ITEM 10. DIRECTORS, EXECUTIVE
OFFICERS AND CORPORATE GOVERNANCE
Directors
The following table sets out each incumbent director
of the Company, all of whom are nominated for election at the next annual meeting of stockholders. The table also includes each
director’s name and place of residence, all major positions and offices with the Company now held by them, the period during
which they have served as directors of the Company, and their principal occupation currently and for the preceding five years.
Director
|
Experience and Qualifications
|
Carol G. Ashe
(2)(3)
Pennsylvania, United States
Director Since August 2018
|
Ms. Ashe, age, 61, has been the Chief Business Officer at the New York
Genome Center, an independent, non-profit academic research institution focused on translating genomic research into the development
of new therapies for human disease, since 2014. Previously, she served as Vice President of Corporate Development for
Endo’s branded, generic and platform drug delivery pharmaceutical business units from 2011 to 2013;a Partner at SR One, the
corporate venture capital fund of GlaxoSmithKline, from 2008 to 2010; and head of GSK’s US Corporate Legal Group supporting
US-based mergers, acquisitions and equity investments from 2007 to 2008. Prior to that, Ms. Ashe led GSK’s global
Business Development Transactions Legal Team supporting both the pharmaceutical and consumer healthcare business units from
1995 to 2007. Ms. Ashe received her BS degree in Biology from Pennsylvania State University, her law degree from Villanova University
School of Law and is a registered patent attorney.
Ms. Ashe makes valuable contributions to the Board based on over 25
years of experience in the biotechnology industry as legal counsel and in business development.
|
Dr. Denis Burger
(1)(2)(4)
Oregon, United States
Director Since 2007
|
Dr. Burger, age 75, co-founded Trinity Biotech, PLC, a diagnostic
biotechnology company based in Dublin, Ireland, in 1992, served as Chairman from 1992 to 1995, and now serves as lead
director on its Board of Directors. Dr. Burger served as the Chairman, Chief Executive Officer and a Director of AVI
Biopharma Inc., an Oregon-based biotechnology company, from 1996 to2007. Dr. Burger has also been the sole member of
Paradigm Ventures LLC, a healthcare consulting and funding firm based in Portland, Oregon, since 1990. He was a
co-founder and Chairman of Epitope Inc. from 1981 to 1990. Dr. Burger was Vice Chairman and Chief Scientific Officer
of CytoDyn Inc. from 2016 to 2018. Dr. Burger has served as President of Yamhill Valley Vineyards since 1983. In
addition, Dr. Burger previously held a professorship in the Department of Microbiology and Immunology and Surgery
(Surgical Oncology) at the Oregon Health Sciences University in Portland. Dr. Burger received his M.Sc. and Ph.D. in
Microbiology and Immunology from the University of Arizona.
Dr. Burger serves on the board of directors of Trinity Biotech, PLC.
(1992 to present)* and CytoDyn Inc. (2014 to 2018)*.
Dr. Burger makes valuable contributions to the Board based on his Ph.D.
in microbiology and immunology, and his more than 25 years of experience in the biotechnology industry as a senior executive and
as a corporate director
.
|
Director
|
Experience and Qualifications
|
Caroline M. Loewy
(1)(3)
California, United States
Director Since April 2018
|
Ms. Loewy, age 52, co-founded and served as Chief Financial Officer
and Chief Business Officer of Achieve Life Sciences, Inc. from 2015 to 2017. Prior to that, she held the position of Chief Financial
Officer of both public and private biopharmaceutical companies including Tobira Therapeutics, Inc. from 2012 to 2014, Corcept Therapeutics
Incorporated from 2008 to 2011, and Poniard Pharmaceuticals, Inc. from 2006 to 2008. Ms. Loewy also spent 11 years as
a senior biotechnology equity research analyst at Morgan Stanley and Prudential Securities. She is a founding board member of the
Global Genes Project, one of the leading rare disease patient advocacy organizations in the world, and she is a member of the National
Advisory Council of the Translational Genomics Research Institute (TGen) Center for Rare Childhood Disorders. She is also a founding
board member of the KCNQ2 Cure Alliance Foundation. Ms. Loewy holds a BA degree from the University of California, Berkeley,
and an MBA/MS degree from Carnegie Mellon University.
