The following table shows compensation awarded to or earned by the Company’s Chief Executive Officer and its two other most highly compensated executive officers, or the Named Executive Officers, for the fiscal years ended December 31, 2017 and 2016.
S
UMMARY
C
OMPENSATION
T
ABLE
FOR
F
ISCAL
2017
Name and Principal
Position
|
Year
|
Salary
($)
|
Bonus
($)
(1)
|
Stock
Award
($)
(2)
|
Option Awards
($)
(2)
|
Non-Equity
Incentive Plan
Compensation
($)
(3)
|
All Other
Compensation
($)
|
Total
($)
|
|
|
|
|
|
|
|
|
|
Jay Shepard
(4)
Chief Executive Officer
|
2017
|
$541,298
|
—
|
$2,037,360
|
$1,392,069
|
$94,500
|
$5,570
|
$4,070,797
|
|
2016
|
$522,173
|
—
|
$692,064
|
$1,510,089
|
$337,900
|
$6,337
|
$3,068,563
|
|
|
|
|
|
|
|
|
|
Tracy Woody
(5)
|
|
|
|
|
|
|
|
|
Chief Commercial Officer
|
2017
|
$492,354
|
—
|
$1,319,560
|
$1,353,730
|
$39,760
|
$1,783
|
$3,207,187
|
|
|
|
|
|
|
|
|
|
Robert Gut
(6)
|
|
|
|
|
|
|
|
|
Chief Medical Officer
|
2017
|
$349,610
|
—
|
$1,375,330
|
$1,674,925
|
$19,073
|
$1,374
|
$3,420,312
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joshua T. Brumm
(7)
Former Chief Financial Officer and
Former Chief Operating Officer
|
2017
|
$951,701
|
—
|
$627,770
|
$630,130
|
—
|
$1,855
|
$2,211,456
|
2016
|
$376,989
|
$70,000
|
$397,880
|
$604,902
|
$150,901
|
$2,461
|
$1,603,133
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Colin Hislop
(8)
Former Chief Medical Officer
|
2017
|
$588,379
|
—
|
$278,850
|
$419,830
|
—
|
$6,270
|
$1,293,329
|
|
2016
|
$289,665
|
$35,000
|
$60,100
|
$1,244,095
|
$104,621
|
$5,112
|
$1,738,593
|
(1)
|
These amounts represent discretionary bonuses for extraordinary performance in 2017 as awarded by the Compensation Committee of the Board of Directors.
|
(2)
|
In accordance with SEC rules, this column reflects the aggregate fair value of the stock and option awards granted during the respective fiscal year computed as of their respective grant dates in accordance with Financial Accounting Standard Board Accounting Standards Codification Topic 718 for stock-based compensation transactions (ASC 718). The valuation assumptions used in determining such amounts are described in Note 2 and Note 10 to our financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017.
|
(3)
|
Amounts reported in the non-equity incentive compensation plan column represent awards earned based on the achievement of company goals for the fiscal year presented as determined by the Compensation Committee of the Board of Directors.
|
(4)
|
Mr. Shepard was appointed as our Chief Executive Officer in May 2015. Prior to May 2015, he was a member and chairman of our Board of Directors.
|
(5)
|
Mrs. Woody joined the company in March 2017.
|
(6)
|
Dr. Gut joined the company in September 2017.
|
(7)
|
Mr. Brumm became our Chief Operating Officer effective January 27, 2017. On December 1, 2017 Mr. Brumm resigned.
In connection with Mr. Brumm’s resignation, 20,086 unvested and outstanding equity awards were accelerated and the value realized for said shares equals $45,194.
|
(8)
|
Dr. Hislop joined the Company in April 2016. On October 6, 2017, Versartis, Inc. notified Dr. Hislop that he would be terminated effective October 20, 2017.
|
N
ARRATIVE
TO
S
UMMARY
C
OMPENSATION
T
ABLE
Employment Offer Letters
We have entered into employment offer letters with each of our Named Executive Officers. The offer letters provide for “at will” employment and set forth the terms and conditions of employment, including annual base salary, target bonus opportunity, equity compensation, severance benefits and eligibility to participate in our employee benefit plans and programs. Our named
10
executive officers were each required to execute our standard proprietary information and inventions agre
ement. The material terms of these offer letters are summarized below. These summaries are qualified in their entirety by reference to the actual text of the offer letters, which are filed as exhibits to the 2017 Annual Report on Form 10-K.
Jay Shepard
We entered into an employment offer letter with Mr. Shepard, our Chief Executive Officer, on May 12, 2015. Effective as of May 6, 2015, the day of his appointment as our Chief Executive Officer, Mr. Shepard received an annual base salary of $500,000, with an annual target bonus of 50% of that base salary, based upon the achievement of performance criteria established by our Board of Directors.
In connection with his employment, on May 11, 2015, Mr. Shepard was granted an option to purchase 309,000 shares of our common stock under our 2014 Equity Incentive Plan, or our 2014 Plan. The option was granted with a per share exercise price equal to the fair market value of our common stock on the grant date. The option will vest over four years, with 25% of the shares subject to the option vesting on the first anniversary of his start date, and the remaining 75% of the shares subject to the option vesting in 36 substantially equal monthly installments thereafter, subject to his continuous service with us on each applicable vesting date. In connection with the commencement of his employment, on May 11, 2015, Mr. Shepard also received restricted stock units (RSUs) for 96,000 shares of our common stock. The RSUs will vest in four equal annual installments on the first, second, third and fourth anniversaries of his start date as our Chief Executive Officer, subject to his continuous service on each vesting date.
