DEF 14A of Arrowhead Pharmaceuticals, Inc.
Filed Jan 29, 2025 · FY20240001628280-25-002848
Proposal One — Election of Directors
Proposal One — Election of Directors The Company’s Board of Directors (the “Board”) has nominated the following eight persons as directors to serve until the 2026 Annual Meeting or until their successors have been duly elected. All but one of the nominees is currently a director of Arrowhead and six were elected most recently by stockholders at the 2024 Annual Meeting. Hongbo Lu was appointed to the Arrowhead Board in February 2024 and was initially recommended to the Board by several non-management directors. Douglas Ingram is expected to be appointed to the board before our 2025 Annual Meeting and was initially recommended to the Board by our CEO and, other executive officers. Douglass Given resigned as director of the Company as of December 31, 2024. None of the nominees is related by blood, marriage or adoption to any other nominee or any executive officer of the Company. The nominees receiving more “FOR” votes than “AGAINST” votes at the Annual Meeting will be elected. Unless otherwise instructed, the proxy holders will vote the proxies received by them for the nominees named below. Under Delaware law, a director not receiving a majority of votes cast in an uncontested election would continue to serve as a “holdover director” until the director resigns or is replaced. Under the Company’s director resignation policy, a director who is not reelected by a majority of the votes cast in an uncontested election will be required to tender his or her resignation to the Board, and the Board will then decide whether to accept or reject the resignation, or whether other action is required. The table below sets forth, with respect to each nominee for election, the nominee’s age, and current position with Arrowhead. The director nominees have indicated that they are willing and able to serve as directors. However, if any of the director nominees becomes unable or, for good cause, unwilling to serve, proxies may be voted for the election of such other person as shall be designated by our Board, or the Board may decrease the size of the Board. Nominees for Election as Directors. The Board unanimously adopted a resolution proposing the nominees set forth below for election as Directors of the Company for the next year.
Proposal One — Election of Directors
| | OUR BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” EACH OF THE NOMINEES LISTED BELOW. |
Proposal One — Election of Directors
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Proposal One — Election of Directors
| Christopher Anzalone, PhD Chief Executive Officer, President, Director & Board Chair | | | Age: 55 Director since: 2007 | Experience & Expertise Dr. Anzalone has been President, Chief Executive Officer and Director of the Company since December 1, 2007 and has led the Company’s business and technical development since then. Prior to joining Arrowhead, Dr. Anzalone formed and served as CEO of the Benet Group LLC, a private equity firm focused on creating and building new nano-biotechnology companies from university-generated science. Before his tenure at the Benet Group, from 1999 to 2003, he was a partner at the Washington, DC-based private equity firm Galway Partners, LLC, where he was responsible for sourcing, structuring and building new business ventures. Dr. Anzalone holds a PhD. in Biology from UCLA and a B.A. in Government from Lawrence University. | | | Qualifications Dr. Anzalone’s qualifications to serve on the Board include his deep understanding of the business through his role as Chief Executive Officer; in addition, Dr. Anzalone has extensive experience in business development, biotechnology, drug development, company-building and venture capital. |
Proposal One — Election of Directors
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Proposal One — Election of Directors
| Mauro Ferrari, PhD Independent Director | | | Age: 65 Director since: 2010 Serves on: •Science Committee (Co-Chair) •Audit Committee •Nomination Committee | Experience & Expertise Dr. Ferrari currently serves as Affiliate Professor of Pharmaceutics at the University of Washington in Seattle, Washington and as President, CEO, and Board Member of BrYet US, Inc., a biotech company, in Houston, Texas. He also serves as Chairman of the Board of BrYet Europe, a wholly-owned subsidiary of BrYet US, based in Italy. From 2010 to 2019, Dr. Ferrari served in several different capacities at the Houston Methodist Hospital, including President and CEO of The Houston Methodist Hospital Research Institute (TMHRI), Executive Vice President of Houston Methodist Hospital, and Senior Associate Dean of the hospital’s academic affiliate, Weill Cornell Medical College in New York. Dr. Ferrari is an internationally recognized expert in cancer therapeutics, nanomedicine and biomedical nanotechnology. His previous academic appointments include tenured professorships at his graduate Alma Mater UC Berkeley, The Ohio State University, as Professor and Chair of The Department of NanoMedicine and Biomedical Engineering at The University of Texas Health Science Center, Professor of Experimental Therapeutics at the MD Anderson Cancer Center, as Adjunct Professor of Bioengineering at Rice University, and as Adjunct Professor of Business at the University of Saint Thomas. From 2003 to 2005, Dr. Ferrari served as Special Expert on Nanotechnology and Eminent Scholar at The National Cancer Institute. He has received many National and International awards and recognitions. | | | Qualifications: Dr. Ferrari’s qualifications to serve on the Board include his extensive training and experience in the fields of nanotechnology, biotechnology and biomedical applications. Dr. Ferrari has significant technical training, several academic appointments, over 500 published articles, over 30 issued patents, and is the recipient of most prestigious academic awards in nanomedicine and drug delivery technology. Additionally, Dr. Ferrari has extensive experience in developmental stage organizations having founded several startup companies. |
Proposal One — Election of Directors
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Proposal One — Election of Directors
| Douglas Ingram Independent Director | | | Age: 62 Director since: New Nominee Other Public Company Boards: •Sarepta Therapeutics, Inc. •Relay Therapeutics, Inc. | Experience & Expertise Mr. Ingram has served as the President and Chief Executive Officer of Sarepta Therapeutics, Inc. (Nasdaq: SRPT), a biopharmaceutical company for rare diseases, since June,2017. Prior to joining Sarepta, Mr. Ingram served as a Chief Executive Officer, President and Director of Chase Pharmaceuticals Corporation, a clinical-stage biopharmaceutical company from December 2015 until November 2016. Prior to joining Chase Pharmaceuticals, Mr. Ingram served as the President of Allergan, Inc., a pharmaceutical company, from July 2013 until it was acquired by Actavis in early 2015. At Allergan, he also served as President, Europe, Africa and Middle East from August 2010 to June 2013, and Executive Vice President, Chief Administrative Officer, and Secretary from October 2006 to July 2010, where he led Allergan’s Global Legal Affairs, Compliance, Internal Audit and Internal Controls, Human Resources, Regulatory Affairs and Safety, and Global Corporate Affairs and Public Relations departments. Mr. Ingram also served as General Counsel of Allergan from January 2001 to June 2009 and as Secretary and Chief Ethics Officer from July 2001 to July 2010. With the acquisition of Allergan by Actavis, Mr. Ingram consulted as a special advisor to the Chief Executive Officer of Actavis. Mr. Ingram served as a director of Pacific Mutual Holding Company, a parent company for subsidiaries engaged in a variety of insurance, financial services and other investment-related businesses, from March 2015 to May 2018. Mr. Ingram received his J.D. from the University of Arizona and his Bachelor of Science degree from Arizona State University. | | | Qualifications: Mr. Ingram’s qualifications to serve on the Board include his deep understanding of the business through his role as President and Chief Executive Officer of Sarepta Therapeutics, Inc., which gives him an extensive understanding of our business and operations. Additionally, Mr. Ingram has extensive experience in business development, biotechnology, drug development, company-building and venture capital. |
Proposal One — Election of Directors
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Proposal One — Election of Directors
| Hongbo Lu Independent Director | | | Age: 54 Director since: 2024 Serves on: •Science Committee •Nomination Committee •Compensation Committee Other Public Company Boards: •Terns Pharmaceuticals, Inc. •Zenas Biopharma Inc | Experience & Expertise Hongbo Lu, Ph.D., has served as a member of our board of directors since March 2024. Dr. Lu is the founding member of NEXTBio Capital, a newly launched biotech investment firm. Dr. Lu has over 20 years of healthcare investment management experience in both public securities and private companies, including prior roles previously served as Managing Partner at Vivo Capital LLC (“Vivo Capital”), a Palo Alto-based investment firm, a position she has held since December 2020, Managing Partner at Lilly Asia Ventures (LAV), a venture capital firm, from January 2017 to December 2020, and Managing Director at OrbiMed Advisors. Over her investment career, Dr. Lu served on the boards of over 20 healthcare companies, including Turning Point Therapeutics, Crown Bioscience Inc (6554.TT), Avedro, Inc., Rgenta, Ronovo Surgical, Avistone, and BlossomHill Therapeutics Inc. Dr. Lu currently serves on the board of directors for, Terns Pharmaceuticals Inc. (Nasdaq: TERN), where she has served as director since 2020, Zenas BioPharma (Nasdaq: ZBIO), where she has served as director since 2022, Ribox Therapeutics, where she has served as director since 2021, Visirna Therapeutics, where she has served as director since 2021, and Createrna Science and Technology. Dr. Lu started her Wall Street career as a biotechanalyst at Piper Jaffray & Co. and was involved in biotech start-up Zyomyx in the San Francisco Bay Area previously. Dr. Lu earned a Ph.D. in Bioengineering from the University of Washington, an M.B.A. from the Haas School of Business at the University of California, Berkeley, and graduated with honors from Tsinghua University. | | | Qualifications: Dr. Lu’s qualifications to serve on the Board include her deep experience in international business and the pharmaceutical industry, her expertise with venture and capital markets, and her executive leadership experience. |