Ms. Loewy sits on the board of directors of CymaBay Therapeutics Inc.
(2016 to present)* and PhaseBio Pharmaceuticals Inc. (2018 to present)*.
Ms. Loewy makes valuable contributions to the Board based on more than
25 years of experience in assessing and accelerating biotechnology product development and growth
and
her financial expertise as a chief financial officer.
|
Dr. Erich Platzer
(2)
Basel, Switzerland
Director Since 2014
|
Dr. Platzer, age 68, served as a board certified physician in internal medicine, hematology
and medical oncology between 1979 and 1991. He has served as the president of Swiss business angel group StartAngels, and as a
director and venture partner of MedTech Innovation Partners, MTIP, a Swiss VC firm focusing on MedTech and eHealth, since 2010.
From 2003 to 2015, Dr. Platzer co-founded HBM Healthcare Investments (formerly HBM BioVentures), a global leader in healthcare
investing. Previously, he served as the business director of oncology, as well as the global strategic marketing and therapeutic
area head of oncology at Roche, Basel. He also served in various other leadership roles at Roche and was responsible for various
strategic corporate partnerships. He has over 12 years of experience in academic medicine and research and was a key member of
the team at MSKCC that purified human G-CSF in 1983 (recombinant form: Neupogen®). He earned his M.D. from the Medical School
and the Institute of Clinical Immunology and Rheumatology of the University of Erlangen, where he also received his “Dr.
med. habil.” (M.D., Ph.D.).
Dr. Platzer has served as a pharmaceutical industry expert on the board of directors
of multiple biotech companies in both the U.S. and Europe. Currently he serves as chairman of Probiodrug, AOT, Léman Micro
Devices, and Credentis, as well as a board member of MedTech Innovation Partners, MTIP, and Peripal.
Dr. Platzer makes valuable contributions to the Board based on over twenty-five
years’ experience in the biotechnology industry as a physician in hematology and medical oncology, as a corporate executive,
and as a corporate director
.
|
|
|
Dr. William G. Rice
California, United States
Director Since 2013
|
Dr. Rice, age 60, joined Aptose as Chairman and Chief Executive
Officer in October 2013. Prior to joining Aptose, Dr. Rice served as the President, Chief Executive Officer and Chairman of the
board of Cylene Pharmaceuticals, Inc., a private biotechnology company from 2003 to 2013. Prior to Cylene, Dr. Rice was the
founder, President, Chief Executive Officer and Director of Achillion Pharmaceuticals, Inc. from 1990 to 2003. He also served as
Senior Scientist and Head of the Drug Mechanism Laboratory at the National Cancer Institute-Frederick Cancer Research and Development
Center from 1992 to 1998, and served as a faculty member in the division of Pediatric Hematology and Oncology at Emory University
School of Medicine from 1989 to 1992. Dr. Rice received his Ph.D. from Emory University Department of Biochemistry.
Dr. Rice continues to serve as the Chairman of the board of Cylene
and is a member of the board of directors of Oncolytics Biotech Inc. (2015 to present)*.
Dr. Rice makes valuable contributions to the Board based on his Ph.D.
in Biochemistry, and his over 25 years of experience in the biotechnology industry as a senior executive and as a corporate director
.
|
Director
|
Experience and Qualifications
|
Dr. Mark D. Vincent
(3)
Ontario, Canada
Director Since 2007
|
Dr. Vincent, age 66, has been a Professor of Oncology at the
University of Western Ontario since 2008 and a staff medical oncologist at the London Regional Cancer Program, where he has been
since 1990. Dr. Vincent has also served as the co-founder and Chief Executive Officer of Sarissa, Inc. since 2000.
Dr. Vincent makes valuable contributions to the Board based on over
25 years of experience as a medical oncologist
.
|
Warren Whitehead
(1)
Ontario, Canada
Director Since 2011
|
Mr. Whitehead, age 66, served as the Chief Financial Officer of ProMIS
Neurosciences Inc. (formerly Amorfix Life Sciences Ltd.) from 2013 to 2015, a TSX-listed company targeting detection and effective
treatment of Alzheimer’s disease and amyotrophic lateral sclerosis. Previously, from 2006 to 2008, he was the Chief Financial
Officer of Arius Research Inc., a TSX-listed company developing anti-cancer antibodies, where he provided financial guidance and
leadership during the acquisition of Arius by Roche in 2008. He was also the former Chief Financial Officer of Labopharm Inc. from
2000 to 2006, where he completed a series of public equity financings, including a cross-border Nasdaq offering. Other positions
include Chief Financial Officer of Resolution Pharmaceuticals Inc., and a position in finance and business development at Glaxo
Canada (now GlaxoSmithKline). Mr. Whitehead holds an MBA, and BComm from the University of Windsor and a BA from the University
of Western Ontario.
