DEF 14A of Coherus Oncology, Inc.
Filed Apr 15, 2024 · FY20230001558370-24-005131
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS Our Board of Directors is divided into three classes. Each class consists, as nearly as possible, of one-third of the total number of directors, and each class has a three-year term. Except as otherwise provided by law, vacancies on the Board of Directors may be filled only by individuals elected by a majority of the remaining directors. A director elected by the Board of Directors to fill a vacancy in a particular class, including a vacancy created by an increase in the number of directors, shall serve for the remainder of the full term of that class and until such director’s successor is elected and qualified, or until such director’s earlier death, resignation or removal. Our Board of Directors currently consists of ten directors divided into the three following classes:
ELECTION OF DIRECTORS
| ● | the Class I directors are Lee N. Newcomer, MD, Charles W. Newton and Kimberly J. Tzoumakas and their terms are expiring at the 2024 Annual Meeting; |
ELECTION OF DIRECTORS
| ● | the Class II directors are Jill O’Donnell-Tormey, Ph.D., Ali J. Satvat and Mark D. Stolper, and their terms will expire at the 2025 annual meeting of the Company’s stockholders; and |
ELECTION OF DIRECTORS
| ● | the Class III directors are Georgia Erbez, Dennis M. Lanfear, Michael Ryan and Mats L. Wahlström, and their terms will expire at the 2026 annual meeting of the Company’s stockholders. |
ELECTION OF DIRECTORS
Our current Class I directors, Lee N. Newcomer, MD, Charles W. Newton and Kimberly J. Tzoumakas, have been nominated to serve as Class I directors and have agreed to stand for election. If the nominees for Class I are elected at the 2024 Annual Meeting, then each nominee will serve for a three-year term expiring at the 2027 annual meeting of the Company’s stockholders, or until his or her successor is elected and qualified, or until his or her earlier death, resignation or removal. Our directors are elected by a plurality of the votes cast. If a choice is specified on the proxy card by a stockholder, the shares will be voted as specified. If a choice is not specified on the proxy card, and authority to do so is not withheld, the shares will be voted “FOR” the election of the three nominees for Class I above. If any of the nominees becomes unavailable for election as a result of an unexpected occurrence, shares that would have been voted for the nominee will instead be voted for the election of a substitute nominee proposed by the Company’s management or the Board of Directors. Each person nominated for election has agreed to serve if elected. Our management has no reason to believe that any nominee will be unable to serve. The following is a brief biography and discussion of the specific attributes, qualifications, experience and skills of each nominee for director and each director whose term will continue after the 2024 Annual Meeting. Our Board of Directors and management encourage each nominee for director and each continuing director to attend the 2024 Annual Meeting. THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE THREE CLASS I NOMINEES FOR DIRECTOR. CLASS I DIRECTORS – To be elected for a three-year term expiring at the 2027 annual meeting of the Company’s stockholders Lee N. Newcomer, MD, age 71, has served as a member of our Board of Directors since February 2022. Dr. Newcomer is a medical oncologist with a career spanning clinical medicine, health care administration and payer management. The majority of his career was with UnitedHealth Group. He was their Chief Medical Officer from 1991 to 2001. He returned in 2006 to lead an initiative combining clinical, financial and program management experts to focus on cancer care and departed UnitedHealth Group in March 2018. This team was the first to complete an episode payment program for cancer treatment and it created the first commercial cancer database combining clinical and claims data. From April 2018 to the present Dr. Newcomer has been working as a principal at Lee N. Newcomer Consulting. Prior to his work at UnitedHealth Group Dr. Newcomer practiced medical oncology for nine years in Minneapolis and Tulsa, Oklahoma. He is a former Chairman of Park Nicollet Health Services (HealthPartners), an integrated system of physicians and hospitals based in Minnesota with national recognition for its leadership in quality, safety, and cost effectiveness. He is a director at Myriad Genetics, Inc. and Cellworks Group Inc. Dr. Newcomer earned his MD degree from the University of Nebraska College of Medicine. His clinical training included an internal medicine residency at the University of Nebraska Medical Center and a medical oncology fellowship at the Yale University School of Medicine. He completed a Master of Health Administration from the University of Wisconsin at Madison in 1990. Dr. Newcomer was selected to serve on our Board of Directors because of his extensive experience and background in the health care sector. Charles W. Newton, age 53, has served as a member of our Board of Directors since May 2022. Mr. Newton has served as Lyell Immunopharma, Inc.’s Chief Financial Officer since February 2021. From November 2015 to February 2021, he served as Managing Director & Co-Head of Healthcare Investment Banking in the Americas at Bank of America. From September 2010 to November 2015, Mr. Newton served as Managing Director at Credit Suisse, where his last position was Co-Head of Healthcare Investment Banking in the Americas. From June 1996 to September 2010, he served in the investment banking division at Morgan Stanley where his last position was Managing Director and Head of Western Region Healthcare Investment Banking. Mr. Newton received an M.B.A. from The Tuck School at Dartmouth College and a B.S. in Finance from Miami University. We believe that Mr. Newton is qualified to serve on our Board of Directors due to his management and financial expertise in the health care sector. Kimberly J. Tzoumakas, age 56, has served as a member of our Board of Directors since July 2020. Since February 2021, Ms. Tzoumakas has served as the Chief Executive Officer of RAYUS Radiology, a national leading provider of imaging services. Prior to that, Ms. Tzoumakas served as Chief Executive Officer of 21st Century Oncology, a global provider of integrated cancer care services from January 2018 until August 2020 after a successful sale of the company. From November 2001 to April 2018, Ms. Tzoumakas practiced health care law with Hall Render Killian Heath & Lyman, providing strategic, transactional and governance advice to health care clients throughout the country. While at Hall Render, she was also a long-term managing partner of the firm’s Michigan office and a board member of the firm. She has also served on the board of directors of SeaSpine Holdings Corporation, a publicly held medical technology company, from February 2019 through March 2021 as well as other private for-profit healthcare boards. Ms. Tzoumakas received a B.A. in business administration from Northwood University and a J.D. from the Thomas M. Cooley Law School. We believe that Ms. Tzoumakas is qualified to serve on our Board of Directors due to her significant experience and background in the health care sector. CLASS II DIRECTORS – To continue in office until the 2025 annual meeting of the Company’s stockholders Jill O’Donnell-Tormey, Ph.D., age 68, has served as a member of our Board of Directors since May 2022. Dr. O’Donnell-Tormey has served as the Chief Executive Officer and the Director of Scientific Affairs of the Cancer Research Institute, or CRI, a nonprofit organization dedicated to advancing immunotherapy, since 1993. Under her leadership, the CRI has seen its annual budget increase from $5 million to over $40 million. Dr. O’Donnell-Tormey joined CRI in 1987 and served as its Director of Scientific Affairs until 1993. Dr. O’Donnell-Tormey was a member of the board of directors of HemaCare Corporation, a blood banking company, from 2018 to 2020. She received a B.S. in Chemistry, summa cum laude, from Fairleigh Dickinson University and a Ph.D. in Cell Biology from the State University of New York Health Science Center. We believe that Dr. O’Donnell Tormey is qualified to serve on our Board of Directors due to her background and various leadership roles in the life sciences field.
