance vesting in equal annual installments (in each case, rounded up to the nearest whole share) over the remaining three years of the four-year period following the award date and 17,153 performance share units for which relevant performance conditions were satisfied as of the fiscal year-end, but performance share units were subject to forfeiture conditions until vesting was determined by the compensation committee on February 6, 2024. |
Outstanding Equity Awards at Fiscal Year-End
| (8) Includes 39,375 time-based restricted stock units that vest over the four-year period following the grant date, with 25% vesting on the first anniversary of the grant date and the balance vesting in equal annual installments (in each case, rounded up to the nearest whole share) over the remaining three years of the four-year period following the award date and 7,025 performance share units for which relevant performance conditions were satisfied as of the fiscal year-end, but performance share units were subject to forfeiture conditions until vesting was determined by the compensation committee on February 6, 2024. |
Outstanding Equity Awards at Fiscal Year-End
| (9) Includes 45,045 time-based restricted stock units that vest over the four-year period following the grant date, with 25% vesting on the first anniversary of the grant date and the balance vesting in equal annual installments (in each case, rounded up to the nearest whole share) over the remaining three years of the four-year period following the award date and 6,678 performance share units for which relevant performance conditions were satisfied as of the fiscal year-end, but performance share units were subject to forfeiture conditions until vesting was determined by the compensation committee on February 6, 2024. |
Outstanding Equity Awards at Fiscal Year-End
| (10) Includes 22,680 time-based restricted stock units that vest over the four-year period following the grant date, with 25% vesting on the first anniversary of the grant date and the balance vesting in equal annual installments (in each case, rounded up to the nearest whole share) over the remaining three years of the four-year period following the award date and 18,526 performance share units for which relevant performance conditions were satisfied as of the fiscal year-end, but performance share units were subject to forfeiture conditions until vesting was determined by the compensation committee on February 6, 2024. |
Outstanding Equity Awards at Fiscal Year-End
| (11) Includes 42,525 time-based restricted stock units that vest over the four-year period following the grant date, with 25% vesting on the first anniversary of the grant date and the balance vesting in equal annual installments (in each case, rounded up to the nearest whole share) over the remaining three years of the four-year period following the award date and 7,586 performance share units for which relevant performance conditions were satisfied as of the fiscal year-end, but performance share units were subject to forfeiture conditions until vesting was determined by the compensation committee on February 6, 2024. |
Outstanding Equity Awards at Fiscal Year-End
| (12) Includes 48,125 time-based restricted stock units that vest over the four-year period following the grant date, with 25% vesting on the first anniversary of the grant date and the balance vesting in equal annual installments (in each case, rounded up to the nearest whole share) over the remaining three years of the four-year period following the award date and 7,135 performance share units for which relevant performance conditions were satisfied as of the fiscal year-end, but performance share units were subject to forfeiture conditions until vesting was determined by the compensation committee on February 6, 2024. |
Outstanding Equity Awards at Fiscal Year-End
| (13) Includes 22,890 time-based restricted stock units that vest over the four-year period following the grant date, with 25% vesting on the first anniversary of the grant date and the balance vesting in equal annual installments (in each case, rounded up to the |
Outstanding Equity Awards at Fiscal Year-End
| nearest whole share) over the remaining three years of the four-year period following the award date and 18,697 performance share units for which relevant performance conditions were satisfied as of the fiscal year-end, but performance share units were subject to forfeiture conditions until vesting was determined by the compensation committee on February 6, 2024. |
Outstanding Equity Awards at Fiscal Year-End