Proposal One — Election of Directors
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Proposal One — Election of Directors
| Adeoye Olukotun, MD, MPH Independent Director | | | Age: 80 Director since: 2020 Serves on: •Science Committee (Co-Chair) •Nomination Committee Other Public Company Boards: •Tonix Pharmaceuticals Holding Corp. | Experience & Expertise Dr. Olukotun is a Mayo Clinic trained cardiologist who has served as Chief Executive Officer of CR Strategies, LLC, which consults on clinical trial design and FDA strategy for pharmaceutical development, since 2001. Dr. Olukotun currently serves on the board of directors of Tonix Pharmaceuticals Holding Corp. (Nasdaq: TNXP), a clinical-stage biopharmaceuticals company. He served as CEO of Epigen Pharmaceuticals, Inc., a discovery phase biotechnology company, from 2014 to 2017, and Vice Board Chair of CardioVax, Inc., a clinical-stage biopharmaceutical company, from 2012 to 2016. He spent the first 20 years of his career in roles of increasing responsibility in clinical development, including multiple product approvals, at Pfizer, Bristol-Myers Squibb, and Mallinckrodt. He has over 35 years of experience in the pharmaceutical industry and has been instrumental in the approval and success of numerous cardiology and metabolic medicines, including the first daily beta blocker and the first approved ACE inhibitor, among others. Dr. Olukotun received his Medical Doctor degree from the Albert Einstein College of Medicine in New York, and a Masters in Public Health from Harvard University School of Public Health. | | | Qualifications Dr. Olukotun’s qualifications to serve on the Board include his extensive background in biopharmaceutical development, particularly in the cardiometabolic field, his scientific and public health expertise, and his board and executive leadership experience. |
Proposal One — Election of Directors
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Proposal One — Election of Directors
| Michael S. Perry, DVM, PhD Independent Director | | | Age: 65 Director since: 2011 Serves on: •Compensation Committee (Chair) •Nomination Committee • Science Committee | Experience and Expertise Dr. Perry is currently a Venture Partner with Bioscience Managers, a global venture capital firm. He also serves as Chairman and board member of 7 Hills Pharma, a private clinical stage pharmaceutical company. Dr. Perry was Chief Executive Officer of Avita Medical, Inc., a regenerative medicine company based in Valencia, CA (Nasdsaq: RCEL) from 2017 to 2022. From 2014 to 2017, he served as Chief Scientific Officer of Novartis' Cell and Gene Therapy Unit, and from 2012 to 2014 he served as Vice President and Global Head of Stem Cell Therapy for Novartis Pharmaceuticals Corp, the US affiliate of Switzerland-based Novartis AG, a global pharmaceutical company. Dr. Perry has also served as SVP and Global Head of R&D at Baxter Healthcare, President and as CEO of Cell & Gene Therapy at Novartis AG. Earlier in his career he served as VP Regulatory Affairs at Novartis, Sandoz Pharmaceuticals, and Syntex Corporation. He also served as Director of Regulatory Affairs at Schering-Plough Corporation. Dr. Perry also served as a Venture Partner with Bay City Capital, LLC for eight years. Dr. Perry has previously served as a board member for the following companies: Ampliphi Bioscience Corp, Gamida Cell Ltd, Targeted Genetics, Inc., American Xeno, Inc., BioTransplant, Inc., ltamar Biomedical Ltd, Systemix, Inc., Genetic Therapy, Inc., Extropy Pharmaceuticals, Inc, and Pharsight Corporation. Dr. Perry holds an Honors Bachelor of Science in Physics and Engineering and a PhD in Biomedical Pharmacology from the University of Guelph. He also holds a Doctor of Veterinary Medicine & Surgery from Ontario Veterinary College and is a graduate of the International Advanced Management Program at Harvard Business School. Dr. Perry currently serves as Adjunct Professor at the Gates Center for Regenerative Medicine at the University of Colorado Anschutz Medical Campus and as Faculty at Houston Methodist and Chair of the Translational Medicine Advisory Board of the Houston Methodist Research Institute. | | | Qualifications Dr. Perry’s qualifications to serve on the board include his medical expertise and his extensive experience in preclinical and clinical drug development, including executive level leadership roles and directorships in several publicly held biotech companies. |
Proposal One — Election of Directors
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Proposal One — Election of Directors
| Victoria Vakiener Independent Director | | | Age: 61 Director since: 2022 Serves on: •Nomination Committee (Chair) •Audit Committee Other Public Company Boards: •Chimerix, Inc. | Experience & Expertise Ms. Vakiener currently serves on the board of directors of Chimerix (Nasdaq: CMRX), a clinical-stage biopharmaceutical company. From November 2018 through September 2021, she served as Chief Commercial Officer of Epizyme, Inc., a biopharmaceutical company that was acquired in 2022, where she built the commercial organization and launched TAZVERIK for two indications within six months. Prior to joining Epizyme, Ms. Vakiener was an executive at Johnson & Johnson (NYSE: JNJ) for more than twenty years where she held positions of leadership with increasing responsibility across the company’s pharmaceutical and diagnostics businesses. Ms. Vakiener began her pharmaceutical career at Schering-Plough, where she spent nine years in both scientific and commercial roles. Ms. Vakiener received a BS in Biochemistry from Albright College. | | | Qualifications Ms. Vakiener’s qualifications to serve on the Board include her deep commercial experience and expertise, her scientific development experience, and her board and executive leadership experience. |
Proposal One — Election of Directors
| William Waddill Lead Independent Director | | | Age: 67 Director since: 2018 Serves on: •Audit Committee (Chair) • Compensation Committee •Nomination Committee Other Public Company Boards: •Protagonist Therapeutics, Inc. • Annexon Biosciences | Experience & Expertise Mr. Waddill began his career over 35 years ago in commercial banking and public accounting and has been in the biotechnology industry for over 30 years. He currently serves on the boards of Protagonist Therapeutics (Nasdaq: PTGX), Annexon Biosciences (Nasdaq: ANNX) and Turnstone Biologics (Nasdaq: TSBX), all clinical-stage biopharmaceutical companies. Mr. Waddill was Senior Vice President and CFO of Calithera Bioscience (Nasdaq: CALA), from 2014 to 2016 and Senior Vice President and CFO at OncoMed Pharmaceuticals from 2007 to 2014, both of which were public clinical-stage biopharmaceutical companies. Prior to that, he served as the Senior Vice President and CFO of Ilypsa, Inc., a biotechnology company that was acquired in 2007 by Amgen, Inc. Before joining Ilypsa, he served as the founder and principal at Square One Finance, a financial consulting business. Mr. Waddill received a BS in accounting from the University of Illinois, Chicago, and certification as a public accountant (inactive) after working at PriceWaterhouseCoopers and Deloitte in Boston. | | | Qualifications Mr. Waddill’s qualifications to serve on the Board include his extensive background in the biopharma industry, his financial and audit expertise, executive leadership roles and experience as a director of other public companies. |
Proposal One — Election of Directors
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Director Compensation
Director Compensation Directors who are also employees of the Company receive no separate compensation from the Company for their service as members of the Board. For 2024, the Company maintained the structure of director compensation it adopted in 2019 to provide a base retainer for each director with higher base retainers for service by the Board Chair and committee leadership. The average total compensation paid to the Company's non-executive directors for service in 2024 is at or below the 60th percentile of the total compensation paid to non-executive directors of its peer group as described later in this proxy statement. The Compensation Committee believes the structure aligns compensation according to the level of service contributions by each director. The fees payable to directors for service on the Board and for service on each committee of the Board on which the director serves are as follows:
Director Compensation
| Board of Directors: | 2023 Annual Retainer: | 2024 Annual Retainer: | | All non-employee directors | $80,000 | $80,000 | | Additional retainer for Non-Executive Chairman of the Board | $15,000 | $15,000 | | Audit Committee: | | | | Chairman | $5,000 | $5,000 | | Compensation Committee: | | | | Chairman | $5,000 | $5,000 |
Director Compensation
The following table sets forth the total compensation paid to our non-employee directors in fiscal 2024. Dr. Anzalone’s compensation is set forth in the discussion of Executive Compensation and in the Summary Compensation Table.