ELECTION OF DIRECTORS
Ali J. Satvat, age 46, has served as a member of our Board of Directors since May 2014. Mr. Satvat joined KKR in January 2012 and is a Partner, Co-Head of the Health Care industry team within KKR’s Americas Private Equity platform, and Global Head of KKR Health Care Strategic Growth. Mr. Satvat is a member of the Investment Committee for KKR’s Americas Private Equity platform and chairs the Investment Committee for KKR Health Care Strategic Growth. Mr. Satvat has served as a member of the boards of directors of numerous privately held and public companies, including BridgeBio Pharma, Inc. since March 2016, PRA Health Sciences, Inc. from September 2013 through April 2018, Eidos Therapeutics, Inc. from June 2018 through January 2021, and Impel Pharmaceuticals, Inc. from December 2018 through April 2024. Prior to joining KKR, Mr. Satvat was a Principal with Apax Partners, where he invested in health care from 2006 to 2012. Previously, Mr. Satvat held various positions with Johnson & Johnson Development Corporation, Audax Group, and The Blackstone Group. Mr. Satvat holds an A.B. in History and Science from Harvard College and an M.B.A. in Health Care Management and Entrepreneurial Management from the Wharton School of the University of Pennsylvania. Mr. Satvat previously served as a member of the board of directors of the Healthcare Private Equity Association. We believe that Mr. Satvat is qualified to serve on our Board of Directors based on his extensive investment and board experience in the health care industry. Mark D. Stolper, age 52, has been a member of our Board of Directors since January 2021. Mr. Stolper has served as Executive Vice President and Chief Financial Officer of RadNet, Inc., a public medical diagnostic imaging centers company, since July 2004, and previously served as a member of the board of directors of RadNet, Inc. from March 2004 to July 2004. He has had diverse experiences in investment banking, private equity, venture capital investing and operations including: in 1999, Mr. Stolper co-founded Broadstream Capital Partners; from 1997 to 1999, Mr. Stolper worked in business development for Eastman Kodak; from 1995 to 1997, Mr. Stolper was a member of Archon Capital Partners; and from 1993 to 1995, Mr. Stolper was a member of the corporate finance group at Dillon, Read & Co., Inc. Mr. Stolper has served on the board of directors of Rotech Healthcare Inc., a private medical equipment company, since February 2016. Previously, Mr. Stolper served as a member of the board of directors of the following companies: Surgalign Holdings, Inc. from March 2017 to October 2023; 21st Century Oncology Holdings, Inc. from January 2018 to May 2020; Surgical Solutions LLC from 2015 to February 2017; On Track Innovations, Ltd. from 2012 until 2016; Physiotherapy Associates from 2013 to 2016; Alco Stores, Inc. from 2014 to 2015; and Compumed, Inc. from 2008 to 2014. Mr. Stolper graduated with a B.A. in Economics from the University of Pennsylvania and a B.S.E. in finance from the Wharton School. Additionally, Mr. Stolper earned a postgraduate Award in Accounting from the University of California, Los Angeles. We believe Mr. Stolper is qualified to serve as a director due to his management and financial expertise and his experience serving on boards of directors of both public and private healthcare companies. CLASS III NOMINEES FOR DIRECTOR – To continue in office until the 2026 annual meeting of the Company’s stockholders Georgia Erbez, age 57, has served on our Board of Directors since February 2024. Ms. Erbez has served as Managing Director of Axiom Financial Partners, a financial consulting firm, since November 2014. Ms. Erbez also previously served as the Chief Operating Officer of Walking Fish Therapeutics, Inc., a biotechnology company, from September 2022 to October 2023, and as Chief Financial Officer of Harpoon Therapeutics, Inc., an immuno-oncology company, from October 2018 to September 2022. Ms. Erbez previously served on the board of directors of AltiBio, Inc., a private biotechnology company, from September 2018 to March 2023, Sierra Oncology, Inc., a public biopharmaceutical company until its acquisition by GSK plc, from June 2021 to July 2022, and Artelo Biosciences, Inc., a public clinical stage biopharmaceutical company, from September 2017 to December 2019. Ms. Erbez earned her B.A. at the University of California, Davis. We believe Ms. Erbez is qualified to serve as a director because of her significant experience and background in the finance and biotechnology sector. Dennis M. Lanfear, age 68, is our co-founder and has served as our President and Chief Executive Officer and Chairman of our Board of Directors since our inception in September 2010. Mr. Lanfear previously was President of InteKrin Therapeutics Inc., a biopharmaceutical company, from 2005 to May 2010. Prior to that, Mr. Lanfear served in various senior leadership roles at Amgen Inc., a biopharmaceutical company from 1986 to 1999. While at Amgen, Mr. Lanfear had key leadership positions in the Process Development department, which under his management became an area of key strategic advantage for Amgen. From 1997 to 1999 Mr. Lanfear was Vice President, Market Development, focusing on long-term strategy for Epogen®, a multi-billion dollar drug. Mr. Lanfear also held senior leadership roles in several product development programs including those for growth factors, somatotrophins and neurotrophins and directed efforts from preclinical studies to Phase 3 clinical trials at Amgen. Mr. Lanfear holds B.S. degrees in Chemical Engineering and Biochemistry from Michigan State University and an M.B.A. from the Anderson School of Management at the University of California, Los Angeles. We believe Mr. Lanfear is qualified to serve on our Board of Directors because of his background and various leadership roles in the biopharmaceutical field. Michael Ryan, age 69, has served on our Board of Directors since July 2023. Dr. Ryan is currently the Founder and Chief Executive Officer of Koios Enterprises & Consulting, an executive consulting firm specializing in patient access with a focus on evidence generation, value, pricing and policy solutions that enable patient access. Dr. Ryan has four decades of experience working in academia and the biopharmaceutical industry bringing therapeutics to patients, and previously served as Senior Vice President, U.S. and Worldwide Value, Access, Pricing and Health Economics and Outcomes Research at Bristol-Myers Squibb Company (“BMS”), a multinational pharmaceutical company from December 2015 to March 2023. From 2015 to 2017, he served as Senior Vice President, U.S. Value, Access, Policy and Health Economics and Outcomes Research at BMS. Prior to BMS, from December 1999 to December 2015, he served as Vice President and General Manager, U.S. Reimbursement, Value, and Access at Amgen Inc. (“Amgen”), a multinational pharmaceutical company. Prior to Amgen, he served as Vice President, Department of Pharmacy at the University of Pittsburgh Medical Center, Chairman, Department of Pharmacy and Therapeutics at the University of Pittsburgh School of Pharmacy and Associate Director and Clinical Associate Professor at the University of Michigan Hospitals’ Department of Pharmacy Services and College of Pharmacy. Dr. Ryan earned his B.A. at the University of California, Los Angeles and his Pharm.D. from the University of California at San Francisco. He completed his residency program in Hospital and Clinical Pharmacy at the University of Michigan. We believe Mr. Ryan is qualified to serve on our Board of Directors because of his background and various leadership roles in the pharmaceutical field.
ELECTION OF DIRECTORS
Mats L. Wahlström, age 69, has served as a member of our Board of Directors since January 2012. He currently serves as the Co-Chairman of HW Investment Partners, LLC, Chairman of Triomed AB since October 2016, Chairman of TriSalus Lifesciences Inc. since January 2017 and Chairman of Caduceus Medical Holdings, Inc. since August 2010. Mr. Wahlström served as a senior leader and Executive Chairman of KMG Capital Partners, LLC from April 2012 to May 2023. He has served on the boards of directors of Alteco Medical AB since October 2012 and Circuit Clinical Solutions, Inc. since July 2016. He served as a director of Health Grades, Inc., a Nasdaq-listed healthcare ratings company, from March 2009 through its sale to a private equity firm in October 2010, as a director of Getinge AB, a Swedish Stock Exchange-listed medical device company, from March 2012 to March 2017, and as a director of Zynex Inc., an over-the-counter medical device manufacturer, from October 2010 through January 2014. From January 2004 to December 2009, Mr. Wahlström served as co-CEO of Fresenius Medical Care North America and a member of the management board at Fresenius Medical Care AG & Co. KGAA. From November 2002 to December 2009, he served as President and CEO of Fresenius Medical Services, which operated more than 1,700 dialysis clinics in the U.S. Prior to joining Fresenius Medical Care in 2002, he held various positions at Gambro AB in Sweden, including President of Gambro North America and Chief Executive Officer of Gambro Healthcare Inc. as well as Chief Financial Officer of the Gambro Group. Mr. Wahlström has a B.S. degree in Economics and Business Administration from University of Lund, Sweden. We believe Mr. Wahlström is qualified to serve on our Board of Directors because of his extensive management and director experience in the life sciences and healthcare sectors.