| (14) Includes 39,375 time-based restricted stock units that vest over the four-year period following the grant date, with 25% vesting on the first anniversary of the grant date and the balance vesting in equal annual installments (in each case, rounded up to the nearest whole share) over the remaining three years of the four-year period following the award date and 7,025 performance share units for which relevant performance conditions were satisfied as of the fiscal year-end, but performance share units were subject to forfeiture conditions until vesting was determined by the compensation committee on February 6, 2024. |
Outstanding Equity Awards at Fiscal Year-End
| (15) Includes 44,275 time-based restricted stock units that vest over the four-year period following the grant date, with 25% vesting on the first anniversary of the grant date and the balance vesting in equal annual installments (in each case, rounded up to the nearest whole share) over the remaining three years of the four-year period following the award date and 6,564 performance share units for which relevant performance conditions were satisfied as of the fiscal year-end, but performance share units were subject to forfeiture conditions until vesting was determined by the compensation committee on February 6, 2024. |
Outstanding Equity Awards at Fiscal Year-End
| (16) Includes 31,185 time-based restricted stock units that vest over the four-year period following the grant date, with 25% vesting on the first anniversary of the grant date and the balance vesting in equal annual installments (in each case, rounded up to the nearest whole share) over the remaining three years of the four-year period following the award date and 4,623 performance share units for which relevant performance conditions were satisfied as of the fiscal year-end, but performance share units were subject to forfeiture conditions until vesting was determined by the compensation committee on February 6, 2024. |
Outstanding Equity Awards at Fiscal Year-End
| (17) These performance share units vest following annual performance periods and a three-year performance period, subject to the satisfaction of the annual and cumulative performance criteria as determined by the compensation committee. These amounts reflect an estimate of the unvested PSUs that may become vested based on the actual performance over the applicable performance periods. For purposes of calculating the amounts set forth in the table, it is assumed that the PSUs will be earned at the maximum level as performance in the previous fiscal year exceeded target; however, the number of shares actually earned will depend upon actual performance over the applicable performance periods. Approximately 33% of the reported amounts correspond to the annual performance period from January 1, 2024 to December 31, 2024 and the remainder corresponds to the cumulative performance period of January 1, 2022 through December 31, 2024. |
Outstanding Equity Awards at Fiscal Year-End
| (18) These performance share units vest following annual performance periods and a three-year performance period, subject to the satisfaction of the annual and cumulative performance criteria as determined by the compensation committee. These amounts reflect an estimate of the unvested PSUs that may become vested based on the actual performance over the applicable performance periods. For purposes of calculating the amounts set forth in the table, it is assumed that the PSUs will be earned at the maximum level as performance in the previous fiscal year exceeded target; however, the number of shares actually earned will depend upon actual performance over the applicable performance periods. Approximately 25% of the amounts reported correspond to each of the annual performance periods from January 1, 2024 to December 31, 2024 and January 1, 2025 to December 31, 2025, and the remaining 50% corresponds to the cumulative performance period of January 1, 2023 through December 31, 2025. |
Option Exercises and Stock Vested
Option Exercises and Stock Vested The following table sets forth certain information regarding option exercises and stock vested during the year ended December 31, 2023 with respect to each of our named executive officers:
Option Exercises and Stock Vested
| | Option Awards | | Stock Awards | | | | Number of Shares Acquired on Exercise | Value Realized on Exercise | Number of Shares Acquired on Vesting | Value Realized on Vesting | | Name | (#) | ($) | (#) | ($) | | Joseph Ciaffoni | 84,375 | 770,456 | 228,944 | 6,124,252 | | Colleen Tupper | — | — | 36,190 | 968,083 | | Shirley Kuhlmann | 25,600 | 252,974 | 63,841 | 1,707,747 | | Scott Dreyer | — | — | 58,210 | 1,557,118 | | Thomas Smith, M.D. | — | — | — | — |
Potential Payments upon Termination without Cause or Resignation for Good Reason