Director Compensation
| Name | Fee Earned or Paid in Cash ($) | Stock Awards ($) (1) (2) | Total ($) | | Douglass Given (3) | $95,000 | $380,833 | $475,833 | | Michael S. Perry | $80,000 | $380,833 | $460,833 | | Mauro Ferrari | $80,000 | $380,833 | $460,833 | | William Waddill | $90,000 | $380,833 | $470,833 | | Hongbo Lu (4)(5) | $43,333 | $761,666 | $804,999 | | Adeoye Olukotun | $80,000 | $380,833 | $460,833 | | Victoria Vakiener | $80,000 | $380,833 | $460,833 |
Director Compensation
(1)This column represents the total grant date fair value, computed in accordance with ASC 718, of RSUs granted during fiscal year 2024 to each director. The assumptions used to calculate the value of the stock underlying the RSU awards are set forth in Note 9 of the Notes to the Consolidated Financial Statements included with the Company’s Annual Report on Form 10-K. (2)The RSUs granted to non-employee directors vest one year from the date of grant, subject to continued service through the vesting date, with the exception of the RSUs granted to Dr. Lu in connection with her appointment to the Board, which vest in three equal installments on each anniversary of the date of grant , subject to continued service through each such vesting date. (3)Douglass Given retired from the Board effective as of December 31, 2024. (4)Dr. Lu joined the Board during fiscal year 2024 and her cash compensation was pro-rated for such fiscal year. (5)In connection with her appointment, Dr. Lu received a sign-on grant of restricted stock units valued at $761,666. As of the last day of fiscal year 2024, the directors held the following outstanding restricted stock unit (“RSU”) grants in the aggregate: Douglass Given — — 19,583; Michael S. Perry — 19,583; Mauro Ferrari —19,583; William Waddill — 19,583; Adeoye Olukotun — 19,583; Victoria Vakiener — 24,722; and Hongbo Lu — 24,080 RSUs. As of the last day of fiscal year 2024, the directors held the following outstanding option ("Options") grants in the aggregate: Douglass Given — 4,593; Michael S. Perry — 4,593; Mauro Ferrari —4,593; William Waddill — 4,593; Adeoye Olukotun — 4,593; Victoria Vakiener — 4,593 Options; and Hongbo Lu — 0.
Director Compensation
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2025 PROXY STATEMENT Director Compensation
2025 PROXY STATEMENT Director Compensation The nominees listed above receiving more “FOR” votes than “AGAINST” votes, assuming a quorum is present, will be elected as directors to serve until their terms expire or until their successors have been duly elected and qualified. Because directors are elected by a majority of votes cast, abstentions from voting and broker non-votes, if any, will be excluded from the vote and will have no effect on its outcome.
2025 PROXY STATEMENT Director Compensation
| | THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” EACH OF THE NOMINEES FOR DIRECTOR IN PROPOSAL ONE. |
2025 PROXY STATEMENT Director Compensation
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Executive Compensation Highlights
| WHAT WE DO | WHAT WE DON’T DO | | ✓ Maintain an Independent Compensation Committee. The Compensation Committee consists solely of independent directors. ✓ Retain an Independent Compensation Advisor. The Compensation Committee engaged its own compensation advisor to provide information and analysis with its fiscal 2024 compensation review, and other advice on executive compensation independent of management. This consultant performed no consulting or other services for us in fiscal 2024. ✓ Annual Executive Compensation Review. The Compensation Committee conducts an annual review and approval of our compensation strategy, including a review and determination of our compensation peer group and a review of our compensation-related risk profile to ensure that our compensation programs do not encourage excessive or inappropriate risk-taking. ✓ Compensation At-Risk. Our executive compensation program is designed so that a significant portion of compensation is “at risk” based on our performance, as well as short-term cash and long-term equity incentives to align the interests of our executive officers and stockholders. ✓ CEO Annual Incentive Compensation Cap. Our CEO’s annual cash incentive compensation opportunity is capped at 150% of his base salary. ✓ Stock Ownership Policy. We maintain a stock ownership policy that requires our CEO and CFO to maintain a minimum ownership level of our common stock. ✓ Compensation Recovery (“Clawback”) Policy. We maintain a clawback policy to allow Arrowhead to recover incentive compensation from our executive officers, on a non-fault basis, in the event a financial restatement is required to correct any accounting errors made by any such executive officer. ✓ Conduct an Annual Stockholder Advisory Vote on NEO Compensation. We conduct an annual stockholder advisory vote on the compensation of our NEOs. ✓ Use a Pay-for-Performance Philosophy. The majority of our CEO’s compensation is directly linked to achievement of milestones to the benefit of all stakeholders; we also structure target total direct compensation opportunities with a significant long-term equity component, thereby making a substantial portion of our CEO’s and each additional executive officer’s target total direct compensation dependent upon our stock price and/or total stockholder return. ✓ “Double Trigger” Feature for Acceleration of CEO Equity Awards — The outstanding equity awards granted to our CEO pursuant to our 2013 Incentive Plan and 2021 Incentive Plan provide that, upon a change in control of the Company, the vesting of such awards will accelerate only in the event of a subsequent involuntary termination of employment (a “double-trigger” arrangement). | ✘ No Executive Retirement Plans. We do not offer pension arrangements or retirement plans or arrangements to our executive officers that are different from or in addition to those offered to our other employees. ✘ No Perquisites. We do not provide perquisites or other personal benefits to our executive officers. ✘ No Special Welfare or Health Benefits. Our executive officers participate in broad-based Company-sponsored health and welfare benefits programs generally on the same basis as our other full-time, salaried employees. ✘ No Post-Employment Tax Payment Reimbursement. We do not provide any tax reimbursement payments (including “gross-ups”) on any severance or change-in-control payments or benefits. ✘ No Hedging and Limit on Pledging of Our Equity Securities. We prohibit our employees, executive officers and the non-employee members of our Board from hedging our equity securities. Our board members and executive officers may pledge up to 75% of owned and vested shares with the approval of our Board. ✘ No Dividends or Dividend Equivalents Payable on Unvested Equity Awards. We do not pay dividends or dividend equivalents on unvested RSU awards or PRSU awards. ✘ No Stock Option Re-pricing. Our employee stock plan does not permit options to purchase shares of our common stock to be repriced to a lower exercise or strike price without the approval of our stockholders. |
Executive Compensation Program Design
Executive Compensation Program Design Our practice is to combine a mixture of compensation elements that balance achievement of our short-term goals with our longer-term performance. Currently, our executive compensation program consists of three principal elements: •base salary; •an annual cash incentive compensation opportunity; and •long-term incentive compensation in the form of equity awards. We believe that cash compensation in the form of base salary and an annual incentive compensation opportunity provides our executive officers with short-term rewards for success in operations, and that long-term incentive compensation in the form of RSU and PRSU awards that may be settled for shares of our common stock, and options to purchase shares of our common stock, align the objectives of our executive officers with those of our stockholders with respect to long-term performance and success. The Compensation Committee takes into consideration, among other things, our financial and working capital condition when approving performance objectives and making compensation decisions for our executive officers. Since we seek to invest our cash prudently and do not have marketed products, overall target total direct compensation opportunities are weighted more heavily toward long-term incentive compensation in the form of equity awards. Thus, a significant portion of each executive officer’s target total direct compensation opportunity is “at risk,” and dependent on the increase in the value of our common stock. The Compensation Committee periodically reassesses the appropriate weighting of cash and equity compensation. In the case of long-term incentive compensation, typically the Compensation Committee designs these awards to vest, or be earned, over a multi-year period, meaning that long-term value creation, contrasted with short-term gain, presents the best opportunity for our executive officers to benefit from their awards. We do not maintain a specific policy on the percentage allocation between short-term and long-term incentive compensation elements.