Mr. Whitehead is the Chairman of Plantform Corporation and a former
Board Member of Telesta Therapeutics (TSX), which was acquired by Prometic Life Sciences in 2016.
Mr. Whitehead makes valuable contributions to the Board based on his
financial expertise as a Chartered Professional Accountant (CPA) and a Certified Management Accountant (CMA) who has held chief
financial officer roles at publicly traded pharmaceutical and biotechnology firms.
.
|
(1)
|
|
Member of the Audit Committee.
|
(2)
|
|
Member of the Compensation Committee.
|
(3)
|
|
Member of the Corporate Governance and Nominating Committee.
|
(4)
|
|
Lead Director of the Company.
|
Executive Officers
Aptose’s leadership team comprises accomplished
industry, financial and clinical research professionals who are dedicated to building a comprehensive anticancer drug pipeline
and clinical development programs focused on targeted therapeutics directed against dysregulated oncogenic processes in patients
with life. The team includes our Chairman and Chief Executive Officer Dr. William G. Rice, whose biography is listed above, and
our Chief Financial Officer Gregory K. Chow.
Gregory K. Chow
, a
ge 46,
joined Aptose as Senior Vice President and Chief Financial Officer in December 2013. Previously, Mr. Chow served as Managing Director,
Director of Private Placements at Wedbush Securities from 2012 to 2013, where he led the private placement capital activities within
the Life Sciences Investment Banking Group. Prior to joining Wedbush, he was a Director in the Private Placements / Equity Capital
Markets Group at RBC Capital Markets from 2006 to 2011, where he led life science private capital activities. From 2003 to 2006,
he led the Private Capital Group at Wells Fargo Securities and was a Senior Auditor at BDO Seidman, LLP in their Century
City, CA office. Mr. Chow is a Certified Public Accountant (inactive) in the State of California. Mr. Chow received his MBA in
Finance from The Wharton School at the University of Pennsylvania, and his BA in Business Economics with an emphasis in Accounting
from the University of California, Santa Barbara.
Compliance with Section 16(a) of the Exchange Act
To our knowledge, based on a review of the copies
of such reports and amendments to such reports furnished to us with respect to the year ended December 31, 2018, and based on written
representations by our directors and executive officers, all required Section 16(a) reports under the Exchange Act for our directors,
executive officers and beneficial owners of greater than 10 percent of our Common Shares were filed on a timely basis during the
year ended December 31, 2018.
Code of Ethics
We have adopted a code of ethics for directors,
officers (including our principal executive officer, principal financial officer and principal accounting officer) and employees,
known as the Code of Business Conduct and Ethics. The Code of Business Conduct and Ethics is available on our website at http://www.aptose.com
under the Corporate Governance section of our Investor Relations page. We will promptly disclose on our website (i) the nature
of any amendment to the policy that applies to our principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions and (ii) the nature of any waiver, including an implicit waiver,
from a provision of the policy that is granted to one of these specified individuals that is required to be disclosed pursuant
to SEC rules and regulations, the name of such person who is granted the waiver and the date of the waiver.
Audit Committee
The Company has a standing Audit Committee, each
member of which qualifies as “independent” for purposes of membership on audit committees under the listing standards
of Nasdaq and the rules and regulations of the SEC.
The current members of the Audit Committee are
Caroline Loewy, Denis Burger and Warren Whitehead. Mr. Whitehead is the Chair of the Audit Committee. The Board has determined
that all members of the Committee qualify as financial experts under the listing standards of Nasdaq.
Item 11. EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
Compensation Objectives and Philosophy
The Compensation Committee’s mandate is to
review and advise the Board on the recruitment, appointment, performance, compensation, benefits and termination of executive officers.