On January 28, 2016, the Compensation Committee increased Mr. Shepard’s annual base salary to $520,000, with an annual target bonus of 50% of that base salary, based upon the achievement of performance criteria established by our Board of Directors. Also on January 28, 2016, the Compensation Committee granted Mr. Shepard an option to purchase 209,200 shares of our common stock under our 2014 Plan. The option will vest over four years, with 8.33% of the shares subject to the option vesting on May 28, 2016 and the remaining 91.67% of the shares subject to the option vesting in 44 substantially equal monthly installments thereafter, subject to his continuous service with us on each applicable vesting date. Also on January 28, 2016, the Compensation Committee granted Mr. Shepard RSUs for 64,800 shares of our common stock. The RSUs will vest in four equal annual installments on the first, second, third and fourth anniversaries of the date of grant, subject to his continuous service on each vesting date.
On January 27, 2017, the Compensation Committee increased Mr. Shepard’s annual base salary to $540,000, with an annual target bonus of 50% of that base salary, based upon the achievement of performance criteria established by our Board of Directors. Also on January 27, 2017, the Compensation Committee granted Mr. Shepard an option to purchase 144,900 shares of our common stock under our 2014 Plan, and such options will vest over four years in 48 substantially equal monthly installments. Also on January 27, 2017, the Compensation Committee granted Mr. Shepard RSUs for 74,700 shares of our common stock. For 10,000 of those shares, one-third will vest on each of the first three anniversaries of the vesting start date, which is January 27, 2017. For the remaining 64,700 shares, 25% will vest on each of the first four anniversaries of the vesting start date, which is January 27, 2017.
On October 4, 2017, the Board of Directors of the Company approved a cash retention bonus for certain of the Company’s employees, including its Chief Executive Officer, Jay P. Shepard, pursuant to which employees will receive a bonus equal to six month’s salary payable after 12 months, conditioned on the employee’s continuing employment on such date. Mr. Shepard will receive a cash bonus of $270,000 payable after 12 months subject to their continuing employment as of such date. Also on October 4, 2017, the Board approved a new severance benefit plan for certain of the Company’s employees, including Mr. Shepard. Pursuant to the Severance Benefit Plan, if Mr. Shepard is involuntarily terminated without Cause (as defined in the Severance Benefit Plan) prior to October 5, 2018, then, upon execution of a general waiver and release, he will be entitled to a lump sum in the amount of 18 months of his then-effective base salary plus a lump sum equal to 140% of his monthly insurance premium in effect in September 2017 multiplied by 18 months. The Severance Benefit Plan supersedes any and all previously announced or maintained severance plans, except for the Company’s Change in Control Severance Benefit Plan, which remains in full force and effect.
On October 6, 2017, the Compensation Committee granted Mr. Shepard RSUs for 189,000 shares of our common stock as part of the retention plan. Such RSU shall have an effective date of grant of October 6, 2017 with 50% of the shares subject to the Award shall vest on each of the first and second anniversaries of the Vesting Commencement Date, respectively, subject to the Participant’s Continuous Service on each applicable vesting date.
On December 20, 2017, The Compensation Committee granted Mr. Shepard RSUs for 223,000 shares of our common stock as part of the Company’s Non-Employee Director Compensation Policy. Such RSU shall have an effective date of grant of December 20, 2017 with 25% of the shares subject to the Restricted Stock Units vest on each of the first four anniversaries of the Vesting Commencement Date, which shall be same as the Effective Date of Grant.
In addition, Mr. Shepard’s offer letter provides that upon a qualifying termination of employment, he will be entitled to certain severance payments and benefits, which are described below under “—Potential payments upon termination or change in control.”
11
Tracy Woody
We entered into an employment offer letter with Mrs. Woody, our Chief Commercial Officer, on February 22, 2017. Effective as of March 22, 2017. Mrs. Woody received an annual base salary of $365,000, with an annual target bonus of 40% of that base salary, based upon the achievement of performance criteria established by our Board of Directors. In addition, a relocation clause was included in the employment letter which included the company paying directly for: (1) three months of rent (up to a maximum of $8,000 a month), (2) travel expenses for three house hunting trips for Mrs. Woody and her family, and (3) $100,000 grossed up to offset the cost of moving to the San Francisco bay area and to counterbalance taxes.
In connection with her employment, on February 22, 2017, Mrs. Woody was granted an option to purchase 100,000 shares of our common stock under our 2014 Equity Incentive Plan, or our 2014 Plan. The option was granted with a per share exercise price equal to the fair market value of our common stock on the grant date. The option will vest over four years, with 25% of the shares subject to the option vesting on the first anniversary of his start date, and the remaining 75% of the shares subject to the option vesting in 36 substantially equal monthly installments thereafter, subject to his continuous service with us on each applicable vesting date. In connection with the commencement of her employment, on February 22, 2017, Mrs. Woody also received restricted stock units (RSUs) for 45,000 shares of our common stock. The RSUs will vest in four equal annual installments on the first, second, third and fourth anniversaries of her start date as our Chief Commercial Officer, subject to her continuous service on each vesting date.
On October 4, 2017, the Board of Directors of the Company approved a cash retention bonus for certain of the Company’s employees, including its Chief Commercial Officer, Tracy Woody, pursuant to which employees will receive a bonus equal to six month’s salary payable after 12 months, conditioned on the employee’s continuing employment on such date. Mrs. Woody will receive a cash bonus of $182,500 payable after 12 months subject to their continuing employment as of such date. Also on October 4, 2017, the Board approved a new severance benefit plan for certain of the Company’s employees, including Mrs. Woody. Pursuant to the Severance Benefit Plan, if Mrs. Woody is involuntarily terminated without Cause (as defined in the Severance Benefit Plan) prior to October 5, 2018, then, upon execution of a general waiver and release, she will be entitled to a lump sum in the amount of 12 months of hers then-effective base salary plus a lump sum equal to 140% of his monthly insurance premium in effect in September 2017 multiplied by 12 months. The Severance Benefit Plan supersedes any and all previously announced or maintained severance plans, except for the Company’s Change in Control Severance Benefit Plan, which remains in full force and effect.
