DEF 14A of Fennec Pharmaceuticals Inc.
Filed May 13, 2024 · FY20230001558370-24-007979
Election of Directors
Election of Directors The number of directors of Fennec to be elected at the Meeting is five (5). The following are the names of the persons for whom it is intended that votes will be cast for their election as directors of the Corporation pursuant to the proxy which is hereby solicited, unless the Shareholder directs therein otherwise: Dr. Khalid Islam Mr. Chris A. Rallis Dr. Marco Brughera Dr. Jodi Cook Mr. Rostislav Raykov The term of office for each such person will be until Fennec’s next annual meeting of Shareholders or until such person’s successor is elected or duly appointed. In the event that prior to the Meeting any vacancies occur in the slate of nominees submitted above, it is intended that discretionary authority shall be exercised to vote the proxy hereby solicited (unless otherwise directed as aforesaid) for the election of any other person or persons as directors. Fennec management is not now aware that any of such nominees would be unwilling to serve as a director if elected. The Board unanimously recommends that Shareholders vote FOR the election of the above-named director nominees. The persons named in the enclosed form of proxy will vote FOR the election of each of the director nominees to hold office until the close of the next annual meeting of Shareholders, unless a Shareholder has specified in the proxy that his or her Common Shares are to be withheld from voting in respect thereof. Fennec has adopted a majority voting policy in director elections that will apply at any meeting of Shareholders where an uncontested election of directors is held. Pursuant to this policy, if the number of proxy votes withheld from a particular director nominee is greater than the votes for such director, the director nominee will be required to submit his or her resignation as a director to the Chair of the Board promptly following the applicable Shareholders’ meeting. Following receipt of resignation, the Governance and Nominating Committee will consider whether or not to accept the offer of resignation and make a recommendation to the Board. Within 90 days following the applicable Shareholders’ meeting, the Board shall publicly disclose in a news release their decision whether to accept the applicable director’s resignation or not, including the reasons for rejecting the resignation, if applicable. The Board shall accept the resignation absent exceptional circumstances. A director who tenders his or her resignation pursuant to this policy will not be permitted to participate in any meeting of the Board or the Governance and Nominating Committee at which the resignation is considered. A copy of the majority voting policy may be found on the Fennec website at www.fennecpharma.com. The following table sets forth the name of each of our executive officers and directors, such person’s principal occupation or employment, all other positions with Fennec and any significant affiliate thereof now held by such person, if any, the year in which such person became a director of Fennec and such person’s age. The Corporation has an Audit Committee, a Compensation Committee, and a Governance and Nominating Committee. The current members of such committees are noted below.
Election of Directors
| | | | | | Options to | | | | Current Principal Occupation | | Common | Acquire | | Name and Province/State and | | and Principal Occupation for | Director | Shares | Common | | Country of Residence, Position | Age | Previous Five Years | Since | Held | Shares | | Rostislav Raykov, New Jersey, USA Chief Executive Officer, Director | 48 | CEO of Fennec Pharmaceuticals | July 2009 | 187,471 | 1,500,000 | | Robert Andrade, Texas USA Chief Financial Officer | 49 | CFO of Fennec Pharmaceuticals | N/A | 104,271 | 605,000 | | Adrian J. Haigh, Dublin, Ireland Chief Operating Officer | 65 | Senior Vice President and General Manager of EMEA Region at PTC Therapeutics; previously Chief Operating Officer at Gentium GmbH; previously Regional VP Commercial Operations at Biogen Idec | N/A | — | 360,246 | | Chris A. Rallis, North Carolina, USA Director(1)(2)(3) | 70 | Executive in-residence at Pappas Capital; previously, CEO of ImmunoBiosciences | August 2011 | 45,838 | 178,450 | | Dr. Marco Brughera, Milano, Italy Director(1)(2)(3) | 68 | Former Group CEO of Leadiant Biosciences SpA; previously Global Head Rare Disease and R&D at Sigma-tau; VP Preclinical Development at Nerviano Medical Sciences. | August 2016 | — | 175,545 | | Dr. Khalid Islam, Lugano, Switzerland Chairman of Board, Director(1) | 68 | Founder and Chairman of Gain Therapeutics ; previously Chairman and CEO of Gentium S.p.A.; previously CEO of Arpida AG | April 2014 | 213,825 | 175,000 | | Jodi A. Cook, PhD South Carolina, USA, Director(2)(3) | 56 | CEO of Skylark Bio Inc, Former SVP, Head of Gene Therapy Strategy PTC Therapeutics, Inc, Former COO Agilis Biotherapeutics, Former Assistant Professor of Audiology Mayo Clinic | September 2019 | — | 100,000 |
Election of Directors
| (1) Member of the Audit Committee |
Election of Directors
| (2) Member of the Compensation Committee |
Election of Directors
| (3) Member of the Governance and Nominating Committee |
Rostislav Raykov
Rostislav Raykov Mr. Raykov, age 48, has served as a director of Fennec since July 2009 and as Chief Executive Officer since July 2009. From January 2006 to December 2007, Mr. Raykov was a portfolio manager for Alchem Investment Partners and John Levin & Co. Prior to founding Alchem, Mr. Raykov was a portfolio manager and securities analyst for John A. Levin & Co. Event Driven Fund (2002-2005). Prior to joining John A. Levin & Co., Mr. Raykov was a securities analyst for the Merger Fund at Tiedemann Investment Group (1999-2002) and an investment banking analyst at Bear Stearns (1998-1999). Mr. Raykov earned a B.S. in Business Administration from the University of North Carolina at Chapel Hill. As a result of these and other professional experiences, Mr. Raykov has financial expertise and experience with the Corporation as it has developed within the drug development industry and, as such, is able to provide the Corporation with unique insight and guidance. Robert Andrade Mr. Andrade, age 49, has served as Chief Financial Officer since November 2015. Mr. Andrade was previously Chief Financial Officer and Director of Fennec from September 2009 until August 2013. In addition to his role with Fennec, Mr. Andrade was a private investor in 2015, and a senior analyst at Magnetar Capital from 2013 - 2014. Mr. Andrade graduated from University of Southern California, where he earned a Masters of Arts degree and Bachelor of Arts degree in economics.