Governance of Executive Compensation Program
Governance of Executive Compensation Program Role of the Compensation Committee The Compensation Committee discharges many of the responsibilities of our Board relating to the compensation of our executive officers, including our NEOs, and the non-employee members of our Board. The Compensation Committee has overall responsibility for overseeing our compensation and benefits philosophy and policies generally, overseeing and evaluating the compensation plans, policies and practices applicable to our CEO and our other executive officers, and ensuring that the target total direct compensation opportunities of our executive officers, including our NEOs, are consistent with our compensation philosophy, policies and objectives. The members of the Compensation Committee are appointed by our Board, and each member is an independent director (as “independence” is currently defined in Rule 5605(a)(2) of Nasdaq listing standards). Currently, the members of the Compensation Committee are Michael Perry (Committee Chair), Hongbo Lu, and William Waddill . The Compensation Committee reviews our executive compensation program annually on a calendar year basis, generally in December. The Compensation Committee draws on a number of resources to assist in the evaluation of the various elements of our executive compensation program including, but not limited to, feedback from our stockholders, input from our CEO, the advice of an external compensation consultant (as identified below) retained by the Compensation Committee, information provided in the public filings of industry peers and industry data compiled yearly by Radford in its Global Life Sciences Survey, which represents a nationally-based assessment of executive compensation widely used within the pharmaceutical and biotechnology industry sectors. The Compensation Committee relies upon the judgment of its members in making compensation decisions. In addition, the Compensation Committee incorporates its members' judgment in the assessment process to respond to and adjust for the evolving business environment. The members of the Compensation Committee have extensive experience in executive management, as well as compensation practices and policies. Compensation-Setting Process The Compensation Committee develops recommendations for the target total direct compensation opportunities for our executive officers, including our NEOs. The Compensation Committee does not use a single method or measure in making its compensation decisions, nor does it ordinarily position compensation levels based upon a specific or target level relative to a compensation peer group or other companies. Nonetheless, the pay practices at other companies are an important factor that the Compensation Committee considers in assessing the reasonableness of compensation and ensuring that our compensation practices are competitive in the marketplace. Generally, the Compensation Committee evaluates the compensation of our executive officers relative to the median of the competitive market. However, as discussed hereafter, various other factors are taken into consideration in determining our executive officers’ compensation and the Compensation Committee does not target compensation at any specific level relative to the competitive market. When reviewing our current executive compensation arrangements and approving each compensation element and the target total direct compensation opportunity for our executive officers, the Compensation Committee considers the following factors: •Our performance against the financial and operational objectives established by the Compensation Committee and our Board; •Each individual executive officer’s skills, experience and qualifications relative to other similarly-situated executives at the companies in our compensation peer group and in selected broad-based compensation surveys; •The scope of each executive officer’s role compared to other similarly-situated executives at the companies in our compensation peer group and in selected broad-based compensation surveys; •The performance of each individual executive officer, based on a subjective assessment of his or her contributions to our overall performance, ability to lead his or her business unit or function and work as part of a team, all of which reflect our core values; •The compensation practices of our compensation peer group and the companies in selected broad-based compensation surveys and the positioning of each executive officer’s compensation in a ranking of peer company compensation levels; and
Governance of Executive Compensation Program
•The recommendations provided by our CEO with respect to the compensation of our other executive officers. These factors provide the framework for compensation decision-making and final decisions regarding the compensation opportunity for each executive officer. No single factor is determinative in setting pay levels, nor was the impact of any factor on the determination of pay levels quantifiable. Role of Chief Executive Officer In discharging its responsibilities, the Compensation Committee works with members of our management, including our CEO. Our management assists the Compensation Committee by providing information on corporate and individual performance, market compensation data and management’s perspective on compensation matters. The Compensation Committee solicits and reviews our CEO’s recommendations with respect to the compensation levels for individual executive officers other than himself based on his performance evaluation of each executive officer. The Compensation Committee reviews and discusses these recommendations and proposals with our CEO and considers them as one factor in determining the compensation for our executive officers, including our other NEOs. Our CEO recuses himself from all discussions and recommendations regarding his own compensation. Role of Compensation Consultant The Compensation Committee engages an external compensation consultant to assist it by providing information, analysis and other advice relating to our executive compensation program and the decisions resulting from its annual executive compensation review. The Compensation Committee has the final authority to engage and terminate the engagement of any compensation consultant that it retains. Since October 2018, the Compensation Committee has engaged Compensia as its external compensation consultant. Compensia assisted the Compensation Committee in its review of executive officer and non-employee director compensation practices for fiscal 2024, including the competitiveness of compensation levels, executive compensation design, comparisons with our industry peers, and other technical considerations. Such assistance included: •Reviewing and updating our compensation peer group; •Reviewing and analyzing the compensation arrangements for our executive officers, including our NEOs; •Reviewing and analyzing the compensation arrangements for the non-employee members of our Board; •Reviewing and updating of the Compensation Discussion and Analysis section of our proxy statement for our 2025 Annual Meeting of Stockholders; and •Supporting on other ad hoc matters. The terms of Compensia’s engagement include reporting directly to the Compensation Committee and to the Compensation Committee Chair. In fiscal 2024, Compensia did not provide any services to us other than those described above. The Compensation Committee has evaluated Compensia’s independence pursuant to the listing standards of Nasdaq and the relevant SEC rules and has determined that no conflict of interest has arisen as a result of the work performed by Compensia. Competitive Positioning For each of the past ten years, the Compensation Committee has directed its external compensation consultant to conduct a comparative study and report on compensation levels and practices relative to industry peers, including a competitive assessment of our executive compensation program as compared to the market data for base salaries, target total cash compensation, long-term incentive compensation and target total direct compensation. Typically, the findings of this study are presented to the Compensation Committee by the compensation consultant in conjunction with the Compensation Committee’s annual review of our executive compensation program. Because the biotechnology sector is dynamic, the comparator group used by the Compensation Committee to assess the competitive positioning of the compensation of our executive officers is updated annually to ensure that peer companies continue to meet the established criteria. For purposes of its review of our executive compensation
Governance of Executive Compensation Program
program in fiscal 2024, the Compensation Committee directed Compensia to update the compensation peer group reflecting the competitive market for executive talent based on the following criteria: •Publicly-held, U.S. biotechnology companies; •Companies with lead assets that are in mid to late clinical stage or early commercialization stage; •Companies with market capitalizations between 0.25x to 4.0x our market capitalization at the time of the peer selection; and •Companies with between 92 to 1,311 employees. The compensation peer group was selected in such a manner that our market capitalization was very near the median for all peer companies. Consideration was also given to the frequency or infrequency with which a company was identified as a peer with other peer companies. For fiscal 2024, the compensation peer group was generated in the first quarter of fiscal 2024 and consisted of the following companies:
Governance of Executive Compensation Program
BioCryst Pharmaceuticals, Deciphera Pharmaceuticals, Ironwood Pharmaceuticals, and Madrigal Pharmaceuticals were added to the compensation peer group and Chemo Centryx, FibroGen, Novavax, amd Reata Pharmaceuticals were removed from the compensation peer group due to changes in our business complexity, employee base and market capitalization, as well as mergers, changes to business complexity, employee base and market capitalization among our prior peer group. The compensation study prepared by Compensia and presented in October 2023 provided an assessment of our compensation practices as compared to industry peers. Compensation levels for our executive officers, in the aggregate, were determined to be within the range of compensation provided to similarly placed executives and consistent with our compensation philosophy.
Individual Compensation Elements
Individual Compensation Elements In 2024, the principal elements of our executive compensation program were as follows: •base salary; •an annual cash incentive compensation opportunity; •long-term incentive compensation in the form of equity awards; •welfare and health benefits; and •post-employment compensation arrangements. Base Salary Base salary represents the fixed portion of the compensation of our executive officers, including our NEOs, and is an important element of compensation intended to attract and retain highly-talented individuals.
Individual Compensation Elements
(1) Dr. San Martin left the Company on February 1, 2024. (2) Ms. Oliver served as the Company's Chief Commercial Officer until October 2024. The actual base salaries paid to our NEOs in fiscal 2024 are set forth in the “Fiscal 2024 Summary Compensation Table” below. Annual Cash Incentive Compensation We provide our executive officers, including our NEOs, with the opportunity to earn performance-based annual incentive awards, payable in cash, which are designed to reward them for our overall corporate performance as well as their individual performance. Generally, our executive officers are evaluated each year for eligibility to receive an annual cash incentive compensation opportunity. Through a collaborative planning process involving our Board and management, corporate performance objectives are established at the beginning of each year and evaluated regularly by our Board for their continued relevance to our status. Target Annual Cash Incentive Award Opportunities For purposes of the fiscal 2024 performance-based incentive awards, each of our NEOs was assigned a target annual cash incentive award opportunity based upon a percentage of his or her base salary. The target annual cash incentive award opportunities for our executive officers, including our NEOs, were recommended by our CEO (except with respect to his own target annual cash incentive award opportunity) based on each executive officer’s accountability, scope of responsibilities, and potential impact on our performance, and approved by the Compensation Committee. The determination of target annual cash incentive award opportunities was also based on the factors described in “Governance of Executive Compensation Program — Compensation-Setting Process” above. Our NEOs' target annual cash incentive award opportunities did not change from fiscal 2023.