Potential Payments upon Termination without Cause or Resignation for Good Reason Pursuant to the executive employment agreements, if the employment of an executive is terminated by the Company without Cause or if the executive resigns with Good Reason (as each term is defined in the employment agreements), and such termination does not occur on or within the 12 month period following a change in control, then Mr. Ciaffoni would be entitled to 18 months of severance benefits and each other executive would be entitled to 12 months of severance benefits. During his or her applicable severance period, and subject to the Company’s receipt of a general release of claims and the terminated executive’s continued compliance with their restrictive covenants, the applicable executive would receive the following severance benefits, less applicable tax withholding:
Potential Payments upon Termination without Cause or Resignation for Good Reason
| • | payment of any annual bonus otherwise payable (but for the cessation of executive’s employment) with respect to a year ended prior to the cessation of executive’s employment; |
Potential Payments upon Termination without Cause or Resignation for Good Reason
| • | continuation of the executive’s then-current base salary in accordance with normal payroll procedures for the applicable severance period; |
Potential Payments upon Termination without Cause or Resignation for Good Reason
| • | payment of a cash severance benefit equal to the executive’s annual bonus at the target percentage for the year in which the termination occurs (except in the case of Mr. Ciaffoni, who would receive payment of a cash severance benefit equal to 150% of his annual bonus at the target percentage for the year in which the termination occurs), paid in monthly installments over the applicable severance period; |
Potential Payments upon Termination without Cause or Resignation for Good Reason
| • | the executive’s unvested equity incentives that are subject only to time-based vesting and would have vested over the applicable severance period will become immediately and automatically fully vested and exercisable; |
Potential Payments upon Termination without Cause or Resignation for Good Reason
| • | the executive’s unvested equity incentives that are subject to performance-based vesting and would have vested over the applicable severance period will vest based on the compensation committee’s determination of achievement of the applicable performance criteria through the date of termination; and |
Potential Payments upon Termination without Cause or Resignation for Good Reason
| • | waiver of the applicable premium otherwise payable for COBRA continuation coverage for the executive, if applicable (and, to the extent covered immediately prior to the date of such cessation, his or her eligible dependents) during the applicable severance period. |
Potential Payments upon Termination without Cause or Resignation for Good Reason
For each named executive officer, the following table sets forth quantitative estimates of the payments and benefits that would have become payable if such executive’s employment had been terminated without cause or the executive resigned for good reason on December 31, 2023 other than in connection with a change of control. Amounts below reflect potential payments pursuant to the employment agreements for such named executive officers as described above in the section titled “—Employment Agreements.”
Potential Payments upon Termination without Cause or Resignation for Good Reason
| Name | Salary Continuation ($)(1) | Annual Cash Incentive ($)(2) | Benefit Continuation ($)(3) | Value of Stock Awards Vesting ($)(4) | Value of Option Awards Vesting ($)(5) | Total ($) | | Joseph Ciaffoni | 1,237,500 | 928,125 | 36,022 | 14,258,343 | 53,100 | 16,513,090 | | Colleen Tupper | 489,000 | 244,500 | 24,015 | 2,023,539 | — | 2,781,054 | | Shirley Kuhlmann | 495,000 | 247,500 | 24,015 | 2,369,475 | 16,227 | 3,152,217 | | Scott Dreyer | 465,000 | 232,500 | 24,015 | 2,237,891 | 12,546 | 2,971,952 | | Thomas Smith, M.D. | 453,000 | 226,500 | 10,742 | 382,257 | — | 1,072,499 |
Potential Payments upon Termination without Cause or Resignation for Good Reason
| (1) Continuation of base salary following termination of employment paid in installments over an 18-month period for Mr. Ciaffoni, and 12-month period for Ms. Tupper, Ms. Kuhlmann, Mr. Dreyer, and Dr. Smith. |
Potential Payments upon Termination without Cause or Resignation for Good Reason
| (2) Target cash incentive equal to 150% target bonus paid over an 18-month period for Mr. Ciaffoni, and 100% target bonus paid over a 12-month period for Ms. Tupper, Ms. Kuhlmann, Mr. Dreyer, and Dr. Smith. |
Potential Payments upon Termination without Cause or Resignation for Good Reason
| (3) Estimated value of continued group health insurance for 18 months for Mr. Ciaffoni, and 12 months for Ms. Tupper, Ms. Kuhlmann, Mr. Dreyer, and Dr. Smith. |
