DEF 14A of Allogene Therapeutics, Inc.
Filed Apr 23, 2024 · FY20230001737287-24-000032
Our Board of Directors
Our Board of Directors Our Board of Directors is divided into three classes. Each class consists, as nearly as possible, of one-third of the total number of directors, and each class has a three-year term. Vacancies on the Board may be filled only by persons elected by a majority of the remaining directors. A director elected by the Board to fill a vacancy in a class, including vacancies created by an increase in the number of directors, shall serve for the remainder of the full term of that class and until the director’s successor is duly elected and qualified. Our Board of Directors currently consists of twelve members with diverse skill sets, demographic, and professional backgrounds. For the graphs below, diversity includes ethnicity and gender, but the Company also values and considers diversity of age, perspective, skill, experience, competency, culture, disability, veteran status and LGBTQ status when evaluating candidates for nomination. There are four directors in Class III, whose term of office expires at the Annual Meeting: Mr. John DeYoung, Dr. Franz Humer, Mr. Joshua Kazam and Dr. Stephen Mayo. The Class III directors have been nominated for election at the Annual Meeting. Mr. DeYoung, Dr. Humer, Mr. Kazam and Dr. Mayo, each current directors of the Company who were nominated as directors by our Board of Directors, were each recommended for nomination to the Board at the Annual Meeting by the Nominating and Corporate Governance Committee of the Board. Each nominee, except for Dr. Mayo, was previously elected as a director by our stockholders. Dr. Mayo was previously appointed as a director by our Board of Directors. Each nominee for director is to be elected at the Annual Meeting to serve for a three-year term until our 2027 Annual Meeting of Stockholders, and until their successor is duly elected and qualified, or until their earlier death, resignation or removal. It is our policy to invite directors and nominees for director to attend the Annual Meeting. All of our directors attended our 2023 Annual Meeting of Stockholders. The Nominating and Corporate Governance Committee seeks to assemble a Board of Directors that, as a whole, possesses the appropriate balance of professional and industry knowledge, financial expertise and high-level management experience necessary to oversee and direct the Company’s business. The Nominating and Corporate Governance Committee also seeks to attain diversity and balance among directors of race, gender, geography, thought, viewpoints, and backgrounds. To those ends, the Nominating and Corporate Governance Committee has identified and evaluated nominees in the broader context of the Board of Directors’ overall composition, with the goal of recruiting members who complement and strengthen the skills of other members through diversity and who also exhibit integrity, collegiality, sound business judgment and other qualities that the Nominating and Corporate Governance Committee views as critical to effective functioning of the Board of Directors. We discuss our approach to our Board diversity efforts in greater detail in this proxy statement under “Information Regarding the Board of Directors and Corporate Governance—Board Qualifications—Board Diversity” and “Information Regarding the Board of Directors and Corporate Governance—Nominating and Corporate Governance Committee.” The brief biographies below include information, as of the date of this proxy statement, regarding the specific and particular experience, qualifications, attributes or skills of each director/nominee that led the Nominating and Corporate Governance Committee to believe that that nominee should continue to serve on the Board. However, each of the members of the Nominating and Corporate Governance Committee may have a variety of reasons why they believe a particular person would be an appropriate nominee for the Board of Directors, and these views may differ from the views of other members.
Nominees for Election at the Annual Meeting
Nominees for Election at the Annual Meeting The following is a brief biography of each nominee. John DeYoung has served as a member of our Board since April 2018. Mr. DeYoung serves as a member of the Compensation Committee and the International and Business Development Oversight Committee. Mr. DeYoung is Vice President of Worldwide Business Development for Pfizer’s Oncology Business Unit. He is a member of Pfizer’s Oncology Leadership Team and its Worldwide Business Development Leadership Team. Mr. DeYoung joined Pfizer in 1991 and has held leadership positions in Finance, Marketing, Commercial Development and Business Development. Mr. DeYoung received his bachelor’s degree in business from Michigan State University in 1985 and his MBA from the University of Chicago in 1990. Skills and Qualifications: Our Nominating and Corporate Governance Committee and Board of Directors believe Mr. DeYoung’s expertise and experience in the life sciences and his financial background provide him with the qualifications and skills to serve on our Board of Directors. Franz Humer, Ph.D. has served as a member of our Board since April 2018. Dr. Humer currently serves on the board of directors of LetterOne Holdings S.A. and as Chair of the board of directors of Kallyope, Inc. In addition, Dr. Humer serves on the board of directors of the International Centre for Missing and Exploited Children and is Chair of the Humer Foundation. Dr. Humer previously served as Chair of the board of directors of Neogene Therapeutics, Inc., a private research-stage biotechnology company, from October 2020 until January 2023 and as a member of the board of directors of Kite Pharma, Inc. (“Kite”) from September 2015 until October 2017. He also served as an independent director of Citigroup Inc. from 2012 until 2018, Chugai Pharmaceuticals Ltd. (Japan) from 2002 until 2014, and Arix Bioscience plc from April 2016 to December 2019. He served as Chair of Diageo plc from 2005 to 2017. He served as a member of the board of directors of WISeKey SA, a publicly traded global cybersecurity company, from May 2016 to December 2017. In addition, Dr. Humer served as Head of Pharmaceuticals and then as Chief Operating Officer of F. Hoffmann-La Roche Ltd. from 1996 to 1998, prior to serving as Chief Executive Officer of Roche Group from 1998 to 2001 and later as Chair and Chief Executive Officer from 2001 to 2008. His tenure as Chair of Roche Holding Ltd. extended from 2008 to 2014. Before joining Roche Group, he served on the board of Glaxo Holdings plc and was responsible for research, business development, manufacturing, commercial strategy, and all non-US operations for 13 years. In 1973, Dr. Humer joined Schering Plough Corporation where he held various General Management positions in Latin America and Europe. Dr. Humer attended the University of Innsbruck, where he obtained a Ph.D. in Law, and INSEAD in Fontainebleau, where he obtained an MBA. Skills and Qualifications: Our Nominating and Corporate Governance Committee and Board of Directors believe that Dr. Humer’s expertise and experience in life sciences, his experience as a director of other companies and his educational background provide him with the qualifications and skills to serve on our Board of Directors. Joshua Kazam has served as a member of our Board since November 2017. Mr. Kazam served as our President from November 2017 until June 2018. He was a founder of Kite and served as a member of Kite’s board of directors from Kite’s inception in June 2009 until October 2017. In June 2009, Mr. Kazam co-founded Two River, LLC, a life-science company incubation and investment firm. Mr. Kazam is a co-founder and Director of Vida Ventures, and an advisor to Symbiotic Capital. Mr. Kazam has served on the board of Kronos Bio, Inc. since June 2017 and served on the board of Capricor Therapeutics, Inc. from May 2005 until May 2019. He also serves on the boards of the following private companies: Vision Path, Inc. (d/b/a Hubble Contacts) since May 2016, ByHeart, Inc. since November 2016, Breakthrough Properties LLC and Breakthrough Services LLC since April 2019, IconOVir Bio, Inc. since August 2018, and Baby Generation since January 2018. Mr. Kazam has also served on the boards of several blank check companies formed for the purpose of effecting a business combination with one or more businesses: Screaming Eagle Acquisition Corp. since January 2022, Tishman Speyer Innovation Corp. II since February 2021 until December 2022, TS Innovation Acquisitions Corp. from November 2020 until June 2021, Soaring Eagle Acquisition Corp. from February 2021 to September 2021, Flying Eagle Acquisition Corp. from February 2020 until December 2020, Diamond Eagle Acquisition Corp. from January 2019 until April 2020, and Platinum Eagle Acquisition Corp. from January 2018 to March 2019. Mr. Kazam has served as the President of Desert Flower Foundation since June 2016. Mr. Kazam received his bachelor’s degree in Entrepreneurial Management from the Wharton School of the University of Pennsylvania and is a Member of the Wharton School’s Undergraduate Executive Board. Skills and Qualifications: Our Nominating and Corporate Governance Committee and Board of Directors believe Mr. Kazam’s expertise and experience in the life sciences and venture capital industries and his educational background provide him with the qualifications and skills to serve on our Board of Directors. Stephen Mayo, Ph.D. has served as a member of our Board since July 2022. Since 2021, he has served as a member of the board of directors and as a member of the research and development and audit committees of Sarepta Therapeutics, Inc., and as a member of the board of directors and on the audit and research committees of Merck & Co., Inc., each publicly-traded companies. In addition, he serves on the scientific advisory boards of Vida Ventures and Evozyne. He co-founded Molecular Simulations Inc. (now Biovia) and Xencor, Inc., a public antibody engineering company. Dr. Mayo is currently the Bren Professor of Biology and Chemistry and Merkin Institute Professor at California Institute of Technology ("Caltech"). He joined the Caltech faculty in 1992, was a Caltech-based Howard Hughes Medical Institute Investigator from 1994 to 2007, served as Vice Provost for Research from 2007 to 2010 and served as Chair of the Division of Biology and Biological Engineering from 2010 to 2020. Dr. Mayo was elected to the National Academy of Sciences in 2004 for his pioneering contributions in the field of protein design. He served as an elected board member for the American Association for the Advancement of Science from 2010 to 2014 and as a presidential appointee on the National Science Foundation’s National Science Board from 2013 to 2018. Dr. Mayo holds a B.S. in Chemistry from Pennsylvania State University and a Ph.D. in Chemistry from Caltech. He completed postdoctoral work at both UC Berkeley and Stanford University School of Medicine in chemistry and biochemistry, respectively. Skills and Qualifications: Our Nominating and Corporate Governance Committee and Board of Directors believe Dr. Mayo's expertise and experience in cancer research, his experience in academia, his experience as a director of other companies and his educational background provide him with the qualifications and skills to serve on our Board of Directors.