Adrian J. Haigh
Adrian J. Haigh Mr. Haigh, age 65, has served as Chief Operating Officer of Fennec since August 2023. Mr. Haigh served as a director of Fennec from April 2014 through July of 2023. Mr. Haigh retired from PTC Therapeutics on December 31, 2022, where his last role at PTC was Senior Vice President and Head of International. He joined PTC in 2014 as Head of EMEA and built its international organization. Previously, Mr. Haigh served as Chief Operating Officer at Gentium GmbH since March 2011. Prior to joining Gentium, Mr. Haigh served as Regional VP Commercial Operations at Biogen Idec where he managed several affiliates and also the global distributor business and prior to that he was the General Manager of Amgen Nordic and Portugal. He served as the Executive Vice President of Global Marketing and Corporate Planning at EUSA Pharma and joined EUSA from Amgen where he led the international oncology franchise. Mr. Haigh previously has held senior commercial and marketing positions at SmithKline Beecham, Schering Plough, Organon and Novo Nordisk. He has been a director of Fennec since April 2014. He received a Bachelor of Arts with Honors in Economic History from Huddersfield Polytechnic, West Yorkshire, England, a Diploma in Marketing from the Institute of Marketing and a Diploma in Company Direction from the Institute of Directors. Chris A. Rallis Mr. Rallis, age 70, has served as a director of Fennec since August 2011. Mr. Rallis has been an executive-in-residence at Pappas Capital, a life science venture capital firm since January 2008. Previously, Mr. Rallis was the President and Chief Executive Officer of ImmunoBiosciences, Inc. (“IBI”), a vaccine technology company formerly located in Raleigh, North Carolina from April 2006 through June 2007. Prior to joining IBI, Mr. Rallis served as an executive in residence (part-time) for Pappas Capital, and as a consultant for Duke University and Panacos Pharmaceuticals, Inc. Mr. Rallis is the former President and Chief Operating Officer (“COO”) and director of Triangle Pharmaceuticals, Inc., which was acquired by Gilead Sciences in January 2003 for approximately $465 million. Prior to assuming the role of President and COO in March 2000, he was Executive Vice President, Business Development and General Counsel. While at Triangle, Mr. Rallis participated in 11 equity financings generating gross proceeds of approximately $500 million. He was also primarily responsible for all business development activities which included a worldwide alliance with Abbott Laboratories and the in-licensing of ten compounds. Before joining Triangle in 1995, Mr. Rallis served in various business development and legal management roles with Burroughs Wellcome Co. over a 13 year period, including Vice President of Strategic Planning and Business Development. Mr. Rallis also serves on the board of Lung Cancer Initiative of NC, located in Raleigh, North Carolina. Mr. Rallis received his A.B. degree in economics from Harvard College and a J.D. from Duke University. As a result of these and other professional experiences, Mr. Rallis possesses particular healthcare industry knowledge and experience which strengthens the Board’s collective qualifications, skills, and experience. Dr. Marco Brughera Dr. Brughera, age 68, has been a director of Fennec since August 2016. Currently, he is the founder at Brucon srls and Strategic Advisor at Essetifin. From 2011 until 2021, Dr. Brughera had been CEO of Lediant Biosciences and has held several positions for the Sigma-Tau Group, including CEO and Global Head of Sigma Tau Rare Disease, President of Sigma-Tau Research and President of Sigma-Tau Pharmaceuticals. He drove the commercial revival of a lead oncology product line resulting in its successful sale for a total of around $900M. He also successfully out-licensed the Defibrotide US rights to Jazz Pharmaceuticals and the product Recovi to Chiesi Pharmaceuticals.. From 2004 to 2010, Dr. Brughera served as the Vice President of Preclinical Development at Nerviano Medical Sciences (NMS), a pharmaceutical oncology-focused integrated discovery and development company. He also served as the Managing Director at Accelera, an independent contract research organization with the NMS Group. From 1999 to 2004, Dr. Brughera held several senior level positions in the areas of research and development with Pharmacia and Pfizer. Prior to 1999, he held various positions at Pharmacia & Upjohn and Farmitalia Carlo Erba SpA, an Italian pharmaceutical company. He currently serves on the Board of Leadiant Biosciences Inc and Limited; advisor and biotech champion at Indaco Ventures Partners SGR. Previously was a Board member of Gentium, Exelead, Soligenix, Lee’s Pharmaceuticals and Naicons. Dr. Brughera earned his degree in veterinary medicine from the University of Milan and is a European Registered Toxicologist. Dr. Brughera has wide-spread experience and knowledge of pharmaceutical drug development in international companies. His scientific and business knowledge in particular in the oncology and orphan drug space deepens the board’s collective qualifications, skills and experience. Dr. Islam, age 68, has been a director of Fennec since April 2014 and is our current Chairman of the Board. Dr. Islam was the Chairman and CEO of Gentium S.p.A. (a Nasdaq-listed company; 2009-2014) where he led the transition from a loss-making to a cash-flow positive and profitable company. Under his leadership, the company value increased from US$25 million leading to a successful all cash US$1 billion merger with Jazz Pharmaceuticals, plc. Subsequent to the sale of Gentium, Dr. Islam has been involved from both an advisory and board level in several public and private healthcare related