On October 6, 2017, the Compensation Committee granted Mrs. Woody RSUs for 82,000 shares of our common stock as part of the retention plan. Such RSU shall have an effective date of grant of October 6, 2017 with 50% of the shares subject to the Award shall vest on each of the first and second anniversaries of the Vesting Commencement Date, respectively, subject to the Participant’s Continuous Service on each applicable vesting date.
On December 20, 2017, The Compensation Committee granted Mrs. Woody RSUs for 93,100 shares of our common stock as part of the Company’s Non-Employee Director Compensation Policy. Such RSU shall have an effective date of grant of December 20, 2017 with 25% of the shares subject to the Restricted Stock Units vest on each of the first four anniversaries of the Vesting Commencement Date, which shall be same as the Effective Date of Grant.
In addition, Mrs. Woody’s offer letter provides that upon a qualifying termination of employment, he will be entitled to certain severance payments and benefits, which are described below under “—Potential payments upon termination or change in control.”
Robert Gut
We entered into an employment offer letter with Dr. Gut, our Chief Medical Officer, on August 8, 2017. Effective as of September 5, 2017. Dr. Gut received an annual base salary of $425,000, with an annual target bonus of 40% of that base salary, based upon the achievement of performance criteria established by our Board of Directors. In addition, a relocation clause was included in the employment letter which included the company paying directly for: (1) three months of rent (up to a maximum of $8,000 a month), (2) travel expenses for three house hunting trips for Dr. Gut and his family, and (3) $100,000 grossed up to offset the cost of moving to the San Francisco bay area and to counterbalance taxes.
In connection with his employment, on September 5, 2017, Dr. Gut was granted an option to purchase 107,000 shares of our common stock under our 2014 Equity Incentive Plan, or our 2014 Plan. The option was granted with a per share exercise price equal to the fair market value of our common stock on the grant date. The option will vest over four years, with 25% of the shares subject to the option vesting on the first anniversary of his start date, and the remaining 75% of the shares subject to the option vesting in 36 substantially equal monthly installments thereafter, subject to his continuous service with us on each applicable vesting date. In connection with the commencement of his employment, on September 5, 2017, Dr. Gut also received restricted stock units (RSUs) for 48,000 shares of our common stock. The RSUs will vest in four equal annual installments on the first, second, third and fourth anniversaries of his start date as our Chief Medical Officer, subject to his continuous service on each vesting date.
12
On October 4, 2017, the Board of Directors of the Company approved a cash retention bonus for certain of the Company’s employees,
including its Chief Medical Officer, Robert Gut, pursuant to which employees
will receive a bonus equal to six month’s salary payable after 12 months, conditioned on the employee’s continuing employment on such date. Dr. Gut will receive a cash bonus of $212,000 payable after 12 months subject to their continuing employment as of
such date. Also on October 4, 2017, the Board approved a new severance benefit plan for certain of the Company’s employees,
including Dr. Gut. Pursuant to the Severance Benefit Plan, if Dr. Gut is involuntarily terminated without Cause (as defined in
the Severance Benefit Plan) prior to October 5, 2018, then, upon execution of a general waiver and release, he will be entitled to a lump sum in the amount of 12 months of his then-effective base salary plus a lump sum equal to 140% of his monthly insuran
ce premium in effect in September 2017 multiplied by 12 months. The Severance Benefit Plan supersedes any and all previously announced or maintained severance plans, except for the Company’s Change in Control Severance Benefit Plan, which remains in full f
orce and effect.
On October 6, 2017, the Compensation Committee granted Dr. Gut RSUs for 88,000 shares of our common stock as part of the retention plan. Such RSU shall have an effective date of grant of October 6, 2017 with 50% of the shares subject to the Award shall vest on each of the first and second anniversaries of the Vesting Commencement Date, respectively, subject to the Participant’s Continuous Service on each applicable vesting date.
On December 20, 2017, The Compensation Committee granted Dr. Gut RSUs for 91,300 shares of our common stock as part of the Company’s Non-Employee Director Compensation Policy. Such RSU shall have an effective date of grant of December 20, 2017 with 25% of the shares subject to the Restricted Stock Units vest on each of the first four anniversaries of the Vesting Commencement Date, which shall be same as the Effective Date of Grant.
In addition, Dr. Gut’s offer letter provides that upon a qualifying termination of employment, he will be entitled to certain severance payments and benefits, which are described below under “—Potential payments upon termination or change in control.”
Joshua T. Brumm
We entered into an employment offer letter with Mr. Brumm on November 8, 2013, pursuant to which he served as our Chief Financial Officer. In connection with his employment, on December 5, 2013, Mr. Brumm was granted an option to purchase 152,108 shares of our common stock under our 2009 Plan, with a per share exercise price equal to the fair market value of our common stock on the date of grant. The option will vest over four years, with 25% of the shares subject to the option vesting on the first anniversary of his start date, and the remaining 75% of the shares subject to the option vesting in 36 substantially equal monthly installments thereafter, subject to his continuous service on each applicable vesting date.
Effective January 1, 2015, Mr. Brumm received an annual base salary of $353,600, with an annual target bonus of 40% of that base salary, based upon the achievement of performance criteria established by our Chief Executive Officer and approved by our Board of Directors.