Directors Continuing in Office Until the 2025 Annual Meeting
Directors Continuing in Office Until the 2025 Annual Meeting The following is a brief biography of each director whose term will continue after the Annual Meeting and until the 2025 Annual Meeting. Elizabeth Barrett has served as member of our Board since July 2021. Ms. Barrett is a director and President and Chief Executive Officer of UroGen Pharma Ltd. (“UroGen”), a biotechnology company dedicated to developing and commercializing innovative solutions that treat urothelial and specialty cancers. At UroGen, Ms. Barrett spearheaded the 2020 approval of Jelmyto® for the treatment of low-grade upper tract urothelial carcinoma. Before joining UroGen, Ms. Barrett served as the Chief Executive Officer of Novartis Oncology, where she managed the development and launch of the autologous CAR T therapy Kymriah®, and as a member of the Executive Committee of Novartis Oncology from February 2018 to December 2018. Prior to that, Ms. Barrett served at Pfizer in various capacities, most recently as the Global President of Oncology, and before that as Pfizer’s Regional President of US Oncology Business Unit since March 2009. Prior to Pfizer, she was Vice President and General Manager of the Oncology Business Unit at Cephalon Inc. Ms. Barrett received a Bachelor of Science in Business Administration from the University of Louisiana and a Master’s in Business Administration-Marketing from St. Joseph’s University. Skills and Qualifications: Our Nominating and Corporate Governance Committee and Board of Directors believe that Ms. Barrett’s expertise and experience in life sciences, her experience as a chief executive and director of a biotechnology company, and her educational background provide her with the qualifications and skills to serve on our Board of Directors. Arie Belldegrun, M.D. is a co-founder of Allogene and has served as Executive Chair of our Board since November 2017. From March 2014 until October 2017, Dr. Belldegrun served as the President and Chief Executive Officer of Kite and as a director from June 2009 until October 2017. Dr. Belldegrun has served as Chair of UroGen Pharma Ltd. since December 2012, Chair of Kronos Bio, Inc., since June 2017, and director of Ginkgo Bioworks, Inc., since September 2021. Dr. Belldegrun has also served on the boards of several private companies, including Breakthrough Properties LLC and Breakthrough Services LLC, since April 2019, ByHeart, Inc., since October 2019, and as Co-Chairman of Symbiotic Capital since June 2023. Dr. Belldegrun has also served as Chairman of Bellco Capital LLC since 2004, as Chair and Partner of Two River Group since June 2009, and as Senior Managing Director of Vida Ventures, LLC since November 2017. He is certified by the American Board of Urology and is a Fellow of the American Association of Genitourinary Surgeons. Dr. Belldegrun is Research Professor, holds the Roy and Carol Doumani Chair in Urologic Oncology, and is Founder and Director of the Institute of Urologic Oncology at the David Geffen School of Medicine at the University of California, Los Angeles (“UCLA”). Prior to joining UCLA in October of 1988, he was a research fellow at NCI/NIH in surgical oncology and immunotherapy from July 1985 to August 1988 under Dr. Steven Rosenberg. Dr. Belldegrun received his M.D. from the Hebrew University Hadassah Medical School in Jerusalem before completing his post graduate studies in Immunology at the Weizmann Institute of Science and his residency in Urologic Surgery at Harvard Medical School. Skills and Qualifications: Our Nominating and Corporate Governance Committee and Board of Directors believe Dr. Belldegrun’s expertise, experience, and track record in forming successful companies in immuno-oncology as well as his expertise as a urological oncologist provide him with the qualifications and skills to serve on our Board of Directors. David Bonderman has served as a member of our Board since April 2018. He is a Founding Partner and Chairman of TPG, a global alternative asset firm, established in 1992. Mr. Bonderman currently serves on the board of directors of TPG, Inc., a public company. He has previously served on the boards of many public companies, some of which include: RyanAir Holdings, plc and Continental Airlines, for both of which he was Chairman, Ducati Motor Holding, S.p.A, China International Capital Corporation Limited, Co-Star Group, Inc., General Motors Company, Kite, Oxford Health Plans, Inc., Paradyne Networks, Inc., Seagate Technology Holdings plc, TPG Pace Tech Opportunities Corp., TPG Pace Solutions Corp., TPG Pace Energy Holdings Corp., TPG Pace Holdings, Inc., TPG Pace Beneficial Finance Corp., and Univision Holdings, Inc. Throughout Mr. Bonderman’s career, he has served as a director on numerous other public, private, advisory, academic and charitable boards. Mr. Bonderman received a Bachelor of Arts degree from the University of Washington, cum laude, and a J.D. from Harvard Law School, magna cum laude, where he was a member of the Harvard Law Review and Sheldon Fellow. Skills and Qualifications: Our Nominating and Corporate Governance Committee and Board of Directors believe that Mr. Bonderman’s expertise and experience as a director of other public companies and his educational background provide him with the qualifications and skills to serve on our Board of Directors. David Chang, M.D., Ph.D. is a co-founder of Allogene and has served as our President and Chief Executive Officer and as a member of our Board since June 2018. Dr. Chang has served on the boards of two private companies as Chair of the Board of Directors of IconOVir Bio, Inc., since June 2020, and director of 1200 Pharma LLC since June 2021. Dr. Chang served on the Board of Directors of Notch Therapeutics, Inc. (“Notch”), a private research-stage biotechnology company, from November 2019 to March 2022. Prior to joining us, Dr. Chang served as the Chief Medical Officer and Executive Vice President, Research and Development of Kite from June 2014 until March 2018. Dr. Chang previously held senior positions at Amgen Inc. ("Amgen"), a biopharmaceutical company. Prior to that, he was an Associate Professor at the UCLA School of Medicine. He has also served as a Venture Partner of Vida Ventures, LLC since November 2017, and Two River, LLC since October 2017. In addition, he serves as a member of the CalTech Cheng Medical Engineering Advisory Council and of the MIT Corporation Biology Visiting Committee. Dr. Chang obtained a B.S. in Biology from the Massachusetts Institute of Technology and an M.D. and Ph.D. from Stanford University. Skills and Qualifications: Our Nominating and Corporate Governance Committee and Board of Directors believe Dr. Chang’s expertise and experience in the life sciences, including his work in immuno-oncology and his educational background, provide him with the qualifications and skills to serve on our Board of Directors.