The Compensation Committee also administers and reviews procedures and policies with respect to the Share Option Plan (as defined
below), the SIP (as defined below), employee benefit programs, pay equity and employment equity and reviews executive compensation
disclosure where it is publicly disclosed.
Aptose’s executive compensation program is designed
to:
|
·
|
attract and retain qualified, motivated and achievement-oriented individuals by offering compensation
that is competitive in the industry and marketplace;
|
|
·
|
align executive interests with the interests of shareholders; and
|
|
·
|
ensure that individuals continue to be compensated in accordance with their personal performance
and responsibilities and their contribution to the overall objectives of the Company.
|
These objectives are achieved by offering executives
and employees a compensation package that is competitive and rewards the achievement of both short-term and long-term objectives
of the Company. As such, our compensation package consists of three key elements:
|
·
|
base salary and initial share options;
|
|
·
|
short-term compensation incentives to reward corporate and personal performance through potential
annual cash bonuses; and
|
|
·
|
long-term compensation incentives related to long-term increase in Common Share value through participation
in the Share Option Plan and SIPs.
|
The Compensation Committee reviews each of these
items on a stand-alone basis and also reviews compensation as a total package. Adjustments to compensation are made as appropriate
following a review of the compensation package as a whole.
Base Salary — Initial Share Options
In establishing base salaries, the objective
of the Compensation Committee is to establish levels that will enable Aptose to attract and retain executive officers that can
effectively contribute to the long-term success of the Company. Base salary for each executive officer is determined by the individual’s
skills, abilities, experience, past performance and anticipated future contribution to the success of Aptose. The members of the
Compensation Committee use their knowledge of the industry and of industry trends as well as independent third party consultants
to assist with the determination of an appropriate compensation package for each executive officer.
Short-Term Incentives
Short-term compensation incentives motivate
our executive officers to achieve specified performance objectives and to reward them for their achievement in the event that those
objectives are met. Each year, the Compensation Committee approves the annual corporate objectives encompassing scientific, clinical,
regulatory, business and corporate development and financial criteria. The annual cash incentive for the executive officers is
based, at least in part, on the level of achievement of these annual objectives, assuming these objectives are still relevant at
the time of evaluation.
All corporate and executive officer objectives
and short-term incentives are reviewed by the Compensation Committee and approved by the Board.
For each executive officer, during the year
ended December 31, 2018, the annual cash incentives ranged from 40% to 50% of base salary.
Cash incentives are determined as soon as practicable
after the end of the fiscal year and, for the Named Executive Officers (as defined hereinafter), are included in the Summary Compensation
Table in the year in respect of which they are earned.
2018 Performance Metrics
The performance of the Named Executive Officers
for the period ended December 31, 2018 was measured with respect to the following objectives:
|
1)
|
Achievement of certain milestones relating to the preclinical development for IND filing, and market awareness of CG-806.
|
|
2)
|
Achievement of certain milestones relating to the efforts to lift the APTO-253 clinical hold.
|
|
3)
|
Metrics related to the improvement of the financial position and market recognition and coverage of the Company.
|
|
4)
|
Metrics related to corporate development and strategic activities, including in connection with competitive positioning and partnering, intellectual property portfolio and human resources.
|
Each of the above objectives is weighted at
40%, 30%, 20% and 10% respectively in relation to assessment of satisfaction of overall corporate objectives and determination
of any general corporate bonuses.
Long-Term Incentives
Long-term compensation incentives at Aptose
reward an executive’s contribution to the attainment of Aptose’s long-term objectives, align an executive’s performance
with the long-term performance of Aptose and to provide an additional incentive for an executive to enhance shareholder value.
Long-term incentive compensation for directors, officers, employees and consultants is reviewed annually and may be accomplished
through the grant of share options under our share option plan (the “Share Option Plan”) and of stock-based awards
comprised of restricted stock units (the “Restricted Stock Units”) or dividend equivalents (the “Dividend
Equivalents”) under our stock incentive plan (the “SIP”).
In certain cases, executive officers may be
granted share options on the commencement of employment with Aptose in accordance with the responsibility delegated to each executive
officer for achieving corporate objectives and enhancing shareholder value in accordance with those objectives.
The number of options granted for certain executives
of Aptose for the year ended December 31, 2018 was based on achievement of both corporate and executive officer objectives.
