UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
PROXY
STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES
EXCHANGE ACT OF 1934
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PAVMED
INC.
(Name
of Registrant as Specified In Its Charter)
N/A
(Name
of Person(s) Filing Proxy Statement, if other than the Registrant)
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PAVMED
INC.
360
Madison Avenue, 25th Floor
New
York, New York 10017
NOTICE
OF
ANNUAL
MEETING OF STOCKHOLDERS
TO
BE HELD ON JUNE 21, 2023
To
the Stockholders of PAVmed Inc.:
NOTICE
IS HEREBY GIVEN that an annual meeting of stockholders (the “Annual Meeting”) of PAVmed Inc., a Delaware corporation
(the “Company”), will be held on June 21, 2023 at 10:00 a.m., Eastern time. The Annual Meeting will be a virtual meeting.
You will be able to attend and participate in the Annual Meeting online by visiting https://www.cstproxy.com/pavmed/2023. Please see
“Questions and Answers” in the accompanying proxy statement for more details.
The
Annual Meeting is being held for the following purposes:
| 1. | to
elect two members of the Company’s board of directors (the “Board”)
as Class A directors, to hold office until the third succeeding annual meeting and until
their respective successors are duly elected and qualified (the “Director Election
Proposal”); |
| | |
| 2. | to
approve an amendment to the Company’s certificate of incorporation, as amended (the
“Certificate of Incorporation”), to incorporate new Delaware law provisions
regarding officer exculpation (the “Charter Amendment Proposal”); |
| | |
| 3. | to
ratify the appointment of Marcum LLP as the Company’s independent registered certified
public accounting firm for the year ending December 31, 2023 (the “Accountant Ratification
Proposal”); and |
| | |
| 4. | to
transact any other business as may properly come before the Annual Meeting or any adjournment
or postponement thereof. |
The
Board has set the close of business on April 25, 2023 as the record date for the determination of stockholders who will be entitled to
notice of and to vote at the Annual Meeting (the “record date”). The list of stockholders entitled to vote at the
Annual Meeting will be available for inspection at the Company’s headquarters at least ten days before the Annual Meeting.
Your
vote is important no matter how many shares you own. Whether or not you expect to attend the meeting, please submit a proxy electronically
by Internet by following the instructions in these proxy materials. If you requested a physical copy of these proxy materials, you may
also submit a proxy by completing, signing and dating the accompanying proxy card and returning it promptly in the enclosed postage paid
reply envelope. Your prompt response is necessary to ensure that your shares are represented at the meeting. You can change your vote
and revoke your proxy at any time before the meeting by following the procedures described in the accompanying proxy statement.
|
By Order of the Board of
Directors |
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Lishan Aklog,
M.D. |
|
Chief Executive Officer and
Chairman of the Board |
May 1,
2023 |
|
New York, New York |
|
Important
Notice Regarding the Availability of Proxy Materials for
the
Annual Meeting of Stockholders to be Held on June 21, 2023:
The
Company’s Proxy Statement and Annual Report are available at http://www.cstproxy.com/pavmed/2023.
PAVMED
INC.
360
Madison Avenue, 25th Floor
New
York, New York 10017
PROXY
STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 21, 2023
INTRODUCTION
The
Company is providing this proxy statement in connection with the solicitation by the Board of proxies to be voted at the Annual Meeting
to be held on June 21, 2023, at 10:00 a.m., Eastern time, and any adjournment or postponement thereof. The Annual Meeting will be a virtual
meeting. You will be able to attend and participate in the Annual Meeting online by visiting https://www.cstproxy.com/pavmed/2023. Please
see “Questions and Answers” below for more details.
The
Company’s annual report for the fiscal year ended December 31, 2022 (the “Annual Report”), which contains the
Company’s audited financial statements, is enclosed with this proxy statement. This proxy statement, the accompanying proxy card
and the Annual Report are being mailed or made available to stockholders beginning on or around May 1, 2023 in connection with
the solicitation of proxies by the Board.
QUESTIONS
AND ANSWERS
When
and where will the meeting take place?
The
Annual Meeting will be held on June 21, 2023, at 10:00 a.m., Eastern time, solely over the Internet by means of a live audio webcast.
The Company will not conduct an in-person annual meeting of stockholders in 2023.
Stockholders
participating in the Annual Meeting will be able to listen only and will not be able to speak during the webcast. However, in order to
maintain the interactive nature of the Annual Meeting, virtual attendees will be able to:
| ● | vote
via the Annual Meeting webcast; and |
| | |
| ● | submit
questions or comments to the Company’s officers during the Annual Meeting via the Annual
Meeting webcast. |
Stockholders
may submit questions or comments during the meeting through the Annual Meeting webcast by typing in the “Submit a question”
box.
What
proposals are being presented for a stockholder vote at the Annual Meeting?
There
are three proposals being presented for stockholder vote at the Annual Meeting:
| ● | the
election of two members of the Board as Class A directors, to hold office until the third
succeeding annual meeting and until their respective successors are duly elected and qualified
(referred to herein as the “Director Election Proposal”); |
| | |
| ● | the
approval of an amendment to the Company’s Certificate of Incorporation to incorporate
new Delaware law provisions regarding officer exculpation (referred to herein as the “Charter
Amendment Proposal”); and |
| | |
| ● | the
ratification of the appointment of Marcum LLP as the Company’s independent registered
certified public accounting firm for the year ending December 31, 2023 (referred to herein
as the “Accountant Ratification Proposal”). |
Stockholders
will also consider any other business as may properly come before the Annual Meeting or any adjournment or postponement thereof.
What
are the recommendations of the Board?
The
Board recommends that you vote:
| ● | “FOR”
the election of the management nominees in the Director Election Proposal; |
| | |
| ● | “FOR”
the Charter Amendment Proposal; and |
| | |
| ● | “FOR”
the Accountant Ratification Proposal. |
Why
did I receive a Notice of Internet Availability of Proxy Materials?
The
Company uses the internet as the primary means of furnishing proxy materials to stockholders. The Company is sending a Notice of Internet
Availability of Proxy Materials (the “Notice of Internet Availability”) to its stockholders with instructions on how
to access the proxy materials online at www.cstproxy.com/pavmed/2023 or request a printed copy of the materials.
Stockholders
may follow the instructions in the Notice of Internet Availability to elect to receive future proxy materials in print by mail or electronically
by email. The Company encourages stockholders to take advantage of the availability of the proxy materials online to help reduce the
environmental impact of the Company’s annual meetings and reduce the Company’s printing and mailing costs.
Who
is entitled to vote?
The
holders of the Company’s common stock at the close of business on the record date, April 25, 2023, are entitled to vote at the
Annual Meeting. As of the record date, 103,487,166 shares of common stock were outstanding (inclusive of shares underlying unvested
restricted stock awards, but exclusive of shares sold but not yet settled under the Company’s at-the-market offering program). Holders of the Company’s common stock have one vote for each share that they own on such date.
What
is the difference between a record holder and a beneficial owner?
If
your shares are registered in your name with the Company’s transfer agent, Continental Stock Transfer and Trust Company, then you
are considered the “record holder” for those shares. If you are the record holder of your shares, you have the right to vote
your shares by proxy or to attend the meeting and vote via the Annual Meeting webcast.
If
your shares are held through a bank, broker or other nominee, then you are considered to hold your shares in “street name.”
While you are the “beneficial owner” of those shares, you are not considered the record holder. As the beneficial owner of
shares of the Company’s common stock, you have the right to instruct your bank, broker or other nominee how to vote your shares.
However, since you are not the record holder of your shares, you may not vote these shares at the Annual Meeting unless you obtain a
“legal proxy” from the stockholder of record.
How
do I submit my vote?
Record
Owners. Record holders can vote by the following methods:
| ● | By
Attending the Annual Meeting. You may attend the Annual Meeting and vote via the Annual
Meeting webcast. |
| | |
| ● | By
Proxy via the Internet. You may vote by proxy via the Internet. Your Notice of Internet
Availability or proxy card provides instructions for accessing the website through which
you may submit a proxy via the Internet. |
| | |
| ● | By
Proxy via the Mail. If you requested printed copies of the proxy materials, you may vote
by proxy via the mail by completing the included proxy card and returning it in the postage-paid
return envelope. |
Beneficial
Owners. Beneficial owners of shares held in street name may instruct their bank, broker or other nominee how to vote their shares.
Beneficial owners should refer to the materials provided to them by their nominee for information on communicating these “voting
instructions.” Beneficial owners may not vote their shares at the Annual Meeting unless they obtain a legal proxy from the stockholder
of record and follow the instructions set forth above for attending the Annual Meeting.
What
does it mean to vote by proxy?
When
you vote “by proxy,” you grant another person the power to vote stock that you own. If you vote by proxy in accordance with
this proxy statement, you will have designated the following individuals as your proxy holders for the Annual Meeting: Lishan Aklog,
M.D., the Company’s Chief Executive Officer and Chairman of the Board; and Dennis McGrath, the Company’s President and Chief
Financial Officer.
Any
proxy given pursuant to this solicitation and received in time for the Annual Meeting will be voted in accordance with your specific
instructions. If you provide a proxy, but you do not provide specific instructions on how to vote on each proposal, the proxy holder
will vote your shares “FOR” election of the management nominees in the Director Election Proposal, “FOR” the
Charter Amendment Proposal, and “FOR” the Accountant Ratification Proposal. With respect to any other proposal that properly
comes before the Annual Meeting, the proxy holders will vote in their own discretion according to their best judgment, to the extent
permitted by applicable laws and regulations.
How
do I attend the Annual Meeting?
The
Annual Meeting will be a virtual meeting. Any stockholder wishing to attend the Annual Meeting must register in advance. To register
for and attend the Annual Meeting, please follow these instructions as applicable to the nature of your ownership of the Company’s
common stock:
Record
Owners. If you are a record holder, and you wish to attend the Annual Meeting, go to https://www.cstproxy.com/pavmed/2023, enter
the control number you received on your Notice of Internet Availability or proxy card, and click on the “Click here to preregister
for the online meeting” link at the top of the page. Immediately prior to the start of the Annual Meeting, you will need to log
back into the meeting site using your control number. You must register before the meeting starts.
Beneficial
Owners. Beneficial owners who wish to attend the Annual Meeting must obtain a legal proxy from the stockholder of record and e-mail
a copy (a legible photograph is sufficient) of their legal proxy to proxy@continentalstock.com. Beneficial owners should contact their
bank, broker or other nominee for instructions regarding obtaining a legal proxy. Beneficial owners who e-mail a valid legal proxy will
be issued a meeting control number that will allow them to register to attend and participate in the Annual Meeting. You will receive
an e-mail prior to the meeting with a link and instructions for entering the Annual Meeting. Beneficial owners should contact Continental
Stock Transfer no later than 4:00 p.m. on June 13, 2023.
Stockholders
will also have the option to listen to the Annual Meeting by telephone by calling:
| ● | Within
the U.S. and Canada: (800) 450-7155 (toll-free) |
| | |
| ● | Outside
of the U.S. and Canada: (857) 999-9155 (standard rates apply) |
The
passcode for telephone access is 5817263#. You will not be able to vote or submit questions unless you register for and log in to the
Annual Meeting webcast as described above.
What
happens if I do not provide voting instructions to my bank, broker or other nominee?
If
you are a beneficial owner and do not provide your bank, broker or other nominee with voting instructions and do not obtain a legal proxy,
under the rules of various national and regional securities exchanges, your bank, broker or other nominee generally may vote on routine
matters but may not vote on non-routine matters. If your bank, broker or other nominee does not receive instructions from you on how
to vote your shares on a non-routine matter, your bank, broker or other nominee will inform the inspector of election that it does not
have the authority to vote on this matter with respect to your shares. This is generally referred to as a “broker non-vote.”
The
Company expects that the Director Election Proposal will be considered a non-routine matter. If it is treated as a non-routine matter,
as expected, broker non-votes may occur with respect to this proposal. The Company expects that the Charter Amendment Proposal and the
Auditor Ratification Proposal will be considered routine matters. If they are treated as routine matters, as expected, broker non-votes
should not occur with respect to these proposals.
How
do I revoke my proxy or voting instructions?
Record
Owners. A record holder may revoke his, her or its proxy by (i) submitting a subsequent written notice of revocation that is received
by the Company’s Secretary at any time prior to the voting at the Annual Meeting, (ii) submitting a subsequent proxy prior to the
voting at the Annual Meeting or (iii) attending the Annual Meeting and voting via the Annual Meeting webcast. Attendance by a stockholder
at the Annual Meeting does not alone serve to revoke a stockholder’s proxy. Stockholders may send written notice of revocation
to the Secretary, PAVmed Inc., 360 Madison Avenue, 25th Floor, New York, New York 10017.
Beneficial
Owners. Beneficial owners should refer to the materials provided to them by their bank, broker or other nominee for information on
changing their voting instructions.
What
constitutes a quorum?
The
presence at the meeting, in person or by proxy, of the holders of a majority of the common stock outstanding and entitled to vote at
the meeting, will constitute a quorum for the transaction of business. Abstentions are voted neither “FOR” nor “AGAINST”
a matter, but are counted in the determination of a quorum. Similarly, as described above, a “broker non-vote” may occur
with respect to shares held in street name when the bank, broker or other nominee has not received instructions from the beneficial owner
as to how the shares are to be voted on a non-routine matter and does not have discretionary authority to vote such shares on the matter.
The shares subject to a proxy which are not being voted on a particular non-routine matter because of a broker non-vote will not be considered
shares present and entitled to vote on the matter. These shares may be present and entitled to vote on other matters (including other
routine matters), in which case the shares will count as present for purposes of determining the existence of a quorum. If the proxy
indicates that the shares are not being voted on any matter at the Annual Meeting, however, the shares will not be counted as present
for purposes of determining the existence of a quorum.
How
many votes are required to approve each proposal?
Director
Election Proposal. Election of a nominee in the Director Election Proposal requires the affirmative vote of a plurality of the shares
of the Company’s common stock represented in person or by proxy at the meeting and entitled to vote thereon. “Plurality”
means that the individuals who receive the largest number of votes cast “FOR” their election (up to the number of directors
to be elected) are elected as directors. Consequently, abstentions and broker non-votes will not have any effect on the vote with respect
to this proposal.
Charter
Amendment Proposal. Approval of the Charter Amendment Proposal requires the affirmative vote of a majority of the outstanding shares
of the Company’s common stock entitled to vote thereon. Abstentions and broker non-votes will have the same effect as a vote “AGAINST”
this proposal. However, if banks, brokers and other nominees have discretionary authority to vote on this proposal, as expected, there
should not be any broker non-votes with respect to this proposal.
Accountant
Ratification Proposal. The Accountant Ratification Proposal requires the affirmative vote of a majority of the shares of the Company’s
common stock represented in person or by proxy at the meeting and entitled to vote thereon. Abstentions, which are considered present
and entitled to vote on this matter, will have the same effect as a vote “AGAINST” this proposal. Broker non-votes, which
are not considered present and entitled to vote on this matter, will not have any effect on the vote with respect to this proposal. However,
if banks, brokers and other nominees have discretionary authority to vote on this proposal, as expected, there should not be any broker
non-votes with respect to this proposal. The results of the Accountant Ratification Proposal are advisory and non-binding on the Board.
Will
I have dissenters’ rights with respect to any of the matters to be presented at the Annual Meeting?
Neither
Delaware law, nor the Company’s Certificate of Incorporation or bylaws, provides for appraisal or other similar rights for dissenting
stockholders in connection with any of the matters to be presented at the Annual Meeting. Accordingly, stockholders will have no right
to dissent and obtain payment for their shares.
Who
is paying for this proxy statement and the solicitation of my proxy, and how are proxies solicited?
Proxies
are being solicited by the Board for use at the Annual Meeting. The Company’s officers and other employees, without additional
remuneration, also may assist in the solicitation of proxies in the ordinary course of their employment. In addition to the use of the
mail and the Internet, solicitations may be made personally or by email or telephone, as well as by public announcement.
The
Company will bear the cost of this proxy solicitation. The Company may also request brokers, dealers, banks and their nominees to solicit
proxies from their clients where appropriate, and may reimburse them for reasonable expenses related thereto.
Who
can help answer my questions?
If
you have questions about how to vote or direct a vote in respect of your shares or about the proposals, or if you need additional copies
of the proxy statement or proxy card, you may contact the Company at:
PAVmed
Inc.
360 Madison Avenue, 25th Floor
New York, New York 10017
Attention: Secretary
THE
DIRECTOR ELECTION PROPOSAL
The
Board is divided into three classes, Class A, Class B and Class C. Currently, there are two directors in Class A, Ronald M. Sparks and
Timothy Baxter, whose terms expire at the Annual Meeting, two directors in Class B, James L. Cox, M.D. and Debra J. White, whose terms
expire at the 2024 annual meeting of stockholders, and three directors in Class C, Lishan Aklog, M.D., Michael J. Glennon and Joan B.
Harvey, whose terms expire at the 2025 annual meeting of stockholders.
At
the Annual Meeting, the Company’s stockholders will elect two Class A directors, to hold office until the third succeeding annual
meeting and until their respective successors are duly elected and qualified. The Board is nominating Ronald M. Sparks and Timothy Baxter,
each a current Class A director, for re-election as the Class A directors. Biographical information about the nominees can be found in
“Directors, Executive Officers and Corporate Governance” below.
Each
of the nominees has agreed to be named in this proxy statement and to serve as a director if elected. Unless otherwise specified by you
when you give your proxy, the shares subject to your proxy will be voted “FOR” the election of these nominees. In case any
of these nominees become unavailable for election to the Board, an event which is not anticipated, the proxy holders, or their substitutes,
shall have full discretion and authority to vote or refrain from voting your shares for any other person in accordance with their best
judgment.
Required
Vote and Recommendation
Nominees
that receive the affirmative vote of a plurality of the issued and outstanding shares of the Company’s common stock, represented
in person or by proxy at the meeting and entitled to vote thereon, will be elected as directors. Abstentions and broker non-votes will
not have any effect on the vote with respect to this proposal.
THE
BOARD RECOMMENDS THAT YOU VOTE “FOR” EACH NOMINEE LISTED ABOVE.
THE
CHARTER AMENDMENT PROPOSAL
On
April 21, 2023, the Board unanimously adopted and declared the advisability of an amendment to the Company’s Certificate
of Incorporation to provide for exculpation of certain of the Company’s officers from liability in specific circumstances, as permitted
by Delaware law. The Board further directed that this amendment be considered for approval by the Company’s stockholders at the
next annual meeting of stockholders. Accordingly, at the Annual Meeting, stockholders will vote on a proposal to approve this amendment.
The
form of the certificate of amendment is attached as Annex A to this proxy statement. If approved by the stockholders, the amendment
to the Company’s Certificate of Incorporation will become effective upon the filing of the certificate of amendment with the Delaware
Secretary of State, which will occur as soon as reasonably practicable after the Annual Meeting.
General
The
State of Delaware, which is the Company’s state of incorporation, recently enacted legislation that enables Delaware corporations,
like the Company, to limit the liability of certain of their officers in limited circumstances under Section 102(b)(7) of the Delaware
General Corporation Law (the “DGCL”). In light of this legislation, the Company is proposing to amend paragraph A
of Article Eighth of its Certificate of Incorporation to provide for exculpation of certain of the Company’s officers from liability
in specific circumstances, as permitted by Delaware law. The new Delaware legislation only permits, and the proposed amendment would
only permit, exculpation for direct claims (as opposed to derivative claims made by stockholders on behalf of the Company) and would
not apply to breaches of the duty of loyalty, acts or omissions not in good faith or that involve intentional misconduct or a knowing
violation of law, or any transaction in which the officer derived an improper personal benefit. The rationale for so limiting the scope
of liability is to strike a balance between stockholders’ interest in accountability and their interest in the Company being able
to attract and retain quality officers to work on such stockholders’ behalf.
Reasons
for the Amendment
The
Company’s Certificate of Incorporation currently provides for the exculpation of directors but does not currently include a provision
that allows for the exculpation of officers. The Board believes it is appropriate for the Company, as a public company, to have exculpation
clauses for both officers and directors in the Company’s Certificate of Incorporation. Officers, like directors, often make decisions
on crucial matters. Frequently, officers, like directors, must make such decisions in response to time-sensitive opportunities and challenges.
Even when acting in good faith and with the intention of furthering the interests of the Company and its stockholders, the Company’s
officers may become subject to investigations, claims, actions, suits or other proceedings seeking to impose liability on them personally
by parties who, with the benefit of hindsight, question the judgments made by them, especially in the current litigious environment.
As a result, officers, like directors, may be exposed to substantial personal financial and other risks. Limiting officers’ concern
about personal risk stemming from unintentional missteps would empower them to best exercise their business judgment in furtherance of
stockholder interests. The Company expects a number of industry participants to adopt similar exculpation clauses that limit the personal
liability of officers in their charters and failing to adopt the amendment could impact the Company’s recruitment and retention
of exceptional officer candidates, as they may conclude that the potential exposure to personal financial and other risks exceeds the
benefits of serving as an officer of the Company. The proposed amendment would better position the Company to attract top officer candidates
and retain its current officers and enable the officers to exercise their business judgment in furtherance of the interests of the Company
and its stockholders without the potential for distraction posed by such risks. Additionally, it will align the protections for the Company’s
officers with those protections afforded to its directors.
