PROPOSAL No. 1
APPROVAL OF AMENDMENT AND RESTATEMENT OF THE
OUTLOOK THERAPEUTICS, INC. 2015 EQUITY INCENTIVE PLAN
On August 18, 2020, the Board approved the amendment and restatement of the Outlook Therapeutics, Inc. 2015 Equity Incentive Plan, as amended, or the 2015 Plan, subject to stockholder approval, to among other things, increase the number of shares of common stock authorized for issuance under the 2015 Plan by 20,000,000 shares. We refer to the 2015 Plan, as so amended and restated, as the “Amended 2015 Plan” throughout this proxy statement. References in this proposal to the Board include the Compensation Committee of the Board where applicable.
A description of the material terms of the Amended 2015 Plan are summarized below. The key differences between the terms of the 2015 Plan and the Amended 2015 Plan are as follows:
The Amended 2015 Plan provides that an additional 20,000,000 shares of common stock may be issued pursuant to stock awards granted under the Amended 2015 Plan; and
The Amended 2015 Plan provides that an additional 60,467,391 shares of common stock are authorized for issuance under the Amended 2015 Plan pursuant to the grant of incentive stock options and extends the period during which incentive stock options may be issued under the Amended 2015 Plan through the tenth anniversary of the date the Amended 2015 Plan was adopted by the Board.
The Board believes the Amended 2015 Plan is an integral part of our long-term compensation philosophy and is necessary to continue providing the appropriate levels and types of equity compensation for our employees.
Equity Awards Are an Integral Component of Our Compensation Program
Equity awards have been historically and, we believe, will continue to be an integral component of our overall compensation program for our employees, directors, and as applicable, consultants. Approval of the Amended 2015 Plan will allow us to continue to grant stock options and other equity awards at levels we determine to be appropriate in order to attract new employees, consultants and directors, retain our existing employees and to provide incentives for such persons to exert maximum efforts for our success and ultimately increase stockholder value. The Amended 2015 Plan allows us to utilize a broad array of equity incentives with flexibility in designing such incentives, including traditional option grants, stock appreciation rights, restricted stock awards, restricted stock unit awards and performance stock awards.
As of July 31, 2020, only 33,148 shares remained available for future grant under the 2015 Plan. The Board believes that the issuance of equity awards is a key element underlying our ability to recruit, retain and motivate key employees, consultants and directors, better aligns the interests of such persons with those of our stockholders, and is a substantial contributing factor to our success and the future growth of our business. However, we believe that the shares currently available for grant under the 2015 Plan will be insufficient to meet our anticipated recruiting and retention needs. Therefore, the Board believes that the approval of the Amended 2015 Plan is in the best interests of our company and its stockholders and recommends a vote in favor of this proposal.
If this Proposal No.1 is adopted by our stockholders, the Amended 2015 Plan will become effective upon the date of the Special Meeting. In the event that our stockholders do not approve this Proposal No. 1, the Amended 2015 Plan will not become effective, and the 2015 Plan will continue in its current form.
As of July 31, 2020, stock awards covering an aggregate of 3,819,726 shares of common stock were outstanding under the 2015 Plan.
If our request to increase the share reserve of the 2015 Plan by 20,000,000 shares is approved, we will have approximately 20,033,148 shares available for grant after the Special Meeting, which, together with the annual “evergreen” increases described below, the Board believes will provide sufficient equity for attracting, retaining and motivating employees, based on our current anticipated needs.