Potential Payments upon Termination without Cause or Resignation for Good Reason
| (4) Amounts reflect the value of restricted stock units and performance share units that would become vested based on the closing price of our common stock of $30.78 on December 29, 2023, the last business day of the fiscal year ending December 31, 2023. |
Potential Payments upon Termination without Cause or Resignation for Good Reason
| (5) Amounts reflect the intrinsic value of unvested stock options that would become vested based on the spread between the closing stock price of our common stock of $30.78 on December 29, 2023, the last business day of the fiscal year ending December 31, 2023, and the exercise price applicable to such stock option. |
Potential Payments Upon Termination or Change in Control
Potential Payments Upon Termination or Change in Control Pursuant to the executive employment agreements, if the employment of an executive is terminated by the Company without Cause or if the executive resigns with Good Reason (as each term is defined in the employment agreements), and such termination occurs on or within the 12 month period following a change in control, then subject to the Company’s receipt of a general release of claims and the terminated executive’s continued compliance with their restrictive covenants, the applicable executive would receive the following severance benefits, less applicable tax withholding:
Potential Payments Upon Termination or Change in Control
| • | payment of any annual bonus otherwise payable (but for the cessation of executive’s employment) with respect to a year ended prior to the cessation of executive’s employment; |
Potential Payments Upon Termination or Change in Control
| • | a lump sum payment equal to 1.5 times the executive’s then-current base salary (except in the case of Mr. Ciaffoni, who would receive payment of a cash severance benefit equal to 2 times his then-current base salary); |
Potential Payments Upon Termination or Change in Control
| • | a lump sum payment equal to 150% of the executive’s annual bonus at the target percentage for the year in which the termination occurs (except in the case of Mr. Ciaffoni, who would receive payment of a cash severance benefit equal to 200% of his annual bonus at the target percentage for the year in which the termination occurs); |
Potential Payments Upon Termination or Change in Control
| • | the executive’s unvested equity incentives that are subject only to time-based vesting will become immediately and automatically fully vested and exercisable; |
Potential Payments Upon Termination or Change in Control
| • | the executive’s unvested equity incentives that are subject to performance-based vesting will vest, if at all, based on the terms of the equity plan and applicable award agreement; and |
Potential Payments Upon Termination or Change in Control
| • | waiver of the applicable premium otherwise payable for COBRA continuation coverage for the executive, if applicable (and, to the extent covered immediately prior to the date of such cessation, his or her eligible dependents) during the 18-month period following the date of termination (or the 24-month period for Mr. Ciaffoni). |
Potential Payments Upon Termination or Change in Control
For each named executive officer, the following table sets forth quantitative estimates of the payments and benefits that would have become payable if such executive’s employment had been terminated without cause or the executive resigned for good reason on December 31, 2023, assuming that such termination occurs within twelve months following a change of control. Amounts below reflect potential payments pursuant to the employment agreements for such named executive officers as described above in the section titled “—Employment Agreements.”
Potential Payments Upon Termination or Change in Control
| Name | Salary Continuation ($)(1) | Annual Cash Incentive ($)(2) | Benefit Continuation ($)(3) | Value of Stock Awards Vesting ($)(4) | Value of Option Awards Vesting ($)(5) | Total ($) | | Joseph Ciaffoni | 1,650,000 | 1,237,500 | 48,030 | 24,400,353 | 53,100 | 27,388,983 | | Colleen Tupper | 733,500 | 366,750 | 36,022 | 5,976,368 | — | 7,112,640 | | Shirley Kuhlmann | 742,500 | 371,250 | 36,022 | 6,615,392 | 16,227 | 7,781,391 | | Scott Dreyer | 697,500 | 348,750 | 36,022 | 6,185,795 | 12,546 | 7,280,613 | | Thomas Smith, M.D. | 679,500 | 339,750 | 16,112 | 1,760,370 | — | 2,795,732 |
Potential Payments Upon Termination or Change in Control
| (1) Continuation of base salary following termination of employment paid in a lump sum payment equal to 24 months of annual base salary for Mr. Ciaffoni, and 18 months of annual base salary for Ms. Tupper, Ms. Kuhlmann, Mr. Dreyer, and Dr. Smith. |