Taking
into account the narrow class and type of claims for which officers’ liability would be exculpated, and the benefits the Board
believes would accrue to the Company and its stockholders as described above, the Board believes it is in the best interests of the Company
and its stockholders that the amendment to the Certificate of Incorporation be approved.
Required
Vote and Recommendation
Approval
of the Charter Amendment Proposal requires the affirmative vote of a majority of the issued and outstanding shares of the Company’s
common stock entitled to vote thereon. Abstentions and broker non-votes will have the same effect as a vote “AGAINST” this
proposal.
THE
BOARD RECOMMENDS THAT YOU VOTE “FOR” THE CHARTER AMENDMENT PROPOSAL.
THE
ACCOUNTANT RATIFICATION PROPOSAL
The
Board has appointed Marcum to serve as the Company’s independent registered public accounting firm for the fiscal year ending December
31, 2023. At the Annual Meeting, stockholders will vote on a proposal to ratify this appointment.
Marcum
has served as the Company’s independent registered public accounting firm since the fiscal year ended December 31, 2019. While
stockholder ratification of the Board’s decision to retain Marcum is not required by the Company’s bylaws or otherwise, the
Board has chosen to submit that selection to the Company’s stockholders for ratification. If the Company’s stockholders fail
to ratify the selection, the Board may, but is not required to, reconsider whether to retain that firm. Additionally, even if the selection
is ratified, the Board may in its discretion direct the appointment of a different independent registered public accounting firm at any
time during the fiscal year, if it determines that such a change would be in the best interests of the Company and its stockholders.
Marcum
has advised the Company that the firm is independent with respect to the Company and its subsidiaries. The Company expects that representatives
of Marcum will be present at the Annual Meeting to make statements and to respond to appropriate questions from the Company’s stockholders.
Independent
Registered Public Accounting Firm’s Fees and Services
The
following table sets forth the fees billed for or in the years ended December 31, 2022 and 2021 by Marcum, the Company’s principal
accountant.
| |
Year
Ended December 31, | |
| |
2022 | | |
2021 | |
Audit Fees (1) | |
$ | 723,000 | | |
$ | 675,000 | |
Audit-Related Fees (2) | |
| — | | |
| — | |
Tax Fees(3) | |
| — | | |
| — | |
All Other Fees | |
| — | | |
| — | |
Total Fees | |
$ | 723,000 | | |
$ | 675,000 | |
| (1) | Audit
fees consist of fees billed for professional services by the Company’s independent
registered public accounting firm for audits and quarterly reviews of the Company’s
consolidated financial statements during the years ended December 31, 2022 and 2021 and for
services that are normally provided by the accounting firm in connection with statutory and
regulatory filings or engagements for those fiscal years, including the issuance of consents
in connection with registration statement filings with the SEC and comfort letters in connection
with securities offerings. |
| | |
| (2) | Audit
related fees represent the aggregate fees billed for assurance and related professional services
rendered by the Company’s independent registered public accounting firm that are reasonably
related to the performance of the audit or review of the Company’s financial statements
and are not reported under “Audit Fees.” |
| | |
| (3) | Tax
fees represent the aggregate fees billed for professional services rendered by the Company’s
independent registered public accounting firm for tax compliance, tax advice, and tax planning
services. |
The
aggregate fees included in Audit Fees are those billed for the fiscal year. The aggregate fees included in the Audit-Related Fees and
Tax Fees are those fees billed in the fiscal year.
Pre-Approval
Policies and Procedures
The
audit committee of the Board has adopted policies and procedures for the pre-approval of audit and non-audit services for the purpose
of maintaining the independence of the Company’s independent auditor. The Company may not engage its independent auditor to render
any audit or non-audit service unless either the service is approved in advance by the audit committee, or the engagement to render service
is entered into pursuant to the audit committee’s pre-approval policies and procedures. All accountant services and fees noted
above were either approved in advance by the audit committee or rendered pursuant to such pre-approval policies and procedures.
Required
Vote and Recommendation
Approval
of the Accountant Ratification Proposal requires the affirmative vote of a majority of the issued and outstanding shares of the Company’s
common stock, represented in person or by proxy at the meeting and entitled to vote thereon. Abstentions will have the same effect as
a vote “AGAINST” this proposal. Broker non-votes will not have any effect on the vote with respect to this proposal.
THE
BOARD RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF MARCUM LLP AS THE COMPANY’S INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM.
DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Directors
and Executive Officers
The
following table sets forth the name, age and position of each of the Company’s executive officers and directors immediately after
the Annual Meeting, assuming the election of the management’s nominees at the Annual Meeting.
Name |
|
Age |
|
Position |
Lishan
Aklog, M.D. |
|
57 |
|
Chairman
and Chief Executive Officer |
Dennis
M. McGrath |
|
66 |
|
President
and Chief Financial Officer |
Shaun
M. O’Neil |
|
41 |
|
Chief
Operating Officer |
Brian
J. deGuzman, M.D. |
|
59 |
|
Chief
Technology and Compliance Officer |
Michael
A. Gordon |
|
49 |
|
General
Counsel and Secretary |
Michael
J. Glennon |
|
57 |
|
Vice
Chairman and Director |
Timothy
E. Baxter |
|
62 |
|
Director |
James
L. Cox, M.D. |
|
80 |
|
Director |
Joan
B. Harvey |
|
56 |
|
Director |
Ronald
M. Sparks |
|
68 |
|
Director |
Debra
J. White |
|
61 |
|
Director |
The
Board is divided into three classes, Class A, Class B and Class C. Currently, there are two directors in Class A, Ronald M. Sparks and
Timothy E. Baxter, whose terms expire at the Annual Meeting, two directors in Class B, James L. Cox, M.D. and Debra J. White, whose terms
expire at the 2024 annual meeting of stockholders, and three directors in Class C, Lishan Aklog, M.D., Michael J. Glennon and Joan B.
Harvey, whose terms expire at the 2025 annual meeting of stockholders.
Executive
Officers
Lishan
Aklog, M.D. has been the Company’s Chairman and Chief Executive Officer since its inception. Dr. Aklog also has been the Chairman
and Chief Executive Officer of Lucid Diagnostics Inc. (“Lucid”), the Company’s majority owned subsidiary, since
the consummation of Lucid’s initial public offering. Prior to the initial public offering, starting from Lucid’s inception,
he served as Lucid’s Executive Chairman. Dr. Aklog also has served as Executive Chairman of the Company’s other majority-owned
subsidiary, Veris Health Inc., since its inception in May 2021. Dr. Aklog has served as a co-founding Partner of both Pavilion Holdings
Group (“PHG”), a medical device holding company, since its inception in 2007 and Pavilion Medical Innovations (“PMI”),
a venture-backed medical device incubator, since its inception in 2009. He has served on the Board of Directors and the Audit Committee
of Contrafect Inc. (Nasdaq: CFRX) since June 2020 and on the Board of Directors of the Advanced Medical Technology Association (AdvaMed),
the world’s leading medical technology trade association, since February 2021. He previously served on the Board of Directors and
as Chair of the Audit Committee of Viveon Health Acquisition Corp. (NYSE: VHAQ) from September 2020 to April 2021, and as Chairman and
Chief Technology Officer of Vortex Medical Inc., a PHG portfolio company, from its inception in 2008 until its acquisition in October
2012 by AngioDynamics Inc. (Nasdaq: ANGO). Dr. Aklog has served as a consultant to numerous medical technology companies including Biomet
Inc., now Zimmer Biomet (NYSE: ZBH), from 2009 to 2017, AngioDynamics, from 2012 to 2016, Edward Lifesciences Corp. (NYSE: EW), from
2007 to 2012, On-X Life Technologies Inc., now CryoLife Inc. (NYSE: CRY), from 2009 to 2012 and Atricure Inc. (Nasdaq: ATRC) from 2007
to 2016. He also previously served on the Scientific Advisory Boards of numerous leading medical device companies, including Medtronic
Inc. (NYSE: MDT), St. Jude Medical Inc., now Abbott Laboratories (NYSE: ABT), Guidant Cardiac Surgery, now, Getinge AB, and Cardiovations,
then, a division of Johnson & Johnson (NYSE: JNJ). Dr. Aklog is an inventor on 35 issued patents and dozens of patent applications,
including the patents of Vortex Medical’s AngioVac system and the majority of PAVmed’s products. His patents have been honored
by the Boston Museum of Science and the Boston Patent Lawyers Association. Prior to transitioning to a full-time career as an entrepreneur
and executive in the life sciences industry in 2012, Dr. Aklog had a distinguished academic and clinical career as a technological innovator
in cardiac surgery serving as Associate Professor of Surgery, Chief of Cardiovascular Surgery and Chair of The Cardiovascular Center
at St. Joseph’s Hospital and Medical Center’s Heart and Lung Institute in Phoenix, Arizona from 2006 to 2012, Assistant Professor
of Cardiothoracic Surgery, Associate Chief of Cardiac Surgery, Director of Minimally Invasive Cardiac Surgery, Surgical Director of the
Cardiothoracic Intensive Care Unit, and Associate Director of the Thoracic Surgery Residency Program at Mount Sinai Medical Center in
New York, from 2006 to 2012, and Assistant Professor of Surgery at Harvard Medical School, Director of the Cardiac Surgery Research Laboratory
and an attending cardiac surgeon at Brigham and Women’s Hospital in Boston from 1999 to 2002. Dr. Aklog received his clinical training
in general and cardiothoracic surgery at Brigham and Women’s Hospital and Boston Children’s Hospital, during which he spent
two years as the Medtronic Research Fellow at Harvard Medical School’s Cardiac Surgery Research Laboratory. He was awarded the
American Association of Thoracic Surgery Traveling Fellowship pursuant to which he received advanced training in heart valve surgery
under renowned cardiac surgeons Sir Magdi Yacoub at Harefield Hospital in London and Professor Alain Carpentier at L’Hopital Broussais
in Paris. Dr. Aklog is a co-author on 38 peer-reviewed articles and 10 book chapters and has served on the Editorial Board of the Journal
of Cardiothoracic Surgery since 2006. He is a member of numerous professional societies and was elected to the American Association
of Thoracic Surgery in 2011. He served on the Board of Directors of the International Society for Minimally Invasive Cardiothoracic Surgery
from 2006 to 2009 and as President of the 21st Century Cardiothoracic Surgery Society in 2011. Dr. Aklog was recognized as one the Top
Healthcare Technology CEO’s of 2021 by Healthcare Technology Report and as one of America’s Top Doctors in the Castle
Connolly Guide from 2002 to 2013. He serves as Chairman of the Boston ECG Project Charitable Foundation, and on the International
Board of Directors and New York Executive Committee of Human Rights Watch. Dr. Aklog received his A.B. degree, magna cum laude,
in Physics from Harvard University, where he was elected to Phi Beta Kappa and his M.D. degree, cum laude with a dissertation
in the field of molecular genetics, from Harvard Medical School. The Company believes Dr. Aklog is well-qualified to serve on the Board
due to his extensive experience in founding and building successful medical device companies, his distinguished career as an academic
cardiac surgeon, his recognition as a thought leader and innovator both as a surgeon and a medical device entrepreneur and his widespread
relationships in the healthcare and medical device communities.
Dennis
M. McGrath has served as the Company’s President since March 2019 (having served as Executive Vice President from March 2017
to March 2019) and as the Company’s Chief Financial Officer since March 2017. Mr. McGrath has also served as the Chief Financial
Officer of Lucid, the Company’s majority owned subsidiary, since the consummation of Lucid’s initial public offering, and
as a member of the Board of Directors of its other majority-owned subsidiary, Veris Health Inc., since its inception in May 2021. Previously,
from 2000 to 2017, Mr. McGrath served in several senior level positions of PhotoMedex, Inc. (formerly, Nasdaq: PHMD), a global manufacturer
and distributor of medical device equipment and services, including from 2011 to 2017 as director, President, and Chief Financial Officer.
Prior to PhotoMedex’s reverse merger with Radiancy, Inc in December 2011, he also served as a board member and Chief Executive
Officer from 2009 to 2011 and served as Vice President of Finance and Chief Financial Officer from 2000 to 2009. He received honors as
a P.A.C.T. (Philadelphia Alliance for Capital and Technology) finalist for the 2011 Investment Deal of the Year, award winner for the
SmartCEO Magazine 2012 CEO of the Year for Turnaround Company, and finalist for the Ernst & Young 2013 Entrepreneur of the Year.
He has extensive experience in mergers and acquisitions, both domestically and internationally, particularly involving public company
acquisitions, including Surgical Laser Technologies, Inc, (formerly, Nasdaq: SLTI), ProCyte Corporation (formerly, Nasdaq: PRCY), LCA
Vision, Inc. (formerly, Nasdaq: LCAV) and Think New Ideas, Inc. (formerly, Nasdaq: THNK). Prior to PhotoMedex, he served in several senior
level positions of AnswerThink Consulting Group, Inc. (then, Nasdaq: ANSR, now, The Hackett Group, Nasdaq: HCKT), a business consulting
and technology integration company, including from 1999 to 2000 as Chief Operating Officer of the Internet Practice, the largest division
of AnswerThink Consulting Group, Inc., while concurrently during the merger of the companies, serving as the acting Chief Financial Officer
of Think New Ideas, Inc. (then, Nasdaq: THNK, now, Nasdaq: HCKT), an interactive marketing services and business solutions company. Mr.
McGrath also served from 1996 until 1999 as Chief Financial Officer, Executive Vice President and director of TriSpan, Inc., an internet
commerce solutions and technology consulting company, which was acquired by AnswerThink Consulting Group, Inc. in 1999. During his tenure
at Arthur Andersen & Co., where he began his career, he became a Certified Public Accountant in 1981 and he holds a B.S., maxima
cum laude, in accounting from LaSalle University. In addition, he serves as the audit and compensation committee chair and a director
of several medical device companies, including DarioHealth Corp. (Nasdaq: DRIO), Cagent Vascular, LLC, BioVector, Inc. and Citius Pharmaceuticals,
Inc. (Nasdaq: CTXR). Formerly from 2007 to 2009, Mr. McGrath served as a director of Embrella Cardiovascular, Inc. (sold to Edwards Lifesciences
Corporation, NYSE: EW). He also serves on the Board of Visitors for Taylor University and as Chairman of the Board of Trustees of Manor
College.
Shaun
M. O’Neil has served as the Company’s Executive Vice President and Chief Operating Officer since February 2022. Previously,
from July 2018 to February 2022, he served as the Company’s Chief Commercial Officer and Executive Vice President of Business Development.
Mr. O’Neil also has served as Executive Vice President and Chief Operating Officer of Lucid, the Company’s majority owned
subsidiary, since March 2022. Previously, from July 2018 to March 2022, he served as the Chief Commercial Officer of Lucid, where he
oversaw the build out of the commercial operations, including sales strategy, market access, clinical support, and national marketing
activities. Additionally, Mr. O’Neil was responsible for the negotiation and integration of the acquisition of certain key assets
from PacificDx (subsidiary of ResearchDx), a CLIA/CAP certified lab operator, which formed the foundation of the Lucid’s own laboratory,
known as LucidDx Labs. From June 2011 to June 2018, Mr. O’Neil served in various positions at Angiodynamics (Nasdaq: ANGO). From
June 2011 to May 2013, he served as a Product Manager for the Peripheral Vascular Division, overseeing the Thrombus Management portfolio
and the marketing lead on the acquisition of Vortex Medical. From May 2013 to June 2014, he served as a Senior Product Manager, Peripheral
Vascular and previously serving in a sales leadership role as a Regional Business Manager from June 2014 to July 2018. During his tenure
at Angiodynamics, Mr. O’Neil held increasing levels of responsibility, lead due diligence on multiple acquisition targets, managed
both up and downstream marketing activities, managed a national team of clinical specialists and a sales team focused on selling to multiple
clinical targets, including Interventional Radiology, Interventional Cardiology, Vascular Surgery, and Cardiothoracic Surgery. He was
instrumental in launching the AngioVac system which has become the standard of care for minimally invasive removal of undesirable intravascular
material from the right side of the heart. From October 2005 to July 2011, Mr. O’Neil held various roles at Aycan Medical Systems
where he was responsible for launching multiple novel proprietary solutions, including a vendor neutral DICOM archive and apple based
medical imaging post processing station that included multi-modality post-processing workstations with specific focus in Mammography,
Nuclear Medicine, Oncology, Vascular Surgery (AAA planning), Dynamic MRI/CT, that included Teleradiology and Dictation services. Mr.
O’Neil received his bachelor’s in business administration from Alfred University and master of business administration from
Rochester Institute of Technology.
Brian
J. deGuzman, M.D. has served as the Company’s Chief Technology and Compliance Officer since April 2023, and previously served
as Executive Vice President of Clinical Affairs from February 2020 to March 2023, as the Company’s Chief Medical Officer from October
2014 to March 2023 and as a director from October 2014 to January 2015. Dr. deGuzman has served as a co-founding Partner of Pavilion
Holdings Group and Pavilion Medical Innovations since their respective inceptions in 2007 and 2009. Dr. deGuzman was the President and
Chief Executive Officer of Kaleidoscope Medical that was founded in 2013 and has also served as a Senior Advisor to PMI portfolio companies
Saphena Medical since February 2013 and Cruzar Medsystems since July 2013. Dr. deGuzman served as Chief Medical Officer of Vortex Medical
from inception until its sale to AngioDynamics in 2012. During his surgical career, Dr. deGuzman was a consultant to various medical
device companies, including Edward Lifesciences, AngioDynamics, Zimmer-Biomet and Atricure, and served on the Revascularization Scientific
Advisory Board of Maquet Cardiovascular (formerly Boston Scientific and Guidant Cardiac Surgery). Prior to moving into the medical device
industry full-time in 2012, Dr. deGuzman was Assistant Professor of Surgery, Associate Chief of Cardiovascular Surgery, and Surgical
Director of the Atrial Fibrillation Clinic and Cardiothoracic Surgical Intensive Care Unit at St. Joseph’s Hospital and Medical
Center’s Heart and Lung Institute from 2006 to 2012. From 2002 to 2006, Dr. deGuzman was Assistant Professor of Surgery at Tufts
University School of Medicine and an attending cardiac surgeon at the Lahey Clinic Medical Center in Massachusetts. From 2001 to 2002,
Dr. deGuzman was a Clinical Associate of Cardiac Surgery at the Cleveland Clinic. Dr. deGuzman received his general surgical training
at the University of Connecticut/Hartford Hospital, was a Research Fellow at Harvard Medical School’s Cardiac Surgery Research
Laboratory and received his cardiothoracic surgical training at Brigham and Women’s Hospital and Boston Children’s Hospital.
Dr. deGuzman was recognized as a Top Doctor in Cardiovascular Surgery by Boston Magazine. Dr. deGuzman received his B.S. in Biology
from Boston College and his M.D. from Georgetown University School of Medicine.
Michael
A. Gordon has served as the Company’s General Counsel and Secretary since May 2022. Mr. Gordon has also served as the General
Counsel and Secretary of Lucid, the Company’s majority owned subsidiary, since May 2022. Previously, from October 2006 to May 2022,
he was a member of the corporate department of the law firm Friedman Kaplan Seiler & Adelman LLP, where he was a partner from January
2013 through May 2022, and a member of the firm’s management committee from January 2019 through May 2022. While at Friedman Kaplan,
Mr. Gordon represented PAVmed and Lucid in a range of M&A, financing and other corporate and commercial transactions, and also advised
the companies and their boards on corporate governance matters. Prior to joining Friedman Kaplan, Mr. Gordon was a corporate associate
with the law firm Cravath Swaine & Moore LLP. Mr. Gordon received his J.D. from Fordham University School of Law, where he graduated
magna cum laude in 2004, and his A.B. in Economics from Dartmouth College, where he graduated cum laude in 1996.
Directors
In
addition to Dr. Aklog, the following individuals will serve as directors of the Company immediately after the Annual Meeting, assuming
the election of the management’s nominees at the Annual Meeting.