NON-EMPLOYEE DIRECTOR COMPENSATION
NON-EMPLOYEE DIRECTOR COMPENSATION
Director Compensation Table
Director Compensation Table The following table sets forth information for the year ended December 31, 2023 regarding the compensation awarded to, earned by or paid to our non-employee directors:
Director Compensation Table
| | Fees Earned or | Option Awards | | | Name | Paid in Cash ($) | ($)(1) | Total ($) | | Lee N. Newcomer, MD | 57,500 | 128,692 | 186,192 | | Charles W. Newton | 60,000 | 128,692 | 188,692 | | Jill O'Donnell-Tormey, Ph.D. | 55,000 | 128,692 | 183,692 | | Michael Ryan (2) | 25,000 | 148,613 | 173,613 | | Ali J. Satvat | 65,000 | — | 65,000 | | Mark D. Stolper | 70,000 | 128,692 | 198,692 | | Kimberly J. Tzoumakas | 65,000 | 128,692 | 193,692 | | Mats L. Wahlström | 100,000 | 128,692 | 228,692 |
Director Compensation Table
| (1) Amount represents the grant date fair value of options granted during the year ended December 31, 2023 as calculated in accordance with ASC Topic 718. The assumptions used in calculating the grant date fair value of the stock options reported in the Option Awards column are set forth in Note 12 to the audited consolidated financial statements included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2023. As of December 31, 2023, our non-employee directors held options to purchase the aggregate number of shares of our common stock set forth in the table below. |
Director Compensation Table
| | Shares Subject to | | Name | Outstanding Options | | Lee N. Newcomer, MD | 92,250 | | Charles W. Newton | 92,250 | | Jill O'Donnell-Tormey, Ph.D. | 92,250 | | Michael Ryan | 54,000 | | Ali J. Satvat | 139,997 | | Mark D. Stolper | 125,250 | | Kimberly J. Tzoumakas | 125,250 | | Mats L. Wahlström | 330,238 |
Director Compensation Table
| (2) Mr. Ryan was appointed to our board of directors in July 2023. |
Director Compensation Table
Our director compensation policy (the “Director Compensation Policy”) as in effect for 2023 provides for both cash retainer fees and automatic, non-discretionary equity grants. Pursuant to the Director Compensation Policy as in effect for 2023, our non-employee directors receive the following cash compensation:
Director Compensation Table
| ● | Each non-employee director receives an annual cash retainer in the amount of $50,000 per year. |
Director Compensation Table
| ● | The lead independent director receives an additional cash retainer in the amount of $30,000 per year. |
Director Compensation Table
| ● | The chairperson of the Audit Committee receives additional cash compensation in the amount of $20,000 per year for such chairperson’s service on the Audit Committee. Each non-chairperson member of the Audit Committee receives additional cash compensation in the amount of $10,000 per year for such member’s service on the Audit Committee. |
Director Compensation Table
| ● | The chairperson of the Compensation Committee receives additional cash compensation in the amount of $15,000 per year for such chairperson’s service on the Compensation Committee. Each non-chairperson member of the Compensation Committee receives additional cash compensation in the amount of $7,500 per year for such member’s service on the Compensation Committee. |
Director Compensation Table
| ● | The chairperson of the Nominating and Corporate Governance Committee receives additional cash compensation in the amount of $10,000 per year for such chairperson’s service on the Nominating and Corporate Governance Committee. Each non-chairperson member of the Nominating and Corporate Governance Committee receives additional cash compensation in the amount of $5,000 per year for such member’s service on the Nominating and Corporate Governance Committee. |
Director Compensation Table
| ● | In April 2024 the Board made changes to the Director Compensation Policy as described below: |
Director Compensation Table
| o | The lead independent director receives an additional cash retainer in the amount of $40,000 per year. |
Director Compensation Table
| o | The chairperson of the Compensation Committee receives additional cash compensation in the amount of $20,000 per year for such chairperson’s service on the Compensation Committee. Each non-chairperson member of the Compensation Committee receives additional cash compensation in the amount of $10,000 per year for such member’s service on the Compensation Committee. |
Director Compensation Table
| o | The chairperson of the Strategic Transaction Committee receives additional cash compensation in the amount of $25,000 per year for such chairperson’s service on the Strategic Transaction Committee. Each non-chairperson member of the Strategic Transaction Committee receives additional cash compensation in the amount of $12,500 per year for such member’s service on the Strategic Transaction Committee. |
Director Compensation Table
Under the Director Compensation Policy, we grant each non-employee director an option to purchase 54,000 shares of our common stock in connection with his or her initial appointment or election to our Board of Directors, and an option to purchase 27,000 shares of our common stock on an annual basis. The initial grant vests and becomes exercisable in substantially equal monthly installments over three years, subject to continued service on our Board of Directors. The annual grant vests and becomes exercisable in substantially equal monthly installments over one year from the date of grant, subject to continued service on the Board of Directors. Each option has an exercise price equal to the closing trading price of our common stock on the date of grant or, if the date of grant is not a trading day, the immediately preceding trading day. In April 2024 the Board made changes to the Director Compensation Policy, so that we now grant each non-employee director an option to purchase 112,000 shares of our common stock on an annual basis. In the fiscal year ended December 31, 2023 we changed the timing of our grant of an option to purchase shares of our common stock from January to June 2023 to align with the timing of our 2023 annual meeting of stockholders. This change was consistent with other similar companies and customary practice. As a result of the timing change, for 2023 there was a prorated adjustment in the amount of 11,250 shares to the normal annual grant of options to the non-employee directors to account for the five months in which no grants of equity were made to the non-employee directors resulting in a total grant of 38,250 shares of our common stock to each non-employee director serving at that time.
Executive Summary
Executive Summary Pay for Performance. Our executive compensation programs are designed to deliver pay in accordance with corporate and individual performance, rewarding superior performance and providing consequences for underperformance. We believe that compensation of our NEOs for fiscal year 2023 was aligned with the Company’s performance during 2023, in which we executed on our strategy to build a leading immuno-oncology business funded with cash generated from our diversified portfolio of FDA-approved therapeutics by completing the acquisition of Surface Oncology, Inc., by achieving the FDA approval of UDENYCA® AI, UDENYCA ONBODY™ and LOQTORZI™, and also met many of our specific financial, legal and organizational targeted achievements. In order to align pay with performance, a significant portion of our NEOs’ compensation is delivered in the form of equity awards and annual cash incentives, the value of each of which depends on our actual performance. For fiscal year 2023, approximately 79% of our NEOs’ total target compensation was in the form of stock options and annual performance-based incentives, in order to focus our management team on short-term and long-term performance goals and execute on our strategy. 2023 Compensation Highlights. Consistent with our compensation philosophy, key compensation decisions for 2023 included the following:
Executive Summary
| • | Base Salaries and Target Annual Cash Incentive Opportunities. Our Compensation Committee determined that our NEOs’ base salaries would be increased an average of 3.33% for 2023 and that target bonuses would be 100% for Mr. Lanfear and 50% of base salary for our other NEOs. |
Executive Summary
| • | Annual Performance-Based Incentives. For 2023, our Board of Directors selected 13 corporate performance goals for our performance-based annual bonus program that were intended to promote our business plan and short-term goals across four operational areas. In early 2024, the Board of Directors determined our overall |
Executive Summary
| • | Equity-Based Long-Term Incentives. In 2023, we granted approximately 68% of our NEOs’ total target compensation as equity-based compensation in the form of stock options and restricted stock units. We believe that stock options effectively align the interests of our executives with those of our stockholders, providing significant potential upside compensation if our objectives are achieved while also placing a significant portion of compensation at risk if our objectives are not achieved. In the event that our executives fail to increase stockholder value over the term of their stock options, or if stockholder value remains stagnant, then our NEOs will realize no value from their stock options. We also grant restricted stock units because the smaller grant sizes associated with restricted stock units are less dilutive than stock options, and reward our NEOs for growth in the price of our stock while providing value in a declining market, which we believe discourages excessive risk taking. |
Executive Summary
| ● | Strong link between performance measures and strategic objectives. Performance measures for incentive compensation are linked to operating priorities designed to create long-term stockholder value. |
Executive Summary
| ● | Independent compensation consultant. The Compensation Committee retains Aon as its independent compensation consultant to review our executive compensation program and practices. |
Executive Summary
| ● | No guaranteed annual salary increases or bonuses. Our NEOs’ salary increases are discretionary and based on individual evaluations, and, other than Mr. Lanfear, their annual cash incentives are tied to individual and corporate performance. |
Executive Compensation Objectives and Philosophy
| ● | Provide reward opportunities consistent with our performance on both a short-term and long-term basis; and |
Executive Compensation Objectives and Philosophy
| ● | Align the long-term interests of our NEOs with those of our stockholders. |
Competitive Market Data and Independent Compensation Consultant
Competitive Market Data and Independent Compensation Consultant In order to design a competitive executive compensation program that will continue to attract top executive talent, our Compensation Committee retained Aon as an independent compensation consultant to provide a competitive review of executive compensation, including developing a peer group of public companies, reviewing our executive compensation program covering cash and equity, and analyzing peer practices. In September 2022, in consultation with Aon, our Compensation Committee selected our 2022 peer group to be used as a reference in making 2023 compensation decisions as follows:
Competitive Market Data and Independent Compensation Consultant
| ACADIA Pharmaceuticals | Collegium Pharmaceuticals | Heron Therapeutics | Pacira BioSciences | | Aerie Pharmaceuticals | Corcept Therapeutics | Intercept Pharmaceuticals | PTC Therapeutics | | Agenus | Deciphera Pharmaceuticals | Ironwood Pharmaceuticals | Supemus Pharmaceuticals | | Agios Pharmaceuticals | Dynavax Technologies | Karyopharm Therapeutics | Vanda Pharmaceuticals | | Amicus Pharmaceuticals | Eagle Pharmaceuticals | Mirum Pharmaceuticals | | | | Fibrogen | Nektar Therapeutics | |
Competitive Market Data and Independent Compensation Consultant
Our 2022 peer group was selected using the following criteria: (i) US-based bio/pharma commercial companies generating revenue; (ii) companies located in geographic biotechnology hubs; (iii) companies with market capitalizations between $300 million to $2.8 billion with a median value roughly equivalent to 0.3 to 3 times the Company’s then-current valuation; and (iv) companies with between 150 and 1,000 full-time equivalent employees. Our Compensation Committee used our 2022 peer group as a reference to help structure a competitive executive compensation program in 2023, which it deemed necessary and appropriate to attract and retain executive talent in the market with which we compete. While the Compensation Committee does not establish compensation levels solely based on a review of competitive data, it believes such data is a useful tool in its deliberations as our compensation policies and practices must be competitive in the marketplace for us to be able to attract, motivate and retain qualified executive officers.