Individual Compensation Elements
| Named Executive Officer | Fiscal 2024 Target Annual Incentive Award Opportunity (as a percentage of base salary) | Fiscal 2023 Target Annual Incentive Award Opportunity (as a percentage of base salary) | | Dr. Anzalone (1) | 100% | 100% | | Mr. Myszkowski | 45% | 45% | | Mr. O’Brien | 45% | 45% | | Dr. Hamilton | 45% | 45% | | Dr. San Martin | 45% | 45% | | Ms. Oliver | 40% | 40% |
Individual Compensation Elements
(1) Dr. Anzalone' annual cash incentive compensation opportunity is capped at 150% of his base salary. Performance Objectives In determining the amount of the annual cash incentive award for each of our executive officers, including each of our NEOs, the Compensation Committee evaluated the corporate performance objectives that had been established at the beginning of the calendar year (as set forth below) as well as other corporate and individual achievements and performance throughout the year. These performance objectives addressed milestones for our lead products, research and development milestones for our drug pipeline and business development objectives. In December 2024, the Compensation Committee determined our performance against our primary business objectives set for calendar 2024, as described below.
Individual Compensation Elements
| Goal | Achievement Highlights | | Corporate/ Business Development - Weight: 40% Meet certain goals related to business development, capitalization, long-term financial planning, preparation for commercialization, and utilization of recent capital improvements | Met Substantial business development transaction leading to significant recapitalization. Manufacturing supply commitments, utilizing our Verona manufacturing facility, for commercial product. Fully deployed a medical affairs field force and other commercially oriented operations. | | Clinical Development and Regulatory Affairs - Weight: 40% Meet certain goals relating to Phase 3 studies in our clinical Cardiometabolic programs. | Met Launched three Phase 3 studies for plozasiran. Established an Early Access Program for plozasiran in patients with FCS. Submitted a New Drug Application with the U.S. Food and Drug Administration | | Discovery and Early Development - Weight: 20% Meet certain goals with regard to progress on our pre-clinical and early clinical programs | Met. Achieved clinical milestone timelines for seven Phase 1 clinical assets Filed three new clinical trial applications Nominated six new drug candidates |
Individual Compensation Elements
Annual Incentive Award Payments The actual annual cash incentive award payments earned by our incumbent NEOs totaled 127% of the respective target award opportunities. Except for the annual incentive award for our CEO, these awards were recommended by our CEO and approved by the Compensation Committee based on the overall achievement of our goals, their contributions to the goals and the overall performance of each executive officer during the year. The following table sets forth the target annual cash incentive award opportunities, the target award expressed as a percentage of each
Individual Compensation Elements
| Named Executive Officer | Target Annual Incentive Award Opportunity (as a percentage of base salary) | Achievement target bonus | Actual Annual Incentive Award ($) | | Dr. Anzalone (1) | 100% | 120% | $1,152,000 | | Mr. Myszkowski | 45% | 120% | $314,496 | | Mr. O’Brien | 45% | 140% | $378,000 | | Dr. Hamilton | 45% | 120% | $314,496 | | Dr. San Martin (2) | 45% | —% | $— | | Ms. Tracie Oliver (3) | 40% | —% | $— |
Individual Compensation Elements
(1) Dr. Anzalone received an initial bonus of $960,000, which was paid in December 2024 and an additional bonus of $192,000 which will be paid upon receipt of Hart Scott Rodino clearance of the Sarepta transaction. (2) Dr. San Martin left the Company on February 1, 2024 and did not receive an annual incentive award. (3) Ms. Oliver served as the Company's Chief Commercial Officer until October 2024 and did not receive an annual incentive award. The annual cash incentive award payments made to our NEOs for fiscal 2024 are set forth in the “Fiscal 2024 Summary Compensation Table” below. Long-Term Incentive Compensation We view long-term incentive compensation in the form of equity awards as a critical element of our executive compensation program. The realizable value of these equity awards over time bears a direct relationship to our stock price, and, therefore, these awards are an incentive for our executive officers, including our NEOs, to create value for our stockholders. Equity awards also help us retain qualified executive officers in a competitive market. Long-term incentive compensation opportunities in the form of equity awards are granted to our executive officers by the Compensation Committee. The amount and forms of such equity awards are determined by the Compensation Committee after considering the factors described in “Governance of Executive Compensation Program — Compensation-Setting Process” above. 2024 Long-Term Incentive Awards Performance-Based RSU Award for Chief Executive Officer Annual equity awards granted to our executive officers are solely in the form of RSU awards that may be settled for shares of our common stock. Our CEO's fiscal 2024 award was designed entirely as a performance-based award consisting of 340,000 PRSUs that will only vest upon the completion of a single performance trigger of a cash inflow to the Company of $1 billion by June 30, 2025. The CEO's fiscal 2024 award was also designed with the intention that the Compensation Committee would not certify performance prior to December 21, 2024 ,without good reasons, in accordance with the Company's 2021 Incentive Compensation Plan. Results from PRSU Awards Previously Granted In fiscal 2024, the Compensation Committee certified achievement of the performance milestones relating to the following PRSU awards:
Individual Compensation Elements
RSU Awards for Other Named Executive Officers The Compensation Committee approved the following aggregate RSU awards for our other NEOs for 2024:
Individual Compensation Elements
| Named Executive Officer | Restricted Stock Unit Awards (number of shares) | Restricted Stock Unit Awards ($) | | Mr. Myszkowski | 75,000 | $2,589,750 | | Mr. O’Brien | 85,000 | $2,935,050 | | Dr. Hamilton | 75,000 | $2,589,750 | | Dr. San Martin | 75,000 | $2,589,750 | | Ms. Tracie Oliver | 75,000 | $2,589,750 |
Individual Compensation Elements
RSUs granted to our NEOs in fiscal 2024 vest over four years in equal annual installments, subject to the NEO’s continued employment on each applicable vesting date. Dr. San Martin and Ms. Oliver forfeited their fiscal 2024 equity awards upon their respective departures. The equity awards granted to our NEOs in fiscal 2024 are set forth in the “Fiscal 2024 Summary Compensation Table” and the “Fiscal 2024 Grants of Plan-Based Awards Table” below. Welfare and Health Benefits Our executive officers, including our NEOs, are eligible to participate in all of our employee benefit plans, including medical, dental, vision, life and disability insurance, in each case on the same basis as our other employees, subject to applicable law. In addition, we provide an additional life insurance benefit to our CEO for the benefit of his heirs. We also provide vacation and other paid holidays to all our employees, including our executive officers, all of which we believe to be comparable to those provided the companies in our compensation peer group. These benefit programs are designed to enable us to attract and retain our workforce in a competitive marketplace. Our health, welfare and vacation benefits are designed to ensure that we have a productive and focused workforce through reliable and competitive health and other benefits. Our retirement savings plan (“401(k) plan”) is a tax-qualified retirement savings plan, pursuant to which qualified employees, including our NEOs, are able to contribute certain amounts of their annual compensation, subject to limits prescribed by the Internal Revenue Service. Historically, we have made matching contributions of 100% of the first 3% of base salary and of 50% of the next 2% of base salary contributed to the plan. The value of these benefits for each of our NEOs is reflected in the “All Other Compensation” column of the “Fiscal 2024 Summary Compensation Table” below. Perquisites and Other Personal Benefits Currently, we do not view perquisites or other personal benefits as a significant component of our executive compensation program. Accordingly, we do not provide significant perquisites or other personal benefits to our executive officers, including our NEOs, except as generally made available to our employees, or in situations where we believe it is appropriate to assist an individual in the performance of his or her duties, to make our executive officers more efficient and effective and for recruitment and retention purposes. In the future, we may provide perquisites or other personal benefits in limited circumstances, such as those described in the preceding paragraph. All future practices with respect to perquisites or other personal benefits will be approved and subject to periodic review by the Compensation Committee.