Michael
J. Glennon has served as the Company’s Vice Chairman and a director since October 2014. Mr. Glennon has served as a co-founding
Partner of both PHG and PMI since their respective inceptions in 2007 and 2009 and also serves as Chairman and Chief Executive Officer
of PMI. Mr. Glennon has served as President, Chief Executive Officer and a director of Saphena Medical since February 2013 and Cruzar
Medsystems since July 2013 and as a director of Kaleidoscope Medical since January 2013. Mr. Glennon was the President and Chief Executive
Officer of Vortex Medical from its inception in 2008 until its acquisition in October 2012 by AngioDynamics. From 2005 to 2007, Mr. Glennon
was Senior Vice President - Sales and Marketing for Accellent Inc., a market-leading provider of outsourced precision manufacturing and
engineering services to the medical device industry. Accellent was a portfolio company of DLJ Merchant Banking Partners and was acquired
in 2005 by KKR and Bain Capital. From 2004 to 2005, Mr. Glennon was a Cardiac Rhythm Management District Manager at Medtronic. From 1996
to 2004, Mr. Glennon was a Sales Manager at Guidant including seven years at Guidant Cardiac Surgery (now, Maquet Cardiovascular). He
was instrumental in the launch and rapid growth of VasoView, the first endoscopic vessel harvesting technology, which became the standard
of care in coronary bypass surgery. From 1993 to 1995, Mr. Glennon worked for Origin Medsystems which was acquired by Eli Lilly and subsequently
spun out as part of Guidant. Previously, Mr. Glennon was with Stryker Endoscopy and Storz Instrument Company. Mr. Glennon received his
B.S. in Business Administration from the University of New Hampshire. The Company believes Mr. Glennon is well-qualified to serve on
the Board due to his significant experience in the marketing and sale of a broad range of medical devices, his expertise in the development
and manufacturing of medical devices, his experience launching, building and running successful medical device companies, and his extensive
relationships in the medical device industry and the broader medical community.
Timothy
E. Baxter has served as a director since June 2021. Mr. Baxter is an experienced corporate leader, having spent thirteen years in
senior executive roles during a rapid-growth period at Samsung Electronics Co., LTD, the world’s second-largest technology company.
He was its first non-Korean-born C-suite executive and rose to become President and Chief Executive Officer, North America – responsible
for 6,000 employees and $30 billion in revenue. He was lauded for capitalizing on emerging trends, scaling businesses, building teams,
strengthening brand loyalty, deploying emerging technology platforms, and successfully managing unanticipated challenges. Before retiring,
he developed the company’s long-term strategic plan for capitalizing on emerging technologies, including 5G, artificial intelligence,
cloud-based computing, and Internet of Things (IOT). Prior to Samsung, Mr. Baxter spent ten years in various senior marketing and general
manager roles at Sony Corporation, where he helped navigate the analog to digital shift in its crown jewel television business unit and
successfully led all Hollywood studio negotiations in the Blu-Ray packaged media format war win. Earlier in his career, he served in
senior sales and marketing roles at AT&T Inc. and Lucent Technologies Inc., where he was instrumental in launching go-to-market plans,
lifecycle management as well as building and globalizing its brand for a $1 billion business unit. Mr. Baxter has served as an industry-wide
leader, including as a member of the Executive Board of CTIA, a leading wireless communication industry trade association, and as a Director
of the Consumer Electronics Association (CEA), the leading consumer technology association. He currently serves as a Senior Advisor at
McKinsey & Co, Operating Partner at Centre Partners Management LLC, a leading middle market private equity firm, Executive Chair
of private-equity backed Tastemakers Holdings LLC, a leading developer and marketer of specialty gaming products, Lead Outside Director
of First Orion Corp., a technology software company, Advisory Board member of Almo Distribution, the largest independent U.S. distributor
of appliances, consumer electronics, professional audio/video equipment, furniture and housewares, an advisor to Raxium Inc., a start-up
company developing next generation display technology, and an outside director of Breville Group Limited (ASX: BRG), a household appliance
manufacturer. Mr. Baxter received his undergraduate degree in Marketing and Finance at Roger Williams University and currently serves
as Chairman of its Board of Trustees. The Company believes Mr. Baxter is well-qualified to serve on the Board due to his significant
experience in marketing, brand-building and growing businesses focused on emerging technologies, as well as his extensive business relationships
and contacts.
James
L. Cox, M.D. has served as a director since January 2015. He also has served as a director of Lucid, the Company’s majority
owned subsidiary, since Lucid’s inception. Dr. Cox is a cardiac surgeon, scientific investigator and medical device entrepreneur
who pioneered the field of surgical intervention for cardiac arrhythmias, including the eponymous Cox-Maze procedure for the treatment
of atrial fibrillation. In January 2017, he became the Surgical Director of the Center for Heart Rhythm Disorders at the Bluhm Cardiovascular
Institute and the Visiting Professor of Surgery at the Feinberg School of Medicine at Northwestern University. In September 2018, he
was appointed as full-time Professor of Surgery at the Feinberg School of Medicine at Northwestern University. From 1983 to 1997, Dr.
Cox served as Professor of Surgery and Chief of the Division of Cardiothoracic Surgery at Washington University School of Medicine and
Cardiothoracic Surgeon-in-Chief at Barnes Hospital in St. Louis. During this tenure, he became the first Evarts A. Graham Professor of
Surgery and Vice-Chair of the Department of Surgery. From 2005 to December 2016, Dr. Cox was the Emeritus Evarts A. Graham Professor
of Surgery at Washington University in St. Louis. Dr. Cox was also previously Professor and Chairman of the Department of Thoracic and
Cardiovascular Surgery at Georgetown University Medical Center and Associate Professor of Surgery at Duke University Medical Center.
Dr. Cox has had a distinguished and highly productive academic career. He has published over 380 peer-reviewed scientific articles and
has served on the editorial boards of numerous journals, including Circulation, the Journal of Thoracic and Cardiovascular Surgery, the
Annals of Surgery, and the Journal of Electrophysiology. His laboratory has received continuous NIH funding for its research on the surgical
treatment of cardiac arrhythmias. Dr. Cox has served in leadership positions at numerous professional organizations. He was the 81st
President of the American Association of Thoracic Surgery and a director of the American Board of Thoracic Surgery. He has been invited
to lecture and perform surgery as a visiting professor at hundreds of institutions around the world. He has received numerous awards
and honors for his clinical and scientific work, most notably as one of 30 “Pioneers in Thoracic and Cardiovascular Surgery”
at a ceremony commemorating the 50th anniversary of the specialty. He is the only person to ever receive the Distinguished Scientist
Awards from the Heart Rhythm Society, the Society of Thoracic Surgeons, and the American Society for Thoracic Surgery. Dr. Cox is the
2020 recipient of the Jacobson Innovation Award from the 82,000-member American College of Surgeons, the highest honor awarded by that
organization which is awarded to only one American surgeon annually. Dr. Cox holds over 30 issued patents. He has been instrumental in
the development of six medical device companies, including Epicor Medical, which was acquired by St. Jude Medical in 2004 for $200 million,
and 3F Therapeutics (co-founder and board member), which was acquired in 2006 by ATS Medical for $40 million, ATS Medical (Medical Director),
which was acquired by Medtronic in 2010 for $370 million, and Harpoon Medical (board member), which was acquired by Edwards LifeSciences
in 2017 for $250 million. Dr. Cox has served on numerous scientific advisory boards, including Medtronic, St. Jude Medical, Atricure,
SentreHEART and CorMatrix, and has served on the Board of Directors of 5 different companies. He is also the Founder and Chairman of
the Board of Directors of the World Heart Foundation, a not-for-profit organization devoted to improving access to cardiac surgery, which
was active in over 75 developing countries around the world from 2000 to 2012. Dr. Cox received his general and cardiothoracic surgical
training at Duke University School of Medicine, during which time he spent two years in the U.S. Army Medical Corps. Dr. Cox received
his M.D. from the University of Tennessee, where he received the Alpha Omega Alpha Distinguished Graduate Award as the outstanding student
in his class. The Company believes Dr. Cox is well-qualified to serve on the Board due to his distinguished career as a world- renowned
cardiac surgeon and scientific investigator, his recognition as a thought leader and innovator both as a surgeon and medical device entrepreneur,
his extensive experience in the medical device industry and his widespread relationships in all segments of the healthcare community.
Joan
B. Harvey has served as a director since February 2022. Ms. Harvey has extensive corporate leadership in the health care space, with
more than two decades of health care experience serving in a variety of leadership roles dedicated to improving whole person health and
advocating for patients. She is the president of Care Solutions for Evernorth, Cigna Corporation’s (NYSE: CI) health services business.
In this role, she oversees Evernorth’s medical, behavioral, and pharmacy clinical programs to meet the diverse needs of health
plans, employers, government organizations—and the people they serve. Prior to joining Evernorth, Ms. Harvey served in senior leadership
roles at Cigna, Medco Health Solutions Inc., WellPoint 360 Health. a subsidiary of Anthem, Inc., American Imaging Management, and Oxford
Health Plans, LLC, a subsidiary of UnitedHealth Group. She is a founding member of the Disease Management Association of America, and
author of “Asthma Disease Management in the 21st Century” for the Managed Care Handbook: Best Practices in Medical Management.
Ms. Harvey holds a Master of Business Administration from the American Graduate School of International Management and a Bachelor’s
degree in International Relations from Bates College. The Company believes Ms. Harvey is well-qualified to serve on the Board due to
her significant experience in executive leadership roles in the healthcare industry and her demonstrated commitment to patient care,
as well as her extensive business relationships and contacts.
Ronald
M. Sparks has served as a director since January 2015. He also has served as a director of Lucid, the Company’s majority owned
subsidiary, since October 2021. Mr. Sparks has more than 42 years of executive experience in the medical device industry and has launched
over 50 products across a wide spectrum of specialties, including orthopedics, endoscopy, wound management, cardiology, interventional
radiology, diagnostic imaging, ophthalmology and otology. From 2007 to October 2013, he served as a Healthcare Industry Executive at
Avista Capital Partners, a private equity firm. Mr. Sparks served as Chairman and Chief Executive Officer of Navilyst Medical Inc., which
was formed by Avista Capital to acquire the fluid management and venous access business units of Boston Scientific, from its inception
in 2008 until its acquisition in May 2012 by AngioDynamics for $372.0 million. From 2003 to 2007, he served as President, Chief Executive
Officer and a director of Accellent, a market- leading provider of outsourced precision manufacturing and engineering services to the
medical device industry. Accellent was a portfolio company of DLJ Merchant Banking Partners and was acquired in 2005 by KKR and Bain
Capital. During his tenure at Accellent, he was recognized as the Credit Suisse/DLJ Merchant Bank 2005 CEO of The Year. From 1986 to
2003, he served in various leadership roles at Smith & Nephew as a member of the Group Executive Committee, President of the Endoscopy
Division, President of the Wound Management Division and Vice President of Finance. Earlier in his career, he served in various finance
roles at Richards Medical, Dyonics and Union Carbide Imaging. Mr. Sparks is a fellow of the American Sports Medicine Institute, a Trustee
of the Arthroscopy Association of North America Education Foundation and Honorary Lifetime Member of the International Society of Arthroscopy,
Knee Surgery and Orthopedic Sports Medicine. He has previously served on numerous boards and industry councils, including AdvaMed, the
National Subacute Care Association, the American College of Foot and Ankle Surgeons, the American Council of Orthopedic Surgeons and
the Society of Interventional Radiology. Mr. Sparks received his B.S. in Finance and Accounting from the University of Massachusetts
and attended the INSEAD Advanced Management Program at the European Institute of Business Administration in Fontainebleau, France. The
Company believes Mr. Sparks is well-qualified to serve on the Board due to his executive leadership roles at numerous medical device
companies, his history of success in launching over 50 new medical device products in 16 years, his extensive experience in acquiring
and integrating 14 medical device companies over 15 years, his execution of public financings, and his strong relationships in the medical
community and with private equity and investment banking firms active in the medical device space.
Debra
J. White has served as a director since April 2021. She also has served as a director of Lucid, the Company’s majority owned
subsidiary, since August 2022. Ms. White is a prominent UK-based global industry executive with broad business leadership experience,
including as a chief executive, financial executive, public company director and strategic consultant, in multiple sectors in Europe
and the United States, including the healthcare services, molecular genetics and biopharmaceutical industries. She served as interim
Chief Human Resources Officer of BT Group, plc (OTCMKTS: BTGOF), a British multinational telecommunications holding company with operations
in around 180 countries, from October 2021 through December 2022. She also has served on the board of directors of Howden Joinery Group
PLC (LSE: HWDN), a UK-headquartered FTSE250 multinational building trade supplier with 10,000 employees and over $2 billion in revenue
since February 2017, and sits on its Audit, Renumeration and Nominating Committees. She has served as a trustee of Wellbeing of Women,
a UK charity which invests in medical research and development of specialist clinicians in women’s health, since March 2013. From
September 2020 to March 2021, Ms. White served as a strategic consultant to Oxford Nanopore Technologies Ltd., a UK-based biotechnology
company which develops and commercializes DNA/RNA sequencing technologies, advising it on product and go-to-market strategy for its emerging
Oxford Nanopore Diagnostics business unit. Early in the COVID-19 pandemic, from March 2020 to July 2020, Ms. White worked with the UK
Department of Health and Social Care to help establish COVID-19 testing facilities across the nation. From September 2017 to December
2019, Ms. White served as Group CEO of Interserve Group (LSE: IRV), a UK-headquartered multinational group of support services and construction
companies with 75,000 employees and over $4 billion in revenue, during a challenging period which required her to implement complex strategic
financing and operational programs prior to its restructuring and sale to its creditors. From January 2004 to August 2017, Ms. White
served in various senior executive roles at Sodexo SA (Euronext: SW), a Paris-headquartered multinational diversified services company
with 440,000 employees and over $20 billion in revenue, including as Chief Financial Officer and later Chief Executive Officer –
Sodexo UK & Ireland, Group Senior VP Strategic Projects, Senior VP and Chief Financial Officer – Sodexo North America, an $8
billion revenue subsidiary, and finally as Executive Board member and Global Chief Executive Officer – Healthcare and Government,
two global businesses with a combined 100,000 employees and over $7 billion in revenue. While at Sodexo, she served on its global body
that promoted the development of women across the company and was inducted into the Women 1st Top 100 Club, a network of the most influential
women in the industry, which highlights the role models and leaders who have achieved success at the highest levels. From 2000 to 2003
she served as a Director at PWC Consulting advising a range of industries, including pharmaceuticals, on integration, financial performance
improvement and post-merger integration. From 1987 to 2000, Ms. White served in various financial and strategic roles at AstraZeneca
(LSE: AZN) a UK-headquartered, multinational pharmaceutical and biotechnology company, including Head of Finance – Manufacturing,
Head of Internal Audit – Zeneca Pharmaceuticals, Controller – Specialty Chemicals, Controller – Corporate Operations
and Senior VP Global Merger Integration. She began her career as a senior tax advisor at Arthur Andersen & Co. Ms. White received
her master’s degree in Economics from Cambridge University, Cambridge UK. The Company believes Ms. White is well-qualified to serve
on the Board due to her extensive executive leadership experience, including financial and strategic roles at numerous global companies,
including in healthcare services the life sciences industry, her experience as a public company director, her relationships with financial
firms active in Europe and the U.S, her commitment to promoting health during the Covid-19 pandemic and her role as a champion and role
model for women executives.
Family
Relationships
There
are no family relationships among any of the Company’s directors or executive officers.
Conflicts
of Interest
Certain
of the Company’s officers have fiduciary obligations to other companies and organizations engaged in medical device business activities.
Accordingly, they may participate in transactions and have obligations that may be in conflict or competition with the Company’s
business.
Lucid.
Certain of the Company’s directors and officers, including Dr. Aklog, Mr. McGrath, Mr. O’Neil, Mr. Gordon, Dr. Cox, Mr. Sparks
and Ms. White, also serve as directors and officers of Lucid, the Company’s majority owned subsidiary. Lucid also operates in the
medical device industry. As a result, Lucid may produce devices that compete directly or indirectly with the Company’s products.
Lucid’s certificate of incorporation includes provisions that delineate the directors’ and officers’ duties, as follows:
| ● | Lucid
renounces any interest or expectancy in, or being offered an opportunity to participate in,
any business opportunities, that are presented to Lucid’s officers, directors, employees
or stockholders, or affiliates thereof, who are also officers, directors, employees or stockholders
of the Company or affiliates thereof (a “PAVmed Party”) and in which a
PAVmed Party may have an interest or expectancy (a “PAVmed Opportunity”),
except as may be prescribed by any written agreement between Lucid and the Company approved
by Lucid’s board of directors; and |
| ● | no
PAVmed Party will be liable to Lucid or its stockholders for monetary damages for breach
of any fiduciary duty by reason of a PAVmed Party pursuing or acquiring any PAVmed Opportunity. |
Lucid
and the Company have agreed that no PAVmed Party will pursue any opportunity related to commercializing the EsoGuard diagnostic test
and the EsoCheck cell collection device or developing and commercializing other products that use or enhance the same underlying technology
(“Lucid Business”).
As
a result of the foregoing, if any PAVmed Party becomes aware of a potential business opportunity that is a PAVmed Opportunity (other
than an opportunity relating to Lucid Business), including any such opportunity relating to any other diagnostic test or medical device,
he or she will be entitled to present those opportunities to another PAVmed Party, including the Company, prior to presenting them to
Lucid. However, any conflicts of interest among the Company and its officers, directors, stockholders, or their affiliates, including
PAVmed and certain of its officers and directors, relating to Lucid Business may not be resolved in the Company’s favor.
Outside
Directorships. Dr. Aklog serves on the board of directors of Contrafect Inc., and Mr. McGrath serves on the board of directors of
DarioHealth Corp., Cagent Vascular, LLC, BioVector, Inc. and Citius Pharmaceuticals, Inc. Accordingly, each of them may have a fiduciary
responsibility to these companies on the boards of which they serve to present certain business opportunities within their respective
specific lines of business (although currently, none of such companies are engaged in the same lines of business in which the Company
and its subsidiaries currently operate). Other directors also serve on the boards or hold officer positions with other companies. Accordingly,
each of them may have a fiduciary responsibility as well to these companies to present certain business opportunities within their respective
lines of business.
Other
Ventures. As an affiliate of Saphena Medical and Cruzar Medsystems, Mr. Glennon may have a fiduciary responsibility to present certain
business opportunities to such entities within their specific lines of business. Saphena Medical’s line of business is endoscopic
vessel harvesting and Cruzar Medsystems’ is peripheral vascular intervention for chronic total occlusions. Accordingly, it is possible
Mr. Glennon may present opportunities to such entities prior to presenting them to the Company. In addition, Drs. Aklog and deGuzman
and Mr. Glennon are affiliates of PHG and PMI. Despite this affiliation, there is no potential conflict with them presenting corporate
opportunities to these entities over the Company. PHG is a holding company which holds their stakes in existing entities but does not
invest in new companies. Its operating agreement explicitly states that they do not have an obligation to present corporate opportunities
to PHG. Similarly, PMI is currently an intellectual property holding company without any ongoing business. Accordingly, they have no
fiduciary or contractual obligations to present corporate opportunities or assign intellectual property to either entity. In addition,
in order to minimize any potential conflicts of interest which may arise from Mr. Glennon’s affiliation with Saphena Medical and
Cruzar Medsystems, and to ensure no unanticipated conflicts of interest arise from the affiliation of Drs. Aklog and deGuzman and Mr.
Glennon with PHG and PMI, each of Dr. Aklog, Mr. Glennon and Dr. deGuzman has contractually agreed, pursuant to a written agreement with
the Company, until such time as he ceases to be an officer, to present to the Company for its consideration, prior to presentation to
any other entity, any suitable business opportunity which may reasonably be required to be presented to the Company, subject to the pre-existing
fiduciary obligations set forth above.
Independence
of Directors
The
Company’s common stock is listed on the Capital Market of The Nasdaq Stock Market LLC (“Nasdaq”) and the Company
adheres to the Nasdaq listing standards in determining whether a director is independent. The Board consults with its counsel to ensure
that its determinations are consistent with those rules and all relevant securities and other laws and regulations regarding the independence
of directors. Nasdaq requires that a majority of the Board must be composed of “independent directors,” which is defined
generally as a person other than an officer of a company, who does not have a relationship with the company that would interfere with
the director’s exercise of independent judgment in carrying out the responsibilities of a director. Consistent with these considerations,
the Company has determined that each of Mr. Glennon, Mr. Baxter, Dr. Cox, Ms. Harvey, Mr. Sparks and Ms. White is an independent director.
Board
Meetings and Committees
During
the fiscal year ended December 31, 2022, the Board met six times and acted by written consent seven times. All of the Company’s
directors attended 75% or more of the aggregate number of meetings of the Board and committees on which they served. The directors are
strongly encouraged to attend meetings of stockholders.
The
Board has three separately standing committees: the audit committee, the compensation committee and the nominating and corporate governance
committee. Each committee is composed entirely of independent directors as determined in accordance with the rules of Nasdaq for directors
generally, and where applicable, with the rules of Nasdaq for such committee. In addition, each committee has a written charter, a copy
of which is available free of charge on the Company’s website at http://ir.pavmed.com/corporate-governance.