companies. From 1999-2008, Dr. Islam was President and CEO of Arpida AG where he transitioned the early-stage start-up to a SWX-listed company and raised US$300 million in the IPO and follow-ons. From 1987-1999, he held various positions in HMR & MMD (now Sanofi-Aventis). From 1977-1987, Dr. Islam worked in academia at Imperial College (Univ. of London) and in Milan University, where he was a contract professor. Dr. Islam is a graduate of Chelsea College and received his Ph.D. from Imperial College, University of London. He holds several patents and has published over 80 articles in leading journals. He is an advisor to the venture group Kurma Biofund (Paris). He is a founder/co-founder of Gain Therapeutics Inc. (GANX), Sirius Healthcare Partners GmbH (Zurich), PrevAbr LLC (D.C.), BioAim LLC (L.A.) & Life Sciences Management GmbH (Zug). Dr. Islam is Board Chair at Minoryx Therapeutics (Spain) and Gain Therapeutics Inc. (GANX), a public company. In the past, he has served on the Board of Directors of Immunomedics (USA), Processa Pahramacueticals (PCSA), Pcovery Aps (Denmark), Adenium Aps (Denmark), C10 Pharma AS (Norway), Karolinska Development (KDEV, Sweden) and MolMed S.p.A. (MLMI, Italy). Dr. Islam’s extensive international pharmaceutical expertise in transitioning companies from development to production strengthens the Board’s collective qualifications, skills and experience. Dr. Jodi Cook
Adrian J. Haigh
Dr. Cook, age 56, has been a director of Fennec since September 2019. Dr. Cook is currently CEO of Skylark Bio Inc, an early-stage Company working on gene therapy for genetic disorders. Dr. Cook previously served as SVP and Head of Gene Therapy Strategy at PTC Therapeutics from August 2018 until February 2020. Previously she was one of the founding members and Chief Operating Officer of Agilis Biotherapeutics, a clinical-stage company focused on gene therapies for rare diseases of the central nervous system, from December 2013 until its acquisition by PTC Therapeutics in August 2018. While at Agilis she led the sale of the company to PTC in a deal that represented significant value to all parties. Dr. Cook’s career spans a wide range of experiences including VP of Clinical Research at InSound Medical and Director of Audiology at Songbird Hearing, both successful biotech start-up companies within the hearing industry. She has been Assistant Professor of Audiology and Director of the Hearing Aid Program at Mayo Clinic. Dr. Cook earned a BA from Loyola University in Maryland, M.Aud. from University of South Carolina, and PhD from Arizona State University in Hearing Science. She completed a clinical fellowship at Johns Hopkins School of Medicine in Baltimore, MD. Her extensive scientific, clinical and executive business experience strengthens the Board’s collective qualifications, skills and expertise.
Compensation Discussion and Analysis
Compensation Discussion and Analysis This discussion relates to the Named Executive Officers listed in the Summary Compensation Table below. Mandate of the Compensation Committee It is the task of the Compensation Committee to periodically review Fennec’s compensation structure with respect to its Named Executive Officers, including its Chief Executive Officer, to ensure that Fennec continues to attract and retain qualified and experienced individuals to its management team and to motivate these individuals to perform to the best of their ability and in Fennec’s best interests. The Compensation Committee determines the compensation of the Named Executive Officers, evaluates and approves the compensation plans, policies and programs of the Corporation and recommends to the Board from time to time other incentive compensation plans that it determines should be considered. In reviewing executive compensation, the Compensation Committee relies on the advice of the Chief Executive Officer regarding other executive officers and allows him to participate in the Committee’s deliberations on those executive officers. The Chief Executive Officer, however, is not allowed to participate in the Committee’s deliberations on his compensation. The Compensation Committee may not delegate any of its responsibilities to another entity or to an individual without the approval of the Board. General Compensation Philosophy The key components of executive officer compensation are salaries, cash incentive awards and equity inventive awards. Fennec’s policy with respect to the compensation of Named Executive Officers is to establish annual goals with respect to corporate development and the individual areas of responsibility of each Named Executive Officers and then to review total compensation with respect to the achievement of these goals. Salary and Non-Equity Incentive Awards It is Fennec’s policy that the base salaries paid to its Named Executive Officers reflect, in addition to the criteria set out above, the individual’s responsibility, experience and achievements. Further, base salary, which forms the basis for attracting talent and remaining competitive with the market, is also determined in consideration of market rates for similar positions. In this regard, Named Executive Officers’ cash compensation represents the 50% percentile mark among Fennec’s comparators (20 companies). Each year the Compensation Committee sets a series of objectives for each executive and for the executive team as a whole to determine the opportunity for cash incentive awards. These objectives are prioritized and assigned potential values in light of overall company objectives, including with respect to scientific, clinical, regulatory, intellectual property, business and corporate development, and financial objectives. The Compensation Committee reviews both base salaries and cash