Components of Compensation
| ● | Annual Performance-Based Incentive Compensation. Annual performance bonuses promote short-term performance objectives and reward executives for their contributions toward achieving those objectives; and |
Components of Compensation
| ● | Equity Based Long-Term Incentive Compensation. Equity compensation, provided in the form of stock options and restricted stock units, aligns executives’ interests with our stockholders’ interests, emphasizes long-term financial and operational performance, and helps retain executive talent. |
Components of Compensation
In addition, our NEOs are eligible to participate in our health and welfare programs and our 401(k) plan on the same basis as our other employees. We also provide for severance and change in control benefits, which aid in attracting and retaining executive talent and help executives to remain focused and dedicated during potential transition periods due to a change in control. Each of these elements of compensation for 2023 is described further below.
Annual Performance-Based Incentive Compensation
Annual Performance-Based Incentive Compensation Our annual performance-based bonus program is designed to motivate our executives to meet or exceed company-wide short-term performance objectives. Our annual bonus program provides for the payment of cash bonuses based on each NEO’s target annual bonus and our overall achievement of corporate performance objectives and, for each NEO other than Mr. Lanfear an assessment of individual performance. The Company maintains a team-based approach to target bonuses, in which employees at the same level are eligible to receive the same target bonus as a percentage of base salary. These levels remained the same as in 2022. Thus, for 2023, our CEO’s target bonus was 100% of his base salary and our other NEOs’ target bonuses were 50% of their respective base salaries. Under our annual bonus program, corporate goals and performance targets are reviewed and approved by the Compensation Committee, which gives its recommendations to the Board of Directors. For fiscal year 2023, following recommendation from our Compensation Committee, our Board of Directors approved 13 performance goals in the four operational areas set forth below, each of which could be achieved at threshold, target and stretch goals of 75%, 100% or 150%, respectively. For each NEO, other than Mr. Lanfear, our Compensation Committee also applied an individual goal factor based on its assessment of individual performance. In addition, certain of our corporate goals are related to our business strategy or are goals shared with partners, and thus are highly confidential, and we do not publicly disclose them. We believe their disclosure would provide our competitors, customers and other third parties with significant insights regarding our confidential business strategies that could cause us substantial competitive harm. The 13 performance goals were set by our Board of Directors at a level our Board of Directors and Compensation Committee determined would require substantial effort to be achieved, such that the goals would not be expected to be achieved with average or below average performance. In February 2024, the Compensation Committee reviewed our 2023 performance under our corporate goals and in April 2024 the Board of Directors subsequently determined, after reviewing the recommendations from the Compensation Committee, overall corporate achievement under our annual bonus program of 95.0% for our NEOs after rounding. The areas of our corporate goals, their corresponding weights, and our actual achievement for 2023 are set forth in the table below.
Annual Performance-Based Incentive Compensation
| | | Actual Weighted | | | Weighting | Achievement | | Corporate Goal Performance Area | (%) | (%) | | UDENYCA® Revenue Goals | 12 | 11 | | CIMERLI Revenue Goals | 13 | 12 | | Toripalimab Revenue Goals | 3 | 2 | | YUSIMRY Revenue Goals | 2 | 1 | | 2023 Expenses | 13 | 13 | | Fundraising | 10 | 10 | | End of Year Cash | 7 | 7 | | Immuno-Oncology Goals | 20 | 14 | | Business Development, In-Licensing and M&A Goals | 20 | 25 | | Total | 100 | 95 |
Annual Performance-Based Incentive Compensation
Our Compensation Committee assessed the individual performance of each of our NEOs other than Mr. Lanfear and assigned an individual performance factor that was combined with our corporate achievement of 95% to result in a combined bonus percentage of 95% based on a full discussion and evaluation of their performance during 2023. For Mr. Stilwell and Dr. Vexler, their individual achievement was not assessed for 2023 and they did not receive a bonus because they departed during that year. The dollar values of the portion of our NEOs’ 2023 annual bonuses based on our corporate achievement of 95.0% and the individual factors described above are set forth in the column entitled “Non-Equity Incentive Plan Compensation” in the “2023 Summary Compensation Table” below.
Equity-Based Long-Term Incentive Awards
Equity-Based Long-Term Incentive Awards Our Compensation Committee believes it is essential to provide equity-based compensation to our executive officers in order to link the interests and risks of our executive officers with those of our stockholders, reinforcing our commitment to ensuring a strong linkage between company performance and pay. In 2023, we granted equity-based compensation to our NEOs in the form of stock options and restricted stock units pursuant to our 2014 Equity Incentive Award Plan. We believe stock options effectively align the interests of our executives with those of our stockholders because our NEOs will realize no value in their stock options in the event they fail to increase stockholder value over the term of their options. We also grant restricted stock units because they are less dilutive than stock options, and reward our NEOs for growth in the price of our stock while providing value in a declining market, which we believe discourages excessive risk taking. In determining the size of the annual stock option and restricted stock unit grants made to our NEOs in January 2023, our Compensation Committee referenced equity grants to similarly situated executives in our 2022 peer group and considered the performance of our NEOs in 2022, the level of each NEO’s responsibilities, and the option awards that were granted in 2022. During fiscal year 2023, our Board of Directors made the following equity-based grants to our NEOs:
Equity-Based Long-Term Incentive Awards
| | Number of Shares Underlying | | Number of | | | Stock Options (#) Granted with a Vest Term of: | | Restricted | | Name | 4 years | 2 years | Stock Units (#) | | Dennis M. Lanfear | 402,500 | 225,000 | 86,250 | | Paul Reider | 80,000 | 70,000 | 40,000 | | Bryan McMichael | 50,000 | 30,000 | 12,500 | | McDavid Stilwell | 80,000 | 70,000 | 40,000 | | Vladimir Vexler, Ph.D. | 80,000 | — | 40,000 |
Equity-Based Long-Term Incentive Awards
The stock option awards vest monthly over four years from the applicable date of grant, except for the grants in June 2023, which vest annually over two years from the applicable date of grant, subject to the NEO’s continued service through each applicable vesting date. The restricted stock unit awards vest annually over three years from the date of grant, subject to the NEO’s continued service through each applicable vesting date. Equity-based grants were made in January 2023 in connection with the Board’s annual review of NEO performance. Mr. McMichael received an additional grant of stock options in March 2023 in connection with his promotion to executive vice president. The Board determined after consultation with the Compensation Committee and the independent compensation consultant Aon to grant additional equity awards in June 2023 to certain of our employees including our NEOs because, among other things, the majority of outstanding options to purchase stock were under water, voluntary employee resignations had increased, and employees were concerned about our 2023 reduction in force.