Audit
Committee
The
audit committee consists of Ms. White, Mr. Baxter, Ms. Harvey and Mr. Sparks. Each of Ms. White, Mr. Baxter, Ms. Harvey and Mr. Sparks
is an independent director under the Nasdaq listing standards applicable to members of audit committees and under the definition of “independent”
as set forth in Rule 10A-3 of the Exchange Act. During the fiscal year ended December 31, 2022, the audit committee met four times and
acted by written consent one time. The audit committee’s duties, which are specified in the audit committee charter, include, but
are not limited to:
| ● | reviewing
and discussing with management and the independent auditor the annual audited financial statements,
and recommending to the Board whether the audited financial statements should be included
in the Company’s annual report on Form 10-K; |
| | |
| ● | discussing
with management and the independent auditor significant financial reporting issues and judgments
made in connection with the preparation of the Company’s financial statements; |
| | |
| ● | discussing
with management major risk assessment and risk management policies; |
| | |
| ● | monitoring
the independence of the independent auditor; |
| | |
| ● | verifying
the rotation of the lead (or coordinating) audit partner having primary responsibility for
the audit and the audit partner responsible for reviewing the audit as required by law; |
| | |
| ● | reviewing
and approving all related-party transactions; |
| | |
| ● | inquiring
and discussing with management the Company’s compliance with applicable laws and regulations; |
| | |
| ● | pre-approving
all audit services and permitted non-audit services to be performed by the Company’s
independent auditor, including the fees and terms of the services to be performed; |
| | |
| ● | appointing
or replacing the independent auditor; |
| | |
| ● | determining
the compensation and oversight of the work of the independent auditor (including resolution
of disagreements between management and the independent auditor regarding financial reporting)
for the purpose of preparing or issuing an audit report or related work; and |
| | |
| ● | establishing
procedures for the receipt, retention and treatment of complaints received by the Company
regarding accounting, internal accounting controls or reports which raise material issues
regarding the Company’s financial statements or accounting policies. |
Financial
Experts on Audit Committee
The
Board has determined that each of Ms. White, Mr. Baxter, Ms. Harvey and Mr. Sparks qualifies as an “audit committee financial expert”
as defined under rules and regulations of the SEC.
As
required by the Nasdaq listing standards, the audit committee will at all times be composed exclusively of independent directors
who are “financially literate.” Nasdaq listing standards define “financially literate” as being able to read
and understand fundamental financial statements, including a company’s balance sheet, income statement, and statement of cash flows.
In addition, the Company must certify to Nasdaq the committee has, and will continue to have, at least one member who has past employment
experience in finance or accounting, requisite professional certification in accounting, or other comparable experience or background
that results in the individual’s financial sophistication. Each of the members of the audit committee who qualifies as an “audit
committee financial expert” also qualifies as financially sophisticated under the Nasdaq listing standards.
Report
of the Audit Committee
The
audit committee reviewed and discussed the Company’s audited financial statements for the year ended December 31, 2022 with management,
as well as with the Company’s independent auditors. The audit committee discussed with the independent auditors the matters required
to be discussed by the statement on Auditing Standards No. 1301, as well as various accounting issues relating to presentation of certain
items in the Company’s financial statements and compliance with Section 10A of the Securities Exchange Act of 1934, as amended.
The audit committee received the written disclosures and letter from the independent auditors required by the applicable requirements
of the PCAOB regarding the independent auditors’ communications with the audit committee concerning independence, and has discussed
with the independent auditors their independence.
Based
upon the review and discussions referred to above, the audit committee recommended that the Company’s audited financial statements
be included in the Company’s annual report on Form 10-K for the year ended December 31, 2022 for filing with the Securities and
Exchange Commission. The Board evaluated the performance of Marcum LLP and re-appointed the firm as the Company’s independent auditors
for the fiscal year ending December 31, 2023.
|
Submitted by the
Audit Committee: Debra J. White (Chair) Timothy E. Baxter Joan B. Harvey Ronald M. Sparks |
Compensation
Committee
The
compensation committee consists of Dr. Cox, Mr. Glennon, Ms. Harvey, Mr. Sparks and Ms. White. Each of Dr. Cox, Mr. Glennon, Ms. Harvey,
Mr. Sparks and Ms. White is an independent director under the Nasdaq listing standards applicable to members of compensation committees.
During the fiscal year ended December 31, 2022, the compensation committee met one time and acted by written consent 16 times. The compensation
committee’s duties, which are specified in the Company’s compensation committee charter, include, but are not limited to:
| ● | reviewing
and approving on an annual basis the corporate goals and objectives relevant to the Chief
Executive Officer’s compensation, evaluating the Chief Executive Officer’s performance
in light of such goals and objectives and determining and approving the remuneration (if
any) of the Chief Executive Officer’s based on such evaluation; |
| | |
| ● | reviewing
and approving the compensation of all of the other executive officers; |
| | |
| ● | reviewing
the Company’s executive compensation policies and plans; |
| | |
| ● | implementing
and administering the Company’s incentive compensation equity-based remuneration plans; |
| | |
| ● | assisting
management in complying with the Company’s proxy statement and annual report disclosure
requirements; and |
| | |
| ● | if
required, producing a report on executive compensation to be included in the Company’s
annual proxy statement. |
The
compensation committee makes all decisions regarding executive officer compensation. The compensation committee periodically reviews
the elements of compensation for the executive officers and, subject to any existing employment agreements, sets each element of compensation
for the Chief Executive Officer and the other executive officers, including annual base salary, annual incentive bonus and equity compensation.
The compensation committee also periodically reviews the terms of employment agreements with the executive officers, including in connection
with any new hire or the expiration of any existing employment agreements. Members of senior management may report on the performance
of the Company’s other executive officers and make compensation recommendations to the compensation committee, which will review
the compensation recommendations. No named executive officer, including the chief executive officer, shall be present during voting and
deliberations relating to such named executive officer’s compensation.
The
compensation committee also reviews and approves the Company’s compensation plans, policies and programs and administers the Company’s
equity incentive plans and employee stock purchase plans. In addition, the Chief Executive Officer, the Chief Financial Officer and other
members of management make recommendations to the compensation committee with regard to overall pay strategy including program designs,
annual incentive design, and long-term incentive plan design for all employees. Management from time to time provides the compensation
committee with market information and relevant data analysis as requested.
The
compensation committee has the authority to retain one or more compensation consultants to assist in the evaluation of executive compensation
or other matters. The compensation committee has the sole authority to select, retain and terminate any such consulting firm, to oversee
the work of the firm, and to approve the firm’s fees and other retention terms. The compensation committee assesses the independence
of any consultants pursuant to the rules and regulations of the SEC and the listing standards of Nasdaq. The Company will provide for
appropriate funding, as determined by the compensation committee, for payment of any such investigations or studies and the compensation
to any consulting firm, legal counsel or other advisors retained by the compensation committee.
Nominating
and Corporate Governance Committee
The
nominating and corporate governance committee consists of Dr. Cox, Ms. Harvey and Messrs. Glennon, Sparks and Baxter, each of whom is
an independent director under the Nasdaq listing standards applicable to members of nominating committees. During the fiscal year ended
December 31, 2022, the nominating and corporate governance committee met two times and acted by written consent one time. The nominating
and corporate governance committee is responsible for overseeing the selection of persons to be nominated to serve on the Board. The
nominating and corporate governance committee will consider persons identified by its members, management, stockholders, investment bankers
and others.
The
guidelines for selecting nominees, which are specified in the nominating and corporate governance committee charter, generally provide
that persons to be nominated:
| ● | should
possess the requisite intelligence, education and experience to make a significant contribution
to the Board and bring a range of skills, diverse perspectives and backgrounds to its deliberations;
and |
| ● | should
have the highest ethical standards, a strong sense of professionalism and intense dedication
to serving the interests of the stockholders. |
The
nominating and corporate governance committee will consider a number of qualifications relating to management and leadership experience,
background and integrity and professionalism in evaluating a person’s candidacy for membership on the Board. The nominating and
corporate governance committee may require certain skills or attributes, such as financial or accounting experience, to meet specific
Board needs that arise from time to time and will also consider the overall experience and makeup of its members to obtain a broad and
diverse mix of Board members. Though the nominating and corporate governance committee does not have specific guidelines on diversity,
it is one of many criteria considered by the nominating and corporate governance committee when evaluating candidates. The nominating
and corporate governance committee does not distinguish among nominees recommended by stockholders and other persons.
The
nominating and corporate governance committee does not have a written policy or formal procedural requirements for stockholders to submit
recommendations for director nominations. However, the nominating and corporate governance committee will consider recommendations from
stockholders. Stockholders should communicate nominee suggestions directly to the nominating and corporate governance committee and accompany
the recommendation with biographical details and a statement of support for the nominee. The suggested nominee must also provide a statement
of consent to being considered for nomination. There have been no material changes to the procedures by which security holders may recommend
nominees to the Board.
In
addition to being responsible for selecting nominees to serve on the Board, the nominating and corporate governance committee is also
responsible for evaluating the performance of the Board and plays a leadership role in the corporate governance of the Company. This
includes, among other things, facilitating annual self-assessments by Board members, making recommendations to the Board regarding Board
committee functions, contributions and composition (as well as other corporate governance matters), reviewing and recommending applicable
changes to the Company’s organizational documents and advising the Board on environmental, social responsibility and sustainability
trends and other matters and making recommendations to the Board regarding the same.
Board
Leadership Structure and Role in Risk Oversight
Dr.
Aklog serves as Chairman and Chief Executive Officer. The Company does not believe that its size or the complexity of its operations
warrants a separation of the Chairman and Chief Executive Officer functions. Furthermore, the Company believes that combining the roles
of Chairman and Chief Executive Officer promotes leadership and direction for executive management, as well as allowing for a single,
clear focus for the chain of command. Dr. Aklog is one of the Company’s founders and has been its Chairman and Chief Executive
Officer since its inception, holds a medical degree and has substantial experience in the Company’s industry. The Company believes
that he is uniquely qualified through his experience and expertise to be the person who generally sets the agenda for, and leads discussions
of, issues relating to the implementation of the Company’s strategic plan. Mr. Sparks serves as the lead independent director of
the Board. In addition, the independent directors meet in executive session regularly without the presence of management.
The
Board’s primary function is one of oversight. The Board as a whole works with the Company’s management team to promote and
cultivate a corporate environment that incorporates enterprise-wide risk management into strategy and operations. Management periodically
reports to the Board about the identification, assessment and management of critical risks and management’s risk mitigation strategies.
Each committee of the Board is responsible for the evaluation of elements of risk management based on the committee’s expertise
and applicable regulatory requirements. In evaluating risk, the Board and its committees consider whether the Company’s programs
adequately identify material risks in a timely manner and implement appropriately responsive risk management strategies throughout the
organization. The audit committee focuses on assessing and mitigating financial risk, including risk related to internal controls, and
receives at least quarterly reports from management on identified risk areas. In setting compensation, the compensation committee strives
to create incentives that encourage behavior consistent with the Company’s business strategy, without encouraging undue risk-taking.
The nominating and corporate governance committee considers areas of potential risk within corporate governance and compliance, such
as management succession and environmental, social responsibility and sustainability initiatives. Each of the committees reports to the
Board as a whole as to their findings with respect to the risks they are charged with assessing.
Board
Diversity Matrix
The
nominating and corporate governance committee believes in an expansive definition of diversity that includes differences of gender, ethnicity,
sexual orientation and other underrepresented groups as well as experience, education and talents, among other things. The diversity
matrix required under the Nasdaq listing rules is set forth below.
Board
Diversity Matrix (As of April 25, 2023) |
Total
Number of Directors |
7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Males |
|
Female |
|
Non-Binary |
|
Did
Not
Disclose Gender |
Part
I: Gender Identity |
|
|
|
|
|
|
|
|
|
Directors |
|
|
5 |
|
2 |
|
|
|
|
Part
II: Demographic Background |
|
|
|
|
|
|
|
|
|
African
American or Black |
|
|
1 |
|
0 |
|
|
|
|
Alaskan
Native or Native American |
|
|
1 |
|
0 |
|
|
|
|
Asian |
|
|
0 |
|
0 |
|
|
|
|
Hispanic
or Latinx |
|
|
0 |
|
0 |
|
|
|
|
Native
Hawaiian or Pacific Islander |
|
|
0 |
|
0 |
|
|
|
|
White |
|
|
3 |
|
2 |
|
|
|
|
Two
or More Races or Ethnicities |
|
|
0 |
|
0 |
|
|
|
|
LGBTQ+ |
|
|
0 |
|
0 |
|
|
|
|
Did
Not Disclose Demographic Background |
|
|
0 |
|
0 |
|
|
|
|
Code
of Ethics
The
Company has a code of ethics that applies to all of its executive officers, directors and employees. The code of ethics codifies the
business and ethical principles that govern all aspects of the Company’s business. This code of ethics is posted on the Company’s
corporate website at http://ir.pavmed.com/corporate-governance. In addition, the Company intends to post on its website disclosures that
are required by law concerning any amendments to, or waivers from, any provision of the Company’s code of ethics.
Insider
Trading Policy; Employee, Officer and Director Hedging
The
Company’s directors, officers, employees and consultants are subject to the Company’s insider trading policy, which generally
prohibits the purchase, sale or trade of the Company’s securities with the knowledge of material nonpublic information. In addition,
the Company’s insider trading policy also prohibits short sales, transactions in derivatives, and hedging of the Company’s
securities by its directors, executive officers, employees and consultants and prohibits pledging of the Company’s securities by
them.
Stockholder
Communications
Stockholders
may contact the Board or individual members of the Board by writing to them in care of the Secretary, PAVmed Inc., 360 Madison Avenue,
25th Floor, New York, New York 10017. The Secretary will forward all correspondence received to the Board or the applicable
director from time to time. This procedure was approved by the Company’s independent directors.
Director
Compensation
Directors
who are also executive officers of the Company receive no additional compensation for serving as directors. Each of the Company’s
non-executive directors receives an annual retainer fee of $50,000 and an additional annual fee for service on committees of the
Board, as listed below.
| |
Chair | | |
Member | |
Audit Committee | |
$ | 27,500 | | |
$ | 17,500 | |
Compensation Committee | |
$ | 18,000 | | |
$ | 12,500 | |
Nominating and Corporate Governance Committee | |
$ | 12,500 | | |
$ | 7,500 | |
Additionally,
the Company has formalized a plan to make an annual option grant to each non-executive director with a grant date fair value of $150,000,
and to make an initial option grant to each new non-executive director with a grant date fair value of $250,000. The Company also reimburses
directors for out-of-pockets costs incurred to attend Board and committee meetings.
The
following information reflects the compensation paid by the Company to its non-executive directors for service on the Board. Dr. Cox,
Mr. Sparks and Ms. White also serve as directors of Lucid, the Company’s majority owned subsidiary. The compensation paid by Lucid
to Dr. Cox, Mr. Sparks and Ms. White for service on Lucid’s board of directors is set forth in filings made by Lucid with the SEC.
The
following table sets forth compensation earned during the year ended December 31, 2022 by each director who is not a “named executive
officer” (as defined in Item 402(m) of Regulation S-K under the Exchange Act) and served during the year ended December 31, 2022.
| |
Fees | | |
Option | | |
| |
Name | |
Earned(1) | | |
Awards(1)(2) | | |
Totals | |
Michael J. Glennon | |
$ | 70,000 | | |
$ | 93,600 | | |
$ | 163,600 | |
Timothy E. Baxter | |
$ | 80,000 | | |
$ | 93,600 | | |
$ | 173,600 | |
James L. Cox, M.D. | |
$ | 70,000 | | |
$ | 93,600 | | |
$ | 163,600 | |
Joan B. Harvey | |
$ | 67,917 | | |
$ | 270,819 | | |
$ | 338,736 | |
Ronald M. Sparks | |
$ | 88,625 | | |
$ | 93,600 | | |
$ | 182,225 | |
Debra J. White | |
$ | 90,000 | | |
$ | 93,600 | | |
$ | 183,600 | |
| (1) | Represents
annual director fees paid. The director fees paid to each person listed are consistent with
the director fees described herein above, including annual retainer and as a member and/or
chair of a committee of the Board. |
| (2) | The
amounts reported under “Option Awards” are the estimated grant date fair value
of stock options granted under the 2014 Plan (as defined in “Executive Officer Compensation”
below) during the respective year, with such amount as determined under Financial Accounting
Standards Board (“FASB”) Accounting Standard Codification Topic 718, Stock-Based
Compensation (“ASC 718”), with respect to accounting for stock-based
compensation. Such estimated fair value amounts do not necessarily correspond to the potential
actual value realized of such stock options. The assumptions made in computing the estimated
fair value of such stock options are disclosed in the notes to the Company’s consolidated
financial statements for the fiscal year ended December 31, 2022. |
The
following table presents information as of December 31, 2022 regarding the outstanding stock options held by each director who is not
a named executive officer and who served during the year ended December 31, 2022.
|
|
Stock
Option Grants |
|
|
|
Number
of
Securities
Underlying
Stock
Options
Exercisable |
|
|
Number
of
Securities
Underlying
Stock
Options
Unexercisable |
|
|
Stock
Option
Exercise
Price |
|
|
Stock
Option
Expiration
Date |
|
Michael
J. Glennon |
|
|
278,726 |
|
|
|
— |
|
|
$ |
5.00 |
|
|
Apr.
27, 2026 |
|
|
|
|
100,000 |
|
|
|
— |
|
|
$ |
2.01 |
|
|
Feb.
13, 2028 |
|
|
|
|
200,000 |
|
|
|
— |
|
|
$ |
1.00 |
|
|
Mar.
16, 2029 |
|
|
|
|
91,663 |
|
|
|
8,337 |
|
|
$ |
2.19 |
|
|
Apr.
30, 2030 |
|
|
|
|
29,168 |
|
|
|
20,832 |
|
|
$ |
4.44 |
|
|
Mar.
31, 2031 |
|
|
|
|
26,668 |
|
|
|
53,332 |
|
|
$ |
1.59 |
|
|
Feb.
17, 2032 |
|
Timothy
E. Baxter |
|
|
43,750 |
|
|
|
31,250 |
|
|
$ |
5.79 |
|
|
Jun.
14, 2031 |
|
|
|
|
26,668 |
|
|
|
53,332
|
|
|
$ |
1.59 |
|
|
Feb.
17, 2032 |
|
Dr.
James L. Cox, M.D. |
|
|
97,554 |
|
|
|
— |
|
|
$ |
5.00 |
|
|
Apr.
27, 2026 |
|
|
|
|
100,000 |
|
|
|
— |
|
|
$ |
2.01 |
|
|
Feb.
13, 2028 |
|
|
|
|
200,000 |
|
|
|
— |
|
|
$ |
1.00 |
|
|
Mar.
6, 2029 |
|
|
|
|
91,663 |
|
|
|
8,337 |
|
|
$ |
2.19 |
|
|
Apr.
30, 2030 |
|
|
|
|
29,168 |
|
|
|
20,832 |
|
|
$ |
4.44 |
|
|
Mar.
31, 2031 |
|
|
|
|
26,668
|
|
|
|
53,332
|
|
|
$ |
1.59
|
|
|
Feb.
17, 2032 |
|
Joan
B. Harvey |
|
|
59,784 |
|
|
|
119,566 |
|
|
$ |
2.05 |
|
|
Feb.
10, 2032 |
|
Ronald
M. Sparks |
|
|
97,554 |
|
|
|
— |
|
|
$ |
5.00 |
|
|
Apr.
27, 2026 |
|
|
|
|
100,000 |
|
|
|
— |
|
|
$ |
2.01 |
|
|
Feb.
13, 2028 |
|
|
|
|
200,000 |
|
|
|
— |
|
|
$ |
1.00 |
|
|
Mar.
6, 2029 |
|
|
|
|
91,663 |
|
|
|
8,337 |
|
|
$ |
2.19 |
|
|
Apr.
30, 2030 |
|
|
|
|
29,168 |
|
|
|
20,832 |
|
|
$ |
4.44 |
|
|
Mar.
31, 2031 |
|
|
|
|
26,668
|
|
|
|
53,332
|
|
|
$ |
1.59
|
|
|
Feb.
17, 2032 |
|
Debra
J. White |
|
|
58,332 |
|
|
|
41,668 |
|
|
$ |
4.81 |
|
|
Apr.
28, 2031 |
|
|
|
|
26,668
|
|
|
|
53,332
|
|
|
$ |
1.59
|
|
|
Feb.
17, 2032 |
|
On
April 28, 2016, upon the consummation of the Company’s initial public offering, each of each of Mr. Sparks and Dr. Cox was granted
a stock option to purchase 97,554 shares of common stock of the Company, and Mr. Glennon was granted a stock option to purchase 278,726
shares of common stock of the Company, in each case at an exercise price of $5.00 per share, vesting as to 3/36 of the shares on July
28, 2016 and as to 1/36 of the shares on each successive month thereafter from August 28, 2016 to April 28, 2019.
On
February 14, 2018, the Company granted to each of Mr. Glennon, Mr. Sparks and Dr. Cox a stock option to purchase 100,000 shares of common
stock of the Company at an exercise price of $2.01 per share, vesting ratably on a quarterly basis with an initial quarterly vesting
date of March 31, 2018 and a final quarterly vesting date of December 31, 2020.
On
March 7, 2019, the Company granted to each of Mr. Glennon, Mr. Sparks and Dr. Cox, a stock option to purchase 200,000 shares of common
stock of the Company at an exercise price of $1.00 per share, vesting ratably on a quarterly basis with an initial quarterly vesting
date of March 31, 2019 and a final quarterly vesting date of December 31, 2021.