Other Compensation Policies and Practices
Other Compensation Policies and Practices Equity Awards Grant Policy We do not have any program, plan, or obligation that requires us to grant equity awards on specified dates, although historically we have granted such awards to our existing executive officers and employees at least annually and to newly-hired employees upon the commencement of their employment. We do not have any program, plan or practice to grant equity awards of our common stock to our executive officers in coordination with the release of material nonpublic information. Equity awards may occasionally be granted following a significant change in job responsibilities or to meet other special retention or performance objectives. Authority to grant equity awards to our employees rests with the Compensation Committee, although the Compensation Committee has delegated authority to our CEO to grant equity awards to non-executive employees within prescribed limits set by the Compensation Committee. With respect to our executive officers, except for our CEO, recommendations for equity awards are made by our CEO and reviewed and approved by the Compensation Committee. Under the terms of our 2021 Incentive Plan, pursuant to which new equity awards are granted, the exercise price of any option to purchase shares of our common stock awarded under the plan must be equal to at least 100% of the
Fiscal 2024 Summary Compensation Table
Fiscal 2024 Summary Compensation Table The following table summarizes compensation earned for services rendered during fiscal 2024, 2023, and 2022 by our Chief Executive Officer, our Chief Financial Officer, our Chief Operating Officer and General Counsel, our Chief of Discovery and Translational Medicine, and our former Chief Medical Officer and former Chief Commercial Officer, collectively our “Named Executive Officers”:
Fiscal 2024 Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Bonus (S) | Stock Awards (1) ($) | Non-Equity Incentive Plan Compensation (2) ($) | All Other Compensation (3) ($) | Total ($) | | Christopher Anzalone | 2024 | 951,012 | — | 10,319,000(4) | 1,152,000 | 1,461 | 12,423,473 | | President and Chief Executive Officer | 2023 | 902,522 | — | 8,314,056(5) | 700,000 | 1,515 | 9,918,093 | | | 2022 | 863,417 | — | 10,382,549(7) | 783,315(6) | 2,688 | 12,031,969 | | Kenneth Myszkowski | 2024 | 592,369 | — | 2,589,750 | 314,496 | 15,761 | 3,512,376 | | Chief Financial Officer | 2023 | 568,128 | — | 2,284,800 | 252,000 | 14,215 | 3,119,143 | | | 2022 | 509,648 | — | 3,978,000 | 238,106 | 13,798 | 4,739,552 | | Patrick O’Brien | 2024 | 605,259 | — | 2,935,050 | 378,000 | 15,261 | 3,933,570 | | Chief Operating Officer and General Counsel | 2023 | 568,422 | — | 2,475,200 | 252,000 | 14,715 | 3,310,337 | | | 2022 | 500,466 | — | 3,978,000 | 235,599 | 13,798 | 4,727,863 | | James Hamilton | 2024 | 567,937 | — | 2,589,750 | 314,496 | 15,261 | 3,487,444 | | Chief of Discovery and Translational Medicine | 2023 | 511,178 | — | 2,284,800 | 236,250 | 14,715 | 3,046,943 | | | 2022 | 450,436 | — | 3,646,500 | 212,580 | 13,798 | 4,323,314 | | Javier San Martin (8) | 2024 | 260,529 | — | 2,589,750 | — | 606,285 | 3,456,564 | | Former Chief Medical Officer | 2023 | 544,467 | — | 2,284,800 | 252,000 | 14,715 | 3,095,982 | | | 2022 | 479,170 | — | — | 225,574 | — | 704,744 | | Tracie Oliver (8) | 2024 | 484,065 | — | 2,589,750 | — | 2,965 | 3,076,780 | | Former Chief Commercial Officer | 2023 | 647,261 | — | 19,040 | 188,000 | 19,521 | 873,822 | | | 2022 | 111,154 | 16,344 | 2,517,200 | 94,874 | 4,899 | 2,744,471 |
Fiscal 2024 Summary Compensation Table
(1)This column represents the total grant date fair value, computed in accordance with ASC 718, of RSUs granted during fiscal years 2024, 2023 and 2022. The assumptions used to calculate the value of the stock underlying the RSU awards are set forth in Note 9 of the Notes to the Consolidated Financial Statements included with the Company’s Annual Report on Form 10-K. (2)These bonus amounts represent the amounts earned for performance under the Company’s Annual Bonus Incentive Plan during calendar years 2024, 2023 and 2022 and paid in fiscal years 2025, 2024 and 2023, respectively. The Annual Bonuses are described in more detail in the “Bonus Incentive” section. (3)Amounts consist of 401(k) matching contribution, as well as life insurance premiums for the benefit of each executive officer.
Fiscal 2024 Summary Compensation Table
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Fiscal 2024 Summary Compensation Table
(4)The amount reported for Christopher Anzalone in the Stock Awards column includes the grant date fair value of a fiscal 2024 RSU award that is subject to vesting upon the achievement of a specific performance condition. We determined the performance condition was 100% probable of being achieved as of the grant date, as defined under applicable accounting guidance, and assigned a grant date fair value of $10,319,000 based on this evaluation. The amount reported in the Summary Compensation Table for this award may not represent the amount that Christopher Anzalone will realize from the award. Whether, and to what extent, an NEO realizes the value will depend on our actual operating performance, stock price fluctuations and the NEO’s continued employment. (5)The amount reported for Christopher Anzalone in the Stock Awards column includes the grant date fair value of a fiscal 2023 RSU award that is subject to vesting upon the achievement of specific performance conditions. We determined the performance conditions that were probable and not probable of being achieved as of the grant date, as defined under applicable accounting guidance, and assigned a grant date fair value of $4,625,270 based on this evaluation. If we had determined that as of the date of the grant it was probable that 100% of the performance conditions would be achieved, we would have assigned a grant date fair value of $8,314,056 for the performance-based RSUs. The amount reported in the Summary Compensation Table for this award may not represent the amount that Christopher Anzalone will realize from the award. Whether, and to what extent, an NEO realizes the value will depend on our actual operating performance, stock price fluctuations and the NEO’s continued employment. (6)Dr. Anzalone's Fiscal Year 2022 bonus, totaling $783,315, was paid as $200,000 cash and the remaining balance as immediately vested Arrowhead stock. (7)In July of 2022, our CEO’s fiscal 2022 compensation was revised by reducing his equity award and re-formulating the equity award to consist 60% of performance-based RSUs and 40% of time-based RSUs. The CEO's Stock Awards are described in more detail in the "Our CEO’s Fiscal 2022 Equity Award" section in our 2023 proxy statement. The amounts reported for Christopher Anzalone in the Stock Awards column reflect the grant date fair value of a July 2022 RSU award that is subject to vesting upon the achievement of specific performance conditions, as described in the Compensation Discussion and Analysis section in our 2023 proxy statement. We determined the performance conditions that were probable and not probable of being achieved as of the grant date, as defined under applicable accounting guidance, and assigned a grant date fair value of $6,229,538 based on this evaluation. The amounts reported in the Summary Compensation Table for these awards may not represent the amounts that Christopher Anzalone will realize from the awards. Whether, and to what extent, an NEO realizes value will depend on our actual operating performance, stock price fluctuations and the NEO’s continued employment. (8)Dr. San Martin left the Company on February 1, 2024 and Ms. Oliver served as the Company's Chief Commercial Officer until October 2024.
Fiscal 2024 Summary Compensation Table
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Fiscal 2024 Grants of Plan Based Awards Table
Fiscal 2024 Grants of Plan Based Awards Table The following table sets forth cash bonus and equity grants made to the NEOs in fiscal 2024:
Fiscal 2024 Grants of Plan Based Awards Table
| | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | | Estimated Future Payouts Under Equity Incentive Plan Awards (2) | All Other Stock Awards: Number of Shares of Stock or Units (#) (3) | Grant Date Fair Value | | Name | Grant Date | Target ($) | Maximum ($) | Target (#) | | | | Christopher Anzalone | | | | | | | | Cash Bonus | | $960,000 | $1,440,000 | — | — | — | | PRSUs | 12/22/2023 | — | | 340,000 | — | $10,319,000 | | Kenneth Myszkowski | | | | | | | | Cash Bonus | | $262,080 | | — | — | — | | RSUs | 01/04/2024 | — | | — | 75,000 | $2,589,750 | | Patrick O’Brien | | | | | | | | Cash Bonus | | $270,000 | | — | — | — | | RSUs | 01/04/2024 | — | | — | 85,000 | $2,935,050 | | James Hamilton | | | | | | | | Cash Bonus | | $262,080 | | — | — | — | | RSUs | 01/04/2024 | — | | — | 75,000 | $2,589,750 | | Javier San Martin (4) | | | | | | | | Cash Bonus | | $262,080 | | — | — | — | | RSUs | 01/04/2024 | — | | — | 75,000 | 2,589,750 | | Tracie Oliver (4) | | | | | | | | Cash Bonus | | $195,552 | | — | — | — | | RSUs | 01/04/2024 | — | | — | 75,000 | $2,589,750 |
Fiscal 2024 Grants of Plan Based Awards Table
(1)Amounts listed represent cash award targets for our NEOs in fiscal 2024. Actual payments were made in fiscal 2025 and the amounts are reported in the Summary Compensation Table above. There are no thresholds or maximum levels applicable under our annual cash incentive awards except with respect to Dr. Anzalone, whose target opportunity is capped at 150%. (2)These PRSUs are described above in the “Compensation Discussion and Analysis” under the heading “Equity Compensation”. (3)RSUs granted in fiscal 2024 vest in four equal annual installments beginning 1 year from the grant date. (4)Dr. San Martin and Ms. Oliver forfeited their fiscal 2024 equity awards upon their respective departures.