incentive awards on at least an annual basis to ensure that the relevant criteria are satisfied. See “2023 Short Term Incentives” below. Fennec also provides change in control cash benefits to Named Executive Officers. The primary rationale of our change in control cash benefit program is to provide sufficient employment and income protection so that our top executives will consider, and even seek out, corporate transactions that are in the best interest of shareholders, regardless of whether those transactions jeopardize their own employment. We believe the existing change in control benefits to the CEO and CFO, together with their equity awards, encourage such value-driving strategic activity. See “Payments on Change of Control” below. Equity Incentives - Stock Options and RSUs The annual compensation considerations also include the awarding of stock options, restricted stock units (“RSUs”) and other equity awards. The granting of options and RSUs to the Named Executive Officers under the Stock Option Plan serves three primary purposes: (1) to recognize significant performance during the past year; (2) to provide long-term incentives for future efforts, since the value of the options is directly dependent on the market valuation of the Corporation; and (3) to retain individuals, as the options and RSUs typically vest over time and, in some cases, upon the achievement of certain events, such as regulatory approval. When determining whether and how many new option or RSU awards will be made, the Compensation Committee takes into account the amount and terms of any outstanding options and RSUs. The Compensation Committee generally considers the granting of options and RSUs twice annually to all eligible employees, including executive officers. The Committee, in its discretion, may grant options, RSUs or other equity awards at other times during a fiscal year to a Named Executive Officer for performance or other reasons. See “2023 Equity Awards” below. Fennec does not require its Named Executive Officers to own a specific number of Common Shares. None of Fennec’s current executive team or board members are company founders and, until relatively recently, Fennec’s cash compensation packages for executives and board members has been comparatively low and insufficient to generate wealth in keeping with meaningful share ownership requirements. Historically, Fennec has also not had equity programs conducive to assisting executives and board members in achieving any prescribed ownership levels. Analysis of Named Executive Officer Compensation The Compensation Committee is charged with annually reviewing and approving corporate goals and objectives relevant to each of the Named Executive Officer’s compensation, evaluating each officer’s performance in light of those goals and objectives, and fixing and determining each Named Executive Officer’s level of salary and award of cash incentive payments and options based on this evaluation. In determining the long-term incentive component of each Named Executive Officer’s compensation, the Compensation Committee considers the Corporation’s performance and relative shareholder return, the value of similar incentive awards to other similarly situated executive officers at companies in the peer group, the awards given to the Named Executive Officer in past years, and such other factors as the Compensation Committee considers relevant. The Compensation Committee’s review and evaluation includes measurement of the following areas:
Compensation Discussion and Analysis
Every Named Executive Officer had a maximum short term incentive award cap in 2023, based on a percentage of such executive’s base salary. These caps were 50% for Mr. Raykov, and 40% for each of Mr. Andrade and Mr. Haigh. All payouts of earned 2023 annual bonuses to Named Executive Officers were accrued at December 31, 2023, and paid in March of 2024. 2023 Equity Awards In 2023, the Named Executive Officers were awarded equity incentives in the form of options and restricted share units (“RSU”). In March of 2023, Mr. Raykov was granted 175,000 options with a strike price of $8.78 and 87,500 RSU’s. In March of 2023, Mr. Andrade was granted 75,000 options with a strike price of $8.78 and 37,500 RSU’s. In August of 2023, Mr. Haigh stepped down from the board to become the Corporation’s Chief Operating Officer and was granted 200,000 options with a strike price of $8.03. In 2022, the Named Executive Officers were not awarded any equity incentive. This is because there were retention awards granted in December 2021, which had immediate vesting if FDA approval of PEDMARK® came before December 31, 2022 and such named officer was still employed by the Corporation. As a result of FDA approval in September of 2022, Mr. Raykov had 300,000 options with a strike price of $4.08 vest and Mr. Andrade had 75,000 options with a strike price of $4.08 vest and 37,500 RSU’s were released from restriction. Ms. Goel left the Corporation in January of 2022 and thus forfeited any grants or award that were unvested upon her departure.
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 Corporation. The following information is presented to disclose the relationship between executive “compensation actually paid” or CAP, as calculated under applicable SEC rules, and the Corporation’s financial performance. As required by SEC rules, the table presented below discloses CAP for (i) the Corporation’s principal executive officer (“PEO”), Mr. Raykov, and (ii) the Corporation’s NEOs other than Mr. Raykov (collectively, “Non-PEO NEOs”), on an average basis. The Corporation’s PEO and the Non-PEO NEOs receive time-based RSU awards and their total compensation is not tied to any specific company performance measures.