On
May 1, 2020, the Company granted to each of Mr. Glennon, Mr. Sparks and Dr. Cox a stock option to purchase 100,000 shares of common stock
of the Company at an exercise price of $2.19 per share, vesting ratably on a quarterly basis with an initial quarterly vesting date of
June 30, 2020 and a final quarterly vesting date of March 31, 2023.
On
April 1, 2021, the Company granted to each of Mr. Glennon, Mr. Sparks and Dr. Cox a stock option to purchase 50,000 shares of common
stock of the Company at an exercise price of $4.44 per share, vesting ratably on a quarterly basis with an initial quarterly vesting
date of June 30, 2021 and a final quarterly vesting date of March 31, 2024.
On
April 29, 2021, the Company granted to Ms. White a stock option to purchase 100,000 shares of common stock of the Company at an exercise
price of $4.81 per share, vesting ratably on a quarterly basis with an initial quarterly vesting date of June 30, 2021 and a final quarterly
vesting date of March 31, 2024.
On
June 15, 2021, the Company granted to Mr. Baxter a stock option to purchase 75,000 shares of common stock of the Company at an exercise
price of $5.79 per share, vesting ratably on a quarterly basis with an initial quarterly vesting date of June 30, 2021 and a final quarterly
vesting date of March 31, 2024.
On
February 18, 2022, the Company granted to each of Mr. Glennon, Dr. Cox, Mr. Baxter, Mr. Sparks and Ms. White a stock option to purchase
80,000 shares of common stock of the Company at an exercise price of $1.59 per share, vesting ratably on a quarterly basis with an initial
quarterly vesting date of March 31, 2022 and a final quarterly vesting date of December 31, 2024.
On
February 22, 2022, the Company granted to Ms. Harvey a stock option to purchase 179,350 shares of common stock of the Company at an exercise
price of $2.05 per share, vesting ratably on a quarterly basis with an initial quarterly vesting date of March 31, 2022 and a final quarterly
vesting date of December 31, 2024.
Subsequent
to December 31, 2022, on February 18, 2023, the Company granted to each of Mr. Glennon, Mr. Baxter, Dr. Cox, Ms. Harvey, Mr. Sparks,
and Ms. White a stock option to purchase 450,000 shares of common stock of the Company at an exercise price of $0.48 per share, with
each such stock option grant vesting: (i) one-third on December 31, 2023; and (ii) the balance vesting ratably on a quarterly basis commencing
March 31, 2024 with a final quarterly vesting date of December 31, 2025.
EXECUTIVE
OFFICER COMPENSATION
Summary
Compensation Table
The
following table sets forth all compensation of the Company’s “named executive officers” (as defined in Item 402(m)
of Regulation S-K under the Exchange Act) for the fiscal years ended December 31, 2022 and 2021, including compensation paid by the Company’s
majority owned subsidiary, Lucid.
Named
Executive Officer and Principal Position |
|
Year |
|
|
Salary(1) |
|
|
Stock
Awards(2) |
|
|
Option
Awards(2) |
|
|
Bonus(1) |
|
|
All
Other Compensation |
|
|
Total |
|
Lishan
Aklog, M.D. |
|
2022 |
|
|
$ |
900,500 |
|
|
$ |
271,200 |
|
|
$ |
234,000 |
|
|
$ |
— |
|
|
$ |
44,591 |
(3) |
|
$ |
1,634,791
|
|
Chairman
of the Board and Chief Executive Officer |
|
2021 |
|
|
$ |
582,667 |
|
|
$ |
8,026,260 |
|
|
$ |
— |
|
|
$ |
613,000 |
|
|
$ |
40,200 |
(3) |
|
$ |
9,262,127 |
|
Dennis
M. McGrath |
|
2022 |
|
|
$ |
653,625 |
|
|
$ |
271,200 |
|
|
$ |
175,500 |
|
|
$ |
— |
|
|
$ |
9,750 |
(4) |
|
$ |
1,233,075 |
|
President
and Chief Financial Officer |
|
2021 |
|
|
$ |
422,500 |
|
|
$ |
8,026,260 |
|
|
$ |
— |
|
|
$ |
306,600 |
|
|
$ |
4,986 |
(4) |
|
$ |
8,760,346
|
|
Shaun
M. O’Neil |
|
2022 |
|
|
$ |
440,589 |
|
|
$ |
542,400 |
|
|
$ |
450,000 |
|
|
$ |
— |
|
|
$ |
6,885 |
(5) |
|
$ |
1,439,874 |
|
Chief
Operating Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) | See
“Employment Agreements and Awards” below for a description of the compensation
arrangements with each Named Executive Officer, including base salary and bonuses. |
| | |
| (2) | The
amounts reported under “Stock Awards” and “Option Awards” are the
estimated grant date fair value of restricted stock and stock options granted both by the
Company under the PAVmed Inc. 2014 Plan, and by Lucid under Lucid’s 2018 Amended and
Restated Long-Term Incentive Equity Plan (the “Lucid Plan”), during the
respective year, as presented in “Outstanding Equity Awards at Fiscal Year End”
below, with such amount as determined under the provisions of ASC 718 with respect to accounting
for stock-based compensation expense. Such estimated fair value amounts do not necessarily
correspond to the potential actual value realized of such stock options. The assumptions
made in computing the grant date estimated fair value of such stock options are disclosed
in the notes to the Company’s consolidated financial statements for the fiscal year
ended December 31, 2022. |
| (3) | The
amount includes $25,200 and $24,750 in 2022 and 2021, respectively, for transportation reimbursement,
$14,400 in each of 2022 and 2021 for reimbursement of membership fees to a club facility
where the Company frequently engages and hosts potential customers, vendors, bankers, and
other Company related personnel for the benefit of Company related business; and $600 in
each of 2022 and 2021 of communication allowance payments (which allowance payment is available
to all full-time employees); and $4,391 and $0 in 2022 and 2021, respectively, with respect
to Company paid employer match of employee 401(k) contributions (with such employer match
available to all eligible participating full-time employees). . |
| (4) | The
amount includes $600 in each of 2022 and 2021 of communication allowance payments (which
allowance payment is available to all full-time employees); and $9,150 and $4,386 in 2022
and 2021, respectively, with respect to Company paid employer match of employee 401(k) contributions
(with such employer match available to all eligible participating full-time employees). |
| (5) | The
amount includes $600 in 2022 of communication allowance payments (which allowance payment
is available to all full-time employees); and $6,285 and $0 in 2022 and 2021, respectively,
with respect to Company paid employer match of employee 401(k) contributions (with such employer
match available to all eligible participating full-time employees). . |
Outstanding
Equity Awards at Fiscal Year End
The
following table presents information regarding the outstanding stock options and stock awards held by the Company’s named executive
officers at December 31, 2022, including outstanding stock options and stock awards granted by Lucid.
| |
Stock
Option Grants | |
Stock
Awards | |
Name | |
Number
of Securities Underlying Stock Options
– Exercisable(1) | | |
Number
of Securities Underlying Stock Options
– Unexercisable(1) | | |
Stock
Option Exercise Price | | |
Stock
Option Expiration Date | |
Number
of Shares or Units of Stock That Have Not Vested(1) | | |
Market
Value of Shares of Units of Stock That Have Not Vested | |
Company
Equity Awards: | |
| | | |
| | | |
| | | |
| |
| | | |
| | |
Lishan
Aklog, M.D. | |
| 278,726 | | |
| — | | |
$ | 5.00 | | |
Apr.
27, 2026 | |
| | | |
| | |
| |
| 195,108 | | |
| — | | |
$ | 2.01 | | |
Feb. 13,
2028 | |
| | | |
| | |
| |
| 66,667 | | |
| 133,333 | | |
$ | 1.59 | | |
Feb. 17,
2032 | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| |
| 400,000 | | |
$ | 192,000 | |
Dennis
M. McGrath | |
| 250,000 | | |
| — | | |
$ | 5.95 | | |
Mar. 19,
2027 | |
| | | |
| | |
| |
| 195,108 | | |
| — | | |
$ | 2.01 | | |
Feb. 13,
2028 | |
| | | |
| | |
| |
| 50,000 | | |
| 100,000 | | |
$ | 1.59 | | |
Feb. 17,
2032 | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| |
| 400,000 | | |
$ | 192,000 | |
Shaun M.
O’Neil | |
| 195,108 | | |
| — | | |
$ | 1.58 | | |
Jul. 23,
2028 | |
| | | |
| | |
| |
| 100,000 | | |
| — | | |
$ | 1.00 | | |
Mar. 6,
2029 | |
| | | |
| | |
| |
| 43,750 | | |
| 31,250 | | |
$ | 4.44 | | |
Mar. 31,
2031 | |
| | | |
| | |
| |
| 100,000 | | |
| 200,000 | | |
$ | 1.48 | | |
Feb. 21,
2032 | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| |
| 75,000 | | |
$ | 36,000 | |
Lucid
Equity Awards: | |
| | | |
| | | |
| | | |
| |
| | | |
| | |
Lishan
Aklog, M.D. | |
| 31,250 | | |
| 43,750 | | |
$ | 3.95 | | |
Feb. 17,
2032 | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| |
| 624,400 | | |
$ | 849,184 | |
Dennis
M. McGrath | |
| 20,833 | | |
| 29,167 | | |
$ | 3.95 | | |
Feb. 17,
2032 | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| |
| 624,400 | | |
$ | 849,184 | |
Shaun M.
O’Neil | |
| 20,833 | | |
| 29,167 | | |
$ | 3.95 | | |
Feb. 17,
2032 | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| |
| 120,000 | | |
$ | 163,200 | |
| (1) | See
“Employment Agreements and Awards” below for a description of the equity
awards held by the named executive officers, including the vesting schedules. |
Although
the Company does not have a formal policy with respect to the grant of equity incentive compensation awards to the Company’s named
executive officers, or any formal equity ownership guidelines applicable to them, the Company believes granting equity incentive compensation
to its named executive officers provides a strong link to its long-term performance, creates an ownership culture, and aligns the interests
of its named executive officers with the stockholders of the Company. Accordingly, the Board periodically reviews the equity incentive
compensation of the Company’s named executive officers and, from time to time, may grant equity incentive compensation to them
in the form of additional stock options, restricted stock awards, and/or other equity incentive awards, in accordance with their respective
employment agreements.
401(k)
Retirement Plan
The
Company maintains a retirement plan (the “401(k) plan”) intended to be a tax-qualified defined contribution plan under
Section 401(k) of the Internal Revenue Code of 1986, as amended (the “Code”). In general, all of the Company’s
employees are eligible to participate, beginning on the first day of the month following commencement of their employment. The 401(k)
plan includes a salary deferral arrangement wherein participants may elect to reduce their current taxable salaries and wages up to the
statutorily prescribed limit of $20,500 and $19,500 for the years ended December 31, 2022 and 2021, respectively, with such amounts contributed
to the 401(k) plan. Additionally, 401(k) participants aged at least 50 years old may also make an additional “catchup” contribution
of up to $6,500 in each of the years ended December 31, 2022 and 2021. The Company has the option to make discretionary matching contributions.
The Company elected to make discretionary matching contributions to the 401(k) plan commencing July 1, 2021.
Long-Term
Incentive Equity Plan
The
Company maintains a Fifth Amended and Restated 2014 Long-Term Incentive Equity Plan (the “2014 Plan”). The Company
may grant stock options, stock appreciation rights, restricted stock awards and other stock-based awards under the 2014 Plan.
A
total of 16,352,807 shares were reserved under the 2014 Plan as of December 31, 2022, of which 2,563,843 shares remained available for
future awards. The number of shares reserved under the 2014 Plan automatically increases on January 1st of each year through (and including)
January 1, 2031, in an amount equal to 5% of the total number of shares of Company common stock outstanding on December 31st of the preceding
calendar year. Notwithstanding the foregoing, the Board may act prior to January 1st of a given year to provide that there will be no
January 1st increase in the number of shares reserved for such year or that the increase for such year will be a lesser number of shares
of Company common stock. On January 1, 2023, pursuant to the foregoing “evergreen” provision, an additional 4,700,000 shares
were reserved under the 2014 Plan.
Stock
Options. The 2014 Plan provides both for incentive stock options as defined in Section 422 of the Code, and for options not qualifying
as incentive options, both of which may be granted with any other stock-based award under the plan. The compensation committee determines
the exercise price per share of common stock purchasable under an incentive or non-qualified stock option, which may not be less than
100% of the fair market value on the day of the grant or, if greater, the par value of a share of common stock. However, the exercise
price of an incentive stock option granted to a person possessing more than 10% of the total combined voting power of all classes of
Company stock may not be less than 110% of the fair market value on the date of grant. The aggregate fair market value of all shares
of common stock with respect to which incentive stock options are exercisable by a participant for the first time during any calendar
year (under all of the Company’s plans), measured at the date of the grant, may not exceed $100,000. An incentive stock option
may only be granted within ten years from the effective date of the 2014 Plan. An incentive stock option may only be exercised within
ten years from the date of the grant, or within five years in the case of an incentive stock option granted to a person who, at the time
of the grant, owns common stock possessing more than 10% of the total combined voting power of all classes of Company stock. Subject
to any limitations or conditions, including any vesting schedule, the compensation committee may impose, stock options may be exercised,
in whole or in part, at any time during the term of the stock option by giving written notice of exercise to the Company specifying the
number of shares of common stock to be purchased.
Stock
Appreciation Rights. The Company may grant stock appreciation rights under the 2014 Plan to participants who have been, or are being,
granted stock options under the plan as a means of allowing the participants to exercise their stock options without the need to pay
the exercise price in cash, or the Company may grant them alone and unrelated to an option. A stock appreciation right entitles the holder
to receive a number of shares of common stock having a fair market value equal to the excess fair market value of one share of common
stock over the exercise price of the related stock option, multiplied by the number of shares subject to the stock appreciation rights.
Restricted
Stock. The Company may award shares of restricted stock under the 2014 Plan either alone or in addition to other awards granted under
the plan. The compensation committee determines the persons to whom grants of restricted stock are made, the number of shares to be awarded,
the price (if any) to be paid for the restricted stock by the person receiving the stock from the Company, the time or times within which
awards of restricted stock may be subject to forfeiture, the vesting schedule and rights to acceleration thereof, and all other terms
and conditions of the restricted stock awards.
Other
Stock-Based Awards. The Company may grant other stock-based awards under the 2014 Plan, subject to limitations under applicable law,
that are denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, shares of common
stock, as deemed consistent with the purposes of the plan. These other stock-based awards may be in the form of purchase rights, shares
of common stock awarded that are not subject to any restrictions or conditions, convertible or exchangeable debentures or other rights
convertible into shares of common stock and awards valued by reference to the value of securities of, or the performance of, one of the
Company’s subsidiaries. These other stock-based awards may include performance shares or options, whose award is tied to specific
performance criteria. These other stock-based awards may be awarded either alone, in addition to, or in tandem with any other awards
under the 2014 Plan or any of the Company’s other plans.
In
2022 and 2021, awards covering a total of 4,804,350 and 3,200,000 shares of the Company’s common stock, respectively, were granted
under the 2014 Plan, with 1,100,000 and 425,000 of such shares, respectively, subject to awards granted to the Company’s named
executive officers.
Lucid
also maintains the 2018 Plan, which is described in its proxy materials.
Employee
Stock Purchase Plan
The
Company maintains an employee stock purchase plan, as amended and restated effective as of June 15, 2021 (the “ESPP”).
The ESPP provides eligible employees with the opportunity to purchase shares of the Company’s common stock at a discount, on a
tax-favored basis, through regular payroll deductions in compliance with Section 423 of the Code. A total of 1,750,000 shares of the
Company’s common stock were reserved under the ESPP as of December 31, 2022, of which 931,841 shares remained available for future
issuance. The number of shares available for issuance under the ESPP automatically increases on January 1st of each year through
(and including) January 1, 2031, in an amount equal to the lesser of (a) 2% of the total number of shares of Company common stock outstanding
on December 31st of the preceding calendar year, and (b) 2,500,000 shares. Notwithstanding the foregoing, the Board may act prior to
January 1st of a given year to provide that there will be no January 1st increase in the number of shares available for such
year or that the increase for such year will be a lesser number of shares of Company common stock. On January 1, 2023, pursuant to the
foregoing “evergreen” provision, an additional 250,000 shares were reserved for issuance under the ESPP.
There
are two offering periods of six months under the plan each calendar year. Participants in the plan are granted an option to purchase
shares of the Company’s common stock at the beginning of each offering period, up to a maximum of $25,000 in shares based on the
fair market value at the commencement of the offering period, with purchases occurring on the last trading day of the offering period.
In general, all of the Company’s employees are eligible to participate, including the Company’s named executive officers,
except that no employee may have the option to purchase shares under the plan to the extent such employee would own or have the right
to acquire more than 5% of the combined voting power or value of the Company’s shares as a result of such option and the Company
may impose additional limits on share purchases pursuant to the ESPP. Each participant in the plan may authorize a payroll deduction
of between 1% and 15% of the employee’s salary, and, except for the Company’s executive officers, may participate in an accompanying
Cashless Participation loan program such that they may purchase up to the maximum number of shares per calendar year. Purchases under
the plan are made at the lower of 85% of the fair market value on the first day of the offering period and the fair market value on the
last day of the offering period.
In
2022 and 2021, a total of 385,938 and 234,592 shares of the Company’s common stock were issued under the ESPP for aggregate cash
proceeds of approximately $358,000 and $435,000, respectively, with such total shares inclusive of 13,756 and 35,595 shares, respectively,
issued to those named executive officers who participated in the ESPP for such years.
While
Lucid also maintains an employee stock purchase plan, which is described in its proxy materials, the Company’s named executive
officers participate solely in the Company’s ESPP.
Employment
Agreements and Awards
Lishan
Aklog, M.D.
Dr.
Aklog’s PAVmed Compensation
Effective
November 1, 2014, the Company entered into a five-year employment agreement with Dr. Aklog, to serve as the Company’s Chief Executive
Officer. The employment agreement was amended and restated on March 15, 2019 in order to, among other things, extend the term through
March 15, 2022. At the end of the initial term (and each renewal term), the employment agreement automatically renews for additional
one-year terms, unless either the Company or Dr. Aklog provides notice of non-renewal at least 60 days prior to the end of the then-current
term. Under the employment agreement, Dr. Aklog earned an annual base salary of $431,000 through March 14, 2021. Commencing on March
15, 2021, his base salary became $613,000. Additionally, through March 14, 2021, Dr. Aklog’s employment agreement provided for
a guaranteed annual bonus equal to 50% of base salary, payable on January 1 of each year, as well as eligibility to earn additional discretionary
annual performance bonuses as determined by the compensation committee. The Board approved a modification to his compensation arrangements
to eliminate his guaranteed bonus arrangements and instead provide for a discretionary annual performance bonus with a target of 100%
of his then current annual base salary, based upon his performance and the Company’s performance over the preceding year, as determined
by the compensation committee. In addition, since March 15, 2019, Dr. Aklog has received a monthly allowance of $3,300 for transportation
and business-related club membership expenses.
On
February 17, 2022, the compensation committee authorized a $613,000 discretionary bonus for the year ended December 31, 2021 to Dr. Aklog,
consistent with his employment agreement. As part of the Company’s current efforts to preserve cash, no discretionary bonus was
paid to Dr. Aklog (or any other executive officer) for the year ended December 31, 2022.
In
addition, Dr. Aklog has received the following equity awards based on the Company’s common stock:
| ● | On
April 28, 2016, upon the consummation of the Company’s initial public offering, Dr.
Aklog was granted a stock option to purchase 278,726 shares of common stock of the Company
at an exercise price of $5.00 per share, which vested as to 3/36 of the shares on July 28,
2016 and 1/36 of the shares on each successive month thereafter from Aug 28, 2016 to April
28, 2019. |
| ● | On
February 14, 2018, the Company granted to Dr. Aklog a stock option to purchase 195,108 shares
of common stock of the Company at an exercise price of $2.01 per share, which vested ratably
on a quarterly basis over a three-year period with an initial quarterly vesting date of March
31, 2018 and a final quarterly vesting date of December 31, 2020. |
| ● | On
March 15, 2019, in connection with the execution of the amendment and restatement of Dr.
Aklog’s employment agreement, the Company granted to Dr. Aklog a restricted stock award
of 200,000 shares of common stock of the Company. The restricted stock award vested as to
one-third of the award on March 15, 2020 and the remainder vested on March 15, 2022. |
| ● | On
May 1, 2020, the Company granted to Dr. Aklog a restricted stock award of 250,000 shares
of common stock of the Company. The restricted stock award vested as to one-third of the
award on May 1, 2021, and as to a second one-third of the award on May 1, 2022, and the remainder
will vest on May 20, 2024. |
| ● | On
April 1, 2021, the Company granted to Dr. Aklog a restricted stock award of 150,000 shares
of common stock of the Company. The restricted stock award vests on April 1, 2024. |
| ● | On
February 18, 2022, the Company granted to Dr. Aklog a stock option to purchase 200,000 shares
of common stock of the Company at an exercise price of $1.59 per share, which vests ratably
on a quarterly basis over a three-year period with an initial quarterly vesting date of March
31, 2022 and a final quarterly vesting date of December 31, 2024. |
The
unvested restricted stock awards are subject to forfeiture in the event Dr. Aklog’s employment terminates prior to vesting, except
the restricted stock awards will become immediately vested in the event of termination for “good reason” or after or within
60 days prior to a change of control (as defined in the Company’s form of indemnification agreement). The unvested stock options
are also subject to forfeiture in the event Dr. Aklog’s employment terminates prior to vesting, except the stock options will become
immediately vested in the event of termination after or within 60 days prior to a change of control.