The Compensation Committee approves the allocation of options and options are priced using the closing market price of the Common
Shares on the TSX on the last trading day prior to the grant. Options to purchase Common Shares expire ten years from the date
of grant and vest over a term determined by the Compensation Committee. The Compensation Committee takes into account previous
grants of options when considering new grant of options.
The granting of options to Named Executive Officers
is included in the Summary Compensation Table in the year in which they are earned.
Other Benefits
In certain cases, the Compensation Committee may
recommend inclusion of automobile allowances, fitness allowances and the payment of certain professional dues as a component of
a competitive remuneration package for executives.
Employment Agreements
Aptose entered into an employment agreement with Dr. Rice on October
25, 2013 upon his commencement as Chairman, President, and Chief Executive Officer. This agreement was amended and restated on
August 19, 2014. Pursuant to the amended and restated employment agreement, Dr. Rice is entitled to an annual base salary of $480,000,
which amount is reviewed annually by the Board and increased at the Board’s discretion, upon the advice of the Compensation
Committee. Dr. Rice is also eligible for an annual discretionary bonus of up to 50% of his current base salary. The annual bonus
is based on the Company’s and Dr. Rice’s achievement of objectives and milestones to be determined on an annual basis
by the Board. Dr. Rice’s current agreement also provides for stock option grants, which are governed by the terms of the
Company’s Stock Option Plan and the applicable stock option agreement, Dr. Rice receives termination benefits described under
“Termination and Change of Control Benefits,” below. Dr. Rice also receives employee benefits including, without limitation,
participation in the Company’s 401(k) plan with a 3% nonelective company contribution, a monthly payment of $2,000 until
such time that the Company establishes a group health coverage plan (the Aptose group health coverage plan for US employees was
established in July 2014 at which time such monthly payments ceased), 25 days of paid vacation time annually, and an annual automobile
allowance of $14,400. Dr. Rice is subject to certain non-confidentiality restrictions.
Aptose entered into an employment agreement
with Mr. Chow upon his commencement as Chief Financial Officer, effective November 29, 2013. Pursuant to the employment
agreement, Mr. Chow is entitled to an annual base salary of $315,000, which amount is reviewed annually by the Board and
increased at the Board’s discretion, upon the advice of the Compensation Committee.. Mr. Chow is also eligible for an
annual discretionary bonus of up to 40% of his current base salary. The annual bonus is based on the Company’s and Mr.
Chow’s achievement of objectives and milestones to be determined on an annual basis by the Board. Mr. Chow’s
agreement also provides for stock option grants which are governed by the terms of the Company’s Stock Option Plan and
the applicable stock option agreement, and termination benefits described under “Termination and Change of Control
Benefits,” below. Mr. Chow also receives employee benefits, including, without limitation, participation in any 401(k)
plan with a 3% nonelective company contribution, participation in other benefits provided by Aptose to its U.S. based
executive officers and other employees, which consist to date of life insurance and health benefits, and 20 days of paid
vacation time annually. Mr. Chow is subject to certain non-confidentiality restrictions.
Summary Compensation Table
The following table details the compensation information
for the fiscal years ended December 31, 2017 and December 31, 2018 of the Company for our two executive officers, the Chairman,
President and Chief Executive Officer and the Senior Vice President and Chief Financial Officer (each, an “NEO” and,
collectively the “Named Executive Officers”). All amounts presented are as recorded in US dollars.
Name and Principal Position
|
Year
|
Salary
($)
|
Stock awards
(1)
($)
|
Option awards
(2)
($)
|
Non-equity incentive
plan compensation
($)
|
All other compensation
(3)
($)
|
Total
compensation
($)
|
Dr. William G. Rice
Chairman, President and Chief Executive Officer
|
2018
2017
|
540,244
520,395
|
167,500
57,500
|
1,498,970
122,182
|
270,122
260,198
|
22,650
22,500
|
2,499,486
982,775
|
Mr. Gregory K. Chow
Senior Vice President and Chief Financial Officer
|
2018
2017
|
375,950
356,703
|
167,500
57,500
|
1,083,387
122,182
|
150,380
142,681
|
8,250
8,100
|
1,785,467
687,166
|
(1)
|
|
The dollar amounts in this column reflect the aggregate grant date fair value of all
stock awards granted during the indicated fiscal year. These amounts have been calculated in accordance with ASC 718, excluding
the effect of estimated forfeitures. Assumptions used in the calculation of these amounts are included in note 9 to our audited
consolidated financial statements included in the Company’s Original 10-K. These amounts do not necessarily correspond
to the actual value recognized or that may be recognized by the NEOs. Dr. Rice and Mr. Chow were each granted 50,000 restricted
share units (RSUs) during each of 2017 and 2018, respectively; the RSUs vested over a three month period. Stock awards are subject
to the executives’ continued employment with the Company. All stock awards issued to Dr. Rice and Mr. Chow may be subject
to accelerated vesting following termination of employment. See “Termination and Change of Control Benefits” below.