Potential Payments Upon Termination or Change in Control
| (2) Annual cash incentive following termination of employment paid in a lump sum payment equal to 200% target bonus for Mr. Ciaffoni, and 150% target bonus for Ms. Tupper, Ms. Kuhlmann, Mr. Dreyer, and Dr. Smith. |
Potential Payments Upon Termination or Change in Control
| (3) Estimated value of continued group health insurance for 24 months for Mr. Ciaffoni, and 18 months for Ms. Tupper, Ms. Kuhlmann, Mr. Dreyer, and Dr. Smith. |
Potential Payments Upon Termination or Change in Control
| (4) Amounts reflect the value of restricted stock units and performance share units that would become vested based on the closing price of our common stock of $30.78 on December 29, 2023, the last business day of the fiscal year ending December 31, 2023. |
Potential Payments Upon Termination or Change in Control
| (5) Amounts reflect the intrinsic value of unvested stock options that would become vested based on the spread between the closing stock price of our common stock of $30.78 on December 29, 2023, the last business day of the fiscal year ending December 31, 2023, and the exercise price applicable to such stock option. |
Potential Payments Upon Death or Disability
Potential Payments Upon Death or Disability Pursuant to Mr. Ciaffoni’s employment agreement, if his employment is terminated due to his death or Disability (as such term is defined in his employment agreement), then subject to the Company’s receipt of a general release of claims and (except in the case of his death) Mr. Ciaffoni’s continued compliance with their restrictive covenants, the applicable executive would receive the following severance benefits, less applicable tax withholding:
Potential Payments Upon Death or Disability
| • | payment of any annual bonus otherwise payable (but for the cessation of executive’s employment) with respect to a year ended prior to the cessation of executive’s employment; |
Potential Payments Upon Death or Disability
| • | a lump sum payment equal to the executive’s annual bonus that would have been paid for the year in which the termination occurs had the executive remained employed, prorated based on the number of days worked in the applicable year in which the termination occurs and paid at the time when normal bonuses are paid for such year; |
Potential Payments Upon Death or Disability
| • | the executive’s unvested equity incentives will become immediately and automatically fully vested and exercisable; and |
Potential Payments Upon Death or Disability
| • | waiver of the applicable premium otherwise payable for COBRA continuation coverage for the executive, if applicable (and, to the extent covered immediately prior to the date of such cessation, his or her eligible dependents) during the 12-month period following the date of termination. |
Potential Payments Upon Death or Disability
The following table sets forth quantitative estimates of the payments and benefits that would have become payable if Mr. Ciaffoni’s employment had ceased upon his death or Disability (as defined in his employment agreement) on December 31, 2023. Amounts below reflect potential payments pursuant to the employment agreement for Mr. Ciaffoni as described above in the section titled “—Employment Agreements.”
Potential Payments Upon Death or Disability
| Name | Annual Cash Incentive ($)(1) | Benefit Continuation ($)(2) | Value of Stock Awards Vesting ($)(3) | Value of Option Awards Vesting ($)(4) | Total ($) | | Joseph Ciaffoni | 618,750 | 24,015 | 25,732,080 | 53,100 | 26,427,945 |
Potential Payments Upon Death or Disability
| (1) Amount equal to the annual bonus that would have been paid to Mr. Ciaffoni for the fiscal year in which his employment terminates (had his employment not terminated), multiplied by a fraction equal to the number of days Mr. Ciaffoni worked through the date of termination of employment over 365, which amount shall be paid in the year following employment termination at the time annual bonuses are paid to the Company’s senior executives. |
Potential Payments Upon Death or Disability
| (2) Estimated value of continued group health insurance for 12 months. |
Potential Payments Upon Death or Disability
| (3) Amount reflects the value of restricted stock units and performance share units that would become vested based on the closing price of our common stock of $30.78 on December 29, 2023, the last business day of the fiscal year ending December 31, 2023. |
Potential Payments Upon Death or Disability
| (4) Amount reflects the intrinsic value of unvested stock options that would become vested based on the spread between the closing stock price of our common stock of $30.78 on December 29, 2023, the last business day of the fiscal year ending December 31, 2023, and the exercise price applicable to such stock option. |