Fiscal 2024 Grants of Plan Based Awards Table
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Fiscal 2024 Outstanding Equity Awards at Fiscal Year End Table
Fiscal 2024 Outstanding Equity Awards at Fiscal Year End Table The following table provides information, with respect to the NEOs, concerning the outstanding equity awards covering shares of the Company’s common stock as of September 30, 2024.
Fiscal 2024 Outstanding Equity Awards at Fiscal Year End Table
| | | Stock Awards | | | | | | Name | Grant Date | Number of Shares or Units of Stock That Have Not Vested (#) (1) | Market Value of Shares or Units of Stock That Have Not Vested ($) (2) | Equity Incentive Plan Awards: Number of Unearned Shares or Units of Stock That Have Not Vested (#) (3) | | Equity Incentive Plan Awards: Market Value of Unearned Shares or Units of Stock That Have Not Vested ($) (2) | | Christopher Anzalone | 01/01/2020 | — | — | 700,000 | | 13,559,000 | | | 01/01/2021 | — | — | 800,000 | | 15,496,000 | | | 07/08/2022 | 49,761 | 963,871 | 149,282 | | 2,891,592 | | | 12/20/2022 | 70,208 | 1,359,929 | 93,610 | | 1,813,226 | | | 12/22/2023 | — | — | 340,000 | | 6,585,800 | | Kenneth Myszkowski | 01/01/2021 | 15,000 | 290,550 | — | | — | | | 01/01/2022 | 30,000 | 581,100 | — | | — | | | 01/04/2023 | 45,000 | 871,650 | — | | — | | | 01/04/2024 | 75,000 | 1,452,750 | — | | — | | Patrick O’Brien | 01/01/2021 | 15,000 | 290,550 | — | | — | | | 01/01/2022 | 30,000 | 581,100 | — | | — | | | 01/04/2023 | 48,750 | 944,288 | — | | — | | | 01/04/2024 | 85,000 | 1,646,450 | — | | — | | James Hamilton | 01/01/2021 | 12,500 | 242,125 | — | | — | | | 01/01/2022 | 27,500 | 532,675 | — | | — | | | 01/04/2023 | 45,000 | 871,650 | — | | — | | | 01/04/2024 | 75,000 | 1,452,750 | — | | — | | Javier San Martin | 01/04/2024 | — | — | — | | — | | Tracie Oliver | 07/01/2022 | 35,000 | 677,950 | — | — | — | | | 01/04/2023 | 375 | 7,264 | — | — | — | | | 01/04/2024 | 75,000 | 1,452,750 | — | — | — |
Fiscal 2024 Outstanding Equity Awards at Fiscal Year End Table
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Fiscal 2024 Outstanding Equity Awards at Fiscal Year End Table
(1)RSUs have various vesting parameters but generally vest in four equal annual installments beginning one year from the grant date. (2)Value is based on our Company’s Common Stock closing price of $19.37 on September 30, 2024. (3)The amounts reported for Christopher Anzalone in this column reflect the January 2020, January 2021, July 2022, December 2022, and December 2023 awards that contain performance-based vesting conditions. These awards and their vesting conditions are described above in the “Compensation Discussion and Analysis” under the heading “Equity Compensation" in this year’s proxy statement and in prior proxy statements, as applicable.
Fiscal 2024 Outstanding Equity Awards at Fiscal Year End Table
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Fiscal 2024 Options Exercises and Stock Vested Table
Fiscal 2024 Options Exercises and Stock Vested Table The following table provides information, with respect to the NEOs, concerning options exercised or RSUs or PRSUs vested during fiscal 2024.
Fiscal 2024 Options Exercises and Stock Vested Table
| | Option Awards | | | | Stock Awards | | | Name | Number of Shares Acquired on Exercise | | Value Realized on Exercise (1) | | Number of Shares Acquired on Vesting | Value Realized on Vesting (2) | | Christopher Anzalone | 57,499 | | $1,024,000 | | 95,087 | $2,603,325 | | Kenneth Myszkowski | — | | — | | 66,250 | $2,212,813 | | Patrick O’Brien | — | | — | | 63,750 | $2,139,688 | | James Hamilton | — | | — | | 52,500 | $1,773,225 | | Javier San Martin | — | — | — | — | 52,500 | 1,570,200 | | Tracie Oliver | — | | — | | 17,625 | $460,191 |
Fiscal 2024 Options Exercises and Stock Vested Table
(1)Value is calculated as the price of our Common Stock upon exercise, less the exercise price, multiplied by the number of shares exercised. (2)Value is calculated as the price of our Common Stock upon vesting, multiplied by the number of shares vested.
Termination Benefits — Potential Payments Upon Termination or Change in Control
Termination Benefits — Potential Payments Upon Termination or Change in Control The Company has the following severance or change of control arrangements with its NEOs: Dr. Anzalone’s employment agreement with the Company provides that, if the Company terminates Dr. Anzalone’s employment without Cause or if Dr. Anzalone terminates his employment for Good Reason, on his date of termination, Dr. Anzalone will receive a one-time lump sum payment equal to the sum of: (i) one month of base salary and (ii) premiums for thirty (30) days of medical and dental benefits. To receive such payments Dr. Anzalone is required to execute a general release in favor of the Company. For purposes of Dr. Anzalone’s employment agreement: “Cause” means (i) the conviction (by trial or upon a plea of nolo contendere) of a felony or other crime involving moral turpitude or the commission of any other material act or omission involving dishonesty, disloyalty or fraud with respect to the Company or any of its subsidiaries or any of their customers or suppliers, (ii) reporting to work under the influence of alcohol or illegal drugs, the use of illegal drugs (whether or not at the workplace) or other repeated conduct causing the Company or any of its subsidiaries substantial public disgrace or disrepute or economic harm, (iii) the engaging of gross misconduct and the failure to cease such conduct and rectify any harm to the Company resulting therefrom within 30 days after written demand therefor by the Company identifying with reasonable particularity such conduct and harm, or (iv) any other material breach by Dr. Anzalone of his employment agreement and the failure to cease such breach and rectify any harm to the Company within 30 days after written demand by the Company identifying with reasonable particularity such breach and harm; and “Good Reason” means (i) Dr. Anzalone’s duties, responsibilities, titles or offices are diminished as compared to those described in his employment agreement without his written consent, and the Company fails to reinstate such duties, responsibilities, titles or offices within 30 days after written demand by Dr. Anzalone
Termination Benefits — Potential Payments Upon Termination or Change in Control
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Termination Benefits — Potential Payments Upon Termination or Change in Control
identifying with reasonable particularity the diminishment, (ii) the relocation of Dr. Anzalone’s base office to an office that is more than thirty (30) highway miles from Pasadena, CA, (iii) the failure of the Company to obtain a satisfactory agreement from any successor to assume and agree to perform the obligations under the employment agreement and (iv) any other material breach of Dr. Anzalone’s employment agreement by the Company and the failure to cease such breach and rectify any harm to Dr. Anzalone resulting within 30 days after written demand by Dr. Anzalone identifying with reasonable particularity the breach and harm. Pursuant to his offer of employment by the Company, Mr. Myszkowski is entitled to severance pay equal to three months’ base salary plus an amount equal to the premiums on his medical and dental benefits for the same period upon termination of his employment without cause. Pursuant to his offer of employment by the Company, Mr. O’Brien is entitled to severance pay equal to six months’ base salary upon a qualifying termination of his employment without cause only upon change of control as defined in the Company’s 2013 Incentive Plan. The Company has not entered into a severance arrangement with Dr. San Martin or Dr. Hamilton or Ms. Oliver. Additionally, pursuant to the 2004 Equity Incentive Plan, the 2013 Incentive Plan, and the 2021 Incentive Plan, any unvested awards held by plan participants, including the NEOs, become fully vested upon a change of control of the Company, except as otherwise determined by the Board and except with respect to the outstanding awards held by the CEO whose awards will only become fully vested if he experiences a qualifying termination of employment following a change of control. The following tables set forth information regarding potential termination and change of control arrangements with our executive officers had their employment been terminated or a change in control of the Company taken place on September 30, 2024:
Termination Benefits — Potential Payments Upon Termination or Change in Control
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CEO Pay Ratio
CEO Pay Ratio Pursuant to Item 402(u) of Regulation S-K, we are required to calculate and disclose the median of the annual total compensation of all of our employees (excluding our CEO, Dr. Anzalone), the annual total compensation of Dr. Anzalone, and the ratio of these two amounts. Based on the fact that we had a significant number of new hires during fiscal 2024, we did not elect to use the same median employee as the prior year. Our median employee was identified using the entire population of our employees as of September 30, 2024 based on a consistently applied compensation measure, or CACM, that reasonably reflects the annual compensation of our employees. The CACM selected by us for our disclosure included annual base salary, the cash bonus amount for fiscal 2024, the grant-date fair value for stock-based awards (calculated in accordance with requirements for the Summary Compensation Table), and welfare and health benefits for fiscal 2024. Based on the CACM methodology described above, we identified the median employee and calculated the fiscal 2024 compensation for this selected employee in the same manner we determine the annual total compensation of our NEOs for purposes of the Summary Compensation Table. The median of the annual total compensation of all our employees was $174,364.00. Dr. Anzalone’s fiscal 2024 annual total compensation as disclosed in the Fiscal 2024 Summary Compensation Table was $ 12,423,473. As a result, our CEO to median employee pay ratio for fiscal 2024 is 70:1. This pay ratio is a reasonable estimate calculated by a method consistent with the SEC requirements, described above, based on our payroll and employment records. As a result of a variety of factors, including employee populations, potential differences in the components used for the CACM, compensation philosophies and certain assumptions, pay ratios reported by other companies may not be comparable to our pay ratio. The pay ratio is not utilized by our management or our compensation committee for compensation-related decisions.