|
(2)
|
|
The dollar amounts in this column reflect the aggregate grant date fair value of all
stock option awards granted during the indicated fiscal year. These amounts have been calculated in accordance with ASC 718, using
the Black-Scholes option-pricing model and excluding the effect of estimated forfeitures. Assumptions used in the calculation
of these amounts are included in note 9 to our audited consolidated financial statements included in the Company’s Original 10-K. These
amounts do not necessarily correspond to the actual value recognized or that may be recognized by the NEOs.
|
During the year ended December 31, 2017,
Dr. Rice and Mr. Chow were each awarded 150,000 stock options with vesting periods of four years. The awards granted in 2018 included
700,000 stock options for Dr. Rice, of which 300,000 vested immediately, and 400,000 that will vest over four years, and 500,000
stock options for Mr. Chow of which 150,000 vested immediately and 350,000 that will vest over four years. Stock options are subject
to the executives’ continued employment with the Company and have a maximum term of 10 years. All stock option grants issued
to Dr. Rice and Mr. Chow may be subject to accelerated vesting following termination of employment. See “Termination and
Change of Control Benefits” below.
(3)
|
|
The dollar amounts in this column reflects the Company’s contributions to the
executives’ accounts in our 401(k) plan in the amount of $8,100 each for 2017 and $8,250 each for 2018, and for Dr. Rice’s
car allowance, which was $14,400 in both 2017 and 2018.
|
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth information concerning the
outstanding equity awards as of December 31, 2018 granted to the Named Executive Officers. Certain exercise prices in the table
below have been converted from Canadian dollars to US dollars using the Bank of Canada closing exchange rate as at December 31,
2018.
|
Option Awards
|
Name and Principal Position
|
Number of securities underlying unexercised options
(#) exercisable
|
Number of securities underlying unexercised options
(#) unexercisable
|
Option exercise price
($)
|
Option expiration date
|
Dr. William G. Rice
Chairman, President and Chief Executive Officer
|
35,417
65,136
5,281
140,000
396,129
100,000
40,000
50,000
25,000
300,000
Nil
|
Nil
Nil
Nil
Nil
Nil
20,000
(1)
20,000
(2)
50,000
(3)
25,000
(4)
Nil
400,000
(5)
|
2.55
(6)
5.37
(7)
5.10
(8)
4.40
(9)
4.18
(10)
5.10
(11)
2.80
(12)
1.11
(13)
1.03
2.80
3.07
|
Oct 27, 2023
Dec 10, 2023
Jan 29, 2024
Apr 10, 2024
Jun 15, 2024
Jun 9, 2025
Mar 30, 2026
Mar 28, 2027
Jun 6, 2027
Jan 19, 2028
Jan 22, 2028
|
|
|
|
|
|
Mr. Gregory K. Chow
Senior Vice President and Chief Financial Officer
|
35,417
35,417
35,417
22,083
64,167
50,000
40,000
50,000
25,000
150,000
Nil
|
Nil
Nil
Nil
Nil
Nil
10,000
(1)
20,000
(2)
50,000
(3)
25,000
(4)
Nil
350,000
(5)
|
6.86
(14)
5.37
(7)
4.40
(9)
4.18
(10)
3.87
(15)
5.10
(11)
2.80
(12)
1.11
(13)
1.03
2.80
3.07
|
Nov 4, 2023
Dec 10, 2023
Apr 10, 2024
Jun 15, 2024
Jul 18, 2024
Jun 9, 2025
Mar 30, 2026
Mar 28, 2027
Jun 6, 2027
Jan 19, 2028
Jan 22, 2028
|
1. Unexercisable options vest on June 9, 2019.
2. Unexercisable options vest as follows: 50% vest on March 30, 2019 and 50% vest on
March 30, 2020.