Directors Continuing in Office Until the 2026 Annual Meeting
Directors Continuing in Office Until the 2026 Annual Meeting The following is a brief biography of each director whose term will continue after the Annual Meeting and until the 2026 Annual Meeting. Deborah Messemer has served as a member of our Board since September 2018. Ms. Messemer has served as a director of TPG Inc. since January 2022 and PayPal Holdings, Inc. since January 2019. Ms. Messemer is a certified public accountant and joined KPMG LLP ("KPMG"), the U.S. member firm of KPMG International, in 1982 and was admitted into the partnership in 1995. Most recently, she served as the Managing Partner of KPMG’s Bay Area and Northwest region until her retirement in September 2018. Ms. Messemer spent the majority of her career in KPMG’s audit practice as an audit engagement partner serving public and private clients in a variety of industry sectors. In addition to her operational and audit signing responsibilities, she has significant experience in SEC filings, due diligence, initial public offerings, mergers and acquisitions, and internal controls over financial reporting. Ms. Messemer received a bachelor’s degree in accounting from the University of Texas at Arlington. Skills and Qualifications: Our Nominating and Corporate Governance Committee and Board of Directors believe Ms. Messemer’s expertise in the accounting and finance industry, her experience advising public companies, her experience as a director of other companies, and her education provide her with the qualifications and skills to serve on our Board or Directors. Vicki Sato, Ph.D. has served as a member of our Board since July 2021. She was a professor of management practice at Harvard Business School from September 2006 to July 2017 and was a professor in the Department of Molecular and Cell Biology at Harvard University from July 2005 until October 2015. Previously, she served as President of Vertex Pharmaceuticals, Inc. ("Vertex"), a publicly-traded biotechnology company, which she joined in 1992. Prior to becoming President of Vertex, she was the Chief Scientific Officer and Senior Vice President of Research and Development. Prior to joining Vertex, Dr. Sato served as Vice President of Research at Biogen Inc. Dr. Sato is a member of the board of directors of the following publicly-traded companies: Denali Therapeutics, Inc. and Vir Biotechnology, Inc. She previously served on the board of directors of Bristol-Myers Squibb Company from July 2006 to May 2021 and BorgWarner, Inc., from February 2014 to April 2021, both publicly-traded companies, as well as Akouos, Inc., from February 2020 to December 2022. Dr. Sato received her A.B. in Biology from Radcliffe College and her A.M. and Ph.D. in Biology from Harvard University. She conducted her postdoctoral work at both the University of California, Berkeley and Stanford Medical Center. Skills and Qualifications: Our Nominating and Corporate Governance Committee and Board of Directors believe that Dr. Sato’s expertise and experience in life sciences, her experience as a director of other companies and her educational background provide her with the qualifications and skills to serve on our Board of Directors. Todd Sisitsky is the President of TPG Inc. (Nasdaq: TPG) and Co‐Managing Partner of TPG Capital, TPG's scale private equity business in the U.S. and Europe and co‐leads the firm's investment activities in the healthcare services, pharmaceuticals and medical product sectors. He also serves on TPG's board of directors and co‐chairs the firm's management committee. He has played leadership roles in connection with TPG’s investments in Allogene Therapeutics, Adare Pharmaceuticals, Aptalis, Biomet, Exactech, Ellodi Pharmaceuticals, Fenwal, Healthscope, IASIS Healthcare, Immucor, IQVIA Holdings, Inc. (and predecessor companies IMS Health and Quintiles), Monogram Health, Par Pharmaceutical and Surgical Care Affiliates. Mr. Sisitsky currently serves on the public company board of directors of IQVIA Holdings, Inc. and Allogene Therapeutics, Inc. He also serves on the private company board of directors of Confluent Medical Technologies and Monogram Health. He received a Bachelor of Arts degree from Dartmouth College, where he graduated summa cum laude, and an M.B.A. from the Stanford Graduate School of Business, where he was an Arjay Miller Scholar. Mr. Sisitsky serves on the Board of Trustees at Dartmouth as well as the international non-profit, Grassroot Soccer. Skills and Qualifications: Our Nominating and Corporate Governance Committee and Board of Directors believe Mr. Sisitsky’s expertise and experience in life science investing and the finance industry provide him with the qualifications and skills to serve on our Board of Directors. Owen Witte, M.D. has served as a member of our Board since April 2018. Dr. Witte previously served as a member of the board of directors of Kite from March 2017 until October 2017. Dr. Witte joined the UCLA faculty in 1980, where he is presently a University Professor of microbiology, immunology and molecular genetics, the UCLA David Saxon Presidential Chair in Developmental Immunology and previously served as the director of the Eli and Edythe Broad Center of Regenerative Medicine and Stem Cell Research. Dr. Witte was appointed a University Professor by the University of California Board of Regents, an honor reserved for scholars of the highest international distinction. Dr. Witte is a member of the National Academy of Sciences, the American Academy of Arts and Sciences, and the National Academy of Medicine. Dr. Witte currently serves on several editorial and advisory boards. He previously served on the board of directors for the American Association for Cancer Research. He was appointed by President Obama to the President’s Cancer Panel. Dr. Witte holds a bachelor’s degree from Cornell University and an M.D. from Stanford University. He completed postdoctoral research at the Massachusetts Institute of Technology. Skills and Qualifications: Our Nominating and Corporate Governance Committee and Board of Directors believe Dr. Witte’s expertise and experience in cancer research, his experience in academia and his educational background provide him with the qualifications and skills to serve on our Board of Directors.
Directors Continuing in Office Until the 2026 Annual Meeting
| Information Regarding the Board of Directors and Corporate Governance |
Compensation Highlights for 2023
Compensation Highlights for 2023 In view of the deprioritization of ALPHA2 and EXPAND, a large percentage of the Company’s corporate goals for 2023 could not be fully achieved. Because our Compensation Committee adheres to a longstanding pay-for-performance philosophy, the failure to fully achieve such goals is reflected in the Compensation Committee’s relatively low scoring of the corporate goals resulting in an achievement level of 57.5%. A general description of the 2023 milestones in support of the Company’s business strategy and this conclusion by the Compensation Committee are described below under the heading “Annual Cash Incentive Plan.” The Compensation Committee evaluates our compensation program, taking into consideration best practices and emerging trends, stockholder input as well as data and feedback provided by our independent executive compensation consultant, Compensia. In the past year, we have continued to take measures to align our compensation program with stockholder interests including the following actions: •In 2023, excluding Dr. Chang, our Named Executive Officer’s base salaries comprised approximately 6% of their total compensation, on an aggregate basis. Dr. Chang’s 2023 base salary represented approximately 5% of his total compensation. •A large majority of our Named Executive Officers’ compensation was represented by long-term incentives, which are inherently performance based. Approximately 93% of Dr. Chang’s total compensation for 2023 was in the form of long-term incentives. For our other Named Executive Officers, on average, approximately 91% of their total compensation for 2023 was represented by long-term incentives. •For 2023 annual long-term incentives, in March 2023 the Compensation Committee determined that Dr. Chang, along with all the executive officers serving at that time, except for Dr. Roberts, would receive 35% of the target dollar value in stock options, 15% in restricted stock units (“RSUs”), and 50% in performance stock units (“PSUs”). As described in more detail below, Dr. Roberts was given a pro-rated PSU award since he joined the Company in January 2023. The graphs above display the base salary, cash incentive, long-term incentives (stock option grant date fair value, RSU grant date fair value and PSU grant date fair value) of our Chief Executive Officer, Dr. Chang (left chart) and other NEOs (Dr. Roberts and Mr. Moore) (right chart). Because Dr. Roberts and Mr. Moore both started with the Company in 2023, their compensation mix shown in the chart above includes new hire grants, sign-on bonuses and other compensation, each as reported in the Summary Compensation Table. As a result, their equity compensation mix differs significantly from our CEO’s equity compensation mix as reflected in the charts above. The target dollar value used by the Compensation Committee in establishing market-based PSU grants (i.e., PSUs wherein the vesting performance measure is based on achieving a target Allogene stock price) differs from the grant date fair value calculated under FASB ASC Topic 718 in which the value is discounted using the Monte Carlo simulation. The values reflected in the graphs above and the compensation tables below reflect the grant date fair values.
Executive Compensation Governance Practices
| WHAT WE DO | | | ✓ | DO maintain an executive compensation program designed to align pay with performance | | ✓ | DO conduct an annual say on pay advisory vote | | ✓ | DO align pay and performance with a significant percentage of total compensation linked to the achievement of Company operational and strategic goals established at the beginning of the performance period by the Compensation Committee, and in the case of NEOs other than the CEO, individual performance, and contribution in achieving the Company goals | | ✓ | DO maintain a Compensation Committee comprised solely of independent directors | | ✓ | DO have double trigger on executive change in control severance arrangements | | ✓ | DO prohibit speculative trading of company stock (short sales, put or call options, hedging transactions, etc.) | | ✓ | DO prohibit pledging or the use of common stock to secure a margin or other loan | | ✓ | DO retain an independent compensation consultant | | ✓ | DO maintain stock ownership guidelines for executives and directors | | ✓ | DO maintain an executive officer recoupment (“claw back”) policy | | ✓ | DO conduct an annual comprehensive compensation program risk assessment | | ✓ | DO evaluate officer compensation levels against a peer group of similarly situated companies | | ✓ | DO annual comprehensive review of compensation of our senior vice presidents and above, including our NEOs | | ✓ | DO require equity awards granted to our executive officers vest over multi-year periods or vest based on the achievement of key strategic goals |
“Say on Pay” Consideration
“Say on Pay” Consideration At our 2023 annual meeting of stockholders, approximately 68.4% of the shares voted at the meeting (exclusive of broker non-votes) were voted in favor of the approval, on an advisory basis, of the compensation of our named executive officers as disclosed in the proxy statement for that annual meeting. In light of the prior year’s say on pay results (93% in June 2022), we were disappointed by the 2023 results. The Compensation Committee considered this support carefully, and took the following meaningful steps in direct response to the 2023 say on pay voting results: •Significantly reduced the grant date fair value of the CEO’s and Executive Chair’s January 2024 annual equity grants to approximately 26% of the 2023 grant date fair value. •Implemented no base salary increase in 2024 for the CEO and the Executive Chair (for the second consecutive year) and approved only a modest adjustment (1%) for one of the remaining NEOs to bring his base compensation in line with approximately the 50th percentile of our peer group. •The level of stockholder support was also a significant factor in the Company’s decision to voluntarily provide the additional disclosure included in this Discussion of Named Executive Officer Compensation to ensure greater transparency, although not required as a Smaller Reporting Company, which includes: ◦More detailed disclosure regarding how the Compensation Committee, in consultation with its independent compensation consultant, set the Executive Chair’s compensation (see disclosure below under the heading “Executive Compensation—Executive Chair Compensation”), and more detailed disclosure regarding the Executive Chair’s role, responsibilities and contributions to the Company which we believe provide a compelling rationale in support of his compensation (see disclosure above under the heading “Information Regarding the Board of Directors and Corporate Governance—Board Leadership Structure”); and ◦Detailed disclosure regarding the 2023 equity grants, which included a mix of options, RSUs and PSUs, and disclosure regarding how the Compensation Committee used PSUs with aggressive vesting events (over 350% increase in share price and product regulatory approval targets) in order to directly align executive compensation with creating long-term stockholder value (see disclosure below under the heading “Executive Compensation Program and Compensation Decisions for the Named Executive Officer—Long-Term Incentive Compensation”). In addition, the Compensation Committee considered that the absence of performance-based equity awards in our 2022 executive compensation programs as described in last year’s proxy statement may have been a significant consideration for those stockholders who did not support last year’s say on pay. The Compensation Committee believes the introduction of PSUs during 2023, in addition to stock options and RSUs, addresses this concern. As discussed in greater detail below, in structuring the Company’s 2023 equity grants to executives, the Compensation Committee sought to balance critical retention needs with the performance-based expectations of investors while focusing management on the creation of long-term shareholder value. This was done through the inclusion of PSUs in the equity mix granted for 2023, in addition to stock options, both of which the Compensation Committee views as performance-oriented, and RSUs which the Committee views as geared more towards retention. The Compensation Committee will monitor and continually evaluate our compensation program going forward in light of our stockholders’ views and our transforming business needs. Our Compensation Committee expects to continue to consider the outcome of our say on pay votes and our stockholders’ views when making future compensation decisions for our NEOs.
Executive Compensation Philosophy and Overview
Executive Compensation Philosophy and Overview We are a clinical-stage biotechnology company pioneering the development of allogeneic CAR T cell (AlloCAR T™) products for cancer and autoimmune disease. We operate in a very technical, highly regulated, and extremely competitive industry where our long-term success is highly dependent on the specialized skills, talent, and dedication of our executive officers. Our Compensation Committee believes that a well-designed compensation program should align executive interests with the drivers of growth and stockholder return, while enabling us to attract and retain employees whose talents, expertise, leadership, and contributions are critical to building and sustaining growth in long-term stockholder value. As a result, we utilize a strong pay-for-performance compensation philosophy, with total compensation levels for our executive officers, including our NEOs, correlated to the achievement of corporate goals and individual performance, and calibrated to our peers with whom we compete for talent. Our executive compensation program is intended to meet five principal objectives: •Enable us to attract, retain and motivate superior talent; •Link rewards to the achievement of critical strategic priorities; •Create incentives for our executive officers to further our long-term strategic plan to create long-term stockholder value; •Provide appropriate levels of risk and reward relative to an executive officer's position with us; and •Differentiate compensation based on individual performance. Based on this philosophy, our performance-driven compensation program primarily consists of three components: base salary, annual cash incentive opportunity, and long-term incentive compensation in the form of equity awards. The Compensation Committee has determined that these three components, with the vast majority of target total direct compensation allocated to “at-risk” performance-based incentives through the use of short-term and long-term incentive compensation, best align the interests of our executive officers with those of our stockholders. While it does not have any formal policies for allocating compensation among the three components, the Compensation Committee reviews relevant competitive market data and uses its judgment to determine the appropriate level and mix of compensation on an annual basis to ensure that compensation levels and opportunities are competitive and that we are able to attract and retain capable executive officers to work for our long-term prosperity and stockholder value, without taking unnecessary or excessive risks.
2023 Summary Compensation Table
2023 Summary Compensation Table The following table sets forth all of the compensation awarded to, earned by or paid to our Named Executive Officers during the fiscal years ended December 31, 2023, December 31, 2022 and December 31, 2021.
2023 Summary Compensation Table
| Name and principal position | Year | Salary ($) | Bonus ($)(1) | Stock awards ($)(2) | Option awards ($)(3) | Non-equity incentive plan compensation ($)(4) | All other compensation ($)(5) | Total ($) | | David Chang, M.D., Ph.D. | 2023 | 724,000 | — | 7,996,888 | 5,070,365 | 270,595 | — | 14,061,848 | | President and Chief Executive Officer | 2022 | 724,000 | — | — | 13,697,357 | 376,480 | — | 14,797,837 | | | 2021 | 695,000 | — | 2,717,669 | 6,352,635 | 396,150 | — | 10,161,454 | | Timothy Moore Chief Technology Officer | 2023 | 360,938 | 100,000 | 2,249,987 | 2,999,886 | 93,416 | — | 5,804,227 | | Zachary J. Roberts M.D., Ph.D. Chief Medical Officer and Executive Vice President of Research and Development | 2023 | 522,813 | 75,000 | 3,533,710 | 3,850,445 | 134,727 | 14,850 | 8,131,545 |
2023 Summary Compensation Table
(1) The dollar amounts in this column reflect the sign-on bonuses paid to Dr. Roberts and Mr. Moore in 2023. (2) The dollar amounts in this column reflect the aggregate grant date fair value of RSUs and PSUs granted during the indicated year and computed in accordance with FASB ASC 718. The grant date fair value of the 2023 RSUs is based on the closing market price of the Company’s common stock on the date of grant. The grant date fair value of the 2023 PSUs is determined using Monte Carlo simulation for PSUs that vest upon achievement of a market condition. For PSUs that vest upon achievement of a performance condition, the grant date fair value is based upon the probable outcome of such condition. Assuming that maximum performance is achieved, the value of the PSUs with performance conditions granted to Dr. Chang, Mr. Moor and Dr. Roberts in 2023 would have been $3,730,502, $1,249,991 and $1,749,858, respectively, at the date of grant under FASB ASC 718. For a discussion of valuation assumptions, see Note 10 “Stock-based Compensation” to our financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023. (3) The dollar amounts in this column represent the aggregate grant date fair value of stock option awards granted during the indicated year. These amounts have been computed in accordance with FASB ASC Topic 718, using the Black-Scholes option pricing model. For a discussion of valuation assumptions, see Note 10 “Stock-based Compensation” to our financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023. These amounts do not reflect the actual economic value that will be realized by the Named Executive Officer upon the vesting of the stock options, the exercise of the stock options, or the sale of the common stock underlying such stock options. (4) The dollar amounts in this column represent annual performance-based incentive earned for the indicated year. For more information, see above under “2023 Performance-Based Cash Incentive.” (5) The dollar amounts in this column represent Section 401(k) Company contributions for Dr. Roberts in 2023.
Potential Payments and Benefits Upon Termination or Change in Control
Potential Payments and Benefits Upon Termination or Change in Control Our executive officers, including our Named Executive Officers are entitled to certain severance and change of control payments and benefits pursuant to our change in control and severance benefit plan (the “Change in Control Plan”). Given the industry in which we participate and the range of strategic initiatives that we may explore, we believe these arrangements are an essential element of our executive compensation program and assist us in recruiting and retaining talented individuals. In addition, since we believe it may be difficult for our executive officers to find comparable employment following an involuntary termination of employment in connection with or following a change of control of the Company, these payments and benefits are intended to ease the consequences to an executive officer of an unexpected termination of employment. By establishing these payments and benefits, we believe we can mitigate the distraction and loss of executive officers that may occur in connection with rumored or actual fundamental corporate changes and thereby protect stockholder interests while a transaction is under consideration or pending. The Change in Control Plan provides for, in the event of an involuntary termination of employment without “cause” or a resignation with “good reason,” and subject to our receipt of an effective waiver and release of claims from the executive, a combination of (1) cash severance for the severance period and (2) the payment or reimbursement of premiums for continuation of coverage under group health plans for the severance period. The severance period is 24 months in the case of our Chief Executive Officer, and 12 months in the case of our other executive officers. In the event that the involuntary termination of employment occurs within the period commencing three months before and ending 12 months after a change in control of the Company, then the participants in the Change in Control Plan are entitled to the same benefits described above, but the severance period is 18 months for our executive officers other than our Chief Executive Officer. In addition, our Chief Executive Officer would be entitled to 200% of his annual target cash incentive and our other executive officers would be entitled to 150% of their annual target cash incentive, and each of our executive officers would be entitled to accelerated vesting of outstanding equity compensation awards. Under the Change in Control Plan, the term “cause” generally means (i) the employee’s commission of any crime involving fraud, dishonesty or moral turpitude; (ii) the employee’s attempted commission of or participation in a fraud or act of dishonesty against us that results in (or might have reasonably resulted in) material harm to our business; (iii) the employee’s intentional, material violation of any contract or agreement between us and the employee or any statutory duty that the employee owes to us; or (iv) the employee’s conduct that constitutes gross insubordination, incompetence or habitual neglect of duties and that results in (or might have reasonably resulted in) material harm to our business. Under the Change in Control Plan, the term “change in control” generally means (1) the acquisition by any person or company of more than 50% of the combined voting power of our then outstanding stock, (2) a merger, consolidation or similar transaction in which our stockholders immediately before the transaction do not own, directly or indirectly, more than 50% of the combined voting power of the surviving entity (or the parent of the surviving entity) in substantially the same proportions as their ownership immediately prior to such transaction, (3) a sale, lease, exclusive license or other disposition of all or substantially all of our assets other than to an entity more than 50% of the combined voting power of which is owned by our stockholders in substantially the same proportions as their ownership of our outstanding voting securities immediately prior to such transaction, or (4) a complete dissolution or liquidation of the company. Under the Change in Control Plan, the term “good reason” generally means (i) a material reduction of such employee’s annual base salary, which is a reduction of at least 10% of such employee’s base salary (unless pursuant to a salary reduction program applicable generally to the Company’s similarly situated employees); (ii) a material reduction in such employee’s authority, duties or responsibilities; (iii) a relocation of such employee’s principal place of employment with the Company (or successor to the Company, if applicable) to a place that increases such employee’s one-way commute by more than 50 miles as compared to such employee’s then-current principal place of employment immediately prior to such relocation (excluding regular travel in the ordinary course of business).
2023 Outstanding Equity Awards at Fiscal Year-End Table
2023 Outstanding Equity Awards at Fiscal Year-End Table The following table presents information concerning equity awards held by our Named Executive Officers as of December 31, 2023.
2023 Outstanding Equity Awards at Fiscal Year-End Table
| | | Option Awards | | | | Stock Awards | | | | | Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable (7) | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares of Stock that have not Vested (RSUs) (#) (2) | Market Value of Shares of Stock that have not Vested (RSUs) ($) (8) | Equity Incentive Plan Awards: Number of Unearned Shares or Units of Stock that have not Vested (PSUs) (#) | Equity Incentive Plan Awards: Market Value of Unearned Shares or Units of Stock that have not Vested (PSUs) ($) (8) | | David Chang, M.D., Ph.D. | 3/13/2019 | 292,700 | — | 26.89 | 3/13/2029 | — | | — | — | | | 3/18/2020 (1) | 541,190 | — | 18.22 | 3/18/2030 | 5,488 | 17,616 | — | 17,616 | | | 3/26/2021 | 298,836 | — | 33.78 | 3/26/2031 | 40,266 | 129,125 | — | 129,125 | | | 3/23/2022 | 2,195,512 | — | 9.69 | 3/23/2032 | — | — | — | — | | | 3/22/2023 | 1,492,200 | — | 5.04 | 3/22/2033 | 444,107 | 1,425,583 | 1,480,357 (3) | 4,751,946 | | Timothy Moore | 4/24/2023 | 831,024 | — | 5.37 | 4/24/2033 | 186,219 | 597,763 | 93,110 (4) | 298,883 | | Zachary J. Roberts M.D., Ph.D. | 1/20/2023 | 873,015 | — | 6.55 | 1/20/2033 | 251,908 | 808,625 | 76,336 (5) | 245,039 | | | 3/22/2023 | — | — | — | — | — | — | 148,035 (6) | 475,192 |
2023 Outstanding Equity Awards at Fiscal Year-End Table
(1) On May 24, 2021, Dr. Chang elected to early exercise 14,897 of his stock option granted on March 18, 2020. We have a right to repurchase any unvested shares subject to such award if Dr. Chang ceases to provide services to us prior to the date on which all shares subject to the award have vested in accordance with the applicable vesting schedule. The March 18, 2020 option award is subject to a four-year vesting schedule, with 25% vesting one year after the vesting commencement date and the balance vesting monthly over the remaining 36 months. The vesting commencement date for such award was March 18, 2020. Unvested shares as of December 31, 2023 are presented as stock awards. The option award is subject to a four-year vesting schedule, with 25% vesting March 13, 2021 and the balance vesting monthly over the remaining 36 months. (2) The RSU awards vest in four equal annual installments from the grant date. (3) 740,178 of PSU awards will vest, if at all, upon our stock price achieving a 30-day weighted average trading price of $18.00 per share prior to January 3, 2025, and 740,179 of PSU awards will vest, if at all, upon the first FDA approval of a Company product prior to January 3, 2028. (4) 186,219 of PSU awards will vest, if at all, in two equal installments, with (a) the first installment to vest upon the filing of a biologics license application with the FDA for ALLO-501A, provided that 125% of such installment shall vest if such filing is completed by the end of 2025, 100% of such installment shall vest if such filing is completed in 2026 and 50% of such installment shall vest if such filing is completed after 2026, and (b) the second installment to vest upon FDA approval of ALLO-501A, provided that 125% of such installment shall vest if such approval is achieved by the end of 2025, 100% of such installment shall vest if such approval is achieved in 2026 and 50% of such installment shall vest if such approval is achieved after 2026. Any unvested portion of PSUs shall expire unvested after five years. Number of PSU awards in the table above is 93,110 and estimated based on the assumption that 50% of both installments will vest. (5) 152,671 of PSU awards will vest, if at all, in two equal installments, with (a) the first installment to vest upon the filing of a biologics license application with the FDA for ALLO-501A, provided that 125% of such installment shall vest if such filing is completed by the end of 2025, 100% of such installment shall vest if such filing is completed in 2026 and 50% of such installment shall vest if such filing is completed after 2026, and (b) the second installment to vest upon FDA approval of ALLO-501A, provided that 125% of such installment shall vest if such approval is achieved by the end of 2025, 100% of such installment shall vest if such approval is achieved in 2026 and 50% of such installment shall vest if such approval is achieved after 2026. Any unvested portion of PSUs shall expire unvested after five years. Number of PSU awards in the table above is 76,336 and estimated based on the assumption that 50% of both installments will vest. (6) 48,852 of PSU awards granted in 2023 will vest, if at all, upon our stock price achieving a 30-day weighted average trading price of $18.00 per share prior to January 3, 2025, and 99,183 of PSU awards will vest, if at all, upon the first FDA approval of a company product prior to January 3, 2028. (7) Our stock options vest as to 1/4th of the shares subject to the option upon the first anniversary of the grant date and 1/36th of the remaining shares each month thereafter until such award is fully vested on the four year anniversary of the grant date. (8) Based on the closing market price of our common stock on December 29, 2023 of $3.21 per share.
Pay Versus Performance
Pay Versus Performance As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive "compensation actually paid" and certain financial performance of our company. Use of the term "compensation actually paid" is required by the SEC's rules and as a result of the calculation methodology required by the SEC, such amounts differ from compensation actually received by the individuals and the compensation decisions described in the "Discussion of Named Executive Officer Compensation" section above.
Pay Versus Performance
| Pay Versus Performance | | | | | | | | Year | Summary Compensation Table Total for Principal Executive Officer (“PEO”)(1) ($) | Compensation Actually Paid to PEO(2) ($) | Average Summary Compensation Table Total for Non-PEO Named Executive Officers (“NEOs”)(3) ($) | Average Compensation Actually Paid to Non-PEO NEOs(4) ($) | Value of Initial Fixed $100 Investment Based On: | Net Income (Loss) (thousands)(6) | | | | | | | Total Shareholder Return (“TSR”)(5) ($) | | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | | 2023 | 14,061,848 | 1,289,577 | 6,967,886 | 2,717,460 | 12.36 | (327,265) | | 2022 | 14,797,837 | 1,395,619 | 4,967,452 | (400,254) | 24.90 | (340,414) | | 2021 | 10,161,454 | (2,306,242) | 4,969,151 | 642,739 | 57.63 | (182,051) |
Pay Versus Performance
(1) The dollar amounts reported in column (b) are the amounts of total compensation reported for Dr. Chang (our Chief Executive Officer) for each corresponding year in the “Total” column of the Summary Compensation Table. Refer to “2023 Summary Compensation Table.” (2) The dollar amounts reported in column (c) represent the amount of “compensation actually paid” to Dr. Chang, 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 Dr. Chang during the applicable year. In accordance with Item 402(v) of Regulation S-K, the following adjustments were made to Dr. Chang’s total compensation for each year to determine the compensation actually paid:
Pay Versus Performance
| Year | Reported Summary Compensation Table Total for PEO ($) | Reported Value of Equity Awards(a) ($) | Equity Award Adjustments(b) ($) | Compensation Actually Paid to PEO ($) | | 2023 | 14,061,848 | (13,067,253) | 294,982 | 1,289,577 |
Pay Versus Performance
(a) The grant date fair value of equity awards represents the total of the amounts reported in the “Option Awards” and “Stock Awards” columns in the Summary Compensation Table for the applicable year. (b) The equity award adjustments for each applicable year include the addition (or subtraction, as applicable) of the following: (i) 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; (ii) 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; (iii) for awards that are granted and vest in same applicable year, the fair value as of the vesting date; (iv) 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; (v) for awards granted in prior years that are determined to fail to meet the applicable vesting conditions during the applicable year, a deduction for the amount equal to the fair value at the end of the prior fiscal year; and (vi) the dollar value of any dividends or other earnings paid on stock or option awards in the applicable year prior to the vesting date that are not otherwise reflected in the fair value of such award or included in any other component of total compensation for the applicable year. The valuations were performed using the Black-Sholes option pricing model, the lattice option pricing model or Monte Carlo simulation. The valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. The amounts deducted or added in calculating the equity award adjustments are as follows:
Pay Versus Performance
| Year | Year End Fair Value of Outstanding and Unvested Equity Awards Granted in the Year ($) | Change in Fair Value of Outstanding and Unvested Equity Awards Granted in Prior Years as of the End of the Year ($) | Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year ($) | Total Equity Award Adjustments ($) | | 2023 | 4,878,379 | (1,761,911) | (2,821,486) | 294,982 |
Pay Versus Performance
(3) The dollar reported in column (d) represent the average of the amounts reported for our Company’s NEOs as a group (excluding Dr. Chang) in the “Total” column of the Summary Compensation Table in each applicable year. The names of each of the NEOs (excluding Dr. Chang) included for purposes of calculating the average amounts in each applicable year are as follows: for 2023, Dr. Roberts and Mr. Moore, and for 2022 and 2021, Dr. Eric Schmidt, Dr. Rafael Amado, Dr. Alison Moore and Mr. Veer Bhavnagri, our former Chief Financial Officer, former Executive Vice President of Research and Development, former Chief Technical Officer, and former General Counsel, respectively. (4) The dollar amounts reported in column (e) represent the average amount of “compensation actually paid” to the NEOs as a group (excluding Dr. Chang), as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual average amount of compensation earned by or paid to the NEOs as a group (excluding Dr. Chang) during 2023. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to average total compensation for the NEOs as a group (excluding Dr. Chang) for 2023 to determine the compensation actually paid, using the same methodology described above in Note (2):
Pay Versus Performance
| Year | Average Reported Summary Compensation Table Total for Non-PEO NEOs ($) | Average Reported Value of Equity Awards ($) | Average Equity Award Adjustments(a) ($) | Average Compensation Actually Paid to Non-PEO NEOs ($) | | 2023 | 6,967,886 | (6,317,014) | 2,066,588 | 2,717,460 |
Pay Versus Performance
(a) The amounts deducted or added in calculating the total average equity award adjustments are as follows:
Pay Versus Performance
| Year | Average Year End Fair Value of Outstanding and Unvested Equity Awards Granted in the Year ($) | Total Average Equity Award Adjustments ($) | | 2023 | 2,066,588 | 2,066,588 |
Pay Versus Performance
(5) Cumulative TSR is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between our Company’s share price at the end and the beginning of the measurement period by our company’s share price at the beginning of the measurement period. No dividends were paid on stock or option awards in 2021, 2022 or 2023. (6) The dollar amounts reported represent the amount of net income (loss) reflected in our consolidated audited financial statements for the applicable year.
Analysis of the Information Presented in the Pay Versus Performance Table
Analysis of the Information Presented in the Pay Versus Performance Table We generally seek to incentivize long-term performance, and therefore do not specifically align our performance measures with “compensation actually paid” (as computed in accordance with Item 402(v) of Regulation S-K) for a particular year. In accordance with Item 402(v) of Regulation S-K, we are providing the following descriptions of the relationships between information presented in the Pay Versus Performance table.
Compensation Actually Paid and Net Income (Loss)
Compensation Actually Paid and Net Income (Loss) Because we are a clinical-stage company, we did not have any product-based revenue during the periods presented. Consequently, we have not historically looked to net income (loss) as a performance measure for our executive compensation program. We also expect and have experienced higher net losses over time as we progress the development of our product candidates through clinical trials. Moreover, as a pre-commercial stage company with only limited, nonrecurring revenue associated with collaborations, we do not believe there is any meaningful relationship between our net loss and compensation actually paid to our NEOs during the periods presented.
Compensation Actually Paid and Cumulative TSR
Compensation Actually Paid and Cumulative TSR The chart below shows the relationship between compensation actually paid to our PEO, the average of compensation actually paid to our non-PEO NEOs, and the Company's cumulative TSR over the three most recently completed fiscal years. All information provided above under the “Pay Versus Performance” heading will not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing, except to the extent the Company specifically incorporates such information by reference.
2023 Director Compensation Table
2023 Director Compensation Table The following table shows for the fiscal year ended December 31, 2023 certain information with respect to the compensation of all non-employee directors of the Company that served during 2023:
2023 Director Compensation Table
| Name | Fees earned ($) | Stock awards ($)(1) | Option awards ($)(3) | All other Compensation ($)(4) | Total ($) | | Elizabeth Barrett | 52,500 | — | 423,933 | — | 476,433 | | Arie Belldegrun, M.D. | — | 5,331,258 (2) | 3,380,244 | 649,097 | 9,360,599 (5) | | David Bonderman | — | — | — | — | — | | John DeYoung | — | — | — | — | — | | Franz Humer, Ph.D. | 160,000 | 424,998 | — | — | 584,998 | | Joshua Kazam | 50,500 | — | 423,993 | 210,000 | 684,493 | | Stephen Mayo, Ph.D. | 40,000 | — | 423,993 | — | 463,993 | | Deborah Messemer | 70,000 | 424,998 | — | — | 494,998 | | Vicki Sato, Ph.D. | 54,000 | 339,999 | 84,787 | — | 478,786 | | Todd Sisitsky | — | — | — | — | — | | Owen Witte, M.D | 50,000 | 424,998 | — | 35,000 | 509,998 |
2023 Director Compensation Table
(1) The amounts reported in this column represent the aggregate grant date fair value of the RSUs granted during the year ended December 31, 2023, as computed in accordance with Financial Accounting Standard Board Accounting Standards Codification Topic 718 for stock-based compensation transactions (ASC Topic 718) excluding the impact of estimated forfeitures related to service-based vesting conditions, which value is based on the closing market price of our common stock on the date of grant. As of December 31, 2023, the aggregate number of RSUs outstanding held by our non-employee directors were: Dr. Belldegrun: 1,309,794; Dr. Humer: 37,281; Mr. Kazam: zero; Dr. Mayo: 23,552; Ms. Messemer: 37,281; Dr. Sato: 36,279 and Dr. Witte: 37,281. For a discussion of valuation assumptions, see Note 10 “Stock-based Compensation” to our financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023. (2) The dollar amounts of RSUs and PSUs granted to Dr. Belldergun reflect the aggregate grant date fair value of RSUs and PSUs computed in accordance with FASB ASC 718. The grant date fair value of the 2023 RSUs is based on the closing market price of the Company's common stock on the date of grant. The grant date fair value of the PSUs is determined using Monte Carlo simulation for PSUs that vest upon achievement of a market condition. For the 2023 PSUs that vest upon achievement of a performance condition, the grant date fair value is based on the probable outcome of such condition. Assuming that maximum performance is achieved, the value of the PSUs with performance conditions that were granted to Dr. Belldegrun in 2023 would have been $2,487,003 at the date of grant under FASB ASC 718. 493,452 of PSU awards granted to Dr. Belldegrun with a grant date fair value of $1,352,058 will vest, if at all, upon our stock price achieving a 30-day weighted average trading price of $18.00 per share prior to January 3, 2025, and 493,453 of PSU awards with a grant date fair value of $2,487,003 will vest, if at all, upon the first FDA approval of a Company product prior to January 3, 2028. For a discussion of valuation assumptions, see Note 10 “Stock-based Compensation” to our financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023. (3) The dollar amounts in this column represent the aggregate grant date fair value of stock option awards granted in 2023. These amounts have been computed in accordance with FASB ASC Topic 718, using the Black-Scholes option pricing model. For a discussion of valuation assumptions, see Note 10 “Stock-based Compensation” to our financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023. These amounts do not reflect the actual economic value that will be realized by the directors upon the vesting of the stock options, the exercise of the stock options, or the sale of the common stock underlying such stock options. As of December 31, 2023, the aggregate number of shares outstanding under all option awards held by our non-employee directors were: Ms. Barrett: 250,575; Dr. Belldegrun: 2,847,489; Dr. Humer: 183,750; Mr. Kazam: 116,120; Dr. Mayo: 170,607; Ms. Messemer: 351,750; Dr. Sato: 93,451; and Dr. Witte: 89,575. (4) For Dr. Belldegrun, amount shown represents $482,600 in consulting fees paid to Bellco Capital LLC (“Bellco”) in 2023 and an annual performance award of $166,497 paid to Bellco in 2024 for services rendered in 2023. Bellco is owned by Dr. Belldegrun, as co-trustee of the Belldegrun Family Trust, and Dr. Rebecka Belldegrun, as co-trustee of the Belldegrun Family Trust. For Mr. Kazam, amount shown represents consulting fees paid to Two River, LLC (“Two River”) in 2023. Mr. Kazam provides consulting services to us through Two River and is a venture partner of Two River. For more information, see description of our consulting arrangement with Bellco and Two River below under “Transactions With Related Persons—Certain Related-Person Transactions—Consulting Arrangements”. For Dr. Witte, amount shown represents $35,000 in fees earned in connection with Dr. Witte's previous services on our scientific advisory board. In September 2023, Dr. Witte stepped down from the Company’s scientific advisory board and will no longer receive future compensation as a member. (5) For a description of Dr. Belldegrun’s compensation, see the “―Executive Chair Compensation” section below. We have reimbursed and will continue to reimburse all of our non-employee directors for their travel, lodging and other reasonable expenses incurred in attending meetings of our Board of Directors and committees of our Board of Directors, and will pay for the travel, lodging and other reasonable expenses incurred by our employee directors to attend meetings of our Board of Directors and, as applicable, committees of our Board of Directors.
Non-Employee Director Compensation Policy
Non-Employee Director Compensation Policy Our 2023 non-employee director compensation policy included: •an annual cash retainer of $40,000; •an additional annual cash retainer of $12,500, $7,500, $5,000 and $10,000 for service as a member of the Audit Committee, Compensation Committee, Nominating and Corporate Governance Committee, and Research and Development Committee, respectively; •an additional annual cash retainer of $100,000, $25,000, $15,000, $10,000, and $20,000 for service as chair of the International and Business Development Oversight Committee, Audit Committee, Compensation Committee, Nominating and Corporate Governance Committee, and Research and Development Committee, respectively (in lieu of the committee member retainer above); •an additional cash payment of $3,500 per meeting for each other member of the International and Business Development Oversight Committee; and $5,000 per annual Scientific Advisory Board meeting attended by a member of the Research and Development Committee; •an initial option grant, vesting in 36 equal monthly installments, and/or an initial restricted stock unit award, vesting annually (or, commencing in 2023, semi-annually in the case of restricted stock unit awards) over a three-year period from the date of grant, having an aggregate grant date value of $850,000, with the director designating the proportionate share between the initial option grant and initial restricted stock unit award prior to or on the date of grant; and •an annual option grant, vesting in 12 equal monthly installments, and/or an annual restricted stock unit award, vesting on the one-year anniversary of the date of grant (or, commencing in 2023, semi-annually over a one-year period in the case of restricted stock unit awards), having an aggregate grant date value of $425,000, with the director designating the proportionate share between the annual option grant and annual restricted stock unit award prior to or on the date of grant. The annual grants will be made on the date of each of our annual meetings of stockholders. Each of the equity awards described above will vest and become exercisable subject to the non-employee director’s continuous service with us through each applicable vesting date, provided that each option and restricted stock unit award will vest in full upon a change of control of the Company, as defined under our EIP. The stock options and restricted stock unit awards will be granted under our EIP. In consultation with Compensia, the Compensation Committee and specifically Mr. Bonderman and Mr. DeYoung reviewed the non-employee director compensation policy and concluded that no changes were warranted in 2023. Neither Mr. Bonderman nor Mr. DeYoung accept any compensation for serving on our Board of Directors. In March 2024, however, upon the recommendation of the Compensation Committee, our Board approved an amendment to our non-employee director compensation policy which lowers the grant date fair value of any initial option grants for new non-employee directors from $850,000 to $600,000 and lowers the grant date fair value of the annual option grants from $425,000 to $300,000. The Compensation Committee recommended these changes following a review of non-employee director compensation peer data with Compensia. The new compensation levels were set at the 50th percentile of the peer data, which decreased from the prior year’s assessment.
Non-Employee Director Compensation Policy
| Security Ownership or Certain Beneficial Owners and Management |
Non-Employee Director Compensation Policy
The following table sets forth certain information regarding the ownership of the Company’s common stock as of March 31, 2024 by: (i) each director; (ii) each of the Company’s named executive officers; (iii) all current executive officers and directors of the Company as a group; and (iv) all those known by the Company to be beneficial owners of more than 5% of its common stock. The table is based upon information supplied by officers, directors and principal stockholders, Schedules 13D and 13G filed with the SEC and other sources believed to be reliable by the Company. Unless otherwise indicated in the footnotes to this table and subject to community property laws where applicable, the Company believes that each of the stockholders named in this table has sole voting and investment power with respect to the shares indicated as beneficially owned. Applicable percentages are based on 170,452,967 shares outstanding on March 31, 2024, adjusted as required by rules promulgated by the SEC. The number of shares of common stock used to calculate the percentage ownership of each listed beneficial owner includes the shares of common stock underlying options or convertible securities held by such beneficial owner that are exercisable or convertible within 60 days following March 31, 2024. Unless otherwise indicated, the address for each person or entity listed in the table is c/o Allogene Therapeutics, Inc., 210 East Grand Avenue, South San Francisco, California 94080.