Pay Versus Performance
| | | | Average | | | | | | | | Summary | Average | Value of | | | | Summary | | Compensation | Compensation | Initial Fixed $100 | | | | Compensation | Compensation | Total for | Actually Paid to | Investment | Net | | | Table | Actually Paid | Non-PEO | Non-PEO | Based On Total | Income | | Year | Total for PEO(1) | To PEO(2) | NEOs(3) | NEOs(4) | Shareholder Return(5) | (millions)(6) | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | | 2023 | 2,497,849 | 4,526,511 | 1,234,679 | 2,036,284 | 151 | (16,045) | | 2022 | 614,161 | 1,569,464 | 428,919 | 1,197,095 | 129 | (23,714) | | 2021 | 3,420,375 | 2,814,862 | 1,517,321 | 1,526,219 | 59 | (17,346) |
Pay Versus Performance
| (1) The dollar amounts reported in column (b) are the amounts of total compensation reported for Mr. Raykov, the Corporaiton’s Chief Executive Office, for each corresponding year in the “Total” column of the Summary Compensation Table. Refer to “Executive Compensation – Summary Compensation Table.” |
Pay Versus Performance
| (2) The dollar amounts reported in column (c) and (e) represent the amount of CAP as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to Mr. Raykov or the Non-PEO NEOs, as applicable, during the applicable year as it includes changes in the value of stock compensation for awards which remained unvested at the end of the applicable year. The following table details the applicable adjustments that were made to determine CAP: |
Pay Versus Performance
| | | | | | | Add: Change in | | | | | | | | | Value as of | | | | | | | | Add: Change in | Vesting Date | | | | | | Deduct: Stock | Add: Fair Value of | Fair Value of | of Equity Awards | | | | | Summary | Compensation | of Equity Awards | Outstanding and | Granted in | | | | | Compensation | Included | Granted in Fiscal year | Unvested Equity | Prior Years | | | | | Table | in Summary | and Unvested | Awards granted | which Vested | Compensation | | Fiscal Year | Executive(s) | Total | Compensation | as of Year-End | in Prior Fiscal Years | in Fiscal Year | Actually Paid | | | | | (a) | (b) | (c) | (d) | | | 2023 | PEO | 2,497,849 | 1,655,873 | 2,283,329 | (618,750) | 2,019,956 | 4,526,511 | | 2023 | Non-PEO NEOs | 1,234,679 | 856,335 | 1,244,623 | (19,094) | 432,411 | 2,036,284 | | 2022 | PEO | 614,161 | - | - | (850,186) | 1,805,489 | 1,569,464 | | 2022 | Non-PEO NEOs | 428,919 | - | - | (221,690) | 989,866 | 1,197,095 | | 2021 | PEO | 3,420,375 | 2,951,923 | 1,435,190 | (267,858) | 1,179,078 | 2,814,862 | | 2021 | Non-PEO NEOs | 1,517,321 | 1,006,364 | 442,985 | 80,860 | 491,417 | 1,526,219 |
Pay Versus Performance
The equity award adjustments for each applicable year include the addition (or subtraction, as applicable) of the following:
Pay Versus Performance
| (a) The grant date fair value of equity-based awards, as reported in the Summary Compensation Table. |
Pay Versus Performance
| (b) The year-end fair value of any equity awards granted in the applicable year that are outstanding and unvested as of the end of the year. |
Pay Versus Performance
| (c) The amount of change as of the end of the applicable year (from the end of the prior fiscal year) in fair value of any awards granted in prior years that are outstanding and unvested as of the end of the applicable year. |
Pay Versus Performance
| (d) For awards granted in prior years that vest in the applicable year, the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value. |
Pay Versus Performance
| (3) The dollar amounts represent the average Summary Compensation Table totals for the non-PEO NEOs. The non-PEO NEOs during the calendar year 2023 were Mr. Andrade, the Corporation’s Chief Financial Officer and effective August 1, 2023, Mr. Haigh, the Corporation’s Chief Operating Officer, and former member of the Corporation’s Board of Directors. The Non-PEO NEO during the calendar year 2022 was Mr. Andrade. The non-PEO NEOs during calendar 2021 period were Mr. Andrade, and Ms. Goel, our former Chief Commercial Officer, who resigned on January 31, 2022. |
Pay Versus Performance
| (4) Represents CAP for non-PEO NEOs. The amounts shown do not reflect the actual compensation earned by or paid to the non-PEO NEOs during the applicable year. In accordance with SEC rules, adjustments were made to determine the CAP using the same methodology described in the footnotes above. |
Pay Versus Performance
| (5) Calculated based upon the closing price of a share of the Corporation’s common stock on the last day of its 2023, 2022, 2021 and 2020 fiscal years, which prices were $11.22, $9.60, $4.40, $7.45, respectively. |
Pay Versus Performance
| (6) Refer to Corporation’s Consolidated Statements of Operations as presented in its Annual Report on Form 10-K filed on March 29, 2024. |
Pay Versus Performance
Relationship Between Compensation Actually Paid, TSR, and Net Income (Loss) The amounts of CAP shown in the above Pay versus Performance Table have been calculated as required by Item 402(v) of SEC Regulation S-K. Such calculated amounts do not represent the actual amount of compensation earned by or paid to such individuals in the fiscal years shown. Item 402(v) also requires that the Corporation’s total shareholder return (“TSR”) and net income(loss) for each of the fiscal years shown be included in the Pay versus Performance Table as performance measures. While the Compensation Committee considers TSR and net income (loss) in determining executive compensation, the Committee also utilizes various other performance measures in seeking to align executive compensation with the non-PEO NEOs’ performance as well as certain subjective measures, all as described in more detail under “Compensation Discussion and Analysis (CD&A).” The Compensation Committee of the Board of Directors of the Corporation does not have a policy or practice of evaluating cumulative total shareholder return as part of its determination of compensation decisions for Named Executive Officers. As noted in the “Compensation Discussion and Analysis” section of this proxy statement, the Compensation Committee reviews various compensation metrics to ensure the competitiveness of its executive compensation. The Compensation Committee determines on an annual basis the relevant objectives and goals that drive each of the Named Executive Officer’s compensation. While the Corporation’s financial condition and share price are measurements that the Corporation utilizes in evaluating the relevant objectives, the Compensation Committee also considers the advancement of the Corporation’s product candidates, both preclinical and clinical, as well as the achievement of corporative objectives, including financings, partnerships and other business development.
Summary Compensation Table
Summary Compensation Table The following table sets out certain information respecting the compensation paid to our Chief Executive Officer, our Chief Financial Officer and our former Chief Commercial Officer (collectively, “Named Executive Officers”) for the fiscal years ended December 31, 2023 and December 31, 2022.
Summary Compensation Table
| | | | | Restricted Share | Option | | | Name and Principal Position | Year | Salary ($) | Bonus ($) | Unit Awards ($)(2) | Awards ($) (1) | Total ($) | | Rostislav Raykov, CEO | 2023 | 607,061 | 278,006 | 728,000 | 927,873 | 2,540,940 | | | 2022 | 503,436 | 110,725 | — | — | 614,161 | | Robert Andrade, CFO | 2023 | 439,764 | 161,113 | 312,000 | 397,660 | 1,310,537 | | | 2022 | 364,698 | 64,221 | — | — | 428,919 | | Adrian Haigh, COO | 2023 | 183,940 | 167,753 | — | 1,003,009 | 1,354,702 | | | 2022 | — | — | — | — | — | | Shubh Goel, CCO | 2023 | — | — | — | — | — | | | 2022 | 8,637 | — | — | — | 8,637 |
Summary Compensation Table
| (1) Represents the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. Dollar value amounts are based on individual grants to each of Mr. Raykov, Mr. Andrade and Mr. Haigh of 175,000, 75,000 and 200,000 options, respectively. Such option grants were received on March 31, 2023 for Mr. Raykov and Mr. Andrade and August 7, 2023 for Mr. Haigh. March grants have an exercise price of $8.32, while the August grant was at an exercise price of $8.03. On March 31, 2023, Mr. Raykov and Mr. Andrade were also awarded 87,500 and 37,500 Restricted Share Units each, respectively. All option grants expire 10 years after the grant date. All equity awards vest in the following manner: one-third of these options shall vest and may be exercised one year after the grant date (the “Vesting Commencement Date”). The remaining two-thirds of the options shall vest monthly at a rate of 1/24th of the remaining grant and shall be exercisable as of the last day of each following month after the Vesting Commencement Date. As of the third anniversary of the grant date, all of the options shall be vested. |
Summary Compensation Table
| (2) Ms. Goel tendered her resignation on January 31, 2022. |
Summary Compensation Table
Rostislav Raykov Mr. Raykov has been employed by us since July 2009. Pursuant to an employment agreement dated May 3, 2010 between Mr. Raykov and Fennec, Mr. Raykov is employed as our Chief Executive Officer and: (a) received an initial annual salary in the amount of $140,000, subject to annual adjustment by our Board of Directors, (b) upon approval by shareholders of our amended stock option plan was granted options to purchase up to 5.0% of our common shares estimated by us to be outstanding upon completion of our 2010 rights offering, and (c) may receive annual bonuses at the sole discretion of the Board. If Mr. Raykov’s employment terminates due to a change of control of Fennec, Mr. Raykov’s remaining unvested equity shall immediately vest and be fully exercisable. If Mr. Raykov is dismissed from employment by us for any reason other than “for cause,” we are obligated to pay Mr. Raykov severance compensation equal to twelve months of salary. The initial term of the agreement was for one year and the agreement automatically extends for additional one-year periods unless terminated by either party in accordance with the agreement. Effective December 31, 2023, Mr. Raykov’s salary is $585,276 per year.
Payments on Termination
Payments on Termination The following table provides details regarding the estimated incremental payments from us to each of the Named Executive Officers assuming termination without cause on December 31, 2023. Ms. Goel’s resignation was voluntary and there is no severance owed.
Payments on Termination
| Name | Severance | Estimated Bonus | Value of benefits | | Rostislav Raykov, CEO | $607,061 | $278,006 | $885,067 | | Robert Andrade, CFO | $219,882 | $161,113 | $380,995 | | Adrian Haigh, COO | $110,364 | $167,753 | $278,117 |
Payments on Termination
| (1) Mr. Haigh’s severance figures translated to U.S. dollars as of December 31, 2023. |
Compensation of Directors
Compensation of Directors
Director Compensation Table
Director Compensation Table The following table summarizes the compensation earned by our non-executive directors for the year ended December 31, 2023.