3. Unexercisable options vest as follows: 33.33% vest on March 28, 2019, 33.33% vest
on March 28, 2020 and 33.33% vest on March 28, 2021.
4. Unexercisable options vest as follows: 33.33% vest on June 6, 2019, 33.33% vest on
June 6, 2020 and 33.33% vest on June 6, 2021.
5. Unexercisable options vest as follows: 50% vest on January 22, 2019, 16.67 % vest
on January 22, 2020, 16.67% vest on January 22, 2021, and 16.67% vest on January 22, 2022.
6. Converted from the Canadian exercise price of $3.48 at the conversion rate of 0.7333
7. Converted from the Canadian exercise price of $7.32 at the conversion rate of 0.7333
8. Converted from the Canadian exercise price of $6.96 at the conversion rate of 0.7333
9. Converted from the Canadian exercise price of $6.00 at the conversion rate of 0.7333
10. Converted from the Canadian exercise price of $5.70 at the conversion rate of 0.7333
11. Converted from the Canadian exercise price of $6.96 at the conversion rate of 0.7333
12. Converted from the Canadian exercise price of $3.82 at the conversion rate of 0.7333
13. Converted from the Canadian exercise price of $1.52 at the conversion rate of 0.7333
14. Converted from the Canadian exercise price of $9.36 at the conversion rate of 0.7333
15. Converted from the Canadian exercise price of $5.28 at the conversion rate of 0.7333
Retirement Benefits
The Company maintains a 401(k) plan in which eligible
employees of the Company may choose to participate, including the Named Executive Officers. The Company makes nonelective contributions
of 3% of compensation for all eligible employees, subject to the maximum allowed by the Internal Revenue Code Section 401(k).
Termination and Change of Control Benefits
The employment agreements of Dr. Rice and Mr.
Chow provide that if their employment is terminated by the Company other than for “cause” (defined as (i) theft, fraud,
dishonesty or material misconduct of the executive involving the property, business or affairs of the Company, which results,
or could result in material harm to the Company, (ii) any material breach by the NEO of any term of his employment agreement,
or (iii) any material breach of the Employee Information and Inventions Agreement (as defined in each employment agreement)),
or if the Named Executive Officer resigns for “good reason” (defined as a material reduction in Executive Base Salary
(as defined in each employment agreement), unless pursuant to a salary reduction program, a material reduction in the NEO’s
duties or the relocation of the NEO’s principal place of employment) each of Dr. Rice and Mr. Chow shall be entitled to
a payment equivalent to 12 months of their respective annual base salaries at the time of termination (Dr. Rice’s December
31, 2018 annual base salary represents $540,244 and Mr. Chow’s December 31, 2018 annual base salary represents $375,950),
plus an amount equal to the average bonus remuneration received from the Company during the last three years of employment completed
prior to the termination date, prorated based on the number of days the executive worked during the year of the termination. In
addition, the employment agreements of Dr. Rice and Mr. Chow provide that certain payments related to health benefits will continue
to be made for a period of 12 months following termination of their employment.
The employment agreements of Dr. Rice and Mr.
Chow provide that, in the event their employment with the Company is terminated within three months immediately preceding or 12 months
immediately following the consummation of a “change of control” (defined as the consummation of any of the following:
(a) the acquisition of the Company by another entity be means of any transaction or series of related transactions to which the
company is a party, (b) a sale, lease or other conveyance of all or substantially all of the assets of the Company, or (c) an liquidation,
dissolution or winding up of the Company, whether voluntary of involuntary), each of Dr. Rice and Mr. Chow would be eligible, subject
to certain conditions, to receive a payment equivalent to 18 months of their annual base salaries at the time of termination,
plus an amount equal to 150% of the average bonus remuneration received from the Company during the last three years of employment
completed prior to the termination date, prorated based on the number of days the executive worked during the year of the termination,
as well as continuation of the payments related to health benefits for a period of 12 months following the termination following
a change of control.
The employment agreements of Dr. Rice and Mr.
Chow provide that in the event of their termination, other than for cause, the vesting and exercisability of all then outstanding
unvested stock options, restricted shares or other equity awards then held by such NEO become immediately vested and exercisable
and shall remain exercisable as set forth in the applicable award documents.