On January 28, 2016, the Compensation Committee increased Mr. Brumm’s annual base salary to $374,816, with an annual target bonus of 50% of that base salary, based upon the achievement of performance criteria established our Chief Executive Officer and approved by our Board of Directors. Also on January 28, 2016, the Compensation Committee granted Mr. Brumm an option to purchase 83,800 shares of our common stock under our 2014 Plan. The option will vest over four years, in equal monthly installments commencing on the date of grant, subject to his continuous service on each applicable vesting date. Also on January 28, 2016, the Compensation Committee granted Mr. Brumm RSUs for 26,000 shares of our common stock. The RSUs will vest in four equal annual installments on the first, second, third and fourth anniversaries of the date of grant, subject to his continuous service on each vesting date.
On October 11, 2016, the Compensation Committee approved a one-time cash bonus payment of $70,000 and a grant of RSUs for 10,000 shares of our common stock to Mr. Brumm. The RSUs will vest as to 33.33%, 33.33%, and 33.34% of the shares, respectively, on each of the first, second, and third anniversaries of the vesting start date, which is the date of grant, subject to his continuous service on each vesting date.
On January 27, 2017, the Compensation Committee increased Mr. Brumm’s annual base salary to $428,000, with an annual target bonus of 40% of that base salary, based upon the achievement of performance criteria established by our Chief Executive Officer and approved by our Board of Directors. Also on January 27, 2017, the Compensation Committee granted Mr. Brumm an option to purchase 65,590 shares of our common stock under our 2014 Plan, and such options will vest over four years in 48 substantially equal monthly installments. Also on January 27, 2017, the Compensation Committee granted Mr. Brumm RSUs for 43,900 shares of our common stock. 25% of the RSU shares will vest on each of the first four anniversaries of the vesting start date, which is January 27, 2017.
13
O
n November 20, 2017, we entered into a separation agreement with Mr. Brumm pursuant to which Mr. Brumm resigned effective December 1, 2017. Mr. Brumm will remain available to assist us with the transition through December
31, 2017. Under the Separation Agreement, Mr. Brumm received, in exchange for, among other things, a general release of all known and unknown legal claims, a lump sum of $510,008, (which is equivalent to one year of base salary plus a lump sum payment of
150% of the cost of Mr. Brumm’s monthly insurance premiums for group health insurance (as in effect in September 2017) multiplied by 12 months, six months’ acceleration of the unvested portion of all of Mr. Brumm’s outstanding equity awards, and a period o
f one year post-separation to exercise his outstanding vested stock options.
Dr. Colin Hislop
We entered into an employment offer letter with Dr. Hislop, who served as our Chief Medical Officer, on February 18, 2016. Effective as of his start date on April 4, 2016, Dr. Hislop receives an annual base salary of $385,000, with an annual target bonus of 40% of that base salary, based upon the achievement of personal and corporate criteria established by our Chief Executive Officer and approved by our Board of Directors.
In connection with his employment, Dr. Hislop was granted an option to purchase 223,100 shares of our common stock under our 2014 Plan,
with a per share exercise price equal to the fair market value of our common stock on the date of grant. The option will vest over four years, with 25% of the shares subject to the option vesting on the first anniversary of his start date, and the remaining 75% of the shares subject to the option vesting in 36 substantially equal monthly installments thereafter, subject to his continuous service on each applicable vesting date.
On October 11, 2016, the Compensation Committee approved a one-time cash bonus payment of $35,000 and a grant of RSUs for 5,000 shares of our common stock to Dr. Hislop. The RSUs will vest with 33.33%, 33.33%, and 33.34% of the shares, respectively, on each of the first, second, and third anniversaries of the vesting start date, which is the date of the grant, subject to his continuous service on each vesting date.
On January 27, 2017, the Compensation Committee increased Dr. Hislop’s annual base salary to $420,000, with an annual target bonus of 40% of that base salary, based upon the achievement of performance criteria established by our Chief Executive Officer and approved by our Board of Directors. Also on January 27, 2017, the Compensation Committee granted Dr. Hislop an option to purchase 43,700 shares of our common stock under our 2014 Plan. The option will vest over four years, with 6.25% of the shares subject to the option vesting on April 27, 2017, and the remaining shares vesting in 45 substantially equal monthly installments thereafter, subject to his continuous service on each vesting date. Also on January 27, 2017, the Compensation Committee granted Dr. Hislop RSUs for 19,500 shares of our common stock. 25% of the RSU shares will vest on each of the first four anniversaries of the vesting start date, which is January 27, 2017, subject to his continuous service on each vesting date.
On October 6, 2017, we notified Dr. Hislop that he would be terminated effective October 20, 2017. Dr. Hislop received as a severance benefit a lump sum payment in the aggregate amount of $206,339, which includes $175,000 representing five months of base salary and $31,339 representing five months of continued welfare benefits.
Employee benefit plans
Our named executive officers are eligible to participate in our employee benefit plans, including our medical, dental, vision, group life and accidental death and dismemberment insurance plans, in each case, on the same basis as all of our other employees. We maintain a 401(k) plan for the benefit of our eligible employees, including our named executive officers, as discussed in the section below entitled “—401(k) Plan.”
401(k) plan
We maintain a retirement savings plan, or 401(k) plan, that provides eligible U.S. employees with an opportunity to save for retirement on a tax advantaged basis. Under our 401(k) plan, eligible employees may defer eligible compensation subject to applicable annual contribution limits imposed by the Internal Revenue Code of 1986, as amended, or the Code. Employees’ pre-tax contributions are allocated to each participant’s individual account. Participants are immediately and fully vested in their contributions. We do not currently provide an employer match on employee contributions. The 401(k) plan is intended to be qualified under Section 401(a) of the Code with the 401(k) plan’s related trust intended to be tax exempt under Section 501(a) of the Code. As a tax-qualified retirement plan, contributions to the 401(k) plan and earnings on those contributions are not taxable to the employees until distributed from the 401(k) plan.