If
his employment is terminated by the Company without “cause” or by him with “good reason” (as such terms are defined
in the employment agreement), Dr. Aklog is entitled to receive his base salary through the date of termination and for a period of 12
months thereafter (or for 24 months thereafter, in the event the termination occurs within 60 days following a change of control), a
pro rata portion of any annual bonus to which he would have been entitled, all valid expense reimbursements, health insurance coverage
for up to 12 months and all accrued but unused vacation pay. If his employment is terminated due to his death or disability, he will
be entitled to the same amounts, except he will only be entitled to his base salary through the date of termination and he will not be
entitled to continued health insurance coverage, but he will also be entitled to any earned and approved but unpaid bonus for any prior
year. If his employment is terminated by the Company with “cause” or by him without “good reason,” Dr. Aklog
will be entitled only to his base salary through the date of termination, valid expense reimbursements and certain accrued but unused
vacation pay. The definition of “good reason” in the employment agreement includes, among other things, any termination by
the executive within 60 days following a change of control.
Dr.
Aklog’s employment agreement contains provisions protecting the Company’s intellectual property and contains provisions restricting
his ability to compete with the Company during his employment and for a period of one year (or two years in the case of a change of control)
thereafter. The non-compete provisions generally impose restrictions on (i) employment or consultation with competing companies or customers,
(ii) recruiting or hiring employees for a competing company and (iii) soliciting or accepting business from the Company’s customers
or business partners for the benefit of a competing business, subject to certain conditions and limitations, except the restrictions
in clause (i) will not apply if he is terminated without “cause” or resigns for “good reason.” Pursuant to the
agreement, Dr. Aklog may serve as a consultant to, or on boards of directors of, or in any other capacity to other companies provided
they will not interfere with the performance of his duties to the Company.
Dr.
Aklog’s Lucid Compensation
On
January 17, 2022, Lucid entered into an employment agreement with Dr. Aklog, who serves as Lucid’s Chairman and Chief Executive
Officer.
The
employment agreement provides for an initial term that expires on March 15, 2025, which will automatically renew for additional one-year
terms, unless either Lucid or Dr. Aklog provides notice of non-renewal at least 60 days prior to the end of the then-current term. The
employment agreement provides for an annual base salary of $300,000 and an annual performance bonus of up to 100% of his base salary
in the preceding fiscal year, upon meeting certain objectives as determined by Lucid’s board of directors or the compensation committee
of the board. Dr. Aklog received no discretionary cash bonus from Lucid for the years ended December 31, 2021 and December 31, 2022.
Dr.
Aklog has received the following equity awards based on Lucid’s common stock:
| ● | On
March 15, 2021, Lucid granted to Dr. Aklog 564,400 shares of restricted stock award. The
award vests on May 20, 2024, subject to acceleration in certain circumstances as discussed
below. |
| ● | On
January 7, 2022, in accordance with the employment agreement, Lucid granted to Dr. Aklog
a restricted stock award covering 60,000 shares of Lucid’s common stock. The restricted
stock award vests in a single installment three years after the date of grant, subject to
acceleration in certain circumstances as discussed below. |
| ● | On
February 18, 2022, Lucid granted to Dr. Aklog a stock option to purchase 75,000 shares of
common stock of Lucid at an exercise price of $3.95 per share, which vests ratably on a quarterly
basis over a three-year period with an initial quarterly vesting date of March 31, 2022 and
a final quarterly vesting date of December 31, 2024. |
The
unvested restricted stock awards are subject to forfeiture in the event Dr. Aklog’s employment terminates prior to vesting, except
the restricted stock award will become immediately vested in the event of termination for “good reason,” termination without
“cause,” or a change of control (as defined in the Lucid Plan). The unvested stock options are also subject to forfeiture
in the event Dr. Aklog’s employment terminates prior to vesting, except the stock options will become immediately vested in the
event of termination after or within 60 days prior to a change of control.
Lucid
may terminate Dr. Aklog’s employment with “cause” (as such term is defined in the employment agreement) or without
cause upon 60 days’ notice (except that Lucid must give 180 days’ notice to Dr. Aklog during the initial term of his employment
agreement). Dr. Aklog may terminate his employment with “good reason” (as such term is defined in the employment agreement)
or without good reason upon 30 days’ notice to Lucid. The definition of good reason in the employment agreement includes, among
other things, any termination by Dr. Aklog within 60 days following a “change of control” (as such term is defined in the
employment agreement). If Dr. Aklog’s employment is terminated by Lucid without cause or by him with good reason, he is entitled
to receive his base salary through the date of termination and for a period of 12 months thereafter (or for 24 months thereafter, in
the event the termination occurs within 60 days following a change of control), a pro rata portion of his current year target bonus amount,
all valid expense reimbursements, health insurance coverage for up to 12 months, and all accrued but unused vacation pay. If Dr. Aklog’s
employment is terminated due to his death or disability, he is entitled to his base salary through the date of termination, a pro rata
portion of any current year target bonus amount, all earned but unpaid prior year annual bonuses, all valid expense reimbursements, and
all accrued but unused vacation pay. If Dr. Aklog’s employment is terminated by Lucid with cause or by him without good reason,
he will be entitled only to his base salary through the date of termination, all valid expense reimbursements and certain accrued but
unused vacation pay.
The
employment agreement contains provisions protecting Lucid’s confidential information and contains provisions restricting Dr. Aklog’s
ability to compete with Lucid during his employment and for a period of one year (or two years in the case of a change of control) thereafter.
The non-compete provisions generally impose restrictions on (i) employment by, rendering services to, engaging in, or owning an interest
in any competing business, (ii) employing or retaining employees or service providers of Lucid and (iii) soliciting or accepting business
from Lucid’s customers or business partners for the benefit of a competing business, subject to certain conditions and limitations,
except the restrictions in clause (i) will not apply if he is terminated without “cause” or resigns for “good reason.”
Nothing in the employment agreement will preclude Dr. Aklog from serving as an officer and director of the Company.
Dennis
M. McGrath
Mr.
McGrath’s PAVmed Compensation
On
March 20, 2017, the Company entered into a two year employment agreement with Mr. McGrath, to serve as the Company’s Executive
Vice President and Chief Financial Officer. The employment agreement was amended and restated on March 15, 2019 in order to, among other
things, extend the term through March 15, 2022 and provide for Mr. McGrath to serve as the Company’s President and Chief Financial
Officer. At the end of the initial term (and each renewal term), the employment agreement automatically renews for additional one-year
terms, unless either the Company or Mr. McGrath provides notice of non-renewal at least 60 days prior to the end of the then-current
term. Under the employment agreement, Mr. McGrath earned an annual base salary of $345,000 through March 14, 2021. Commencing on March
15, 2021, his base salary became $431,000. Additionally, through March 14, 2021, Mr. McGrath’s employment agreement provided for
a discretionary annual performance bonus with a target of 50% of his then current annual base salary, based upon his performance and
the Company’s performance over the preceding year, as determined by the compensation committee. The Board has approved a modification
to his compensation arrangements to provide for a target of 70% of his then current annual base salary.
On
February 17, 2022, the compensation committee authorized a $306,600 discretionary bonus for the year ended December 31, 2021 to Mr. McGrath,
consistent with his employment agreement. As part of the Company’s current efforts to preserve cash, no discretionary bonus was
paid to Mr. McGrath (or any other executive officer) for the year ended December 31, 2022.
In
addition, Mr. McGrath has received the following equity awards based on the Company’s common stock:
| ● | On
March 20, 2017, upon his employment on such date, the Company granted to Mr. McGrath a stock
option to purchase 250,000 shares of common stock of the Company at an exercise price of
$5.95 per share, which vested ratably on a quarterly basis over a three-year period with
an initial quarterly vesting date of June 30, 2017 and a final quarterly vesting date of
March 31, 2020. |
| ● | On
February 14, 2018, the Company granted to Mr. McGrath a stock option to purchase 195,108
shares of common stock of the Company at an exercise price of $2.01 per share, which vested
ratably on a quarterly basis over a three-year period with an initial quarterly vesting date
of March 31, 2018 and a final quarterly vesting date of December 31, 2020. |
| ● | On
March 15, 2019, in connection with the execution of the amendment and restatement of Mr.
McGrath’s employment agreement and his appointment as President and Chief Financial
Officer, the Company granted to Mr. McGrath a restricted stock award of 500,000 shares of
common stock of the Company. The restricted stock award vested as to one-third of the award
on March 15, 2020 and the remainder vested on March 15, 2022. |
| ● | On
May 1, 2020, the Company granted to Mr. McGrath a restricted stock award of 250,000 shares
of common stock of the Company. The restricted stock award vested as to one-third of the
award on May 1, 2021, and as to a second one-third of the award on May 1, 2022, and the remainder
will vest on May 20, 2024. |
| ● | On
April 1, 2021, the Company granted to Mr. McGrath a restricted stock award of 150,000 shares
of common stock of the Company. The restricted stock award vests on April 1, 2024. |
| ● | On
February 18, 2022, the Company granted to Mr. McGrath a stock option to purchase 150,000
shares of common stock of the Company at an exercise price of $1.59 per share, which vests
ratably on a quarterly basis over a three-year period with an initial quarterly vesting date
of March 31, 2022 and a final quarterly vesting date of December 31, 2024. |
The
restricted stock awards are subject to forfeiture in the event Mr. McGrath’s employment terminates prior to vesting, except the
restricted stock awards will become immediately vested in the event of termination for “good reason” or after or within 60
days prior to a change of control (as defined in the Company’s form of indemnification agreement). The unvested stock options are
also subject to forfeiture in the event Mr. McGrath’s employment terminates prior to vesting, except the stock options will become
immediately vested in the event of termination after or within 60 days prior to a change of control.
If
his employment is terminated by the Company without “cause” or by him with “good reason” (as such terms are defined
in the employment agreement), Mr. McGrath is entitled to receive his base salary through the date of termination and for a period of
12 months thereafter (or for 24 months thereafter, in the event the termination occurs within 60 days following a change of control),
a pro rata portion of any annual bonus to which he would have been entitled, all valid expense reimbursements, health insurance coverage
for up to 12 months and all accrued but unused vacation pay. If his employment is terminated due to his death or disability, he will
be entitled to the same amounts, except he will only be entitled to his base salary through the date of termination and he will not be
entitled to continued health insurance coverage, but he will also be entitled to any earned and approved but unpaid bonus for any prior
year. If his employment is terminated by the Company with “cause” or by him without “good reason,” Mr. McGrath
will be entitled only to his base salary through the date of termination, valid expense reimbursements and certain accrued but unused
vacation pay. The definition of “good reason” in the employment agreement includes, among other things, any termination by
the executive within 60 days following a change of control.
Mr.
McGrath’s employment agreement contains provisions protecting the Company’s intellectual property and contains provisions
restricting his ability to compete with the Company during his employment and for a period of one year (or two years in the case of a
change of control) thereafter. The non-compete provisions generally impose restrictions on (i) employment or consultation with competing
companies or customers, (ii) recruiting or hiring employees for a competing company and (iii) soliciting or accepting business from the
Company’s customers or business partners for the benefit of a competing business, subject to certain conditions and limitations,
except the restrictions in clause (i) will not apply if he is terminated without “cause” or resigns for “good reason.”
Mr. McGrath may serve as a consultant to, or on boards of directors of other companies provided they will not interfere with the performance
of his duties to the Company.
Mr.
McGrath’s Lucid Compensation
On
January 17, 2022, Lucid entered into an employment agreement with Mr. McGrath, who serves as Lucid’s Chief Financial Officer.
The
employment agreement provides for an initial term that expires on March 15, 2025, which will automatically renew for additional one-year
terms, unless either Lucid or Mr. McGrath provides notice of non-renewal at least 60 days prior to the end of the then-current term.
The employment agreement provides for an annual base salary of $225,000 and an annual performance bonus of up to 70% of his base salary
in the preceding fiscal year, upon meeting certain objectives as determined by Lucid’s board of directors or the compensation committee
of the board. Mr. McGrath received no discretionary cash bonus from Lucid for the years ended December 31, 2021 and December 31, 2022.
Mr.
McGrath has received the following equity awards based on Lucid’s common stock:
| ● | On
March 15, 2021, Lucid granted to Mr. McGrath 564,400 shares of restricted stock award. The
award vests on May 20, 2024, subject to acceleration in certain circumstances as discussed
below. |
| ● | On
January 7, 2022, in accordance with the employment agreement, Lucid granted to Mr. McGrath
a restricted stock award covering 60,000 shares of Lucid’s common stock. The restricted
stock award vests in a single installment three years after the date of grant, subject to
acceleration in certain circumstances as discussed below. |
| ● | On
February 18, 2022, Lucid granted to Mr. McGrath a stock option to purchase 50,000 shares
of common stock of Lucid at an exercise price of $3.95 per share, which vests ratably on
a quarterly basis over a three-year period with an initial quarterly vesting date of March
31, 2022 and a final quarterly vesting date of December 31, 2024. |
The
unvested restricted stock awards are subject to forfeiture in the event Mr. McGrath’s employment terminates prior to vesting, except
the restricted stock award will become immediately vested in the event of termination for “good reason,” termination without
“cause,” or a change of control (as defined in the Lucid Plan). The unvested stock options are also subject to forfeiture
in the event the executive’s employment terminates prior to vesting, except the stock options will become immediately vested in
the event of termination after or within 60 days prior to a change of control.
Lucid
may terminate Mr. McGrath’s employment with “cause” (as such term is defined in the employment agreement) or without
cause upon 60 days’ notice. Mr. McGrath may terminate his employment with “good reason” (as such term is defined in
the employment agreement) or without good reason upon 30 days’ notice to Lucid. The definition of good reason in the employment
agreement includes, among other things, any termination by Mr. McGrath within 60 days following a “change of control” (as
such term is defined in the employment agreement). If Mr. McGrath’s employment is terminated by Lucid without cause or by him with
good reason, he is entitled to receive his base salary through the date of termination and for a period of 12 months thereafter (or for
24 months thereafter, in the event the termination occurs within 60 days following a change of control), a pro rata portion of his current
year target bonus amount, all valid expense reimbursements, health insurance coverage for up to 12 months, and all accrued but unused
vacation pay. If Mr. McGrath’s employment is terminated due to his death or disability, he is entitled to his base salary through
the date of termination, a pro rata portion of any current year target bonus amount, all earned but unpaid prior year annual bonuses,
all valid expense reimbursements, and all accrued but unused vacation pay. If Mr. McGrath’s employment is terminated by Lucid with
cause or by him without good reason, he will be entitled only to his base salary through the date of termination, all valid expense reimbursements
and certain accrued but unused vacation pay.
The
employment agreement contains provisions protecting Lucid’s confidential information and contains provisions restricting Mr. McGrath’s
ability to compete with Lucid during his employment and for a period of one year (or two years in the case of a change of control) thereafter.
The non-compete provisions generally impose restrictions on (i) employment by, rendering services to, engaging in, or owning an interest
in any competing business, (ii) employing or retaining employees or service providers of Lucid and (iii) soliciting or accepting business
from Lucid’s customers or business partners for the benefit of a competing business, subject to certain conditions and limitations,
except the restrictions in clause (i) will not apply if he is terminated without “cause” or resigns for “good reason.”
Nothing in the employment agreement will preclude Mr. McGrath from serving as an officer and director of the Company.
Shaun
O’Neil
Mr.
O’Neil’s PAVmed Compensation
On
February 22, 2022, the Company entered into a three-year employment agreement with Mr. O’Neil, to serve as the Company’s
Executive Vice President and Chief Operating Officer. At the end of the initial term (and each renewal term), the employment agreement
will automatically renew for additional one-year terms, unless either the Company or Mr. O’Neil provides notice of non-renewal
at least 60 days prior to the end of the then-current term. Under the employment agreement, Mr. O’Neil earns an annual base salary
of $325,000. Additionally, Mr. O’Neil’s employment agreement provides for a discretionary annual performance bonus with a
target of 50% of his then current annual base salary, based upon his performance and Lucid’s performance over the preceding year,
as determined by the compensation committee.
On
February 17, 2022, the compensation committee authorized a $123,750 discretionary bonus for the year ended December 31, 2021 to Mr. O’Neil.
As part of the Company’s current efforts to preserve cash, no discretionary bonus was paid to Mr. O’Neil (or any other executive
officer) for the year ended December 31, 2022.
In
addition, Mr. O’Neil has received the following equity awards based on the Company’s common stock:
| ● | On
July 23, 2018, the Company granted to Mr. O’Neil a stock option to purchase 195,108
shares of common stock of the Company at an exercise price of $1.58 per share, vesting ratably
on a quarterly basis over a three-year period. |
| ● | On
March 7, 2019, the Company granted to Mr. O’Neil a stock option to purchase 100,000
shares of common stock of the Company at an exercise price of $1.00 per share, which vested
ratably on a quarterly basis over a three-year period with an initial quarterly vesting date
of March 31, 2019 and a final quarterly vesting date of December 31, 2021. |
| ● | On
May 1, 2020, the Company granted to Mr. O’Neil a restricted stock award of 225,000
shares of common stock of the Company. The restricted stock award vested as to one-third
of the award on May 1, 2021, and vested as to a second one-third of the award on May 1, 2022,
and the remainder will vest on May 20, 2024. |
| ● | On
April 1, 2021, the Company granted to Mr. O’Neil a stock option to purchase 75,000
shares of common stock of the Company at an exercise price of $4.44 per share, which vests
ratably on a quarterly basis over a three-year period with an initial quarterly vesting date
of September 30, 2021 and a final quarterly vesting date of June 30, 2024. |
| ● | On
February 22, 2022, the Company granted to Mr. O’Neil a stock option to purchase 300,000
shares of common stock of the Company at an exercise price of $1.48 per share, which vests
ratably on a quarterly basis over a three-year period with an initial quarterly vesting date
of March 31, 2022 and a final quarterly vesting date of December 31, 2024. |
The
restricted stock awards are subject to forfeiture in the event Mr. O’Neil’s employment terminates prior to vesting, except
the restricted stock awards will become immediately vested in the event of termination for “good reason” or after or within
60 days prior to a change of control (as defined in the Company’s form of indemnification agreement). The unvested stock options
are also subject to forfeiture in the event Mr. O’Neil’s employment terminates prior to vesting, except the stock options
will become immediately vested in the event of termination after or within 60 days prior to a change of control.
If
his employment is terminated by the Company without “cause” or by him with “good reason” (as such terms are defined
in the employment agreement), Mr. O’Neil is entitled to receive his base salary through the date of termination and for a period
of 12 months thereafter, a pro rata portion of any annual bonus to which he would have been entitled, all valid expense reimbursements,
health insurance coverage for up to 12 months and all accrued but unused vacation pay. If his employment is terminated due to his death
or disability, he will be entitled to the same amounts, except he will only be entitled to his base salary through the date of termination
and he will not be entitled to continued health insurance coverage, but he will also be entitled to any earned and approved but unpaid
bonus for any prior year. If his employment is terminated by the Company with “cause” or by him without “good reason,”
Mr. O’Neil will be entitled only to his base salary through the date of termination, valid expense reimbursements and certain accrued
but unused vacation pay. The definition of “good reason” in the employment agreement includes, among other things, any termination
by the executive within 60 days following a change of control.
Mr.
O’Neil’s employment agreement contains provisions protecting the Company’s intellectual property and contains provisions
restricting his ability to compete with the Company during his employment and for a period of one year (or two years in the case of a
change of control) thereafter. The non-compete provisions generally impose restrictions on (i) employment or consultation with competing
companies or customers, (ii) recruiting or hiring employees for a competing company and (iii) soliciting or accepting business from the
Company’s customers or business partners for the benefit of a competing business, subject to certain conditions and limitations.
Mr.
O’Neil Lucid Compensation
On
February 22, 2022, the Company entered into an employment agreement with Mr. O’Neil, to serve as the Company’s Executive
Vice President and Chief Operating Officer. The initial term of the employment agreement expires on February 22, 2025. At the end of
the initial term (and each renewal term), the employment agreement will automatically renew for additional one-year terms, unless either
the Company or Mr. O’Neil provides notice of non-renewal at least 60 days prior to the end of the then-current term. Under the
employment agreement, Mr. O’Neil earns an annual base salary of $150,000. Additionally, Mr. O’Neil’s employment agreement
provides for a discretionary annual performance bonus with a target of 50% of his then current annual base salary, upon meeting certain
objectives as determined by Lucid’s board of directors or the compensation committee of the board. Mr. O’Neil received no
discretionary cash bonus from Lucid for the years ended December 31, 2021 and December 31, 2022.