CEO Pay Ratio
CEO Pay Ratio Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are required to disclose the median of the annual total compensation of our employees, the annual total compensation of our President and Chief Executive Officer, Joseph Ciaffoni, and the ratio of these two amounts. As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, we must identify our median employee once every three years. As we had used the same median employee for 2020, 2021, and 2022, we were required to reevaluate our median employee for 2023. Thus, for 2023, we identified a new median employee by examining the 2023 target total compensation for all our employees, excluding Mr. Ciaffoni, who were employed by us as of December 31, 2023. For 2023, we changed the date used to identify the median employee from the prior year to better align with the period for which annual compensation is calculated in the Summary Compensation Table. We included all employees, whether employed on a full-time, or part-time, salaried, or hourly basis. Target total compensation used to identify the median employee was based on annual base salary paid, target bonus opportunity, and the grant date fair value of equity awards granted for 2023 and was consistently applied for all employees. After identifying our median employee, we calculated annual total compensation for such employee using the same methodology we use for our named executive officers as set forth in the 2023 Summary Compensation Table in this proxy statement. We determined the median of the annual total compensation of all employees, excluding Mr. Ciaffoni, for 2023 was $215,476. The annual total compensation of Mr. Ciaffoni, as shown in the Summary Compensation Table above is $9,142,924. The ratio of annual total compensation for Mr. Ciaffoni to that of our median employee’s annual total compensation was approximately 42 to 1. The pay ratio reported above is a reasonable estimate calculated in a manner consistent with SEC rules which allow companies to adopt a variety of methodologies. Therefore, the pay ratio reported by other companies may not be comparable to the pay ratio reported above.
Pay versus Performance
Pay versus Performance As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid and certain financial performance of the Company.
Pay versus Performance
| | | | | | Total Shareholder Return (Value of Initial Fixed $100 Investment) | | | | | Year | Summary Compensation Table Total for PEO(1) ($) | Compensation Actually Paid to PEO(2) ($) | Average Summary Compensation Table Total for Non-PEO NEOs(3)($) | Average Compensation Actually Paid to Non-PEO NEOs(2) ($) | COLL TSR (4) ($) | Peer Group TSR (5) ($) | Net Income (millions)(6) ($) | Adjusted EBITDA (millions)(7) ($) | | 2023 | 9,142,924 | 15,001,055 | 2,566,547 | 3,732,025 | 149.56 | 118.87 | 48 | 367 | | 2022 | 6,917,530 | 10,486,100 | 1,846,402 | 1,984,482 | 112.73 | 113.65 | (25) | 266 | | 2021 | 7,314,335 | 5,084,054 | 2,179,351 | 462,642 | 90.77 | 126.45 | 72 | 118 | | 2020 | 6,042,639 | 5,159,204 | 2,158,889 | 1,870,232 | 97.33 | 126.42 | 27 | 140 |
Pay versus Performance
| (1) Amounts represent the total compensation reported for Mr. Ciaffoni (our Chief Executive Officer) for each corresponding year in the “Total” column of the Summary Compensation Table. Refer to “Executive Compensation – Executive Compensation Tables – Summary Compensation Table.” |
Pay versus Performance
| (2) The Summary Compensation Table totals reported for the PEO and the average of the Summary Compensation Table totals reported for the Non-PEO NEOs for each year were subject to the following adjustments per Item 402(v)(2)(iii) of Regulation S-K to calculate “compensation actually paid” and do not reflect the actual amount of compensation earned by the PEO and Non-PEO NEOs during the applicable year: |
Pay versus Performance
| | 2023 | | 2022 | | 2021 | | 2020 | | | | PEO ($) | Average for Other NEOs ($) | PEO ($) | Average for Other NEOs ($) | PEO ($) | Average for Other NEOs ($) | PEO ($) | Average for Other NEOs ($) | | Summary Compensation Table "Total" | 9,142,924 | 2,566,547 | 6,917,530 | 1,846,402 | 7,314,335 | 2,179,351 | 6,042,639 | 2,158,889 | | Adjustments: | | | | | | | | | | Deduction for amounts reported under the “Stock Awards” and “Option Awards” columns (if applicable) of the Summary Compensation Table | (7,691,315) | (1,827,070) | (5,231,750) | (1,111,785) | (6,214,320) | (1,682,609) | (4,910,651) | (1,498,890) | | Increase/(decrease) for the Inclusion of Rule 402(v) Equity Values: | | | | | | | | | | Fair value as of the end of the covered fiscal year of all awards granted during the covered fiscal year that are outstanding and unvested as of the end of the covered