14
Pension benefits
We do not maintain any pension benefit plans.
Nonqualified deferred compensation
We do not maintain any nonqualified deferred compensation plans.
15
O
UTSTANDING
E
QUITY
A
WARDS
AT
F
ISCAL
Y
EAR
E
ND
.
The following table shows for the fiscal year ended December 31, 2017, certain information regarding outstanding equity awards at fiscal year-end for the Named Executive Officers. Each award set forth below is subject to accelerated vesting upon a qualifying termination of the executive’s employment with us following a change in control, as described under “—Potential Payments Upon Termination or Change in Control.”
O
UTSTANDING
E
QUITY
A
WARDS
A
T
D
ECEMBER
31, 2017
|
Option Awards
(1)(2)
|
Stock Awards
(1)
|
|
|
|
|
|
|
|
|
Name
|
Grant Date
|
Number of
Securities
Underlying
Unexercised
options (#)
exercisable
|
Number of
Securities
Underlying
Unexercised
options (#)
unexercisable
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Number of
shares or units of
stock that have
not vested (#)
|
Market value of
shares or units of
stock that have
not vested ($)
|
|
|
|
|
|
|
|
|
Jay Shepard
|
12/28/2013
(2)
|
78,891
|
—
|
$2.53
|
12/27/2023
|
—
|
—
|
|
2/19/2014
(2)
|
43,487
|
1,891
|
$8.165
|
2/18/2024
|
—
|
—
|
|
5/11/2015
(4)
|
—
|
—
|
—
|
—
|
48,000
|
$105,600
|
|
5/11/2015
(2)
|
199,562
|
109,438
|
$15.19
|
5/10/2015
|
—
|
—
|
|
1/28/2016
(5)
|
100,241
|
108,959
|
$10.68
|
1/27/2027
|
—
|
—
|
|
1/28/2016
(4)
|
—
|
—
|
—
|
—
|
48,600
|
$106,920
|
|
1/27/2017
(6)
|
33,206
|
111,694
|
$14.30
|
1/26/2027
|
—
|
—
|
|
1/27/2017
(4)
|
—
|
—
|
—
|
—
|
74,700
|
$164,340
|
|
10/06/2017
(4)
|
—
|
—
|
—
|
—
|
189,000
|
$415,800
|
|
12/20/2017
(4)
|
—
|
—
|
—
|
—
|
223,000
|
$490,600
|
|
|
|
|
|
|
|
|
Tracy Woody
|
3/22/2017
(7)
|
—
|
100,000
|
$20.15
|
3/21/2027
|
—
|
—
|
|
3/22/2017
(4)
|
—
|
—
|
—
|
—
|
45,000
|
$99,000
|
|
10/06/2017
(4)
|
—
|
—
|
—
|
—
|
82,000
|
$180,400
|
|
12/20/2017
(4)
|
—
|
—
|
—
|
—
|
93,100
|
$204,820
|
|
|
|
|
|
|
|
|
Robert Gut
|
9/05/2017
(7)
|
—
|
107,000
|
$19.80
|
9/04/2027
|
—
|
—
|
|
9/05/2017
(4)
|
—
|
—
|
—
|
—
|
48,000
|
$105,600
|
|
10/06/2017
(4)
|
—
|
—
|
—
|
—
|
88,000
|
$193,600
|
|
12/20/2017
(4)
|
—
|
—
|
—
|
—
|
91,300
|
$200,860
|
|
|
|
|
|
|
|
|
Joshua T. Brumm
|
12/5/2013
(2)
|
138,805
|
—
|
$2.53
|
12/4/2023
|
—
|
—
|
|
12/31/2013
(2)
|
4,347
|
—
|
$3.34
|
12/30/2023
|
—
|
—
|
|
2/19/2014
(2)
|
53,569
|
—
|
$8.17
|
2/18/2024
|
—
|
—
|
|
6/11/2014
(4)
|
—
|
—
|
—
|
—
|
|
$8,250
|
|
6/11/2014
(6)
|
31,332
|
|
$31.96
|
6/10/2024
|
—
|
—
|
|
12/26/2014
(4)
|
—
|
—
|
—
|
—
|
|
$5,744
|
|
12/26/2014
(6)
|
20,818
|
|
$22.24
|
12/25/2024
|
—
|
—
|
|
1/28/2016
(6)
|
48,883
|
|
$10.68
|
1/27/2026
|
—
|
—
|
|
1/28/2016
(4)
|
—
|
—
|
—
|
—
|
|
$28,600
|
|
10/11/2016
(3)
|
—
|
—
|
—
|
—
|
|
$14,665
|
|
1/27/2017
(6)
|
21,863
|
|
$14.30
|
1/26/2027
|
—
|
—
|
|
1/27/2017
(4)
|
—
|
—
|
—
|
—
|
|
$72,435
|
|
|
|
|
|
|
|
|
Colin Hislop
|
4/4/2016
(7)
|
48,662
|
|
$8.17
|
4/3/2026
|
—
|
—
|
|
10/11/2016
(3)
|
—
|
—
|
—
|
—
|
|
$7,333
|
|
1/27/2017
(6)
|
7,283
|
|
$14.30
|
1/26/2027
|
—
|
—
|
|
1/27/2017
(4)
|
—
|
—
|
—
|
—
|
|
$42,900
|
(1)
|
Vesting of all options and restricted stock units is subject to continued service on the applicable vesting date.