In
addition, Mr. O’Neil has received the following equity awards based on Lucid’s common stock:
| ● | On
January 7, 2022, Lucid granted to Mr. O’Neil a restricted stock award of 120,000 shares
of Lucid common stock. The restricted stock award vests on January 7, 2025. |
| ● | On
February 18, 2022, Lucid granted to Mr. O’Neil a stock option to purchase 50,000 shares
of Lucid common stock at an exercise price of $3.95 per share, which vests ratably on a quarterly
basis over a three-year period with an initial vesting date of March 31, 2022 and a final
vesting date of December 31, 2024. |
The
unvested restricted stock awards are subject to forfeiture in the event Mr. O’Neil’s employment terminates prior to vesting,
except the restricted stock award will become immediately vested in the event of termination for “good reason,” termination
without “cause,” or a change of control (as defined in the Lucid 2018 Long-Term Incentive Equity Plan). The unvested stock
options are also subject to forfeiture in the event Mr. O’Neil’s employment terminates prior to vesting, except the stock
options will become immediately vested in the event of termination after or within 60 days prior to a change of control.
Lucid
may terminate Mr. O’Neil’s employment with “cause” (as such term is defined in the employment agreement) or without
cause upon 60 days’ notice. Mr. O’Neil may terminate his employment with “good reason” (as such term is defined
in the employment agreement) or without good reason upon 30 days’ notice to Lucid. If Mr. O’Neil’s employment is terminated
by Lucid without cause or by him with good reason, he is entitled to receive his base salary through the date of termination and for
a period of 12 months thereafter, a pro rata portion of his current year target bonus amount, all valid expense reimbursements, health
insurance coverage for up to 12 months, and all accrued but unused vacation pay. If Mr. O’Neil’s employment is terminated
due to his death or disability, he is entitled to his base salary through the date of termination, a pro rata portion of any current
year target bonus amount, all earned but unpaid prior year annual bonuses, all valid expense reimbursements, and all accrued but unused
vacation pay. If Mr. O’Neil’s employment is terminated by Lucid with cause or by him without good reason, he will be entitled
only to his base salary through the date of termination, all valid expense reimbursements and certain accrued but unused vacation pay.
The
employment agreement contains provisions protecting Lucid’s confidential information and contains provisions restricting Mr. O’Neil’s
ability to compete with Lucid during his employment and for a period of one year (or two years in the case of a change of control) thereafter.
The non-compete provisions generally impose restrictions on (i) employment by, rendering services to, engaging in, or owning an interest
in any competing business, (ii) employing or retaining employees or service providers of Lucid and (iii) soliciting or accepting business
from Lucid’s customers or business partners for the benefit of a competing business, subject to certain conditions and limitations.
Potential
Payments Upon Termination
As
indicated above, each of Dr. Aklog, Mr. McGrath and Mr. O’Neil is entitled to a severance payment if his employment is terminated
by the Company under specified circumstances. If the Company terminates the employment of any such executive without cause, or if such
executive officer terminates his employment with the Company for good reason, each as defined in his Company employment agreement, such
executive officer is entitled to severance compensation as follows: he will receive 100% of his base salary at the time of termination
from the initial date of his termination through 12 months thereafter (or, in the case of Dr. Aklog and Mr. McGrath, for 24 months thereafter,
in the event the termination occurs within 60 days following a change of control), a pro rata portion of any annual bonus to which he
would have been entitled, all valid expense reimbursements, health insurance coverage for up to 12 months and all accrued but unused
vacation pay.
Also
as indicated above, each of Dr. Aklog, Mr. McGrath and Mr. O’Neil is entitled to a severance payment if his employment is terminated
by Lucid under specified circumstances. If Lucid terminates the employment of any such executive without cause, or if such executive
officer terminates his employment with Lucid for good reason, each as defined in his Lucid employment agreement, such executive officer
is entitled to severance compensation as follows: he will receive base salary through the date of termination and for a period of 12
months thereafter (or, in the case of Dr. Aklog and Mr. McGrath, for 24 months thereafter, in the event the termination occurs within
60 days following a change of control), a pro rata portion of his current year target bonus amount, all valid expense reimbursements,
health insurance coverage for up to 12 months, and all accrued but unused vacation pay.
In
addition, the stock options and restricted stock granted to the Company’s named executive officers under the 2014 Plan and the
Lucid Plan will be accelerated upon the occurrence of certain non-negotiated change of control transactions. In the event of certain
negotiated change of control transactions, the compensation committee of the Company or Lucid, as applicable, may (i) accelerate the
vesting of the stock options, or (ii) require the executive to relinquish the stock options to the Company or Lucid upon the tender by
the Company or Lucid to the executive of cash in an amount equal to the repurchase value of such award. Furthermore, in the event of
the sale of all or substantially all of the Company’s assets, a change of control of the Company or Lucid, or the liquidation of
the Company or Lucid (subject to certain conditions and exceptions), the right to purchase shares in the current offering period of the
ESPP and in Lucid’s employee stock purchase plan will be automatically exercised. Additionally, as indicated above, the shares
of restricted stock granted by the Company to Dr. Aklog, Mr. McGrath and Mr. O’Neil will become immediately vested in the event
of termination for “good reason” or after or within 60 days prior to a change of control (as defined in the Company’s
form of indemnification agreement), and the restricted stock granted by Lucid to Dr. Aklog, Mr. McGrath and Mr. O’Neil will become
immediately vested in the event of termination for “good reason,” termination without “cause,” or a change of
control (as defined in the Lucid Plan). The stock options granted by the Company and Lucid to Dr. Aklog, Mr. McGrath and Mr. O’Neil
will become immediately vested in the event of termination after or within 60 days prior to a change of control.
To
the extent any severance or other compensation payment to any of the Company’s named executive officers pursuant to an employment
agreement or any other agreement constitutes an “excess parachute payment” within the meaning of Sections 280G and 4999 of
the Code, then such executive officer will receive the full amount of such severance and other payments, or a reduced amount intended
to avoid the application of Sections 280G and 4999, whichever provides the executive with the highest amount on an after-tax basis.
Pay
Versus Performance Disclosure
The
following tables and related disclosures provide information about (i) the “total compensation” of the Company’s Chief
Executive Officer (the “CEO”) and its other named executive officers (the “Non-CEO NEOs”) as presented
in the Summary Compensation Table on page 21 of this proxy statement, (ii) the “compensation actually paid” to the Company’s
CEO and its Non-CEO NEOs, as calculated pursuant to the SEC’s pay-versus-performance rules, (iii) certain financial performance
measures, and (iv) the relationship of the “compensation actually paid” to those financial performance measures.
This
disclosure has been prepared in accordance with Item 402(v) of Regulation S-K under the Exchange Act (“Item 402(v)”)
and does not necessarily reflect value actually realized by the executives or how the Company’s compensation committee evaluates
compensation decisions in light of company or individual performance.
Year | |
Summary
Comp.
Table Total
for CEO(1) | | |
Compensation
Actually
Paid to
CEO(1)(2)(3) | | |
Average
Summary
compensation
Table Total
for Non-CEO
NEOs(1) | | |
Average
Compensation
Actually Paid
to Non-CEO
NEOs(1)(2)(3) | | |
Value
of Initial
Fixed $100
Investment
Based On Total
Shareholder
Return(4) | | |
Net
Income/(Loss) (in
thousands) | |
2022 | |
$ | 1,634,791 | | |
$ | (2,025,000 | ) | |
$ | 1,336,475 | | |
$ | (1,054,908 | ) | |
$ | 23 | | |
$ | (89,264 | ) |
2021 | |
$ | 9,262,127 | | |
$ | 4,766,028 | | |
$ | 4,676,723 | | |
$ | 2,524,720 | | |
$ | 116 | | |
$ | (50,630 | ) |
| (1) | The
Company’s CEO for 2022 and 2021 was Lishan Aklog, M.D. The Non-CEO NEOs for whom the
average compensation is presented in this table for 2022 are Dennis M. McGrath and Shaun
M. O’Neil; and for 2021 are Dennis M. McGrath and Brian J. deGuzman, M.D. |
| (2) | The
amounts shown as “compensation actually paid” have been calculated in accordance
with Item 402(v) and do not reflect compensation actually realized or received by the Company’s
named executive officers. These amounts reflect total compensation as set forth in the Summary
Compensation Table for each year, adjusted as described in footnote 3 below. |
| (3) | Compensation
actually paid reflects the exclusions and add-backs for the CEO and the Non-CEO NEOs described
in this footnote. The amounts excluded to determine compensation actually paid, which are
set forth in column (c) in the tables below, represent the restricted stock and stock option
awards reported in the “Stock Awards” and “Option Awards” columns
of the Summary Compensation Table for each applicable year. The amounts added back to determine
compensation actually paid are made up of the following components, which are set forth in
columns (d) to (g) in the tables below, as applicable: (i) the fair value as of the end of
the fiscal year of outstanding and unvested equity awards granted in that year; (ii) the
change in fair value during the year of equity awards granted in prior years that remained
outstanding and unvested at the end of the year; (iii) the fair value as of the vesting date
of equity awards that were granted and vested in that year; and (iv) the change in fair value
during the year through the vesting date of equity awards granted in prior years that vested
during that year. The fair value at the end of the prior year of awards granted in any prior
year that failed to meet applicable vesting conditions during the covered year are subtracted,
although there were no such awards for the CEO or the Non-CEO NEOs in 2022 or 2021. Equity
values are calculated in accordance with ASC Topic 718. |
| (4) | Total
shareholder return illustrates the value, of the cumulative total shareholder return, for
the measurement period commencing on the first day of the first indicated fiscal year and
ending on the last day of the last indicated fiscal year, of an investment of $100 in the
Company’s common stock based on the closing price of the last trading day immediately
before the first indicated fiscal year. |
Based
on the foregoing, the calculation of compensation actually paid for the CEO is as follows:
Year
(a) | |
Summary
Comp. Table Total for CEO (b) | | |
Minus
Stock and Option Awards from Summ. Comp. Table (c) | | |
Plus
Year-End Equity Value of Unvested Awards Granted During Year (d) | | |
Plus
Change in Value of Unvested Awards Granted in Prior Years (e) | | |
Plus
Value of Awards Granted and Vested During Year (f) | | |
Plus
Change in Value of Prior Years’ Awards Vested During Year (g) | | |
Comp.
Actually Paid to CEO (h) | |
2022 | |
$ | 1,634,791 | | |
$ | (689,700 | ) | |
$ | 166,745 | | |
$ | (3,055,244 | ) | |
$ | 89,074 | | |
$ | (170,666 | ) | |
$ | (2,025,000 | ) |
2021 | |
$ | 9,262,127 | | |
$ | (8,026,260 | ) | |
$ | 3,399,828 | | |
$ | 130,333 | | |
$ | — | | |
$ | — | | |
$ | 4,766,028 | |
Based
on the foregoing, the calculation of compensation actually paid for the Non-CEO NEOs is as follows:
Year
(a) | |
Summary
Comp. Table Total for Non-CEO NEOs (b) | | |
Minus
Stock and Option Awards from Summ. Comp. Table (c) | | |
Plus
Year-End Equity Value of Unvested Awards Granted During Year (d) | | |
Plus
Change in Value of Unvested Awards Granted in Prior Years (e) | | |
Plus
Value of Awards Granted and Vested During Year (f) | | |
Plus
Change in Value of Prior Years’ Awards Vested During Year (g) | | |
Comp.
Actually Paid to Non-CEO NEOs (h) | |
2022 | |
$ | 1,336,475 | | |
$ | (781,050 | ) | |
$ | 200,453 | | |
$ | (1,624,363 | ) | |
$ | 81,418 | | |
$ | (267,841 | ) | |
$ | (1,054,908 | ) |
2021 | |
$ | 4,676723 | | |
$ | (4,095,880 | ) | |
$ | 1,731,699 | | |
$ | 102,188 | | |
$ | 29,292 | | |
$ | 80,698 | | |
$ | 2,524,720 | |
The
estimated fair value of restricted stock awards are based on the quoted closing price per share of the common stock of the Company for
a respective fair value date. The estimated fair value of stock options is computed using a Black-Scholes valuation model with input
assumptions corresponding to a respective valuation date. As presented in the Summary Compensation Table above, the restricted stock
awards and stock options estimated fair value are computed as of their respective grant date (“grant date estimated fair value”)
under the provisions of FASB ASC 718.
As
presented in the Pay v. Performance Tables above, the restricted stock awards and stock options estimated fair values were computed as
of a vesting date in 2022 or 2021, or if unvested, as of December 31, 2022 or December 31, 2021, and as of the base year on December
31, 2020. In this regard, the restricted stock awards estimated fair value was based on the Company’s quoted closing price per
share on each vest date during the applicable years or if unvested, then the quoted closing price per share on the last trading day of
the applicable year; and the stock options estimated fair value was computed using the Black-Scholes valuation model, using input assumptions
corresponding to the respective vesting day in the applicable years, or if unvested, then input assumptions corresponding to the last
trading day of the applicable year. Generally, the Black-Scholes assumptions as of the vesting date and end-of-year date were developed
in a manner consistent with the grant date input assumptions.
Those
stock options which vested during 2022 and 2021, or were outstanding as of December 31, 2022 or December 31, 2021, estimated fair value
was computed using a Black-Sholes valuation model with the following input assumptions:
| |
Stock
Options Vested During Year or
Outstanding on December 31, | |
| |
2022 | | |
2021 | |
Expected Term (in years) | |
| 7.4
-10.0 | | |
| 7.25
- 9.8 | |
Expected Volatility | |
| 84%
- 88 | % | |
| 73%
- 76 | % |
Risk-Free Interest Rate | |
| 1.8%
- 2.2 | % | |
| 0.5%
- 1.0 | % |
Expected Dividend
Yield | |
| 0 | % | |
| 0 | % |
The
stock-based equity awards estimated fair values are subjective and are affected by changes in valuation model input assumptions. Changes
in these subjective input assumptions can materially affect the resulting computed estimated fair values.
Description
of Relationship Between Compensation Actually Paid and Total Shareholder Return
The
following chart sets forth the relationship between compensation actually paid to the Company’s CEO and its Non-CEO NEOs and the
Company’s total shareholder return over the fiscal two year period from 2022 through 2021.
Description
of Relationship Between Compensation Actually Paid and Net Income/(Loss)
The
following chart sets forth the relationship between compensation actually paid to the Company’s CEO and its Non-CEO NEOs and the
Company’s net income/(loss) over the fiscal two year period from 2022 through 2021.
DELINQUENT
SECTION 16(A) REPORTS
Section
16(a) of the Exchange Act requires the Company’s directors and certain officers and holders of more than 10% of the Company’s
common stock to file with the SEC initial reports of ownership of the Company’s common stock and other equity securities on Form
3 and reports of changes in such ownership on a Form 4 or Form 5. These Section 16 reporting persons are required by SEC regulations
to furnish the Company with copies of all Section 16(a) forms they file. To the Company’s knowledge, during the fiscal year ended
December 31, 2022, all reports required to be filed pursuant to Section 16(a) were filed on a timely basis, except for the following:
| ● | Joan
B. Harvey, a director of the Company, filed one late report, which included one transaction
that was not disclosed on a timely basis: a Form 4 filed on February 18, 2022 with respect
to a grant of stock options to Ms. Harvey on February 11, 2022. |
| ● | Timothy
E. Baxter, a director of the Company, filed one late report, which included one transaction
that was not disclosed on a timely basis: a Form 4 filed on March 1, 2022 with respect to
a grant of stock options to Mr. Baxter on February 18, 2022. |
| ● | Lishan
Aklog, M.D., the chairman of the board and chief executive officer of the Company, filed
one late report, which included one transaction that was not disclosed on a timely basis:
a Form 4 filed on April 11, 2022 with respect to the payment of withholding taxes in shares
of common stock on March 28, 2022. |
| ● | Dennis
M. McGrath, the president and chief financial officer of the Company, filed one late report,
which included one transaction that was not disclosed on a timely basis: a Form 4 filed on
April 11, 2022 with respect to the payment of withholding taxes in shares of common stock
on March 28, 2022. |
| | |
| ● | Shaun
M. O’Neil, the chief operating officer of the Company, filed two late reports, which
included one transaction that was not disclosed on a timely basis: a Form 3/A filed on May
1, 2023 to update the total number of shares of common stock beneficially owned by Mr. O’Neil
and a Form 4 filed on May 1, 2023 with respect to the payment of withholding taxes in shares
of common stock on May 4, 2022. |
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Security
Ownership of Certain Beneficial Owners
The
following table sets forth information regarding the beneficial ownership of the Company’s common stock as of the record date,
April 25, 2023, by:
| ● | each
person known by the Company to be the beneficial owner of more than 5% of the Company’s
outstanding shares of common stock; |
| ● | each
of the Company’s officers and directors; and |
| ● | all
of the Company’s officers and directors as a group. |
The
beneficial ownership of each person was calculated based on 103,539,449 shares of the Company’s common stock issued as of
April 25, 2023 (inclusive of shares underlying unvested restricted stock awards, and inclusive of shares sold but not yet settled under the Company’s at-the-market offering program). Except as otherwise indicated, the Company
believes all persons named in the table below have sole voting and investment power with respect to all the shares of common stock beneficially
owned by them.
Name
and Address of Beneficial Owner (1) | |
Amount
and Nature
of Beneficial
Ownership | | |
Percent
of Class | |
Directors
and Officers: | |
| | | |
| | |
Lishan Aklog,
M.D. | |
| 8,668,193 | (2) | |
| 8.1 | % |
Dennis M. McGrath | |
| 1,282,114 | (3) | |
| 1.2 | % |
Brian J. deGuzman, M.D. | |
| 650,849 | (4) | |
| * | |
Shaun M. O’Neil | |
| 739,544 | (5) | |
| * | |
Michael A. Gordon | |
| 133,333 | (6) | |
| * | |
Michael J. Glennon | |
| 995,394 | (7) | |
| 1.0 | % |
Timothy E. Baxter | |
| 83,333 | (8) | |
| * | |
James L. Cox, M.D. | |
| 564,222 | (9) | |
| * | |
Joan B. Harvey | |
| 74,729 | (10) | |
| * | |
Ronald M. Sparks | |
| 564,222 | (11) | |
| * | |
Debra J. White | |
| 99,998 | (12) | |
| * | |
All directors and executive
officers as a group (nine individuals) | |
| 13,855,931 | | |
| 12.6 | % |
5% Stockholders: | |
| | | |
| | |
Pavilion Venture Partners
LLC | |
| 6,534,855 | (13) | |
| 6.2 | % |
| * | Represents
less than one percent of class. |
| (1) | The
business address of each of the individuals is 360 Madison Avenue, 25th Floor,
New York, New York 10017, unless otherwise indicated. |
| (2) | Includes:
(i) 4,456,570 shares of common stock and 2,078,285 shares of common stock issuable upon the
potential exercise of Series Z Warrants held by Pavilion Venture Partners LLC (“PVP”),
of which Dr. Aklog is a member and sole manager, and, accordingly, he is deemed to have voting
and dispositive power over such shares held by PVP; (ii) 20,000 shares of common stock and
10,000 shares of common stock issuable upon the potential exercise of Series Z Warrants held
by HCFP/AG LLC, of which Dr. Aklog is a co-manager, and, accordingly, he is deemed to have
joint voting and dispositive power over such shares and Series Z Warrants held by HCFP/AG
LLC; (iii) 1,180,860 shares of common stock and 365,311 shares of common stock issuable upon
the potential exercise of Series Z Warrants held by Dr. Aklog and his children; and (iv)
557,167 shares of common stock issuable upon the potential exercise of stock options granted
to Dr. Aklog which have vested or are expected to vest within sixty days as of April 25,
2023. Notwithstanding the foregoing, Dr. Aklog disclaims beneficial ownership of the
shares of common stock and Series Z Warrants held by PVP and HCFP/AG LLC, except to the extent
of his proportionate pecuniary interest therein. |
| (3) | Includes
762,506 shares of common stock and 12,000 shares of common stock issuable upon the potential
exercise of Series Z Warrants held by Mr. McGrath; and 507,608 shares of common stock issuable
upon the potential exercise of stock options granted to Mr. McGrath which have vested and
are expected to vest within sixty days as of April 25, 2023. |
| (4) | Includes
67,954 shares of common stock held by Dr. deGuzman; and 582,895 shares of common stock issuable
upon the potential exercise of stock options granted to Dr. deGuzman which have vested and
are expected to vest within sixty days as of April 25, 2023. |
| (5) | Includes
268,986 shares of common stock and 450 shares of common stock issuable upon the potential
exercise of Series Z Warrants held by Mr. O’Neil; and 470,108 shares of common stock
issuable upon the potential exercise of stock options granted to Mr. O’Neil which have
vested and are expected to vest within sixty days as of April 25, 2023. |
| (6) | Includes
133,333 shares of common stock issuable upon the potential exercise of stock options granted
to Mr. Gordon which have vested and are expected to vest within sixty days as of April 25,
2023. |
| (7) | Includes
250,000 shares of common stock and 745,394 shares of common stock issuable upon the potential
exercise of stock options granted to Mr. Glennon which have vested and are expected to vest
within sixty days as of April 25, 2023. |
| (8) | Includes
83,333 shares of common stock issuable upon the potential exercise of stock options granted
to Mr. Baxter which have vested and are expected to vest within sixty days as of April 25,
2023. |
| (9) | Includes
564,222 shares of common stock issuable upon the potential exercise of stock options granted
to Dr. Cox which have vested and are expected to vest within sixty days as of April 25,
2023. |
| (10) | Includes
74,729 shares of common stock issuable upon the potential exercise of stock options granted
to Ms. Harvey which have vested and are expected to vest within sixty days as of April 25,
2023. |
| (11) | Includes
564,222 shares of common stock issuable upon the potential exercise of stock options granted
to Mr. Sparks which have vested and are expected to vest within sixty days as of April 25,
2023. |
| (12) | Includes
99,998 shares of common stock issuable upon the potential exercise of stock options granted
to Ms. White which have vested and are expected to vest within sixty days as of April 25,
2023. |
| (13) | Includes
4,456,570 shares of common stock and 2,078,285 shares of common stock issuable upon the potential
exercise of Series Z Warrants held by PVP. The business address of PVP is 10 Hickory Pine
Court, Purchase, New York 10577. |
Equity
Compensation Plans
As
of December 31, 2022, the Company had the following compensation plans (including individual compensation arrangements) under which equity
securities were authorized for issuance:
Plan category | |
Number
of
securities to
be issued upon
exercise of
outstanding
options, warrants
and rights | | |
Weighted-
average exercise price of outstanding options, warrants and rights | | |
Number
of securities remaining available for future issuance under equity compensation plans (excluding
securities reflected in column (a)) | |
| |
(a) | | |
(b) | | |
(c) | |
Equity
compensation plans approved by security holders(1) | |
| 11,942,801 | | |
$ | 2.59 | | |
| 3,495,684 | (1) |
Equity
compensation plans not approved by security holders(2) | |
| 600,584 | | |
$ | 5.47 | | |
| — | |
Total | |
| 12,543,655 | | |
$ | 2.71 | | |
| 3,495,684 | (3) |
(1) | Represents
2,563,843 shares of common stock of the Company available for issuance under the 2014 Plan
and 931,841 shares of common stock of the Company available for issuance under the ESPP,
each as of December 31, 2022. |
(2) | Represents
500,584 stock options to purchase shares of common stock of the Company at a weighted average
exercise price of $5.47 per share of common stock of the Company and 100,000 restricted stock
awards granted to a consultant. |
(3) | Subsequent
to December 31, 2022, through April 25, 2023: |
| ● | 7,280,000
stock options to purchase shares of common stock of the Company, with a weighted average
exercise price of $0.48 per share of common stock of the Company were granted under the 2014
Plan to the Company’s non-employee directors and certain of the Company’s non-executive
employees; and |
| ● | 573,229
shares of common stock of the Company were issued under the ESPP. |
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Related
Party Transactions
The
following is a description of transactions since January 1, 2021 in which the Company has been a participant and the amount involved
exceeds the lesser of $120,000 and one percent of the average of the Company’s total assets at year-end for the last two completed
fiscal years, and in which any of its directors, executive officers, holders of more than 5% of its voting securities, or affiliates
of the foregoing, had or will have a direct or indirect material interest. The Company believes all of the transactions described below
were made on terms no less favorable to the Company than could have been obtained from unaffiliated third parties. Compensation arrangements
for the Company’s directors and named executive officers are described above under “Executive Compensation.”