fiscal year | 9,008,809 | 2,126,738 | 7,137,019 | 1,220,089 | 4,465,202 | 819,304 | 4,078,624 | 1,290,232 | | Change as of the end of the covered fiscal year from the end of the prior fiscal year in fair value of any awards granted in any prior fiscal year that are outstanding and unvested as of the end of the covered fiscal year | 3,730,190 | 725,566 | 1,856,809 | 243,592 | (1,079,877) | (122,874) | (12,117) | (29,695) | | Fair value as of the vesting date for awards that are granted and vest in the same year | — | — | — | 51,914 | — | — | — | — | | Change as of the vesting date from the end of the prior fiscal year in fair value of any awards granted in any prior fiscal year for which all applicable vesting conditions were satisfied at the end of or during the covered fiscal year | 810,447 | 140,244 | (193,508) | (17,831) | 598,714 | 139,828 | (39,291) | (50,306) | | Fair value at the end of the prior fiscal year for any awards granted in any prior fiscal year that fail to meet the applicable vesting conditions during the covered fiscal year | — | — | — | (247,898) | — | (870,358) | — | — | | Compensation Actually Paid | 15,001,055 | 3,732,025 | 10,486,100 | 1,984,482 | 5,084,054 | 462,642 | 5,159,204 | 1,870,232 |
Pay versus Performance
| (3) Amounts represent the average of the amounts reported for the Company’s Non-PEO NEOs as a group (i.e., excluding Mr. Ciaffoni, who has served as our CEO since July 2018) in the “Total” column of the Summary Compensation Table in each applicable year. The names of each of the Non-PEO NEOs included for purposes of calculating the average amounts in each applicable year are as follows: (i) for 2023, Ms. Tupper, Ms. Kuhlmann, Mr. Dreyer, and Dr. Smith; (ii) for 2022, Ms. Tupper, Ms. Kuhlmann, Mr. Dreyer, Dr. Smith, and Dr. Malamut; (iii) for 2021, Ms. Tupper, Ms. Kuhlmann, Mr. Dreyer, Dr. Malamut, Mr. Brannelly (our former Executive Vice President and Chief Financial Officer), and Dr. Fleming (our former Executive Vice President and Chief Technology Officer); and (iv) for 2020, Ms. Kuhlmann, Dr. Malamut, Mr. Brannelly, and Dr. Fleming. |
Pay versus Performance
| (4) Cumulative TSR is calculated by dividing the difference between the Company’s share price at the end and the beginning of the measurement period by the Company’s share price at the beginning of the measurement period. The measurement period is determined in accordance with the requirements of Item 402(v)(2)(iv) of Regulation S-K. |
Pay versus Performance
| (5) Represents the weighted peer group TSR, weighted according to the respective companies’ stock market capitalization at the beginning of each period for which a return is indicated. The peer group used for this purpose is the Nasdaq Biotechnology Index. |
Pay versus Performance
| (6) The dollar amounts reported represent the amount of net income (loss) reflected in the Company’s audited financial statements for the applicable year. |
Pay versus Performance
| (7) Adjusted EBITDA represents GAAP net income (loss) adjusted to exclude interest expense, interest income, the benefit from or provision for income taxes, depreciation, amortization, stock-based compensation, and other adjustments to reflect changes that occur in our business but do not represent ongoing operations. While the Company uses numerous financial and non-financial performance measures for the purpose of evaluating performance for the Company’s compensation programs, the Company has determined that Adjusted EBITDA is the financial performance measure that, in the Company’s assessment, represents the most important performance measure (that is not otherwise required to be disclosed in the table) used by the Company to link compensation actually paid to the company’s NEOs, for the most recently completed fiscal year, to company performance. |
Analysis of the Information Presented in the Pay versus Performance Table
Analysis of the Information Presented in the Pay versus Performance Table As described in more detail in the section “Executive Compensation – Compensation Discussion and Analysis,” our compensation program reflects a variable pay-for-performance philosophy. While we utilize several performance measures to align executive compensation with Company performance, all of those Company measures are not presented in the Pay versus Performance table. Moreover, we generally seek to incentivize long-term performance, and therefore, do not specifically align the Company’s performance measures with compensation that is actually paid (as computed in accordance with Item 402(v) of Regulation S-K) for a particular year. In accordance with Item 402(v) of Regulation S-K, we are providing the following descriptions of the relationships between information presented in the Pay versus Performance table.