Non-Employee Director Compensation Policy
| Name of Beneficial Owner | Number of shares Beneficially Owned | Percentage Beneficially Owned | | Greater than 5% Stockholders | | | | Fidelity Management Research LLC(1) | 25,241,499 | 14.8% | | Pfizer Inc.(2) | 22,032,040 | 12.9% | | TPG GP A, LLC(3) | 18,716,306 | 11.0% | | BlackRock, Inc.(4) | 10,001,804 | 5.9% | | Vanguard Group(5) | 9,030,825 | 5.3% | | Directors and Named Executive Officers | | | | David Bonderman(6) | 18,716,306 | 11.0% | | Arie Belldegrun, M.D.(7) | 9,983,329 | 5.8% | | David Chang, M.D., Ph.D.(8) | 10,047,561 | 5.7% | | Joshua Kazam(9) | 419,183 | * | | Franz Humer, Ph.D.(10) | 412,922 | * | | Deborah Messemer(11) | 376,925 | * | | Owen Witte, M.D.(12) | 345,126 | * | | Elizabeth Barrett(13) | 250,575 | * | | Vicki Sato, Ph.D.(14) | 155,272 | * | | Todd Sisitsky | — | — | | John DeYoung | — | — | | Stephen Mayo(15) | 172,383 | * | | Zachary J Roberts, M.D.(16) | 911,302 | * | | Earl Douglas(17) | 960,854 | * | | Timothy Moore(18) | 831,024 | * | | Geoffrey Parker(19) | 950,190 | * | | All current executive officers and directors as a group (16 persons)(20) | 44,532,952 | 24.3% |
Non-Employee Director Compensation Policy
* Represents beneficial ownership of less than 1%. (1) Consists of 25,241,499 shares of common stock held by Fidelity Management & Research Company LLC (“FMR LLC”). The address of FMR LLC is 245 Summer Street, Boston, Massachusetts 02210. This information is based on the Schedule 13G filed on February 9, 2024 with the SEC. (2) Consists of 22,032,040 shares of common stock held by Pfizer. The address of Pfizer is 235 E. 42nd Street, New York, NY 10017. This information is based on the Schedule 13D/A filed on October 25, 2023 with the SEC. (3) Consists of an aggregate of 18,716,306 shares of common stock. TPG GP A is the managing member of TPG Group Holdings (SBS) Advisors, LLC, a Delaware limited liability company, which is the general partner of TPG Group Holdings (SBS), L.P., a Delaware limited partnership, which holds 100% of the shares of Class B common stock (which represents a majority of the combined voting power of the common stock) of TPG Inc., a Delaware corporation (“TPG”), which is the controlling shareholder of TPG GP Co, Inc., a Delaware corporation, which is the managing member of TPG Holdings I-A, LLC, a Delaware limited liability company, which is the general partner of TPG Operating Group I, L.P., a Delaware limited partnership, which is the sole member of each of (i) TPG GenPar VII Advisors, LLC, a Delaware limited liability company and (ii) The Rise Fund GenPar Advisors, LLC, a Delaware limited liability company. TPG GenPar VII Advisors, LLC is the general partner of TPG GenPar VII, L.P., a Delaware limited partnership, which is the general partner of TPG Carthage Holdings, L.P., a Delaware limited partnership, which directly holds 12,477,536 shares of Common Stock. The Rise Fund GenPar Advisors, LLC is the general partner of The Rise Fund GenPar, L.P., a Delaware limited partnership, which it the general partner of The Rise Fund Carthage, L.P., a Delaware limited partnership (together with TPG Carthage Holdings, L.P., the “TPG Funds”), which directly holds 6,238,770 shares of Common Stock. Because of TPG GP A’s relationship with the TPG Funds, TPG GP A may be deemed to beneficially own the shares of Common Stock held by the TPG Funds. TPG GP A is owned by entities owned by Messrs. Bonderman, Coulter and Winkelried. Because of the relationship of Messrs. Bonderman, Coulter and Winkelried to TPG GP A, each of Messrs. Bonderman, Coulter and Winkelried may be deemed to beneficially own the shares of Common Stock held by the TPG Funds. Messrs. Bonderman, Coulter and Winkelried disclaim beneficial ownership of the shares of Common Stock held by the TPG Funds except to the extent of their pecuniary interest therein. The address of each of the TPG Funds is c/o TPG Global, LLC, 301 Commerce Street, Suite 3300, Fort Worth, Texas 76102. This information is based on the Schedule 13D/A filed on January 18, 2022 with the SEC. (4) Based solely on information contained in a Schedule 13G as filed with the SEC on January 29, 2024 by BlackRock, Inc. (“BlackRock”). According to the Schedule 13G, BlackRock has sole voting power with respect to 9,787,819 shares and sole dispositive power with respect to 10,001,804 shares. The address of BlackRock is 50 Hudson Yards, New York, NY 10001. The Schedule 13G filed by BlackRock provides information only as of December 31, 2023. Because the information in the table above does not reflect any transactions between December 31, 2023 and March 31, 2024, BlackRock’s actual beneficial ownership of our common stock on March 31, 2024 may be different than reported in the table above. (5) Based solely on information contained in a Schedule 13G as filed with the SEC on February 13, 2024 by Vanguard Group (“Vanguard”). According to the Schedule 13G, Vanguard has shared voting power with respect to 56,409 shares, sole dispositive power with respect to 8,863,635 shares and shared dispositive power with respect to 167,190 shares. The address of Vanguard is 100 Vanguard Blvd., Malvern, PA 19355. The Schedule 13G filed by Vanguard provides information only as of December 29, 2023. Because the information in the table above does not reflect any transactions between December 29, 2023 and March 31, 2024, Vanguard’s actual beneficial ownership of our common stock on March 31, 2024 may be different than reported in the table above. (6) Consists of the shares described in note (2) above. (7) Consists of (i) 4,710,120 shares of common stock beneficially owned by Rebecka Belldegrun, as beneficiary and trustee of the Bellco Legacy Trust fbo Rebecka Belldegrun, (ii) 195,039 shares of common stock beneficially owned by Bellco Legacy LLC, of which Dr. Belldegrun is a manager, (iii) 1,798,163 shares of common stock beneficially owned by Vida Ventures LLC (“Vida”), of which VV Manager LLC is the manager, of which Dr. Belldegrun is a Senior Managing Director, (iv) 432,518 shares of common stock held by Dr. Belldegrun, and (v) 2,847,489 shares of common stock issuable upon exercise of options, 1,414,559 of which will be unvested but exercisable within 60 days of March 31, 202 held by Dr. Belldegrun. The address of Dr. Belldegrun, Bellco Legacy Trust and Bellco Legacy LLC is 10100 Santa Monica Blvd., 15th Floor, Los Angeles, CA 90067. The address of Vida Ventures LLC is 40 Broad Street, #201, Boston, MA 02109. (8) Consists of (i) 2,313,927 shares of common stock held by David Chang, M.D., Ph.D., (ii) 1,201,108 shares of common stock held by the Chang 2006 Family Trust (“Chang Trust”), (iii) 856,044 shares of common stock held by the JEC 2019 Trust, (iv) 856,044 shares of common stock held by the RTC 2019 Trust, and (v) 4,820,438 shares of common stock issuable upon exercise of options, 2,125,511 of which will be unvested but exercisable within 60 days of March 31, 2024. Dr. Chang is co-trustee of the Chang Trust, JEC 2019 Trust and RTC 2019 Trust. (9) Consists of (i) 303,063 shares of common stock held by Joshua Kazam and (ii) 116,120 shares of common stock issuable upon exercise of options, 6,976 of which will be unvested but exercisable within 60 days of March 31, 2024. (10) Consists of (i) 229,172 shares of common stock held by Franz Humer, Ph.D. and (ii) 183,750 shares of common stock issuable upon exercise of options. (11) Consists of (i) 6,535 shares of common stock held by the Messemer Family Trust (“Messemer Trust”), (ii) 18,640 shares of common stock held by Ms. Messemer and (iii) 351,750 shares of common stock issuable upon exercise of options. Ms. Messemer is trustee of the Messemer Trust. (12) Consists of (i) 255,551 shares of common stock held by Owen Witte, M.D. and (ii) 89,575 shares of common stock issuable upon exercise of options. (13) Consists of 250,575 shares of common stock issuable upon exercise of options, 13,198 of which will be unvested but exercisable within 60 days of March 31, 2024. (14) Consists of (i) 64,821 shares of common stock held by Vicki Sato, Ph.D., and (ii) 90,451 shares of common stock issuable upon exercise of options, 3,697 of which will be unvested but exercisable within 60 days of March 31, 2024. (15) Consists of (i) 1,776 shares of common stock held by Stephen Mayo and (ii) 170,607 shares of common stock issuable upon exercise of options, 30,864 of which will be unvested but exercisable within 60 days of March 31, 2024. (16) Consists of (i) 38,287 shares of common stock held by Zachary J Roberts, M.D. and (ii) 873,015 shares of common stock issuable upon exercise of options, 582,011 of which will be unvested but exercisable within 60 days of March 31, 2024. (17) Consists of 960,854 shares of common stock issuable upon exercise of options, all of the options will be unvested but exercisable within 60 days of March 31, 2024. (18) Consists of 831,024 shares of common stock issuable upon exercise of options, 605,956 of which will be unvested but exercisable within 60 days of March 31, 2024.
Non-Employee Director Compensation Policy
(19) Consists of (i) 190 shares of common stock held by Geoffrey Parker and (ii) 950,000 shares of common stock issuable upon exercise of options, all of the options will be unvested but exercisable within 60 days of March 31, 2024. (20) Includes the shares described in notes (6) through (19) above.
Non-Employee Director Compensation Policy
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