Formation
of Lucid and CWRU License Agreement
In
May 2018, in connection with Lucid’s organization, Lucid sold (i) 11,552,562 shares of Lucid common stock to the Company, (ii)
1,331,228 shares to Case Western Reserve University (“CWRU”), which previously owned greater than 5% of Lucid’s outstanding
common stock, and (iii) 408,738 shares to each of the three individual physician inventors of the EsoGuard technology, Sanford Markowitz,
M.D., a member of the Lucid’s board of directors at the time, Amitabh Chak, M.D., a consultant of Lucid, and Joseph Willis, M.D.,
a consultant of Lucid. The shares were sold for an aggregate purchase price of $10,000.
Upon
Lucid’s formation, Lucid entered into a license agreement with CWRU, which was subsequently amended (the “License Agreement”).
Under the terms of the License Agreement, Lucid acquired an exclusive worldwide right to use the intellectual property rights to the
EsoGuard and EsoCheck technology for the detection of changes in the esophagus. As compensation for the license, CWRU received equity
in Lucid as described above. In addition, CWRU is entitled to receive royalties based on net sales by Lucid of products utilizing the
EsoGuard and EsoCheck technology, as well as a specified portion of any other non-royalty proceeds received by Lucid pursuant to a sublicense
of the EsoGuard and EsoCheck technology (less any amounts distributed to CWRU as a stockholder of Lucid during the applicable calendar
year). Lucid also will be required to pay CWRU a minimum yearly royalty commencing the year after the first commercial sale of a product
utilizing the EsoGuard technology, with the minimum amount rising based on prior years’ net sales of the product.
The
License Agreement is subject to certain regulatory and commercialization milestones, with a payment due from Lucid to CWRU upon the achievement
of certain milestones. The Milestone I payment has been made – a $75,000 milestone payment upon FDA’s clearance of EsoCheck.
With regard to Milestone II, first commercial sale of a licensed product, in February 2021, Lucid entered into an amendment to the License
Agreement with CWRU which extended the date of Milestone II, eliminated the $100,000 Milestone II payment, and provided for an equivalent
amount paid by Lucid to CWRU in connection with execution of the amendment. The License Agreement provides for one remaining milestone
payment – a $200,000 milestone payment due upon a PMA submission to FDA related to a licensed product.
Under
the License Agreement, Lucid is responsible for the costs of CWRU in preparing, filing, and prosecuting any patents related to the EsoGuard
and EsoCheck technology (subject to a provision for cost sharing in the event CWRU grants other non-overlapping licenses to the technology),
and agreed to reimburse CWRU for approximately $272,553 of such costs incurred by it prior to the date of the License Agreement. Of such
amount, $50,000 was paid at the initial signing of the License Agreement and $222,553 was paid at the signing of an August 2021 amendment
to the License Agreement. The Company provided Lucid with the initial $50,000 to reimburse CWRU (which amount was included in the $22.4
million owed to the Company that was satisfied through the issuance of a convertible promissory note as described below). Lucid also
paid CWRU a fee of $10,000 in connection with the August 2021 amendment to the License Agreement.
In
the years ended December 31, 2022 and 2021, Lucid paid or accrued an aggregate of approximately $0.30 million and $0.23 million, respectively,
to CWRU pursuant to the License Agreement, consisting of $0.28 million and $0.20 million, respectively, in reimbursable costs and $0.02
million and $0.04 million, respectively, in royalty fee payments.
In
connection with the License Agreement, Lucid entered into the management services agreement with the Company, as more fully described
below.
Ongoing
Relationship with Lucid
Management
Services Agreement
Since
Lucid’s inception, Lucid’s business has been operated through an entity separate from the Company. However, Lucid is party
to a management services agreement with the Company. Under the management services agreement, the Company provides management and oversight
of Lucid’s activities relating to research and development for the EsoGuard and EsoCheck products; regulatory matters concerning
the EsoGuard and EsoCheck products; manufacturing, marketing, and commercialization of the EsoGuard and EsoCheck products; financial
and accounting matters; and legal matters. The Company also provides senior management oversight and makes its office space available
to Lucid under the agreement. The Company agreed to cause certain of its employees to devote as much of their professional time and attention
as is reasonably necessary to perform the services described in the management services agreement.
The
amount that Lucid pays to the Company under the management services agreement relates to the amount of Company resources dedicated to
Lucid’s activities, including an unspecified portion of the compensation to the executive officers and employees it makes available
to Lucid, and over time the business focus and consequently the type of costs incurred changed from engineering and product development
to clinical trial efforts and commercial activities. Lucid initially paid a fee of $20,000 per month, which increased to $60,000 per
month on February 16, 2019, to $90,000 on June 5, 2019, to $190,000 per month on July 1, 2020, to $290,000 per month on February 1, 2021,
to $390,000 on October 15, 2021, and to $550,000 on July 1, 2022. In addition, effective as of July 1, 2022, the parties agreed that
the Company may elect to receive payment of the monthly fee in cash or in shares of Lucid’s common stock, with such shares valued
at the volume weighted average price during the final ten trading days of the applicable month (subject to a floor price of $0.70 per
share). However, in no event will the Company be entitled to receive under the management services agreement more than 7,709,836 shares
of Lucid’s common stock. Lucid paid or accrued a total of approximately $5.6 million and $3.6 million in the years ended December
31, 2022 and 2021, respectively under the management services agreement. Of such amount, approximately $1.7 million was paid through
the issuance of shares of Lucid’s common stock to the Company.
The
term of the management services agreement continues until such time as Lucid’s board of directors determines. Lucid expects to
continue to use the Company’s services under the management services agreement until such time as Lucid’s board of directors
determines it would be in Lucid’s best interest to engage a dedicated management team. Lucid believes this shared services arrangement
is more cost-effective to Lucid, because it provides economies of scale and permits Lucid to focus its infrastructure and resources on
the pillars of its growth strategy – expanding commercialization and its clinical evidence base.
Payroll
and Benefit-Related Expense Reimbursement Agreement
On
November 30, 2022, the Company and Lucid entered into a payroll and benefit expense reimbursement agreement (the “PBERA”).
Historically, the Company had paid for certain payroll and benefit-related expenses in respect of Lucid’s personnel on behalf of
Lucid, and Lucid had reimbursed the Company for the same. Pursuant to the PBERA, the Company agreed to continue to pay such expenses,
and Lucid agreed to continue to reimburse the Company for the same. The PBERA further provided that the expenses would be reimbursed
on a quarterly basis or at such other frequency as the parties may determine, in cash or, subject to approval by the board of directors
of each of the Company and Lucid, in shares of Lucid’s common stock, with such shares valued at the volume weighted average price
of such stock during the final ten trading days preceding the later of the two dates on which such stock issuance is approved by the
board of directors of each of the Company and Lucid (subject to a floor price of $0.40 per share), or in a combination of cash and shares.
However, in no event would Lucid issue any shares of its common stock to the Company in satisfaction of all or any portion of the expenses
if the issuance of such shares of its common stock would exceed the maximum number of shares of common stock that Lucid may issue under
the rules or regulations of Nasdaq, unless Lucid obtained the approval of its stockholders as required by the applicable rules of Nasdaq
for issuances of shares of its common stock in excess of such amount. Lucid paid or accrued a total of approximately $2.7 million in
the year ended December 31, 2022 under the PBERA. In accordance with the PBERA, the Company and Lucid elected for Lucid to reimburse
all of such amount through the issuance of 1,479,326 shares of Lucid’s common stock.
Esocure
On
April 11, 2022, the Company and Lucid entered into a license agreement pursuant to which the Company agreed to license to Lucid certain
intellectual property rights relating to technology that may be used to develop and commercialize an esophageal ablation device that
can be used to treat dysplastic Barrett’s Esophagus before it can progress to adenocarcinoma of the esophagus. In consideration
of the Company’s agreement to license this technology to Lucid, Lucid agreed to make certain royalty payments to the Company based
on net sales generated from any licensed products sold by Lucid that incorporate the licensed technology. The term of the license continues
until such time as Lucid determines it wishes to abandon the commercialization of the licensed technology or such other time as may be
mutually agreed by the Company and Lucid.
CapNostics
Assignment
On
April 11, 2022, PAVmed Subsidiary Corp., a wholly-owned subsidiary of the Company (“SubCo”), and Lucid entered into
an assignment agreement pursuant to which SubCo assigned to Lucid 100% of the equity interests of CapNostics, LLC (“CapNostics”),
which was acquired by SubCo in October 2021 and which manufactures EsophaCap – a U.S. FDA 510(k)-cleared and European CE Mark certified,
non-endoscopic esophageal cell collection device. In connection with such assignment, SubCo also assigned to Lucid certain commercial
and other agreements SubCo had entered into related to CapNostics. In consideration of such assignment, Lucid agreed to pay SubCo an
amount equal to the purchase price paid by SubCo to acquire CapNostics, and also to reimburse SubCo for certain expenses incurred by
SubCo related to CapNostics during the period of time following such acquisition. On November 30, 2022, pursuant to a supplement to the
assignment agreement, Lucid, SubCo and the Company agreed that Lucid would pay the purchase price for the interests through the issuance
to the Company of 1,145,086 shares of Lucid’s common stock.
Convertible
Note
On
June 1, 2021, Lucid issued to the Company a convertible promissory note with face value principal of $22.4 million, in exchange for the
cancellation of $22.4 million payable by Lucid to the Company related to working capital advances and earned, but unpaid, management
services fees. The note had a maturity date of May 18, 2028, bore interest at a rate of 7.875% per annum and was convertible at the Company’s
option into shares of Lucid’s common stock at a conversion price of $1.42 per share. On October 13, 2021, the Company converted
the outstanding principal amount of the note into 15,803,200 of shares of Lucid’s common stock as provided in the note.
Expense
Reimbursements
The
Company will reimburse its management team and their affiliates for any reasonable out-of-pocket business expenses incurred by them in
connection with activities on the Company’s behalf. There is no limit on the amount of accountable out-of-pocket expenses reimbursable
by the Company, which will be reviewed only by the Board or a court of competent jurisdiction if such reimbursement is challenged.
Related
Party Policy
The
Company’s Code of Ethics requires that it avoid, wherever possible, all transactions that could result in actual or potential conflicts
of interests, which includes related party transactions, except under guidelines approved by the Board. Related party transactions are
defined under SEC rules as transactions in which (1) the aggregate amount involved will or may be expected to exceed the lesser of $120,000
and one percent of the average of the Company’s total assets at year-end for the last two completed fiscal years, (2) the Company
or any of its subsidiaries is a participant, and (3) any (a) executive officer, director or nominee for election as a director, (b) greater
than 5% beneficial owner of the Company’s shares of common stock, or (c) immediate family member, of the persons referred to in
clauses (a) and (b), has or will have a direct or indirect material interest (other than solely as a result of being a director or a
less than 10% beneficial owner of another entity). More generally, a conflict of interest situation may arise when a person takes actions
or has interests that may make it difficult to perform his or her work objectively and effectively. Conflicts of interest generally may
also arise if a person, or a member of his or her family, receives improper personal benefits as a result of his or her position.
All
future and ongoing related party transactions will require prior review and approval by the audit committee, which will have access,
at the Company’s expense, to the Company’s attorneys or independent legal counsel. The Company will not enter into any such
transaction without the approval of the audit committee. The audit committee will consider all relevant factors when determining whether
to approve a related party transaction, including whether the related party transaction is on terms no less favorable than terms generally
available to an unaffiliated third-party under the same or similar circumstances and the extent of the related party’s interest
in the transaction.
No
director may participate in the approval of any transaction in which he is a related party, but that director is required to provide
the other members of the Board with all material information concerning the transaction. Additionally, the Company requires each of its
directors and executive officers to complete a directors’ and officers’ questionnaire that elicits information about related
party transactions.
These
procedures are intended to determine whether any such related party transaction impairs the independence of a director or presents a
conflict of interest on the part of a director, employee or officer.
STOCKHOLDER
PROPOSALS AND NOMINATIONS
The
Company intends to hold its 2024 annual meeting of stockholders on June 19, 2024. A proposal that a stockholder intends to present at
the 2024 annual meeting of stockholders and wishes to be considered for inclusion in the Company’s proxy materials must be received
no later than December 30, 2023. All proposals must comply with Rule 14a-8 under the Exchange Act.
The
Company’s bylaws contain provisions intended to promote the efficient functioning of stockholder meetings. Some of the provisions
require advance notice to the Company of stockholder proposals or director nominations to be considered at an annual meeting. Under the
Company’s bylaws, in order to properly bring stockholder proposals or director nominations before an annual meeting, even if the
stockholder does not intend to include such proposal in the Company’s proxy materials, the stockholder must deliver written notice
of such proposal or nomination to the Secretary not less than 60 days nor more than 90 days prior to the meeting; provided, however,
that in the event that less than 70 days’ notice or prior public disclosure of the date of the annual meeting is given or made
to stockholders, notice by a stockholder, to be timely, must be received no later than the close of business on the 10th day
following the day on which such notice of the date of the annual meeting was mailed or such public disclosure was made. Accordingly,
for the 2024 annual meeting of stockholders, this notice must be received no earlier than March 21, 2024 and no later than April 20,
2024. A notice of a stockholder proposal or director nomination must include the information set forth in the Company’s bylaws.
Stockholder proposals and director nominations should be addressed to Secretary, PAVmed Inc., 360 Madison Avenue, 25th Floor,
New York, New York 10017.
HOUSEHOLDING
OF PROXY MATERIALS
The
Securities and Exchange Commission has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery
requirements for proxy statements with respect to two or more stockholders sharing the same address by delivering a single proxy statement
addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially means extra convenience
for stockholders and cost savings for companies.
A
number of brokers with account holders who are stockholders of the Company will be “householding” the Company’s proxy
materials. A single set of the Company’s proxy materials will be delivered to multiple stockholders sharing an address unless contrary
instructions have been received from the affected stockholders. Once you have received notice from your broker that they will be “householding”
communications to your address, “householding” will continue until you are notified otherwise or until you revoke your consent.
If, at any time, you no longer wish to participate in “householding” and would prefer to receive a separate set of the Company’s
proxy materials at no charge, please notify your broker, bank or other nominee, if you are a beneficial owner, or direct a request to
the Company, if you are a holder of record. Holders of record may make send a request in writing to PAVmed Inc., 360 Madison Avenue,
25th Floor, New York, New York 10017, or may make a request by telephone at (212) 949-4319. The Company undertakes to deliver promptly,
upon any such written or verbal request, a separate copy of the Company’s proxy materials to a stockholder at a shared address
to which a single copy of these documents was delivered. Stockholders who currently receive multiple copies of the Company’s proxy
materials at their address and would like to request “householding” of their communications should contact their broker,
bank or other nominee, or contact the Company at the above address or phone number.
OTHER
MATTERS
The
Company does not intend to bring before the Annual Meeting any matters other than those specified in the Notice of the Annual Meeting,
and the Company does not know of any business which persons other than the Board intend to present at the Annual Meeting. Should any
business requiring a vote of the stockholders, which is not specified in the notice, properly come before the Annual Meeting, the proxy
holders specified in this proxy statement and in the accompanying proxy card intend to vote the shares represented by them in accordance
with their best judgment.
SOLICITATION
OF PROXIES
Proxies
are being solicited by the Board for use at the Annual Meeting. The Company’s officers and other employees, without additional
remuneration, also may assist in the solicitation of proxies in the ordinary course of their employment.
In
addition to the use of the mail and the Internet, solicitations may be made personally or by email or telephone, as well as by public
announcement. The Company will bear the cost of this proxy solicitation. The Company may also request brokers, dealers, banks and their
nominees to solicit proxies from their clients where appropriate, and may reimburse them for reasonable expenses related thereto.
If
you have questions about how to vote or direct a vote in respect of your shares or about the proposals, or if you need additional copies
of the proxy statement or proxy card, you may contact the Company at:
PAVmed
Inc.
360 Madison Avenue, 25th Floor
New York, New York 10017
Attention: Secretary
Dated
May 1, 2023
ANNEX
A
CERTIFICATE
OF AMENDMENT
OF
CERTIFICATE
OF INCORPORATION
OF
PAVMED
INC.
Pursuant
to Section 242 of the
General
Corporation Law of Delaware
The
undersigned Chairman and Chief Executive Officer of PAVmed Inc. (the “Corporation”) does hereby certify:
FIRST:
The name of the Corporation is PAVmed Inc.
SECOND:
The certificate of incorporation of the Corporation is hereby amended by deleting the paragraph A of Article EIGHTH in its entirety and
by substituting the following new paragraph A of Article EIGHTH in lieu thereof:
“A.
To the fullest extent permitted by the General Corporation Law of the State of Delaware, a director or officer of the Corporation shall
not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director or officer,
except for any liability of (i) a director or officer for any breach of the director’s or officer’s duty of loyalty to the
Corporation or its stockholders, (ii) a director or officer for acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) a director under Section 174 of the GCL, (iv) a director or officer for any transaction from which
the director or officer derived an improper personal benefit, or (v) an officer in any action by or in right of the Corporation. If the
GCL is amended to authorize corporate action further eliminating or limiting the personal liability of directors or officers, then the
liability of a director or officer of the Corporation shall be eliminated or limited to the fullest extent permitted by the GCL, as so
amended. Any repeal or modification of this paragraph A by the stockholders of the Corporation shall not adversely affect any right or
protection of a director or officer of the Corporation with respect to events occurring prior to the time of such repeal or modification.”
THIRD:
The foregoing amendment to the Corporation’s certificate of incorporation was duly adopted in accordance with the provisions of
Sections 242 of the Delaware General Corporation Law.
IN
WITNESS WHEREOF, the undersigned has signed this certificate of amendment on this ___ day of ________, 2023.
|
|
|
Lishan Aklog, M.D. |
|
Chairman and Chief Executive
Officer |
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