|
(2)
|
The shares subject to the stock options vest over a four-year period as follows: 25% of the shares underlying the options vest on the one-year anniversary of the vesting start date, and thereafter 1/48th of the shares vest each month.
|
(3)
|
The shares subject to these restricted stock units vest according to the following schedules: one-third of the shares subject to the award vest on each of the first, second and third anniversaries of the grant date.
|
(4)
|
The shares subject to these restricted stock units vest according to the following schedule: 25% of the shares vest on each of the first, second, third and fourth anniversaries of the grant date.
|
16
(5)
|
4/48
th
of the shares subject to the option became exercisable on May 28, 2016, and the balance of the shares vest and become exercisable monthly thereafter.
|
(6)
|
1/48
th
of the shares subject to the option become exercisable monthly measured from the date of the grant.
|
(7)
|
1/4th of the total number of shares subject to the option shall vest on the first yearly anniversary of the vesting commencement date and 1/36th of the remaining number of shares subject to the option shall vest on each monthly anniversary of the vesting commencement date thereafter.
|
P
OTENTIAL
P
AYMENTS
U
PON
T
ERMINATION
OR
C
HANGE
IN
C
ONTROL
Severance benefits other than in connection with a change in control
Mr. Shepard
Mr. Shepard’s offer letter provides that if we terminate his employment for any reason other than cause or permanent disability, or a qualifying termination, if Mr. Shepard (i) executes and does not revoke a release of claims within 60 days following the date he terminates employment with us, (ii) returns all of our property in his possession and (iii) resigns as a member of the Board, he will be entitled to twelve months of salary continuation payments and if he timely elects to continue his health insurance coverage under COBRA, we will pay a portion of his monthly COBRA premiums (at the same rate that we pay for active employees) for up to twelve months following the date he terminates employment with us. In addition, in the event of a qualifying termination, each of the option and restricted stock units granted to him under his offer letter will be credited with twelve months of service for purposes of vesting and the vested portion of such option and RSU shall remain exercisable for up to six months following the date he terminates service with us.
Mrs. Woody
Mrs. Woody’s offer letter provides that if we terminate her employment for any reason other than cause or permanent disability, and a Separation occurs, and the Separation is not in connection with a Change in Control or if Mrs. Woody terminates her employment for Good Reason, if Mrs. Woody (i) executes and does not revoke a release of claims within 60 days following the date she terminates employment with us, (ii) returns all of our property in her possession, she will be entitled to six months of salary continuation payments and if she timely elects to continue her health insurance coverage under COBRA, we will pay a portion of her monthly COBRA premiums (at the same rate that we pay for active employees) for up to six months following the date she terminates employment with us. In addition, in the event of a qualifying termination, the Company will accelerate the vesting of the number of shares subject to the Option and RSU that would have vested in the six-month period after her Separation. Furthermore, Mrs. Woody will have the opportunity to exercise the vested portion of her Option until the first anniversary of her termination.
Dr. Gut
Dr. Gut’s offer letter provides that if we terminate his employment for any reason other than cause or permanent disability and a separation occurs, and the Separation is not in connection with a Change in Control, if Dr. Gut (i) have executed a general release of all claims that you may have against the Company or persons affiliated with the Company, (ii) have returned all the Company property in his possession, he will be entitled to six months of salary continuation payments and if he timely elects to continue his health insurance coverage under COBRA, we will pay a portion of his monthly COBRA premiums (at the same rate that we pay for active employees) for up to six months following the date he terminates employment with us. In addition, in the event of a qualifying termination, the Company will accelerate the vesting of the number of shares subject to the Option and RSU that would have vested in the six month period after her Separation. Furthermore, Mrs. Woody will have the opportunity to exercise the vested portion of her Option until the first anniversary of her termination.
Change in control
Change in control severance benefit plan
We have adopted a change in control severance benefit plan, or the severance plan. The severance plan provides certain of our employees, including each of our named executive officers, with severance payments and benefits upon certain qualifying terminations of employment within a one-year period following the closing of a change in control, as defined in the severance plan. The summary below is qualified by reference to the actual text of the severance plan, which is filed as an exhibit to the Form S-1, as amended, filed with the SEC on March 10, 2014.
Under the severance plan, in the event of a participant’s involuntary termination without cause (and not due to death or disability) or if a participant resigns for good reason, if the participant in the severance plan (i) executes and does not revoke a release of claims within 60 days following the date he terminates employment with us and (ii) returns all of our property in his possession, he will be entitled to cash severance equal to the sum of his or her monthly base salary and monthly annual bonus target, multiplied by a
17
severance multiplier, which is 15 in the case of Mr. Shepard and 12 in the cases of Mr
s. Woody and Dr. Gut. In addition, following a qualifying termination, if a participant timely elects to continue his health insurance coverage under COBRA, we will pay a portion of his monthly COBRA premiums for up to 15 months in the case of Mr. Shepard,
and 12 months in the cases of Mrs. Woody and Dr. Gut, following the date of termination.
All stock awards which are vested and exercisable as of the date of a qualifying termination under the severance plan (including by virtue of the provisions of the applicable equity plan) will remain outstanding and exercisable until the earliest to occur of (i) the last day of the applicable severance period, which is 15 months in the case of Mr. Shepard and 12 months in the cases of Mrs. Woody and Dr. Gut and (i) the expiration of the original term of such stock awards.
If one of our named executive officers is entitled to severance benefits under the severance plan by virtue of a qualifying termination of employment within 12 months following a change in control, he would not be entitled to severance benefits under the terms of his offer letter.