Severance and Change in Control Arrangements
Severance and Change in Control Arrangements We maintain an Executive Change in Control and Severance Plan that provides for severance benefits and payments upon certain involuntary terminations, including in connection with a change in control. Our Compensation Committee believes that severance and change in control protections are necessary to attract and retain executive talent and are a customary component of executive compensation. In particular, such protections can serve to mitigate a potential disincentive for our NEOs when they are evaluating a potential acquisition of the Company and can encourage retention through the conclusion of the transaction. The severance benefits provided are designed to provide our NEOs with treatment that is competitive with market practices. In connection with each of Dr. Vexler’s and Mr. Stilwell’s resignation of employment with us, in exchange for a general release of claims against us, we provided each of Dr. Vexler and Mr. Stilwell with 12 months continued payment of base salary, 12 months of COBRA coverage reimbursement and accelerated the vesting of each stock option and restricted stock unit award held by him such that the option and restricted stock units became vested as to that number of shares of our common stock underlying the equity awards as would have vested had the NEO’s employment with us continued for one year after his resignation of employment. A description of these arrangements, as well as information on the estimated payments and benefits that our NEOs would have been eligible to receive as of December 31, 2023 are set forth in “Potential Payments Upon Termination or Change in Control” below.
Summary Compensation Table
Summary Compensation Table The following table sets forth total compensation earned by our NEOs for the fiscal years presented.
Summary Compensation Table
| | | | | | | Non-Equity | | | | | | | | Stock | Option | Incentive Plan | All Other | | | | | Salary | Bonus | Awards | Awards | Compensation | Compensation | | | Name and Principal Position | Year | ($) | ($) | ($)(1) | ($)(2) | ($)(3) | ($)(4) | Total ($) | | Dennis M. Lanfear | 2023 | 982,873 | — | 777,975 | 3,297,706 | 829,920 | 9,450 | 5,897,924 | | President, Chief Executive Officer and Chairman of the | 2022 | 945,038 | — | 1,374,825 | 3,697,083 | 840,000 | 9,450 | 6,866,396 | | Board of Directors | 2021 | 885,275 | — | — | 6,730,275 | 976,995 | 1,950 | 8,594,495 | | Bryan McMichael | 2023 | 445,732 | — | 112,750 | 342,402 | 161,834 | 7,500 | 1,070,218 | | Interim Chief Financial Officer (5) | | | | | | | | | | Paul Reider | 2023 | 537,680 | — | 360,800 | 715,701 | 241,467 | 74,911 | 1,930,559 | | Chief Commercial Officer | | | | | | | | | | McDavid Stilwell | 2023 | 522,926 | — | 449,598 | 744,208 | — | 588,001 | 2,304,733 | | former Chief Financial Officer (6) | 2022 | 503,294 | — | 637,600 | 734,824 | 208,845 | 7,500 | 2,092,063 | | | 2021 | 485,481 | — | 295,200 | 431,565 | 256,868 | 13,648 | 1,482,762 | | Vladimir Vexler, Ph.D. | 2023 | 182,829 | — | 360,800 | 767,252 | — | 837,769 | 2,148,650 | | former Chief Scientific Officer (7) | 2022 | 537,575 | — | 637,600 | 734,824 | 234,686 | 7,500 | 2,152,185 | | | 2021 | 508,877 | — | 844,575 | 1,173,834 | 269,407 | — | 2,796,693 |
Summary Compensation Table
| (1) These amounts for fiscal year 2023 represent the sum of (a) the grant date fair value of restricted stock units granted to our NEOs during 2023 and (b) the incremental fair value of restricted stock units held by our NEOs that were modified during 2023, in each case, as computed in accordance with ASC 718. The assumptions used in calculating the grant date fair value are set forth in Note 12 to the audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. |
Summary Compensation Table
| (2) These amounts for fiscal year 2023 represent the sum of (a) the grant date fair value of options granted to our NEOs during 2023 and (b) the incremental fair value of options held by our NEOs that were modified during 2023, in each case, as computed in accordance with ASC 718. The assumptions used in calculating the grant date fair value are set forth in Note 12 to the audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. |
Summary Compensation Table
| (3) These amounts for fiscal year 2023 represent the bonuses awarded to our NEOs based on achievement of our corporate goals at 95% under our 2023 annual bonus plan for Mr. Lanfear, Mr. Reider and Mr. McMichael. Mr. Stilwell and Dr. Vexler did not receive a bonus because they departed during 2023. |
Summary Compensation Table
| (4) Amounts reported for fiscal year 2023 constituted: (i) severance of $491,700 and $515,721 paid to Mr. Stilwell and Dr. Vexler, respectively; (ii) equity acceleration of $88,801 and $322,048 to Mr. Stilwell and Dr. Vexler, respectively; (iii) $7,500 of matching contributions under our 401(k) plan for each NEO other than Dr. Vexler; (ii) $1,950 for Mr. Lanfear physician concierge services we paid on his behalf; and (iii) $67,411 housing allowance for Mr. Reider. |
Summary Compensation Table
| (5) Mr. McMichael was appointed our Interim Chief Financial Officer on December 8, 2023. |
Summary Compensation Table
| (6) Mr. Stilwell, our former Chief Financial Officer, ceased serving as our Chief Financial Officer on December 8, 2023 and resigned his employment effective December 31, 2023. |
Summary Compensation Table
| (7) Dr. Vexler, our former Chief Scientific Officer, resigned effective March 31, 2023. |
2023 Grants of Plan-Based Awards
2023 Grants of Plan-Based Awards The following table summarizes information about the incentive awards and equity-based awards granted to our NEOs in 2023:
2023 Grants of Plan-Based Awards
| | | | | All Other | All Other | | | | | | | | Stock | Option | | Grant Date | | | | | | Awards: | Awards: | Exercise | Fair Value | | | | Estimated Future Payouts | | Number of | Number of | or Base | of Stock | | | | Under Non-Equity Incentive | | Shares of | Securities | Price of | and | | | | Plan Awards(1) | | Stock or | Underlying | Option | Option | | | | Target | Maximum | Units | Options | Awards | Awards | | Name | Grant Date | ($) | ($) | (#)(2) | (#)(3) | ($/Sh) | (#)(4) | | Dennis Lanfear | | 873,600 | 1,310,400 | | | | | | | 01/05/2023 | | | | 402,500 | 10.37 | 2,540,379 | | | 06/13/2023 | | | | 225,000 | 5.44 | 757,328 | | | 01/20/2023 | | | 86,250 | | | 777,975 | | McDavid Stilwell | | 245,850 | 368,775 | | | | | | | 01/04/2023 | | | | 80,000 | 9.87 | 480,088 | | | 06/13/2023 | | | | 70,000 | 5.44 | 235,613 | | | 01/20/2023 | | | 40,000 | | | 360,800 | | | 12/19/2023(5) | | | | 150,000 | 18.09 | 7,228 | | | 12/19/2023(5) | | | | 46,875 | 14.76 | 3,329 | | | 12/19/2023(5) | | | | 58,333 | 15.94 | 3,593 | | | 12/19/2023(5) | | | | 38,333 | 9.87 | 5,224 | | | 12/19/2023(5) | | | | 35,000 | 5.44 | 9,133 | | | 12/19/2023(5) | | | 13,333 | | | 28,266 | | | 12/19/2023(5) | | | 13,333 | | | 28,266 | | Vladimir Vexler, Ph.D. | | 257,861 | 286,791 | | | | | | | 01/04/2023 | | | | 80,000 | 9.87 | 480,088 | | | 01/20/2023 | | | 40,000 | | | 360,800 | | | 12/04/2023(6) | | | | 23,002 | 17.17 | 8,544 | | | 12/04/2023(6) | | | | 35,000 | 12.27 | 23,742 | | | 12/04/2023(6) | | | | 126,000 | 12.37 | 84,454 | | | 12/04/2023(6) | | | | 62,500 | 17.73 | 21,685 | | | 12/04/2023(6) | | | | 25,000 | 29.00 | 2,521 | | | 12/04/2023(6) | | | | 49,479 | 17.58 | 17,483 | | | 12/04/2023(6) | | | | 50,000 | 17.60 | 17,624 | | | 12/04/2023(6) | | | | 43,333 | 15.94 | 18,720 | | | 12/04/2023(6) | | | | 25,000 | 14.43 | 13,021 | | | 12/04/2023(6) | | | | 23,333 | 9.87 | 20,696 | | | 12/04/2023(6) | | | | 25,000 | 20.15 | 6,504 | | | 12/04/2023(6) | | | | 50,000 | 12.70 | 32,207 | | | 12/04/2023(6) | | | | 4,688 | 9.30 | 4,393 | | | 12/04/2023(6) | | | | 17,188 | 10.05 | 14,969 | | | 12/04/2023(6) | | | | 1,616 | 17.17 | 600 | | Paul Reider | | 254,176 | 381,264 | | | | | | | 01/04/2023 | | | | 80,000 | 9.87 | 480,088 | | | 06/13/2023 | | | | 70,000 | 5.44 | 235,613 | | | 01/20/2023 | | | 40,000 | | | 360,800 | | Bryan McMichael | | 170,352 | 255,528 | | | | | | | 01/04/2023 | | | | 25,000 | 9.87 | 150,028 | | | 03/27/2023 | | | | 25,000 | 6.00 | 91,398 | | | 06/13/2023 | | | | 30,000 | 5.44 | 100,977 | | | 01/20/2023 | | | 12,500 | | | 112,750 |
2023 Grants of Plan-Based Awards
| (1) The amounts shown represent the value of bonus awards under our 2023 annual bonus program. The maximum amount specified represents 150% of the target achievement of corporate and individual performance goals. For 2023, there was no minimum under our annual bonus program and bonuses would be payable upon any level of achievement of performance goal. For |
2023 Grants of Plan-Based Awards
additional detail on our annual bonus program, please see “Compensation Discussion and Analysis – Annual Performance-Based Incentive Compensation” above.
2023 Grants of Plan-Based Awards
| (2) Restricted stock unit award vests as to 1/3rd of the total numbers of units in annual installments over three years measured from the vesting commencement date, subject to continued service through the applicable vesting date. |
2023 Grants of Plan-Based Awards
| (3) Options granted in January and March 2023 vest and become exercisable as to 1/48th of the total numbers of shares subject to the options in monthly installments over four years measured from the date of grant, subject to continued service through the applicable vesting date, and options granted in June 2023 vest annually over two years. |
2023 Grants of Plan-Based Awards
| (4) These amounts represent the grant date fair value of the options and restricted stock units granted to our NEOs during 2023 and the incremental fair value of the options and restricted stock units held by our NEOs that were modified during 2023, in each case, as computed in accordance with ASC 718. The assumptions used in calculating the grant date fair value are set forth in Note 12 to the audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. |
2023 Grants of Plan-Based Awards
| (5) Constitute stock options and restricted stock units for which vesting was accelerated and the post termination exercise period for the stock options was extended through December 31, 2024. |
2023 Grants of Plan-Based Awards
| (6) Constitute stock options for which vesting was accelerated and the post termination exercise period was initially extended through the first anniversary of the date of modification and subsequently extended through December 31, 2024. |
Outstanding Equity Awards at 2023 Fiscal Year End
Outstanding Equity Awards at 2023 Fiscal Year End The following table lists all outstanding equity awards held by our NEOs as of December 31, 2023:
Outstanding Equity Awards at 2023 Fiscal Year End
| | | Option Awards(1) | | | | Stock Awards(2) | | | | | | | | | | Market | | | | Number of | Number of | | | Number of | Value of | | | | Securities | Securities | | | Shares or | Shares or | | | | Underlying | Underlying | Option | | Units of | Units of | | | Vesting | Unexercised | Unexercised | Exercise | Option | Stock That | Stock that | | | Commencement | Options (#) | Options (#) | Price | Expiration | Have Not | Have Not | | Name | Date | Exercisable | Unexercisable | ($) | Date | Vested (#) | Vested ($)(3) | | Dennis Lanfear | 03/11/2014 | 899,377 | — | 1.67 | 03/10/2024 | | | | | 04/01/2015 | 250,000 | — | 29.00 | 04/01/2025 | | | | | 04/01/2015 | 150,000 | — | 29.00 | 04/01/2025 | | | | | 04/01/2015 | 35,000 | — | 25.26 | 05/21/2025 | | | | | 05/06/2016 | 323,889 | — | 17.17 | 05/11/2026 | | | | | 08/01/2017 | 200,000 | — | 12.70 | 08/06/2027 | | | | | 02/01/2018 | 400,000 | — | 10.05 | 02/01/2028 | | | | | 01/11/2019 | 450,000 | — | 12.37 | 01/11/2029 | | | | | 01/10/2020 | 489,583 | 10,417 | 17.73 | 01/10/2030 | | | | | 01/23/2021 | 364,583 | 135,417 | 18.33 | 01/23/2031 | | | | | 02/01/2021 | 125,000 | — | 17.60 | 02/01/2031 | | | | | 01/04/2022 | 192,864 | 209,636 | 15.94 | 01/04/2032 | | | | | 01/04/2022 | | | | | 57,500 | 191,475 | | | 01/05/2023 | 92,239 | 310,261 | 10.37 | 01/05/2033 | | | | | 06/13/2023(4) | — | 225,000 | 5.44 | 06/13/2033 | | | | | 01/20/2023 | | | | | 86,250 | 287,213 | | Paul Reider | 03/22/2021 | 85,937 | 39,063 | 14.76 | 04/28/2031 | | | | | 12/13/2021 | 20,000 | 20,000 | 17.06 | 12/13/2031 | | | | | 12/13/2021 | | | | | 6,666 | 22,198 | | | 01/04/2022 | 17,968 | 19,532 | 15.94 | 01/04/2032 | | | | | 01/04/2022 | | | | | 12,500 | 41,625 | | | 01/04/2023 | 18,333 | 61,667 | 9.87 | 01/04/2023 | | | | | 01/20/2023 | | | | | 40,000 | 133,200 | | | 06/13/2023(4) | — | 70,000 | 5.44 | 06/13/2033 | | | | Bryan McMichael | 03/29/2021 | 68,750 | 31,250 | 14.76 | 03/29/2023 | | | | | 01/07/2022 | 11,979 | 13,021 | 14.67 | 01/07/2032 | | | | | 01/07/2022 | | | | | 8,333 | 27,749 | | | 09/07/2022 | 4,687 | 10,313 | 10.78 | 09/07/2032 | | | | | 01/04/2023 | 5,729 | 19,271 | 9.87 | 01/04/2033 | | | | | 03/27/2023 | 4,687 | 20,313 | 6.00 | 03/27/2033 | | | | | 06/13/2023(4) | — | 30,000 | 5.44 | 06/13/2033 | | | | | 01/20/2023 | | | | | 12,500 | 41,625 | | McDavid Stilwell | 10/15/2020 | 150,000 | — | 18.09 | 12/31/2024 | | | | | 03/08/2021 | 46,875 | — | 14.76 | 12/31/2024 | | | | | 01/04/2022 | 58,333 | — | 15.94 | 12/31/2024 | | | | | 01/04/2023 | 38,333 | — | 9.87 | 12/31/2024 | | | | | 06/13/2023 | 35,000 | — | 5.44 | 12/31/2024 | | | | Vladimir Vexler, Ph.D. | 04/01/2015 | 25,000 | — | 29.00 | 12/31/2024 | | | | | 03/01/2016 | 25,000 | — | 14.43 | 12/31/2024 | | | | | 05/06/2016 | 24,618 | — | 17.17 | 12/31/2024 | | | | | 04/03/2017 | 25,000 | — | 20.15 | 12/31/2024 | | | | | 08/01/2017 | 50,000 | — | 12.70 | 12/31/2024 | | | | | 11/15/2017 | 4,688 | — | 9.30 | 12/31/2024 | | | | | 02/01/2018 | 17,188 | — | 10.05 | 12/31/2024 | | | | | 11/16/2018 | 35,000 | — | 12.27 | 12/31/2024 | | | | | 01/11/2019 | 126,000 | — | 12.37 | 12/31/2024 | | | | | 01/10/2020 | 62,500 | — | 17.73 | 12/31/2024 | | | | | 01/11/2021 | 49,479 | — | 17.58 | 12/31/2024 | | | | | 02/01/2021 | 50,000 | — | 17.60 | 12/31/2024 | | | | | 01/04/2022 | 43,333 | — | 15.94 | 12/31/2024 | | | | | 01/04/2023 | 23,333 | — | 9.87 | 12/31/2024 | | |
Outstanding Equity Awards at 2023 Fiscal Year End
| (1) Other than as otherwise noted, the unvested portion of each option vests and becomes exercisable in substantially equal monthly installments through the fourth anniversary of the vesting commencement date, subject to continued service through the applicable vesting date. |
Outstanding Equity Awards at 2023 Fiscal Year End
| (2) Except as otherwise noted, each restricted stock unit award vests in substantially equal annual installments through the third anniversary of the vesting commencement date, subject to continued service through the applicable vesting date. |
Outstanding Equity Awards at 2023 Fiscal Year End
| (3) Amounts shown are based on the number of restricted stock units multiplied by the closing trading price of our common stock of $3.33 per share on December 29, 2023, the last trading day in 2023. |
Outstanding Equity Awards at 2023 Fiscal Year End
| (4) The option award vests annually over two years from the applicable vesting commencement date, subject to continued service through the applicable vesting date. |
Option Exercises and Stock Vested
Option Exercises and Stock Vested The following table summarizes the stock options exercised and restricted stock units that vested during the year ended December 31, 2023, and the value realized upon exercise or vesting by our NEOs.
Option Exercises and Stock Vested
| | Option Awards | | Stock Awards | | | | Number of Shares | Value Realized | Number of Shares | Value Realized | | | Acquired on Exercise | Upon | Acquired on Vesting | Upon | | Name | (#) | Exercise ($)(1) | (#) | Vesting ($)(2) | | Dennis M. Lanfear | 299,940 | 179,978 | 28,750 | 283,763 | | Bryan McMichael | — | — | 4,167 | 39,920 | | Paul Reider | — | — | 20,417 | 128,788 | | Vladimir Vexler, Ph.D. | — | — | 81,250 | 663,130 | | McDavid Stilwell | — | — | 76,667 | 377,605 |
Option Exercises and Stock Vested
| (1) The value realized equals the excess of the closing trading price of our common stock on the date of exercise over the option exercise price, multiplied by the number of shares for which the option was exercised. |
Option Exercises and Stock Vested
| (2) The value realized in connection with the vesting of restricted stock units equals the closing trading price of our common stock on the date of vesting (or if such day is not a trading day, the immediately preceding trading day), multiplied by the number of shares vesting. |
Potential Payments Upon Termination or Change in Control
Potential Payments Upon Termination or Change in Control In April 2017, our Compensation Committee adopted an Executive Change in Control and Severance Plan (the “Severance Plan”), in which all of our NEOs participate. The Severance Plan provides for the payment of severance and other benefits in the event of a termination of employment by the Company other than for “cause” or by the executive’s “constructive termination” (each as defined in the Severance Plan and each such termination, a “Covered Termination”). In the event of a Covered Termination of an NEO other than during the 12-month period following a “change in control” (as defined in the Severance Plan), the Severance Plan provides for the following payments and benefits to such NEO, subject to the NEO’s delivery to the Company of a general release of all claims against the Company and its affiliates (a “Release”): (i) continued payment of the NEO’s base salary during a specified period (the “Severance Period”), which is 24 months in the case of our CEO and 12 months in the case of our other NEOs; (ii) payment or reimbursement of healthcare premiums until up to the last day of the Severance Period; and (iii) vesting of the NEO’s outstanding equity awards to the same extent such equity awards would have vested had the NEO remained employed by the Company during the Severance Period. In the event of a Covered Termination of an NEO during the 12-month period following a change in control, the Severance Plan provides for the following payments and benefits, subject to the NEO’s delivery to the Company of a Release: (i) an amount equal to the base salary the NEO would have received during the Severance Period, payable in a cash lump sum; (ii) payment or reimbursement of healthcare premiums until up to the last day of the applicable Severance Period; and (iii) full accelerated vesting of all outstanding equity awards. The Severance Plan also includes parachute payment “best pay” provision, under which payments and benefits will either be made to the NEO in full or as to such lesser amount as which would result in no portion of the payments and benefits being subject to an excise tax under Section 280G of the Code, whichever of the foregoing amounts is greater on an after-tax basis. In January 2023, our Compensation Committee amended and restated the Severance Plan. The Severance Plan was amended to provide, among other things, that: employees at the Senior Vice President level continue to receive payment of base salary for three months plus one month for every year of service, not to exceed a total of six months for a qualifying termination following a change in control, but do not receive payments for any other qualifying termination; and employees at the Vice President level continue to receive payment of base salary for two months plus one month for every year of service, not to exceed a total of three months for a qualifying termination following a change in control, but do not receive payments for any other qualifying termination. The Severance Plan, as amended and restated in January 2023, was filed as an exhibit to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 The following table shows the payments and benefits that would be made to our NEOs under the Severance Plan, assuming a qualifying termination or a qualifying termination following a change in control occurred on December 31, 2023.
Potential Payments Upon Termination or Change in Control
| | | COBRA | Equity | | | | Cash Severance | Premiums | Acceleration | Total Potential | | Name | ($) | ($) | ($)(1) | Payment ($)(2) | | Dennis M. Lanfear | | | | | | Qualifying Termination | 1,747,200 | 89,195 | 382,950 | 2,219,345 | | Qualifying Termination in Connection with a CIC | 1,747,200 | 89,195 | 478,688 | 2,315,082 | | Bryan McMichael | | | | | | Qualifying Termination | 425,880 | 44,597 | 27,752 | 498,230 | | Qualifying Termination in Connection with a CIC | 425,880 | 44,597 | 69,374 | 539,851 | | Paul Reider | | | | | | Qualifying Termination | 508,352 | 31,429 | 87,413 | 627,193 | | Qualifying Termination in Connection with a CIC | 508,352 | 31,429 | 197,023 | 736,804 |
Potential Payments Upon Termination or Change in Control
| (1) Amounts shown are based on the closing trading price of our common stock of $3.33 per share on December 29, 2023 and assume that all unvested RSUs would receive accelerated vesting and that all stock options for which vesting is accelerated with exercise prices below $3.33 per share would be exercised immediately upon termination of employment. |
Potential Payments Upon Termination or Change in Control
| (2) Amounts shown are the maximum potential payment the NEO would have received as of December 31, 2023. Amounts of any reduction pursuant to the parachute payment best pay provision, if any, would be calculated upon actual termination of employment. |
Potential Payments Upon Termination or Change in Control
On March 27, 2023 we entered into a letter agreement with Dr. Vexler that provided for a mutual release of claims and the following severance benefits: $515,721 in a single lump sum, which constituted 12 months of Dr. Vexler’s base salary; 12 months’ of Company-paid COBRA premiums having a value of $28,806; 12 months’ of accelerated vesting of stock options and restricted stock units held by Dr. Vexler, valued at $322,048, calculated by multiplying the number of shares underlying the equity award for which vesting was accelerated by the difference between the closing trading price of our common stock of $6.84 per share on March 31, 2023 and the exercise price of the equity award, if any; 12 months of extended exercisability of each vested stock option held by Dr. Vexler as of March 31, 2023 (after giving effect to the foregoing vesting acceleration), valued at $232,108 based on the difference in the black-scholes value of each option before and after the extension; and an additional 9 months’ of extended exercisability of each vested stock option held by Dr. Vexler as of December 4, 2023 (after giving effect to the foregoing vesting acceleration), valued at $55,056 based on the difference in the black-scholes value of each option before and after the extension, for an aggregate severance value of $1,153,739. Mr. Stilwell resigned his employment with us effective December 31, 2023. On December 11, 2023 we entered into a letter agreement with Mr. Stilwell that provided for a mutual release of claims and following severance benefits: $491,700 in a single lump sum, which constituted 12 months’ of Mr. Stilwell’s base salary; 12 months of Company-paid COBRA premiums having a value of $44,597; and 12 months’ of accelerated vesting of stock options and restricted stock units held by Dr. Vexler, valued at $177,599, calculated by multiplying the number of shares underlying the equity award for which vesting was accelerated by the difference between the closing trading price of our common stock of $3.33 per share on December 29, 2023 and the exercise price of the equity award, if any, for an aggregate severance value of $713,896.
CEO PAY RATIO
CEO PAY RATIO As required by Section 953(b) of Dodd-Frank and Item 402(u) of Regulation S-K, we are providing information about the relationship of the annual total compensation of our employees and the annual total compensation of our CEO. For 2023, our last completed fiscal year, the total compensation of our CEO was approximately 18.6 times the median total compensation in 2023 of all of our other employees. The median of the annual total compensation of all employees of our Company (other than our CEO) was $309,620 and the annual total compensation of our CEO was $5,897,924, as included in the “Summary Compensation Table” above. The Company chose December 31, 2023 as the date for establishing the employee population used in identifying the median employee and used 2023 as the measurement period. We identified the median employee using a consistently applied compensation measure equal to the sum of (i) the annual base salary in effect as of December 31, 2023 for all permanent employees and all base salary earned during 2023 for all temporary employees and (ii) the target bonus as of December 31, 2023 for all employees. We captured all employees as of December 31, 2023, consisting of approximately 306 individuals. Our methodology used for 2023 was consistent with the process developed to identify the median employee for 2022. The annual total compensation of the median employee and the annual total compensation of the CEO were calculated in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K.
PAY VERSUS PERFORMANCE
PAY VERSUS PERFORMANCE The disclosure included in this section is prescribed by SEC rules and does not necessarily align with how the Company or the Compensation Committee views the link between the Company’s performance and its NEOs’ pay. For a discussion of how the Company views its executive compensation structure, including alignment with Company performance, see “Compensation Discussion and Analysis” above. The use of the term compensation actually paid, or CAP, is required by the SEC’s rules. Neither CAP nor the total amount reported in the Summary Compensation Table reflect the amount of compensation actually paid, earned or received during the applicable year. Per SEC rules, CAP was calculated by adjusting the Summary Compensation Table Total values for the applicable year as described in the footnotes to the following table.
PAY VERSUS PERFORMANCE
| | | | | | Value of Initial Fixed $100 Investment Based on: | | | | | Year | Summary Compensation Table Total for PEO (1) | Compensation Actually Paid to PEO (2) | Average Summary Compensation Table Total for Non-PEO NEOs (3) | Average Compensation Actually Paid to Non-PEO NEOs (3) | Coherus Total Shareholder Return (TSR) (4) | Peer Group TSR (5) | Net Income (Loss) | Net Product Revenue (Company-Selected Measure) (6) | | (a) | (b)($) | (c)($) | (d)($) | (e)($) | (f)($) | (g)($) | (h)($ in 000's) | (i)($ in 000's) | | 2023 | 5,897,924 | 1,734,065 | 1,863,540 | 744,699 | (82) | 15 | (237,892) | 256,580 | | 2022 | 6,866,396 | 212,826 | 2,122,124 | 470,265 | (56) | 11 | (291,754) | 210,760 | | 2021 | 8,594,495 | 6,461,745 | 2,449,597 | 2,031,913 | (11) | 25 | (287,100) | 326,509 | | 2020 | 7,278,761 | 8,381,980 | 2,035,344 | 2,408,072 | (3) | 26 | 132,244 | 475,824 |
PAY VERSUS PERFORMANCE
| (1) Represents total compensation paid to the principal executive officer, or PEO, Mr. Dennis Lanfear, as reflected in the Summary Compensation Table. |
PAY VERSUS PERFORMANCE
| (2) The following table sets forth the adjustments made during each year presented to arrive at CAP to our PEO during each year: |
PAY VERSUS PERFORMANCE
| | 2023 | 2022 | 2021 | 2020 | | | ($) | ($) | ($) | ($) | | Summary Compensation Table (SCT) Total Compensation | 5,897,924 | 6,866,396 | 8,594,495 | 7,278,761 | | Deduct for amounts reported under the "Stock Awards" and "Option Awards" in the SCT | (4,075,681) | (5,071,908) | (6,730,275) | (5,454,150) | | Fair value as of year-end of equity awards granted during the year that remain unvested | 1,161,479 | 1,795,132 | 3,351,633 | 3,953,739 | | Change in fair value of prior years' equity awards that remain unvested as of year-end | (1,100,382) | (2,186,702) | (576,558) | 1,510,655 | | Fair value on vesting date for awards granted and vested in the same year | 248,745 | 433,008 | 2,291,315 | 1,275,275 | | Change in fair value from prior year-end to vesting date of prior years' awards that vested during year | (398,020) | (1,623,100) | (468,865) | (182,300) | | Compensation Actually Paid (CAP) | 1,734,065 | 212,826 | 6,461,745 | 8,381,980 |
PAY VERSUS PERFORMANCE
| (3) The following table sets forth the adjustments made during each year presented to arrive at CAP to our non-PEO NEOs during each year: |
PAY VERSUS PERFORMANCE
| | | | | | | | 2023 | 2022 | 2021 | 2020 | | | ($) | ($) | ($) | ($) | | Average SCT Total for Non-PEO NEOs | 1,863,540 | 2,122,124 | 2,449,597 | 2,035,344 | | Deduct for amounts reported under the "Stock Awards" and "Option Awards" in the SCT | (963,378) | (1,372,424) | (1,829,098) | (1,235,831) | | Fair value as of year-end of equity awards granted during the year that remain unvested | 260,238 | 537,826 | 1,286,137 | 1,037,351 | | Change in fair value of prior years' equity awards that remain unvested as of year-end | (229,356) | (550,147) | (108,942) | 439,657 | | Fair value on vesting date for awards granted and vested in the same year | 121,694 | 86,062 | 294,903 | 159,400 |
PAY VERSUS PERFORMANCE
| Change in fair value from prior year-end to vesting date of prior years' awards that vested during year | (122,691) | (353,176) | (60,684) | (27,849) | | Deduct fair value as of end of prior fiscal year of awards granted in any prior year that fail to meet vesting conditions during the fiscal year | (185,348) | — | — | — | | Average CAP to Non-PEO NEOs | 744,699 | 470,265 | 2,031,913 | 2,408,072 |
PAY VERSUS PERFORMANCE
The non-PEO NEOs included in average compensation shown in columns (d) and (e) above are as follows:
PAY VERSUS PERFORMANCE
| 2023 | 2022 | 2021 | 2020 | | McDavid Stilwell | McDavid Stilwell | Jean-Frederic Viret | Jean-Frederic Viret | | Vladimir Vexler, Ph.D. | Vladimir Vexler, Ph.D. | McDavid Stilwell | Vincent Anicetti | | Paul Reider | | Vincent Anicetti | Vladimir Vexler, Ph.D. | | Bryan McMichael | | Vladimir Vexler, Ph.D. | |
PAY VERSUS PERFORMANCE
| (4) Total Shareholder Return, or TSR, represents the cumulative growth of a hypothetical $100 investment in the Company made as of December 31, 2020, reflected as of the end of each respective year. |
PAY VERSUS PERFORMANCE
| (5) Peer group TSR represents the cumulative growth of a hypothetical $100 investment made as of December 31, 2020 in the Nasdaq Biotechnology Index, which we also use for purposes of the stock performance graph included in our Annual Report for the year ended December 31, 2023, reflected as of the end of each respective year. |
PAY VERSUS PERFORMANCE
| (6) SEC rules require us to designate a “company-selected measure” that in our assessment represents the most important financial performance measure (that is not TSR or net income) used by the Company to link the CAP of our NEOs, for the most recently completed fiscal year, to our performance. We selected Net Product Revenue as this measure for 2023 as reflected in column (i) in the first table above because of our most important financial performance measures, described below, it had the most weight in determining the bonus paid to our NEOs for 2023. Net Product Revenue is the sum of the following items listed in our 2023 corporate goal performance table in the section above entitled “Compensation Discussion and Analysis”: UDENYCA® Revenue Goals; CIMERLI Revenue Goals; Toripalimab Revenue Goals and YUSIMRY Revenue Goals. Net Product Revenue is a Generally Accepted Accounting Principle measure reported in the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023. This performance measure may not have been the most important financial performance measure for years 2022, 2021 and 2020, and we may determine a different financial performance measure to be the most important financial performance measure in future years. |
PAY VERSUS PERFORMANCE
TABULAR LIST OF MOST IMPORTANT FINANCIAL PERFORMANCE MEASURES The following financial performance measures represent the most important financial measure used to link compensation actually paid to the NEOs for 2023 to Company performance: Net Product Revenue, Combined SG&A and R&D expenses and cash as of December 31, 2023. RELATIONSHIP BETWEEN COMPENSATION ACTUALLY PAID (CAP) AND PERFORMANCE The below charts show the graphical relationship between Compensation Actually Paid to our PEO and the average of the other NEOs (as shown in the above Pay versus Performance Table), and the following: Net Income (Loss), TSR, Peer Group TSR, and Net Product Revenue.