The following table sets out the amount that
would have been payable to each NEO had there been a change of control of the Company on December 31, 2018 and the severance payment
that would have been payable to each NEO had the Company terminated employment of the NEO without cause on December 31, 2018:
Name
|
|
Termination Without Cause
|
|
|
Change of Control
|
|
Dr. William G. Rice
|
|
|
$759,000
|
(1)
|
|
|
$1,139,000
|
(2)
|
Mr. Gregory K. Chow
|
|
|
$496,000
|
(1)
|
|
|
$744,000
|
(2)
|
|
(1)
|
This amount represents 12 months of annual base salary at the time of termination, plus an amount equal to the average bonus remuneration received from the Company during the last three years of employment completed prior to the termination date, prorated based on the number of days the executive worked during the year of the termination (assumed at 100%), as well as continuation of the payments related to health benefits for a period of 12 months following the termination.
|
|
(2)
|
This amount represents 18 months of annual base salary at the time of termination, plus an amount equal to 150% of the average bonus remuneration received from the Company during the last three years of employment completed prior to the termination date, prorated based on the number of days the executive worked during the year of the termination (assumed at 100%), as well as continuation of the payments related to health benefits for a period of 12 months following the termination.
|
DIRECTOR COMPENSATION
Overview
The Compensation Committee makes recommendations
regarding compensation payable to our non-employee directors to the entire Board of Directors, which then makes final decisions
regarding such compensation.
Cash Compensation
Directors are entitled to an annual fee of $40,000
with no per meeting fees. The lead director is entitled to an additional annual fee of $40,000. The chair of each committee is
entitled to an annual fee of $12,000 with each committee member receiving an annual fee of $8,000 per committee. All fees are paid
in quarterly installments.
Non-executive directors are reimbursed for any
out-of-pocket travel expenses incurred in order to attend meetings. Executive directors are not entitled to directors’ compensation.
Option Awards
Upon appointment to the Board a director will be
entitled to an option grant of 25,000 options under the Stock Option Plan and each year thereafter are eligible for an additional
grants at the beginning of the fiscal year. The options vest 50% after one year, and 25% for each of the second and third years.
If a director resigns, the director will have 90-days to exercise all vested and unexercised options from the date resignation.
The following table details the compensation received
by each director for the year ended December 31, 2018:
Name
|
Fees earned or paid in cash
($)
|
Option awards
(1)(2)
($)
|
Total
($)
|
Carol G. Ashe
(3)
|
28,000
|
55,278
|
83,278
|
Caroline M. Loewy
(3)
|
42,000
|
57,335
|
99,335
|
Dr. Denis Burger
|
100,000
|
121,713
|
221,713
|
Brad Thompson
(3)
|
32,000
|
121,713
|
153,713
|
Dr. Mark Vincent
|
52,000
|
121,713
|
173,713
|
Mr. Warren Whitehead
|
52,000
|
121,713
|
173,713
|
Dr. Erich Platzer
|
48,000
|
121,713
|
169,713
|
|
(1)
|
The dollar amounts in this column reflect the aggregate grant date fair value of all stock option
awards granted during the indicated fiscal year. These amounts have been calculated in accordance with ASC 718, using the Black-Scholes
option-pricing model and excluding the effect of estimated forfeitures. Assumptions used in the calculation of these amounts are
included in note 9 to our audited consolidated financial statements included in the Company's Original 10-K. These amounts do not necessarily correspond to the
actual value recognized or that may be recognized by the non-employee directors.
|
|
(2)
|
The aggregate number of Common Shares subject to outstanding stock options held by each of the non-employee directors listed
in the table above as of December 31, 2018 was as follows: 25,000 for Ms. Ashe, 25,000 for Ms. Loewy, 120,334 for Dr. Burger, 114,083
for Dr. Vincent, 112,500 for Mr. Whitehead, 95,500 for Dr. Platzer, and 35,750 for Mr. Thompson.
|
|
(3)
|
Mr. Thompson resigned from the Board effective June 5, 2018. Ms. Loewy joined the Board effective
April 25, 2018, and Ms. Ashe joined the Board effective August 15, 2018. In recognition of his service, all of Mr. Thompson’s
outstanding options vested immediately and will expire on June 5, 2019.
|