In addition, the severance plan provides that, except as otherwise expressly provided in an agreement between us and a participant, if any payment or benefit a participant would receive in connection with a change in control would constitute a “parachute payment” within the meaning of Section 280G of the Internal Revenue Code and such payment or benefit would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code, then such payment or benefit will be equal to either (1) the largest portion of the change in control payment that would result in no portion of the payment or benefit being subject to the excise tax, or (2) the largest portion, up to and including the total payment or benefit, whichever amount, after taking into account all applicable taxes, including the excise tax (all computed at the highest applicable marginal rate), would result in the participant’s receipt, on an after-tax basis, of the greatest economic benefit to the participant, notwithstanding that all or some portion of the payment or benefit may be subject to the excise tax. If a reduction is so required, the reduction will occur in the order specified in the severance plan.
Treatment of options under our 2009 Stock Plan
Our 2009 Plan, provides that outstanding options will be treated as follows in the event of a change in control, subject to any other limitations proposed by the administrator of the 2009 Plan:
|
•
|
Immediately prior to the consummation of a change in control, outstanding repurchase rights held by us related to any outstanding options will terminate;
|
|
•
|
To the extent that outstanding options are not assumed or otherwise continued in connection with a change in control, the shares subject to each outstanding option will vest in full immediately prior to the closing of the change in control and the option will terminate immediately following the change in control; or
|
|
•
|
If outstanding options are assumed or otherwise continued in connection with a change in control, in the event of an involuntary termination of employment (as defined in the 2009 Plan) within 12 months following the closing of the change in control, the shares subject to such assumed or continued options will vest in full on the date of termination.
|
|
•
|
In addition, our form of option agreement under the 2009 Plan provides that if options are not assumed or otherwise continued in connection with a change in control transaction, the options subject to such agreements will become fully exercisable.
|
For purposes of the 2009 Plan, a change in control generally means (i) a merger, consolidation or other reorganization in which securities representing more than 50% of the total combined voting power of our outstanding securities are beneficially owned, directly or indirectly, by a person or persons different from the person or persons who beneficially owned those securities immediately prior to such transaction, (ii) a sale, transfer or other disposition of all or substantially all of our assets, or (iii) any person becomes the “beneficial owner”, directly or indirectly, of securities representing 50% or more of the total voting power of our then outstanding securities.
For purposes of the 2009 Plan, an involuntary termination generally means, during the 12 months following the closing of a change in control, either (1) a termination of service other than for misconduct (as defined in the 2009 Plan) or (2) a voluntary resignation following: a material diminution in the optionee’s base compensation; a material diminution in the optionee’s authority, duties, position or responsibilities; a material diminution in the authority, duties, position or responsibilities of the optionee’s supervisor (including a requirement that an optionee report to a corporate officer or employee instead of directly to our Board of Directors); a material diminution in the budget over which the optionee retains authority; a relocation of the optionee’s principal place of work to a location more than 50 miles away from the principal place of work prior to a change in control; or any other act or omission that constitutes a material breach by us of the 2009 Plan.
18
Treatment of stock awards under our 2014 Equity Incentive Plan
Our 2014 Plan, provides that in the event of certain corporate transactions, as defined in the 2014 Plan, the following provisions will apply to outstanding stock awards, unless otherwise provided in a stock award agreement or any other written agreement between us and a participant, or unless otherwise expressly provided by our Board of Directors at the time of grant of a stock award:
|
•
|
The surviving or acquiring corporation (or its parent) may assume, continue or substitute similar stock awards for outstanding stock awards under the 2014 Plan and any reacquisition or repurchase rights held by us may be assigned to the surviving or acquiring corporation (or its parent); provided, that if any such stock awards are so assumed, continued or substituted, if a participant incurs an involuntary termination on or within 12 months following the date of such corporate transaction, any unvested shares subject to such assumed, continued or substituted stock awards will vest in full as of the date of such termination;
|
|
•
|
To the extent that outstanding stock awards are not so assumed, continued or substituted, the vesting and, if applicable, exercisability of any such stock awards held by participants whose continuous service has not terminated prior to the effective time of the corporate transaction will be accelerated in full to a date prior to the effective time of such corporate transaction, and such stock awards will terminate if not exercised (if applicable) at or prior to the effective time of such corporation transaction, and any reacquisition or repurchase rights held by us will lapse, contingent upon the effectiveness of such corporate transaction;
|
|
•
|
To the extent that outstanding stock awards are not so assumed, continued or substituted, the vesting and, if applicable, exercisability of any such stock awards held by participants whose continuous service has terminated prior to the effective time of the corporate transaction will not be accelerated and all unvested stock awards held by such participants will terminate if not exercised (if applicable) prior to the effective time of the corporate transaction, but any reacquisition or repurchase rights held by us may continue to be exercised notwithstanding such corporate transaction; or
|
|
•
|
To the extent a stock award will terminate if not exercised prior to the effective time of a corporate transaction, our Board of Directors may provide that the holder of the stock award may not exercise the stock award, but instead will receive a payment, in such form as may be determined by our Board of Directors, equal in value to the excess, if any, of the value of the property the participant would have received upon exercise of the stock award over any exercise price payable by such holder in connection with such exercise.
|
A stock award may be subject to additional acceleration of vesting and exercisability upon or after a change in control, as defined in the 2014 Plan, as may be provided in the stock award agreement for such stock award or in any other written agreement between us and a participant, but in the absence of such a provision, no such acceleration will occur.