CEO Pay Ratio
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Pay Versus Performance
Pay Versus Performance As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive “compensation actually paid” and certain financial performance of the Company. This information has been prepared in accordance with Item 402(v) and does not necessarily reflect the actual amount of compensation earned by or paid to our named executive officers ("NEOs") for the applicable year. Please refer to the Compensation Discussion and Analysis section of this proxy statement for a discussion of our executive compensation program objectives and the ways in which we align executive compensation with performance.
Pay Versus Performance
| | | | | | Value of Initial Fixed $100 Investment Based On: | | (in thousands) | | | Year (a) | Summary Compensation Table Total for PEO (1)(b) | Compensation Actually Paid to PEO (2)(c) | Average Summary Compensation Table Total for Non-PEO NEOs (1)(d) | Average Compensation Actually Paid to Non-PEO NEOs (2) (e) | Total Shareholder Return (3)(f) | Peer Group Total Shareholder Return (4)(g) | Net Loss (5) (h) | Company Selected Measure (6)(i) | | 2024 | $12,423,473 | ($5,232,848) | $3,493,347 | $2,614,573 | $31 | $94 | ($599,493) | $— | | 2023 | $9,918,093 | ($2,160,939) | $3,143,102 | $2,298,902 | $62 | $49 | ($205,275) | $— | | 2022 | $12,031,969 | ($40,073,641) | $4,133,800 | ($386,118) | $77 | $67 | ($176,063) | $— | | 2021 | $24,703,855 | $69,061,855 | $3,324,746 | $6,080,786 | $145 | $116 | ($140,848) | $— |
Pay Versus Performance
(1)The dollar amounts reported are the amounts reported for Christopher Anzalone (the Company’s Chief Executive Officer) for each of the corresponding years in the “Total” column in our Summary Compensation Table. The dollar amounts reported in column (d) represent the average of the amounts reported for the Company’s named executive officers (NEOs) as a group (excluding Christopher Anzalone) in the “Total” column of the Summary Compensation Table in each applicable year. The names of each of the NEOs included for these purposes in each applicable year are as follows: (i) for fiscal year 2024, Kenneth Myszkowski, Patrick O'Brien, James Hamilton, Javier San Martin and Tracie Oliver, (ii) for fiscal year 2023, Kenneth Myszkowski, Patrick O'Brien, James Hamilton, and Javier San Martin; (iii) for fiscal year 2022, Kenneth Myszkowski, Patrick O'Brien, James Hamilton, and Tracie Oliver; and (iv) for fiscal year 2021, Kenneth Myszkowski, Patrick O'Brien, James Hamilton, Javier San Martin, and James Hassard. (2)The dollar amounts reported in column (c) represent the amount of “compensation actually paid” to Christopher Anzalone, and the dollar amounts reported in column (e) represent the average amount of “compensation actually paid” to our other NEOs as a group, each as computed in accordance with Item 402(v) of Regulation S-K and do not reflect the total compensation actually realized or received by Christopher Anzalone or the other NEOs on average, as applicable. In accordance with these rules, these amounts reflect “Total Compensation” as set forth in the Summary Compensation Table for each year, adjusted as shown below. Equity values are calculated in accordance with FASB ASC Topic 718, and the valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant.
Pay Versus Performance
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Pay Versus Performance
| Compensation Actually Paid | 2024 | | 2023 | | 2022 | | 2021 | | | | PEO | Other NEOs* | PEO | Other NEOs* | PEO | Other NEOs* | PEO | Other NEOs* | | Summary Compensation Table Total | $12,423,473 | $3,493,347 | $9,918,093 | $3,143,102 | $12,031,969 | $4,133,800 | $24,703,855 | $3,324,746 | | Less, value of “Stock Awards” and “Option Awards” reported in Summary Compensation Table | $(10,319,000) | $(2,658,810) | $(8,314,056) | $(2,332,400) | $(10,382,549) | $(3,529,925) | $(23,019,000) | $(2,608,820) | | Plus, year-end fair value of outstanding and unvested equity awards granted in the year | $6,585,800 | $1,501,175 | $6,288,252 | $1,645,788 | $8,222,939 | $1,578,138 | $49,944,000 | $3,537,700 | | Plus, fair value as of vesting date of equity awards granted and vested in the year | $— | $— | $595,920 | $— | $— | $— | $— | $— | | Plus (less), year over year change in fair value of outstanding and unvested equity awards granted in prior years | $(13,971,458) | $(570,234) | $(10,653,844) | $(492,469) | $(49,946,000) | $(2,754,375) | $17,433,000 | $2,015,691 | | Plus (less), change in fair value from last day of prior fiscal year to vesting date for equity awards granted in prior years that vested in the year | $48,337 | $849,095 | $4,696 | $334,881 | $— | $186,244 | $— | $(188,531) | | Compensation Actually Paid | $(5,232,848) | $2,614,573 | $(2,160,939) | $2,298,902 | $(40,073,641) | $(386,118) | $69,061,855 | $6,080,786 |
Pay Versus Performance
* Amounts presented are averages for the entire group of Other NEOs in each respective year. (3)Total Shareholder Return (TSR) is calculated by dividing (a) the sum of (i) the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and (ii) the difference between the Company’s share price at the end of each fiscal year shown and the beginning of the measurement period, and the beginning of the measurement period by (b) the Company’s share price at the beginning of the measurement period. The beginning of the measurement period for each year in the table is September 30, 2020. (4)The peer group used for this purpose is the Nasdaq Biotechnology Index. (5)The dollar amounts reported represent the amount of net income reflected in the Company’s audited financial statements for the applicable year. (6)The Company does not use any financial performance measures to link executive compensation actually paid to company performance. Consequently, no “Company Selected Measure” is included in the table above.
Analysis of Information Presented in the Pay versus Performance Table
Analysis of Information Presented in the Pay versus Performance Table As described in more detail in the Compensation Discussion and Analysis section, the Company’s executive compensation program reflects a variable pay-for-performance philosophy. While the Company utilizes several performance measures to align executive compensation with Company performance, all of those Company measures are not presented in the Pay versus Performance table. Moreover, the Company generally seeks to incentivize long-term performance, and therefore does not specifically align the Company’s performance measures with compensation that is actually paid (as computed in accordance with SEC rules) for a particular year. In accordance with SEC rules, the Company is providing the following descriptions of the relationships between information presented in the Pay versus Performance table.
Analysis of Information Presented in the Pay versus Performance Table
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Compensation Actually Paid, Cumulative TSR and Peer Group TSR
Compensation Actually Paid, Cumulative TSR and Peer Group TSR
Compensation Actually Paid, Cumulative TSR and Peer Group TSR
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Compensation Actually Paid and Net Loss
Compensation Actually Paid and Net Loss
Compensation Actually Paid and Net Loss
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