Director Compensation Table
| Name | Fees paid in Cash | Stock Awards | Option Awards(1)(3) | Total | | Dr. Islam | 96,250 | — | 128,979 | 225,229 | | Mr. Brughera | 63,125 | — | 103,183 | 166,308 | | Mr. Haigh(2) | 42,500 | — | 103,183 | 145,683 | | Dr. Cook | 50,625 | — | 103,183 | 153,808 | | Mr. Rallis | 70,000 | — | 103,183 | 173,183 | | Total | $322,500 | $— | $541,711 | $864,211 |
Director Compensation Table
| (1) Represents the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. |
Director Compensation Table
| (2) Mr. Haigh stepped down from the board to become Chief Operating Officer in August of 2023. |
Director Compensation Table
| (3) Detail of grants are presented in the following table: |
Director Compensation Table
| | | | Option Exercise Price | | Name | Date of Grant | Number of Options Granted | $USD | | Mr. Rallis | June 12, 2023 | 20,000 | 8.78 | | Mr. Brughera | June 12, 2023 | 20,000 | 8.78 | | Mr. Haigh | June 12, 2023 | 20,000 | 8.78 | | Dr. Islam | June 12, 2023 | 25,000 | 8.78 | | Dr. Cook | June 12, 2023 | 20,000 | 8.78 | | Total | | 105,000 | |
Director Compensation Table
The annual compensation considerations for non-executive directors also include the awarding of stock options. We believe that granting of options to the non-executive directors serves three primary purposes: (1) to recognize the significant time and effort commitments of being a member of our Board; (2) to provide long-term incentives for future efforts since the value of the options is directly dependent on our market valuation; and (3) to retain quality individuals. When determining whether and how many new option grants will be made, the Compensation Committee takes into account the amount and terms of any outstanding options. We do not require our non-executive directors to own a specific amount of our common shares. Each of current directors Khalid Islam, Marco Brughera, Jodi Cook and Chris A. Rallis has entered into an Independent Director Agreement with the Corporation, which provides for cash compensation as set forth by the Compensation Committee commensurate with that member’s responsibilities. The Compensation Committee may also remunerate members in the form of a grant of options to purchase shares of our common shares. The options immediately vest when granted and are otherwise subject to the terms and conditions of our stock option plan, as amended. The Independent Director Agreements also provide for the reimbursement of such director’s reasonable travel and related expenses incurred in the course of attending board meetings.
Director Outstanding Equity Awards at December 31, 2023
Director Outstanding Equity Awards at December 31, 2023
Director Outstanding Equity Awards at December 31, 2023
| | | | | Value of | | | Number of Securities | | Option | Unexercised in | | | Underlying Unexercised | Option | Expiration | the-Money | | Name | Options (#) Exercisable | Exercise Price (USD$) | Date | Options (USD$)(1) | | Adrian Haigh | 133,333(2) | 2.31 | 04/25/2024 | 1,187,997 | | | 10,000 | 2.69 | 12/31/2024 | 85,300 | | | 10,246 | 2.44 | 06/09/2026 | 89,960 | | | 20,000 | 5.10 | 06/27/2027 | 122,400 | | | 20,000 | 10.93 | 06/08/2028 | 5,800 | | | 20,000 | 4.26 | 06/18/2029 | 139,200 | | | 20,000 | 6.17 | 08/13/2030 | 101,000 | | | 20,000 | 7.52 | 06/29/2031 | 74,000 | | | 20,000 | 5.59 | 06/14/2032 | 112,600 | | | 20,000 | 8.78 | 06/12/2033 | 48,800 | | | 200,000 | 8.03 | 08/07/2033 | 638,000 | | Chris Rallis | 4,329(2) | 2.31 | 04/25/2024 | 38,571 | | | 1,389(2) | 3.60 | 05/15/2024 | 10,584 | | | 1,792 | 2.79 | 08/04/2024 | 15,107 | | | 1,960 | 2.55 | 11/07/2024 | 16,993 | | | 10,000 | 2.69 | 12/31/2024 | 85,300 | | | 1,992 | 2.51 | 03/16/2025 | 17,350 | | | 2,173 | 2.30 | 05/11/2025 | 19,383 | | | 2,127 | 2.35 | 08/03/2025 | 18,866 | | | 4,062 | 1.23 | 11/10/2025 | 40,579 | | | 4,098 | 2.44 | 06/09/2026 | 35,980 | | | 10,246 | 2.44 | 06/09/2026 | 89,960 | | | 20,000 | 5.10 | 06/27/2027 | 122,400 | | | 20,000 | 10.93 | 06/08/2028 | 5,800 | | | 20,000 | 4.26 | 06/18/2029 | 139,200 | | | 20,000 | 6.17 | 08/13/2030 | 101,000 | | | 20,000 | 7.52 | 06/29/2031 | 74,000 | | | 20,000 | 5.59 | 06/14/2032 | 112,600 | | | 20,000 | 8.78 | 06/12/2024 | 48,800 | | Dr. Khalid Islam | 25,000 | 5.10 | 06/27/2027 | 153,000 | | | 25,000 | 10.93 | 06/08/2028 | 7,250 | | | 25,000 | 4.26 | 06/18/2029 | 174,000 | | | 25,000 | 6.17 | 08/13/2030 | 126,250 | | | 25,000 | 7.52 | 06/29/2031 | 92,500 | | | 25,000 | 5.59 | 06/14/2032 | 140,750 | | | 25,000 | 8.78 | 06/12/2024 | 61,000 | | Dr. Marco Brughera | 35,545 | 2.11 | 12/30/2026 | 323,815 | | | 20,000 | 5.10 | 06/27/2027 | 122,400 | | | 20,000 | 10.93 | 06/08/2028 | 5,800 | | | 20,000 | 4.26 | 06/18/2029 | 139,200 | | | 20,000 | 6.17 | 08/13/2030 | 101,000 | | | 20,000 | 7.52 | 06/29/2031 | 74,000 | | | 20,000 | 5.59 | 06/14/2032 | 112,600 | | | 20,000 | 8.78 | 06/12/2024 | 48,800 | | Dr. Jodi Cook | 20,000 | 5.40 | 11/13/2029 | 116,400 | | | 20,000 | 6.17 | 08/13/2030 | 101,000 | | | 20,000 | 7.52 | 06/29/2031 | 74,000 | | | 20,000 | 5.59 | 06/14/2032 | 112,600 |
Director Outstanding Equity Awards at December 31, 2023
| (1) Calculated using the closing price of our Common Share on December 30, 2023 USD$11.22 on the Nasdaq which was the last trading day for the year 2023. |
Director Outstanding Equity Awards at December 31, 2023
| (2) Mr. Rallis and Mr. Haigh exercised option grants subsequent to year end but before April 29, 2024. As of the record date, Mr. Rallis still holds the resulting Fennec shares less amounts disposed of to pay for taxes, while Mr. Haigh retained none of the resulting shares. |
Indebtedness of Directors and Executive Officers
Indebtedness of Directors and Executive Officers Section 13(k) of the Exchange Act prohibits Fennec from making or arranging an extension of credit to its directors or executive officers in the form of a personal loan. No individual, who is or was a director, executive officer or employee of Fennec, nor any proposed nominee for election as a director of Fennec, nor any associate of any one of them: (i) is or, at any time since the beginning of Fennec’s most recent completed financial period, has been indebted to Fennec or any of its subsidiaries; or (ii) was indebted to another entity, which indebtedness is, or was at any time during Fennec’s most recent completed financial period, the subject of a guarantee, support agreement, letter of credit or other similar arrangement or understanding provided by Fennec or any of its subsidiaries.
Board of Directors
Board of Directors The Board of Directors is composed of a majority of independent directors. The Board applies the definition of independence found in Canadian National Instrument 58-101 and National Policy 58-201 and the applicable rules of Nasdaq. The Board has determined that four of the current five directors are “independent”, being Dr. Cook and Messrs. Rallis, Brughera and Islam. Only one director has a material relationship with the Corporation and therefore is not independent. Mr. Raykov, Chief Executive Officer of the Corporation is considered to have a material relationship with the Corporation by virtue of his executive officer position. Fennec is of the view that the composition of its Board reflects a diversity of background and experience that are important for effective corporate governance. Other directorships held by Board members are described in this Circular under the heading “Ordinary Matters – Election of Directors.” During the financial year ended December 31, 2023, the Board devoted a portion of ten meetings to discuss in the absence of directors who are not “independent,” and certain of the Committees also conducted executive sessions where all participants were independent directors. In order to facilitate open and candid discussion among its independent directors, the Corporate Governance Guidelines provide that independent directors should meet at least annually without the presence of management or non-independent directors, that the Chairman or Lead Independent Director is authorized to call additional meetings of the independent directors and that the Chairman or Lead Independent Director is authorized to act as the presiding director at such meetings and to develop the agenda for such meetings. In addition, each Board member is free to suggest the inclusion of items on any Board or Committee meeting agenda and suggest pre-meeting materials to either the Chair of the Board or the Lead Independent Director. At any meeting of the Board, each Board member is also free to raise subjects that are not on the agenda for that meeting. Furthermore, each Board committee, the Chairman and the Lead Independent Director, on behalf of the independent directors as a group, have the authority to hire legal, accounting, financial or other advisors as they may deem necessary in their best judgment, without the need to obtain the prior approval of any officer of the Corporation. The Chief Financial Officer of the Corporation will arrange for payment of the invoices of any such third party. Directors’ Attendance For the fiscal year ended December 31, 2023, the Board met on ten occasions, the Audit Committee met on five occasions, the Compensation Committee met on seven occasions, and the Governance and Nominating Committee met on three occasions. The following table sets forth the attendance of directors at meetings of the Board and Committee meetings.
Board of Directors
| | | | | Attendance at | | | | Attendance at | Attendance at | Governance/ | | | | Audit | Compensation | Nominating | | | Attendance at | Committee | Committee | Committee | | Director | Board Meetings | Meetings | Meetings | Meetings | | Adrian Haigh | 6/6 | 3/3 | — | 1/1 | | Chris Rallis | 10/10 | 5/5 | 7/7 | 3/3 | | Dr. Khalid Islam | 10/10 | 5/5 | — | — | | Dr. Marco Brughera | 10/10 | 2/2 | 7/7 | 3/3 | | Dr. Jodi Cook | 10/10 | — | 7/7 | 3/3 | | Rostislav Raykov | 10/10 | — | — | — |
Board of Directors
The Board expects management to be responsible for the day-to-day operations of and to implement the approved strategic business plan within the context of authorized budgets and corporate policies and procedures. Management is expected to report regularly to the Board in a comprehensive, accurate, and timely fashion on Fennec’s business and affairs. Fennec does not have a formal written policy regarding attendance of Board members at annual meetings of the shareholders. Fennec, however, strongly encourages all directors to attend such meetings.