For purposes of the 2014 Plan, an involuntary termination generally means, during the 12 months following the closing of a corporate transaction or change in control, either (1) a termination of service other than for cause (as defined in the 2014 Plan) or (2) a voluntary resignation following: a material diminution in the participant’s base salary; a material diminution in the participant’s authority, duties, position or responsibilities; a material diminution in the authority, duties, position or responsibilities of the participant’s supervisor (including a requirement that a participant report to a corporate officer or employee instead of directly to our Board of Directors); a material diminution in the budget over which the participant retains authority; a relocation of the participant’s principal place of work to a location more than 50 miles away from the principal place of work prior to the consummation of a corporate transaction or a change in control; or any other act or omission that constitutes a material breach by us of the 2014 Plan.
19
D
IREC
TOR
C
OMPENSATION
The following table shows for the fiscal year ended December 31, 2017 certain information with respect to the compensation of all non-employee directors of the Company:
D
IRECTOR
C
OMPENSATION
FOR
F
ISCAL
2017
Name
|
Fees
Earned or Paid
in Cash
($)
|
Option
Awards
($)
(1)
|
Restricted Stock
Awards
($)
(1)
|
Total
($)
|
|
|
|
|
|
Mr. Edmon R. Jennings
|
$51,000
|
$68,618
|
$78,591
|
$198,209
|
Dr. Srinivas Akkaraju, M.D., Ph.D.
|
$85,000
|
$68,618
|
$128,593
|
$282,211
|
Mr. R. Scott Greer
|
$45,000
|
$68,618
|
$78,591
|
$192,209
|
Shahzad Malik, M.D.
|
$55,000
|
$68,618
|
$78,591
|
$202,209
|
Dr. Anthony Y. Sun, M.D.
|
$47,500
|
$68,618
|
$78,591
|
$194,709
|
Mr. John Varian
|
$51,250
|
$68,618
|
$78,591
|
$198,459
|
Mr. Eric Dobmeier
|
$24,066
|
$137,236
|
$133,662
|
$294,964
|
(1)
|
The amounts in this column reflect the aggregate grant date fair value of each option award granted during the fiscal year, computed in accordance with FASB ASC Topic 718. The valuation assumptions used in determining such amounts are described in Note 2 and Note 10 to our financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017. The table below lists the aggregate number of shares and additional information with respect to the outstanding option awards held by each of our non-employee directors.
|
The table below shows the aggregate number of option awards outstanding at fiscal year end for each of our non-employee directors.
Name
|
Number of Shares Subject to
Outstanding Options as of
December 31, 2017
|
Number of Shares Subject to
Outstanding Stock Awards as of
December 31, 2017
|
|
|
|
Mr. Edmon R. Jennings
|
80,931
|
23,880
|
Dr. Srinivas Akkaraju, M.D., Ph.D.
|
67,628
|
26,155
|
Mr. R. Scott Greer
|
69,575
|
23,880
|
Shahzad Malik, M.D.
|
69,575
|
23,880
|
Dr. Anthony Y. Sun, M.D.
|
69,575
|
23,880
|
Mr. John Varian
|
69,575
|
23,880
|
Mr. Eric Dobmeier
|
13,700
|
18,160
|
N
ON
-E
MPLOYEE
D
IRECTOR
C
OMPENSATION
P
OLICY
In March 2014, the Board of Directors approved a non-employee director compensation policy that became effective upon the completion of our initial public offering, or the IPO, and was subsequently amended effective as of May 21, 2015, March 17, 2016 and January 27, 2017.
Under this policy, we will pay each of our non-employee directors a cash retainer for service on the Board of Directors and for service on each committee on which the director is a member. The chairman of each committee receives an additional retainer for such service. These retainers are payable in arrears in four equal quarterly installments on the last day of each quarter, provided that the amount of such payment will be prorated for any portion of such quarter that the director is not serving on our Board of Directors. The
20
retainers paid to non-employee directors for service on the Board of Directors and for service on each committee of the Board of Directors on which the director is a member are as follows:
|
|
|
|
Member Annual
Service Retainer
|
Chairman Annual
Service Retainer
|
Board
|
$40,000
|
$30,000
|
Audit Committee
|
$7,500
|
$15,000
|
Compensation Committee
|
$5,000
|
$15,000
|
Nominating and Corporate Governance Committee
|
$3,500
|
$10,000
|
In addition, on the date of each annual meeting of stockholders held, each non-employee director that continues to serve as a non-employee member on our Board of Directors will receive equity awards under our 2014 Plan, with a total grant date fair value of $140,000, with 60% of the grant date value allowed to a stock option grant and 40% of the grant date value to a restricted stock unit award. Each stock award will vest in full on the earlier of the date of the annual stockholder meeting following the meeting in connection with which it was granted, or the first anniversary of the grant date. The exercise price of such options will equal the fair market value of our common stock on the date of grant. For any new non-employee director who joins the Board, the initial equity award will have a total grant date fair value of $140,000, and the awards will vest on an annual basis over three years. For a new non-employee director is elected or appointed at a time other than at the annual meeting of stockholders, then the director will receive an additional award with a grant date fair value of $140,000, prorated for the number of days from such election or appointment until the next annual meeting, and the award will vest on the date of first annual meeting following such election or appointment. In each case, vesting of the award is subject to the director’s continuous service on each vesting date. This policy is intended to provide a total compensation package that enables us to attract and retain qualified and experienced individuals to serve as directors and to align our directors’ interests with those of our stockholders.
In accordance with this policy prior to its amendment in March 2016, we paid each of our non-employee directors a cash retainer of $35,000 for the year ended December 31, 2015 for their service on the Board of Directors. Directors have been and will continue to be reimbursed for expenses directly related to their activities as directors, including attendance at board and committee meetings. Directors are also entitled to the protection provided by their indemnification agreements and the indemnification provisions in our certificate of incorporation and bylaws.