Compensation Actually Paid and Cumulative TSR
Compensation Actually Paid and Cumulative TSR As demonstrated by the following graph, the amount of compensation actually paid to Mr. Ciaffoni and the average amount of compensation actually paid to the Company’s NEOs as a group (excluding Mr. Ciaffoni) is aligned with the Company’s cumulative TSR over the four years presented in the table. The alignment of compensation actually paid with the Company’s cumulative TSR over the period presented is primarily related to our use of long-term equity incentives in our compensation program. As described in more detail in the section “Executive Compensation – Compensation Discussion and Analysis,” we generally target that approximately 70% of the value of total compensation awarded to the NEOs is comprised of long-term equity incentives comprising of a mix of RSUs and PSUs.
Compensation Actually Paid and Net Income
Compensation Actually Paid and Net Income As demonstrated by the following graph, the amount of compensation actually paid to Mr. Ciaffoni and the average amount of compensation actually paid to the Company’s NEOs as a group (excluding Mr. Ciaffoni) is generally not aligned with our net income over the four years presented in the table. We do not use net income as a performance measure in our overall executive compensation program because it includes several adjustments that occur in our business but that we believe do not represent ongoing operations. Instead, we use Adjusted EBITDA and Total Net Revenue, as described in the section “Executive Compensation – Compensation Discussion and Analysis,” as performance metrics in our cash incentive compensation program.
Compensation Actually Paid and Adjusted EBITDA
Compensation Actually Paid and Adjusted EBITDA As demonstrated by the following graph, the amount of compensation actually paid to Mr. Ciaffoni and the average amount of compensation actually paid to the Company’s NEOs as a group (excluding Mr. Ciaffoni) is generally aligned with the Company’s Adjusted EBITDA over the four years presented in the table. As described above, Adjusted EBITDA represents GAAP net income (loss) adjusted to exclude interest expense, interest income, the benefit from or provision for income taxes, depreciation, amortization, stock-based compensation, and other adjustments to reflect changes that occur in our business but do not represent ongoing operations. While we use numerous financial and non-financial performance measures for the purpose of evaluating performance for the Company’s compensation programs, we have determined that Adjusted EBITDA is the financial performance measure that, in our assessment, represents the most important performance measure (that is not otherwise required to be disclosed in the table) used in our compensation program to link compensation actually paid to our NEOs, for the most recently completed fiscal year to Company performance. We utilize Adjusted EBITDA as a performance metric in our annual cash incentive compensation program.
Indemnification Agreements with our Directors and Officers
Indemnification Agreements with our Directors and Officers We have entered into, and intend to continue to enter into, indemnification agreements with our directors and executive officers, in addition to the indemnification provided for in our articles of incorporation and bylaws. These agreements, among other things, require us to indemnify our directors and executive officers for certain expenses, including attorneys’ fees, judgments, fines and settlement amounts incurred by a director or executive officer in any action or proceeding arising out of their services as one of our directors and/or executive officers or any other company or enterprise to which the person provides services at our request. We believe that these charter and bylaw provisions and indemnification agreements are necessary to attract and retain qualified persons as directors and officers. The limitation of liability and indemnification provisions in our articles of incorporation and bylaws may discourage shareholders from bringing a lawsuit against directors for breach of their fiduciary duties. They may also reduce the likelihood of derivative litigation against directors and officers, even though an action, if successful, might benefit us and our shareholders. A shareholder’s investment may be harmed to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions.