UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
CytRx
Corporation
(Name
of Registrant as Specified In Its Charter)
(Name
of Person(s) Filing Proxy Statement, if other than the Registrant)
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CytRx
Corporation
11726
San Vicente Boulevard, Suite 650
Los
Angeles, California 90049
June
12, 2020
Dear
Stockholder:
You
are cordially invited to attend the 2020 Annual Meeting of Stockholders of CytRx Corporation. The meeting will be held at the
Company’s corporate offices, 11726 San Vicente Blvd, Ste 650, Los Angeles, CA 90049 at 10:00 A.M., local time, on Thursday,
July 30, 2020.
The
Notice of Meeting and the Proxy Statement on the following pages cover the formal business of the Annual Meeting.
Given
the current environment related to COVID-19, we will enforce the appropriate social distancing protocols and request that all
stockholders wear an appropriate face covering; in addition the Company will employ a screener to conduct temperature checks
of all attendees prior to allowing admission to the Annual Meeting.
Your
vote is very important. Whether or not you plan to attend or participate in the 2020 Annual Meeting, we encourage you to read
the Proxy Statement and vote as soon as possible. For specific instructions on how to vote your shares, please refer to the section
in the Proxy Statement entitled “How can I vote my shares?” and the instructions on the proxy card or proxy materials
you receive from your broker, bank or other intermediary.
Thank
you.
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Sincerely,
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/s/
Steven A. Kriegsman
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Steven
A. Kriegsman
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Chairman
and Chief Executive Officer
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CytRx
Corporation
11726
San Vicente Boulevard, Suite 650
Los
Angeles, California 90049
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
to
be held on July 30, 2020
Notice
is hereby given to the holders of common stock, $0.001 par value per share, of CytRx Corporation that the 2020 Annual Meeting
of Stockholders will be held at the Company’s corporate offices, 11726 San Vicente Blvd, Ste 650, Los Angeles, CA 90049
at 10:00 A.M., local time, on Thursday, July 30, 2020 for the following purposes:
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The
election of one Class I director to serve until the 2022 Annual Meeting of Stockholders;
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The
election of one Class II director to serve until the 2023 Annual Meeting of Stockholders;
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Approval
of an amendment to our Restated Certificate of Incorporation to increase the number of authorized shares of common stock from
41,666,666 to 51,666,666;
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The
ratification of the appointment of Weinberg & Company as our independent registered public accounting firm for the fiscal
year ending December 31, 2020; and
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The
transaction of such other business as may properly come before the Annual Meeting and at any postponement or adjournment thereof.
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Only
those stockholders of record at the close of business on June 5, 2020 are entitled to notice of and to vote at the Annual Meeting
and at any postponement or adjournment thereof.
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By
Order of the Board of Directors,
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/s/
John Y. Caloz
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John
Y. Caloz
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Chief
Financial Officer
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June
12, 2020
Important
Notice Regarding Internet Availability of Proxy Materials
for
the Annual Meeting of Stockholders to Be Held on July 30, 2020:
The
proxy materials for the Annual Meeting, including the Annual Report and the Proxy Statement,
are
available at http://materials.proxyvote.com/232828.
WHETHER
OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, SIGN, DATE, AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE ENCLOSED
BUSINESS REPLY ENVELOPE (OR USE TELEPHONE OR INTERNET VOTING PROCEDURES, IF AVAILABLE THROUGH YOUR BROKER). IF YOU ATTEND THE
ANNUAL MEETING AND WISH TO DO SO, YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON.
TABLE
OF CONTENTS
CytRx
Corporation
11726
San Vicente Boulevard, Suite 650
Los
Angeles, California 90049
To
Be Held July 30, 2020
PROXY
STATEMENT
GENERAL
INFORMATION
This
Proxy Statement is furnished to holders of common stock, $0.001 par value per share, of CytRx Corporation, a Delaware corporation
(“we,” “us,” “our,” “CytRx” or the “Company”), in connection with
the solicitation of proxies by our board of directors (“board of directors” or “board”) for use at our
Annual Meeting of Stockholders to be held at the Company’s corporate offices, 11726 San Vicente Blvd, Ste 650, Los Angeles,
CA 90049, local time, on Thursday, July 30, 2020 and at any postponement or adjournment thereof.
This
Proxy Statement and the accompanying proxy materials are first being furnished to our stockholders on or about June 12, 2020.
Our board of directors is asking you to vote your shares as described below. If you attend the Annual Meeting in person, you may
vote at the Annual Meeting even if you have previously submitted a proxy. Please note, however, that if your shares are held of
record by a broker, bank or other nominee and you wish to vote at the Annual Meeting, you must obtain a proxy issued in your name
from that record holder.
In
accordance with the rules of the SEC, we are furnishing our proxy materials, including this Proxy Statement and our 2019 Annual
Report on Form 10-K, to our stockholders via the Internet. We are mailing to certain of our stockholders a Notice of Internet
Availability of Proxy Materials (the “Notice of Internet Availability”) that contains instructions on how to access
our proxy materials on the Internet and how to vote. Other stockholders, in accordance with their prior requests, will receive
an email with instructions on how to access our proxy materials and vote, or will be mailed paper copies of our proxy materials
and a proxy card or voting form. Stockholders may request to receive all future proxy materials in printed form by mail or electronically
by email by following the instructions contained in the Notice of Internet Availability.
This
Proxy Statement and our Annual Report on Form 10-K for the year ended December 31, 2019 are available on the Internet at: http://www.cytrx.com/investor-relations/sec-filings/
.
What
is a proxy?
A
proxy is the legal designation of another person to vote the stock you own. That other person is called a proxy. If you designate
someone as your proxy in a written document, that document is also called a proxy or a proxy card. We have designated Ms. Cristina
Newman, Corporate Secretary and Mr. John Y. Caloz, our Chief Financial Officer, as proxy holders for the Annual Meeting. By completing,
signing and returning the accompanying proxy card, you are authorizing Ms. Newman and Mr. Caloz, or either of them, to vote your
shares at the Annual Meeting as you have instructed them on the proxy card. This way, your shares will be voted whether or not
you attend the Annual Meeting. Even if you plan to attend the Annual Meeting, it is advisable to complete, sign and return your
proxy card before the Annual Meeting date just in case your plans change. You may vote, in person, at the Annual Meeting even
if you have previously returned a proxy.
What
is a Proxy Statement?
This
Proxy Statement is a document that regulations of the Securities and Exchange Commission, or SEC, require us to give you when
we ask you to sign a proxy card designating Ms. Newman and Mr. Caloz as proxies to vote on your behalf.
What
is in this Proxy Statement?
This
Proxy Statement describes the Proposals on which we would like you, as a stockholder, to vote at the Annual Meeting. It gives
you information on the Proposals, as well as other information about us, so that you can make an informed decision.
What
am I voting on?
Proposal
1: Election of Directors
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The
election of one Class I director to serve until the 2022 annual meeting of stockholders; and
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the
election of one Class II director to serve until the 2023 annual meeting of stockholders.
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Proposal
2: Approval of an amendment to our Restated Certificate of Incorporation to increase the authorized shares of common stock from
41,666,666 to 51,666,666.
Proposal
3: Ratification of the appointment of Weinberg & Company as our independent registered public accounting firm for the fiscal
year ending December 31, 2020.
Who
is entitled to vote at and attend the Annual Meeting?
Only
stockholders of record at the close of business on June 5, 2020 are entitled to notice of, and to vote at, the Annual Meeting
and at any adjournment or postponement thereof. Due to the COVID-19 pandemic, attendees this year will be required to wear a face
covering and adhere to social distancing requirements.
Attendance
at the Annual Meeting will be limited to stockholders or their proxy holders. If you are a proxy holder for a stockholder whose
shares are registered in his or her name, you must provide a copy of the proxy from the stockholder of record. If you hold shares
through a broker, bank or similar organization, you must provide proof of beneficial ownership as of June 5, 2020, such as a brokerage
or bank account statement, a copy of the proxy from the broker or other agent, or other similar evidence of ownership. Each attendee
must also present valid photo identification, such as a driver’s license or passport. Cameras, recording devices, and other
electronic devices will not be permitted at the Annual Meeting.
How
can I vote my shares?
Whether
you hold shares as a stockholder of record or a beneficial owner, you may direct how your shares are voted without attending the
2020 Annual Meeting by the following means:
(1)
By mail — Complete, sign and date the proxy card where indicated and return it in the prepaid envelope included with the
proxy card. Proxy cards submitted by mail must be received by the time of the meeting in order for your shares to be voted. If
you are a beneficial owner of shares held in street name, you may vote by mail by completing, signing and dating the voting instructions
in the notice provided by your broker, bank or other intermediary and mailing it in the accompanying pre-addressed envelope.
(2)
By telephone — If you are a stockholder of record or a record holder that has shares of our common stock registered in their
names with our transfer agent, American Stock Transfer, please submit your proxy by calling 1-800-690-6903 specified on your paper
copy of the proxy card you received if you received a printed set of the proxy materials. If you are a beneficial owner, who owns
shares that are held in ‘Street name” through a broker, bank or other intermediary, please submit your vote by calling
1-800-454-8683 specified on your voting instruction form. You must have your sixteen digit control number that appears on your
proxy card or voting instruction form available when submitting your proxy over the telephone.
(3)
By Internet — If you received a Notice of Internet Availability by mail, you can submit your proxy or voting instructions
over the Internet by following the instructions provided in the Notice of Internet Availability. If you received a Notice of Internet
Availability or proxy materials by email, you may submit your proxy or voting instructions over the Internet by following the
instructions included in the email. If you received a printed set of the proxy materials by mail, including a paper copy of the
proxy card or voting instruction form, you may submit your proxy or voting instructions over the Internet by following the instructions
on the proxy card or voting instruction form.
If
your control number is not recognized, please refer to your proxy card or voting instruction form for specific voting instructions.
What
does it mean if I receive more than one proxy card?
It
means that you have multiple accounts at the transfer agent or with stockbrokers. Please complete, sign and return all proxy cards
to ensure that all your shares are voted. Unless you need multiple accounts for specific purposes, it may be less confusing if
you consolidate as many of your transfer agent or brokerage accounts as possible under the same name and address.
What
if I change my mind after I return my proxy card?
You
may revoke your proxy card and change your vote by:
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signing
another proxy card with a later date and returning it before the polls close at the Annual Meeting; or
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voting
in person at the Annual Meeting.
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However,
if you hold your shares in street name, you must request a proxy from the person in whose name your shares are held, usually your
stockbroker, to vote at the Annual Meeting.
Will
my shares be voted if I do not return my proxy card?
If
your shares are held in street name, your brokerage firm may vote your shares without your instructions only under certain circumstances.
Brokerage
firms have authority under the rules of The New York Stock Exchange to vote customers’ unvoted shares on “routine”
matters only. Under these rules, Proposals 1 and 2 are considered non-routine, so if you do not give your broker instructions,
your shares will be treated as broker non-votes and will not be voted with respect to each of Proposals 1 and 2. Proposal 3 is
considered a routine matter.
If
you do not return a proxy card to vote your shares, your brokerage firm may either:
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vote
your shares on Proposal 3 only; or
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leave
your shares unvoted.
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We
encourage you to provide instructions to your brokerage firm by returning your proxy card. This ensures that your shares will
be voted at the Annual Meeting with respect to all of the Proposals described in this Proxy Statement.
What
constitutes a quorum?
Our
Restated Bylaws, as amended (“Restated Bylaws”), provide that the presence, in person or by proxy, at the Annual Meeting
of the holders of a majority of outstanding shares of our common stock will constitute a quorum for the transaction of business.
For
the purpose of determining the presence of a quorum, proxies marked “withhold authority” or “abstain”
will be counted as present. Shares represented by proxies that include so-called broker non-votes (shares held by a broker or
nominee that has no authority to vote upon a particular matter) also will be counted as shares present for purposes of establishing
a quorum. On the record date, there were 33,637,501 shares of our common stock issued and outstanding.
What
are the voting rights of the holders of our common stock?
Holders
of our common stock are entitled to one vote per share with respect to each of the matters to be presented at the Annual Meeting.
With
regard to Proposal 1, the election of directors, each Class of director will be elected by a plurality of the votes cast for such
Class. You may vote “FOR” or “WITHHOLD AUTHORITY” with respect to each of the nominees. In tabulating
the voting results for the election of directors, only “FOR” votes will be counted. Abstentions
and broker non-votes will not be considered as votes cast on this proposal and therefore will not affect the outcome of this proposal.
Approval
of Proposal 2, the amendment to our Restated Certificate of Incorporation, will require the affirmative vote of the holders of
a majority of the outstanding shares of common stock. As a result, abstentions and broker non-votes have no effect on the outcome
of this proposal.
Approval
of Proposal 3, the ratification of the Company’s independent accountants, requires the affirmative vote of a majority of
the shares present in person or represented by proxy and entitled to vote on that proposal at the Annual Meeting. As a result,
abstentions are treated as votes against this proposal, while broker non-votes have no effect.
What
happens if a director nominee is unable to stand for election?
Our
board of directors may select a substitute nominee. If you have completed, signed and returned your proxy card, Ms. Newman and
Mr. Caloz, or either of them, can vote your shares for the substitute nominee.
What
are the board’s recommendations?
The
recommendations of our board of directors are set forth together with the description of each Proposal in this Proxy Statement.
In summary, our board of directors recommends a vote:
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“FOR”
election of one Class I director and one Class II director, both named in this Proxy Statement, as described in Proposal 1;
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“FOR”
approval of an amendment to our Restated Certificate of Incorporation to increase the number of authorized shares of common
stock from 41,666,666 to 51,666,666, as described in Proposal 2; and
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“FOR”
ratification of the appointment of Weinberg & Company as our independent registered public accounting firm for the year
ending December 31, 2020, as described in Proposal 3.
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Proxies
If
the enclosed proxy card is executed, returned in time and not revoked, the shares represented thereby will be voted at the Annual
Meeting and at any postponement or adjournment thereof in accordance with the directions indicated on the proxy card. IF NO DIRECTIONS
ARE INDICATED, PROXIES WILL BE VOTED IN ACCORDANCE WITH OUR BOARD OF DIRECTORS’ RECOMMENDATIONS IN THIS PROXY STATEMENT
AND, AS TO ANY OTHER MATTERS PROPERLY BROUGHT BEFORE THE ANNUAL MEETING OR ANY POSTPONEMENT OR ADJOURNMENT THEREOF, IN THE SOLE
DISCRETION OF THE PROXIES.
Is
my vote kept confidential?
Proxies,
ballots and voting tabulations identifying stockholders are kept confidential and will not be disclosed to third parties except
as may be necessary to meet legal requirements.
Where
do I find the voting results of the Annual Meeting?
We
will announce preliminary voting results at the Annual Meeting and publish the final results in a Form 8-K to be filed with the
SEC. You may obtain a copy of the Form 8-K by contacting us at (310) 826-5648 or at an SEC public reference room. For the location
of an SEC public reference room, please contact the SEC at (800) SEC-0330.
You
can also read the Form 8-K that will contain the voting results on the Internet at www.cytrx.com or through the SEC’s
electronic data system called EDGAR at www.sec.gov.
How
do I receive an annual report?
A
copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 (the “Annual Report”) is being
delivered with this Proxy Statement. The Annual Report is also available on our website at www.cytrx.com/investor-relations/sec-filings/
and on the SEC’s website at www.sec.gov. The Annual Report available on our website includes a letter to stockholders
from our Chairman and Chief Executive Officer. Copies of exhibits to the Annual Report will be made available for a reasonable
charge upon written request to CytRx Corporation, 11726 San Vicente Boulevard, Suite 650, Los Angeles, California 90049, Attention:
Corporate Secretary.
We
encourage you to review our periodic reports filed with the SEC, including, but not limited to, our most recent Quarterly Report
on Form 10-Q filed on May 14, 2020.
PROPOSAL
1
ELECTION
OF DIRECTORS
Pursuant
to our Restated Bylaws, our board of directors has fixed the number of our directors at four. Our Restated Certificate of Incorporation
and our Restated Bylaws provide for the classification of our directors into three classes, which we refer to as Class I, Class
II and Class III, with each Class to consist as nearly as possible of an equal number of directors. One Class of directors is
to be elected at each annual meeting of stockholders to serve for a term of three years.
We
have one incumbent Class I director, Dr. Louis Ignarro, whose regular term of office was due to expire at the 2019 Annual Meeting
of Stockholders. Since the Company did not attain a quorum for its 2019 Annual Meeting of Stockholders, our board of directors
has re-nominated the incumbent Class I director, Dr. Ignarro, for re-election as Class I director to serve until the 2022 Annual
Meeting of Stockholders and until his successor is duly elected and qualified.
We
have one incumbent director in Class II whose regular term expires at the Annual Meeting. Our board of directors has nominated
the incumbent Class II director, Mr. Steven A. Kriegsman, for re-election as a Class II director to serve until the 2023 Annual
Meeting of Stockholders and until his successor is duly elected and qualified.
Information
concerning Dr. Ignarro and Mr. Kriegsman, as well as the directors whose terms of office will continue after the 2020 Annual Meeting,
is set forth below. Each director’s age is indicated in parentheses after his name.
Class
I — Nominee to Serve as Director Until the 2022 Annual Meeting of Stockholders
We
believe that Dr. Ignarro will be available and able to serve as lead director and continue as our Chairman of the Compensation
Committee and Chairman of the Nomination and Governance Committee. In the event that he is unable or unwilling to serve, the proxy
holders will vote the proxies for such other substituted nominee as the Board has selected.
Louis
Ignarro, Ph.D. (79) has been a director since July 2002 and has served as the Chairman of the board’s Compensation Committee
since December 2016. He has also served as the Company’s lead independent director since that date. Dr. Ignarro received
the Nobel Prize for Medicine in 1998, in recognition of his discoveries of the effects of nitric oxide on human physiology. He
previously served as a director of Global Genomics from November 2000 until 2002. Until his retirement as Professor Emeritus in
2013, Dr. Ignarro served as the Jerome J. Belzer, M.D. Distinguished Professor of Pharmacology in the Department of Molecular
and Medical Pharmacology at the UCLA School of Medicine. He had been at the UCLA School of Medicine since 1985 as a professor,
acting chairman and assistant dean. Dr. Ignarro received a B.S. in pharmacy from Columbia University and his Ph.D. in Pharmacology
from the University of Minnesota. As a Nobel Laureate and an esteemed medical researcher, Dr. Ignarro’s intellect and experience
enables him to offer important scientific guidance to our board of directors.
Class
II — Nominee to Serve as Director Until the 2023 Annual Meeting of Stockholders
Steven
A. Kriegsman (78) has been CytRx’s Chief Executive Officer and a director since July 2002. In October 2014, he was elected
Chairman of the Board. Mr. Kriegsman served on the boards of directors of Galena Biopharma, Inc. from 2009 until 2016 and Catasys,
Inc. from November 2013 to August 2015. He previously served as Director and Chairman of Global Genomics from June 2000 until
2002. Mr. Kriegsman is an inactive Chairman and the founder of Kriegsman Capital Group LLC, a financial advisory firm specializing
in the development of alternative sources of equity capital for emerging growth companies in the healthcare industry. During his
career, he has advised such companies as SuperGen Inc., Closure Medical Corporation, Novoste Corporation, Miravant Medical Technologies,
and Maxim Pharmaceuticals. In the past, Mr. Kriegsman has also served on the Board of Directors of Bradley Pharmaceuticals, Inc.
and Hythiam, Inc. Mr. Kriegsman has a B.S. degree with honors from New York University in Accounting and completed the Executive
Program in Mergers and Acquisitions at New York University, The Management Institute. Mr. Kriegsman is a graduate of the Stanford
Law School Directors’ College.
Mr.
Kriegsman was formerly a Certified Public Accountant with KPMG in New York City. In February 2006, Mr. Kriegsman received the
Corporate Philanthropist of the Year Award from the Greater Los Angeles Chapter of the ALS Association and in October 2006, he
received the Lou Gehrig Memorial Corporate Award from the Muscular Dystrophy Association. Mr. Kriegsman has been a guest speaker
and lecturer at various universities including California Institute of Technology (Caltech), Brown University, and New York University.
He also was an instructor at York College in Jamaica (Queens), NY, where he taught business to a diverse group of students in
York’s adult education program. Mr. Kriegsman has been active in various charitable organizations including the Biotechnology
Industry Organization, the California Health Institute, the ALS Association, the Los Angeles Venture Association, the Southern
California Biomedical Council, the American Association of Dance Companies and the Palisades-Malibu YMCA. Mr.
Kriegsman served in the US Army from 1963-1969.
Mr.
Kriegsman’s extensive history as a member of management is vital to the board of directors’ collective knowledge of
our day-to-day operations. He also provides great insight as to how CytRx grew as an organization and his institutional knowledge
is an invaluable asset to the board of directors in effecting its oversight of CytRx’s strategic plans. Mr. Kriegsman’s
presence on the board of directors allows for a flow of information and ideas between the board of directors and management.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE
“FOR”
ELECTION OF DR. IGNARRO AS A CLASS I DIRECTOR AND
“FOR”
ELECTION OF MR. KRIEGSMAN AS A CLASS II DIRECTOR.
Continuing
Directors
The
following is a description of the incumbent Class III directors whose terms of office will continue after the 2020 Annual Meeting:
Class
III – Term Expiring at the 2021 Annual Meeting
Dr.
Earl W. Brien, M.D. (60) joined our board of directors on December 2, 2016. He is a renowned orthopedic and sarcoma surgeon
who is a Professor of Orthopedic Surgery and also the Surgical Director of the Sarcoma Service at Cedars Sinai Medical Center
in Los Angeles, California. After completing his matriculation as a Fellow at Memorial Sloan Kettering Cancer Center and the Hospital
for Special Surgery in musculoskeletal tumors and metabolic bone disease respectively, he became the Director of the Musculoskelatal
Tumor Program and Metabolic Bone Disease Center at Orthopedic Hospital. Dr. Brien is the recipient of numerous grants, with an
extensive bibliography of peer-reviewed articles spanning more than 20 years to his credit. He has also presented annually at
national and international meetings for the past 20 years. From 1993 until 2004, he served as the Cancer Commission Chairman and
Cancer Liaison Physician for the American College of Surgeons Commission on Cancer at Orthopedic Hospital. Our board of directors
believes that Dr. Brien is highly qualified to serve as a member of the board because of his wide-ranging experience with sarcoma
patients in particular, and his expertise in medical research and other matters related to the operation of a biotechnology company.
Joel
K. Caldwell (65) joined our board of directors and became the Chairman of the Audit Committee on July 12, 2017. He brings
more than 30 years of experience in tax matters, finance and internal auditing. Mr. Caldwell retired from Southern California
Edison, one of the nation’s largest public utilities, where he had been employed for 28 years in various executive-level
accounting and finance positions covering Internal Audits, Executive Compensation, Long Term Finance, Employee Benefits and, most
recently prior to his retirement, Sarbanes-Oxley Internal Controls Compliance. He also worked in public accounting at the firm
of Arthur Andersen & Co. Mr. Caldwell volunteers his business skills, serving as a financial advisor on the board of trustees
of a charitable organization, and continues his involvement with track and field sports by volunteering as a meet official at
Pacific Palisades Charter High School. He holds B.S. and M.B.A. degrees from the University of California, Berkeley. Mr. Caldwell
has been a Certified Public Accountant in California since 1982 and a Certified Internal Auditor since 1986. He is a member of
both the American Institute of Certified Public Accountants and the California Society of Certified Public Accountants. His diverse
background in accounting, auditing and finance will provide the board with a balanced perspective to enhance its stewardship of
the Company.
CORPORATE
GOVERNANCE
Meetings
of the Board of Directors and Committees
Board
of Directors
The
property, affairs and business of CytRx are conducted under the general supervision and management of our board of directors as
called for under the laws of Delaware and our Restated Bylaws. Mr. Kriegsman, our Chief Executive Officer, also serves as Chairman
of our board of directors. Dr. Ignarro serves as our lead independent director. Our board of directors has established two standing
committees, the Audit Committee and the Compensation Committee to provide effective oversight of the Company.
The
board of directors held five meetings in 2019. Each of our current directors attended at least 75% of the meetings of the board
and of board committees on which the director served during this period. Board meeting agendas include regularly scheduled executive
sessions for the independent directors to meet without management present.
Director
Independence
Our
board of directors has determined that the continuing directors, Dr. Brien and Mr. Caldwell, as well as the incumbent nominee
Dr. Ignarro, are “independent” under the current independence standards of the OTC Markets, and have no material relationships
with us (either directly or as a partner, shareholder or officer of any entity) that are inconsistent with a finding of their
independence as members of our board of directors. Our board has determined that the directors mentioned above also met the higher
standards of the OTC Markets of “independence” for purposes of service as the members of our Audit Committee. In making
these determinations, our board of directors has broadly considered all relevant facts and circumstances, recognizing that material
relationships can include commercial, banking, consulting, legal, accounting, and familial relationships, among others.
The
following table provides information concerning the current membership of our board committees:
Name
|
|
Audit
Committee
|
|
Compensation
Committee
|
Louis J. Ignarro, Ph.D. (Lead Director)
|
|
●
|
|
Chair
|
|
|
|
|
|
Earl W, Brien, M.D.
|
|
|
|
|
|
|
|
|
|
Mr. Joel Caldwell, CPA
|
|
Chair
|
|
●
|
Audit
Committee
Our
board of directors has determined that each of the current members of the Audit Committee is “independent” under the
current independence standards of the OTC Markets. Our board of directors has also determined that Mr. Caldwell is an audit committee
financial expert.
The
Audit Committee’s responsibilities include oversight activities described below under the “Report of the Audit Committee.”
The Audit Committee reviews our financial structure, policies and procedures, appoints our independent registered public accounting
firm, reviews with our independent registered public accounting firm the plans and results of the audit engagement, approves audit
and permitted non-audit services provided by our independent registered public accounting firm, reviews the independence of our
independent registered public accountants and reviews the adequacy of our internal accounting controls as well as of our ethics
programs.
The
Audit Committee has discussed with our independent registered public accounting firm the firm’s independence from management
and us, including the matters in the written disclosures required by the Independence Standards board and considered the compatibility
of permitted non-audit services with the auditors’ independence.
Audit
Committee Report
Set
forth below is the Audit Committee Report:
The
following Report does not constitute soliciting material and should not be considered or deemed filed, or incorporated by reference
into any filing, by us with the SEC, except to the extent we specifically incorporate this Report by reference.
The
primary function of the Audit Committee is to assist the board of directors in fulfilling its oversight responsibilities relating
to:
|
●
|
The
quality and integrity of our financial statements and reports.
|
|
|
|
|
●
|
Our
independent registered public accounting firm’s qualifications and independence.
|
|
|
|
|
●
|
The
performance of our internal audit function and our independent auditors.
|
|
|
|
|
●
|
Compliance
with our disclosure policy and applicable federal and state laws, including Delaware’s duty of disclosure.
|
The
Audit Committee operates under a written charter adopted by our board of directors, a copy of which is available on our website
at www.cytrx.com.
The
Audit Committee’s primary duties and responsibilities are to:
|
●
|
Serve
as an independent and objective party to monitor our financial reporting process and internal control system.
|
|
|
|
|
●
|
Review
and appraise the audit efforts of our independent accountants and internal audit function.
|
|
|
|
|
●
|
Provide
an open avenue of communication among the independent accountants, our management and the board of directors.
|
The
Audit Committee provides assistance to the board of directors in fulfilling its oversight responsibility to the stockholders,
the investment community and others relating to our financial statements and the financial reporting process, our disclosure policy,
our systems of internal accounting and financial controls, our internal audit function, the annual independent audit of our financial
statements and the ethics programs established by our management and the board of directors. The Audit Committee has the sole
authority (subject, if applicable, to stockholder ratification) to appoint or replace the outside auditors and is directly responsible
for determining the compensation of the independent auditors. The Audit Committee also receives reports from the Disclosure Committee
and Director of Communications Compliance.
The
Audit Committee must pre-approve all auditing services and all permitted non-auditing services to be provided by the outside auditors.
In general, the Audit Committee’s policy is to grant such approval where it determines that the non-audit services are not
incompatible with maintaining the auditors’ independence and there are cost or other efficiencies in obtaining such services
from the auditors as compared to other possible providers. During 2019, the Audit Committee approved all of the audit and non-audit
services proposals submitted to it.
The
Audit Committee met four times during 2019. The Audit Committee schedules its meetings with a view to ensuring that it devotes
appropriate attention to all of its tasks. In discharging its oversight role, the Audit Committee is empowered to investigate
any matter brought to its attention, with full access to all of our books, records, facilities and personnel, and to retain its
own legal counsel and other advisers as it deems necessary or appropriate.
As
part of its oversight of our financial statements, the Audit Committee reviews and discusses with both management and its outside
auditors our interim financial statements and annual audited financial statements that are included in our Quarterly Reports on
Form 10-Q and Annual Report on Form 10-K, respectively. Our management advised the Audit Committee in each case that all such
financial statements were prepared in accordance with accounting principles generally accepted in the United States and reviewed
significant accounting issues with the Audit Committee. These reviews included discussion with the outside auditors of matters
required to be discussed under applicable rules, regulations and U.S. generally accepted auditing standards (including Auditing
Standard No. 1301, “Communications with Audit Committees” as adopted by the Public Company Accounting Oversight Board
(“PCAOB”).
The
Audit Committee has retained Weinberg & Company since June 2019 to audit our financial statements for 2019. The Audit Committee
also has selected Weinberg & Company as our independent registered public accounting firm for fiscal 2020.
The
Audit Committee discussed with Weinberg & Company, which audited our annual financial statements for 2019, matters relating
to its independence, including a review of audit and non-audit fees and the letter and written disclosures made by Weinberg &
Company to the Audit Committee as required by the PCAOB.
In
addition, the Audit Committee reviewed initiatives aimed at strengthening the effectiveness of CytRx’s internal control
structure. As part of this process, the Audit Committee continues to monitor and review staffing levels and steps taken to implement
recommended improvements in internal procedures and controls.
Taking
all of these reviews and discussions into account, the Audit Committee recommended to our board of directors that our audited
financial statements be included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the
SEC.
|
Respectfully
submitted,
|
|
|
|
Audit
Committee:
|
|
|
|
Joel
Caldwell, CPA, Chair
|
|
Louis
Ignarro, Ph.D.
|
Compensation
Committee
The
Compensation Committee is authorized to determine the annual salaries and bonuses of our officers and to make and approve in
its sole discretion, stock option grants and other discretionary awards under our stock option or other equity incentive
plans to all persons who are Board members or officers, and shall approve the amount of stock options annually granted to
staff. The Committee also is authorized to interpret our stock option plans, to prescribe, amend and rescind rules and
regulations relating to the plans, to determine the term and provisions of the respective option agreements, and to make all
other determinations deemed necessary or advisable for the administration of the plans. The Compensation Committee is also
authorized to approve all special perquisites, special cash payments and other special compensation and benefit arrangements
for officers The Compensation Committee operates pursuant to a written charter a copy of which is available on our website at www.cytrx.com.
Our board of directors has determined that each of the current members of the Compensation Committee, Dr. Ignarro and Mr.
Caldwell, are “independent” under the current independence standards of the OTC Markets for purposes of service
on the Compensation Committee.
The
Compensation Committee has reviewed our compensation policies and practices for all employees, including our named executive officers,
as they relate to risk management practices and risk-taking incentives, and has determined that there are no risks arising from
these policies and practices that are reasonably likely to have a material adverse effect on us.
The
Compensation Committee held three meetings during 2019.
Stockholder
Recommendations of Director Candidates
The
policy of the Board of Directors is that a stockholder wishing to submit recommendations for director candidates for consideration
as nominees of the Board of Directors for election at an annual meeting of shareholders must do so in writing by December 15 of
the calendar year prior to the next annual meeting. The written recommendation must include the following information:
|
●
|
A
statement that the writer is a stockholder and is proposing a candidate for consideration, and include the name and address
of the stockholder and the number of shares of our common stock which the stockholder owns beneficially or of record.
|
|
|
|
|
●
|
The
name and contact information for the candidate.
|
|
|
|
|
●
|
A
statement of the candidate’s business and educational experience.
|
|
|
|
|
●
|
The
number of shares of our common stock, if any, owned either beneficially or of record by the candidate and the length of time
such shares have been so owned.
|
|
|
|
|
●
|
The
written consent of the candidate to serve as a director if nominated and elected.
|
|
●
|
Information
regarding any relationship or understanding between the proposing stockholder and the candidate.
|
|
|
|
|
●
|
A
statement that the proposed candidate has agreed to furnish us all information as we deem necessary to evaluate such candidate’s
qualifications to serve as a director.
|
Any
recommendations in proper form received from stockholders will be evaluated in the same manner that potential nominees recommended
by our board members or management are evaluated.
Stockholder
Nominations of Directors
Our
Restated Bylaws specify the procedures by which stockholders may nominate director candidates directly, as opposed to merely recommending
a director candidate to the Board of Directors as described above. Any stockholder nominations must comply with the requirements
of our Restated Bylaws and should be addressed to: Corporate Secretary, CytRx Corporation, 11726 San Vicente Boulevard, Suite
650, Los Angeles, California 90049. The deadline for such nominations is the same as the deadline for stockholder proposals submitted
under SEC Rule 14a-8, as discussed below under the heading “Stockholder Proposals For 2021 Annual Meeting.”
Stockholder
Communication with Board Members
Stockholders
who wish to communicate with our board members may contact us by telephone, facsimile or regular mail at our principal executive
office. Written stockholder communications specifically marked as a communication for our board of directors or a particular director,
will be forwarded unopened to the Chairman of the Board or to the particular director to which they are addressed, or presented
to the full board or the particular director at the next regularly scheduled board meeting. In addition, stockholder communications
received by us via telephone or facsimile for our board of directors or a particular director will be forwarded to our board or
the particular director by an appropriate officer.
Code
of Ethics
We
have adopted a Code of Ethics applicable to all employees, including our principal executive officer, principal financial officer
and principal accounting officer, a copy of which is available on our website at www.cytrx.com. We will furnish, without
charge, a copy of our Code of Ethics upon request. Such requests should be directed to Attention: Corporate Secretary, 11726 San
Vicente Boulevard, Suite 650, Los Angeles, California, or by telephone at 310-826-5648.
Board
Leadership Structure
On
October 15, 2014, our board of directors appointed Mr. Kriegsman as Chairman of the Board. The Chairman of the Board presides
at all meetings of our board of directors (but not at its executive sessions) and exercises and performs such other powers and
duties as may be assigned to him from time to time by the board or prescribed by our amended and restated bylaws.
Our
board of directors has no established policy on whether it should be led by a Chairman who is also the Chief Executive Officer,
but periodically considers whether combining, or separating, the role of Chairman and Chief Executive Officer is appropriate.
At this time, our board is committed to the combined role given the circumstances of our Company, including Mr. Kriegsman’s
knowledge of the pharmaceutical industry and our Company’s strategy. Our board believes that having a Chairman who also
serves as the Chief Executive Officer allows timely communication with our board on company strategy and critical business issues,
facilitates bringing key strategic and business issues and risks to the board’s attention, avoids ambiguity in leadership
within the Company, provides a unified leadership voice externally and clarifies accountability for Company business decisions
and initiatives. In December 2016, Dr. Ignarro was appointed as an independent Lead Director to act as a liaison between the Chairman
of the Board and the independent directors. The board will continue to assess whether this leadership structure is appropriate
and will adjust it as it deems appropriate.
Board
of Directors’ Role in Risk Oversight
In
connection with its oversight responsibilities, our board of directors, including the Audit Committee, periodically assesses the
significant risks that we face. These risks include, but are not limited to, financial, technological, competitive, and operational
risks. Our board of directors administers its risk oversight responsibilities through our Chief Executive Officer and Chief Financial
Officer, who review and assess the operations of our business as well as operating management’s identification, assessment
and mitigation of the material risks affecting our operations.
Transactions
with Related Persons
General
Our
Audit Committee is responsible for reviewing and approving, as appropriate, all transactions with related persons, in accordance
with its Charter.
Transactions
between us and one or more related persons may present risks or conflicts of interest or the appearance of conflicts of interest.
Our Code of Ethics requires all employees, officers and directors to avoid activities or relationships that conflict, or may be
perceived to conflict, with our interests or adversely affect our reputation. It is understood, however, that certain relationships
or transactions may arise that would be deemed acceptable and appropriate so long as there is full disclosure of the interest
of the related parties in the transaction and review and approval by disinterested directors to ensure there is a legitimate business
reason for the transaction and that the transaction is fair to us and our stockholders.
As
a result, the procedures followed by the Audit Committee to evaluate transactions with related persons require:
|
●
|
That
all related person transactions, all material terms of the transactions, and all the material facts as to the related person’s
direct or indirect interest in, or relationship to, the related person transaction must be communicated to the Audit Committee;
and
|
|
|
|
|
●
|
That
all related person transactions, and any material amendment or modification to any related person transaction, be reviewed
and approved or ratified by the Audit Committee.
|
Our
Audit Committee will evaluate related person transactions based on:
|
●
|
Information
provided by members of our board of directors in connection with the required annual evaluation of director independence;
|
|
|
|
|
●
|
Pertinent
responses to the Directors’ and Officers’ Questionnaires submitted periodically by our officers and directors
and provided to the Audit Committee by our management;
|
|
|
|
|
●
|
Background
information on nominees for director provided by the Nominating and Corporate Governance Committee of our board of directors;
and
|
|
|
|
|
●
|
Any
other relevant information provided by any of our directors or officers.
|
In
connection with its review and approval or ratification, if appropriate, of any related person transaction, our Audit Committee
is to consider whether the transaction will compromise standards included in our Code of Ethics. In the case of any related person
transaction involving an outside director or nominee for director, the Audit Committee also is to consider whether the transaction
will compromise the director’s status as an independent director as prescribed in the standards of the OTC Markets pertaining
to companies listed on OTCQB.
There
were no related person transactions in 2019.
Applicable
Definitions
For
purposes of our Audit Committee’s review:
|
●
|
“Related
person” has the meaning given to such term in Item 404(a) of Securities and Exchange Commission Regulation S-K (“Item
404(a)”); and
|
|
|
|
|
●
|
“Related
person transaction” means any transaction for which disclosure is required under the terms of Item 404(a) involving
us and any related persons.
|
Board
Member Attendance at Annual Meetings
Our
Governance Guidelines state that our directors are expected to attend the Company’s annual meeting of stockholders. However,
due to the COVID-19 pandemic, our directors will not attend the 2020 Annual Meeting in person. Our 2019 annual meeting of stockholder
was not convened due to lack of a quorum.
Delinquent
Section 16(a) Reports
Each
of our executive officers and directors and persons who owns more than 10% of our outstanding shares of common stock is required
under Section 16(a) of the Securities Exchange Act to file with the SEC initial reports of ownership and reports of changes in
ownership of our common stock and to furnish us with copies of those reports. Based solely on our review of copies of reports
we have received and written representations from certain reporting persons, we believe that our directors and executive officers
and greater than 10% shareholders for 2019 timely complied with all applicable Section 16(a) filing requirements.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Based
solely upon information made available to us, the following table sets forth information with respect to the beneficial ownership
of our common stock as of June 5, 2020 by: (1) each person who is known by us to beneficially own more than five percent of our
common stock; (2) each of our directors; (3) our named executive officers listed in the Summary Compensation Table under the caption
“Executive Compensation”; and (4) all of our executive officers and directors as a group.
Beneficial
ownership is determined in accordance with the SEC rules. Shares of common stock subject to warrants or options that are presently
exercisable, or exercisable within 60 days of June 5, 2020, which are indicated by footnote, are deemed outstanding in computing
the percentage ownership of the person holding the warrants or options, but not in computing the percentage ownership of any other
person. The percentage ownership reflected in the table is based on 33,637,501 shares of our common stock outstanding as of June
5, 2020. Except as otherwise indicated, the holders listed below have sole voting and investment power with respect to all shares
of common stock shown, subject to applicable community property laws. An asterisk (*) represents beneficial ownership of less
than 1%.
|
|
Shares
of
Common
Stock
|
|
Name
of Beneficial Owner
|
|
Number
|
|
|
Percent
|
|
Named
Executive Officers and Directors
|
|
|
|
|
|
|
|
|
Louis Ignarro, Ph.D.
|
|
|
872,427
|
(1)
|
|
|
2.6
|
%
|
Steven A. Kriegsman
|
|
|
4,820,643
|
(2)
|
|
|
14.3
|
%
|
Earl W. Brien, M.D.
|
|
|
590,247
|
(3)
|
|
|
1.8
|
%
|
Joel Caldwell
|
|
|
510,000
|
(4)
|
|
|
1.5
|
%
|
John Y. Caloz.
|
|
|
590,275
|
(5)
|
|
|
1.8
|
%
|
All executive officers and directors
as a group (five persons)
|
|
|
7,383,592
|
(6)
|
|
|
22.0
|
%
|
|
|
|
|
|
|
|
|
|
Name
and Address of 5% Beneficial Owners
|
|
|
|
|
|
|
|
|
ImmunityBio, Inc.
|
|
|
1,969,697
|
|
|
|
5.9
|
%
|
9920 Jefferson Blvd.
|
|
|
|
|
|
|
|
|
Culver City, CA 90232
|
|
|
|
|
|
|
|
|
(1)
|
Includes
870,238 shares subject to options or warrants.
|
(2)
|
Includes
3,945,931 shares subject to options or warrants.
|
(3)
|
Includes
580,000 shares subject to options or warrants.
|
(4)
|
Includes
510,000 shares subject to options or warrants.
|
(5)
|
Includes
589,518 shares subject to options or warrants.
|
(6)
|
Includes
6,495,687 shares subject to options or warrants.
|
Executive
Officers
Set
forth below is information regarding our current executive officers (other than information relating to Steven A. Kriegsman, our
Chairman and Chief Executive Officer, which is set forth above under “Continuing Directors”). Each officer’s
age is indicated in parentheses after his name.
John
Y. Caloz (68) joined us in October 2007 as our Chief Accounting Officer. In January 2009 Mr. Caloz was named Chief Financial
Officer. He has a history of providing senior financial leadership in the life sciences sector, as Chief Financial Officer of
Occulogix, Inc, a NASDAQ listed, medical therapy company. Prior to that, Mr. Caloz served as Chief Financial Officer of IRIS International
Inc., a Chatsworth, CA based medical device manufacturer. He served as Chief Financial Officer of San Francisco-based Synarc,
Inc., a medical imaging company, and from 1993 to 1999 he was Senior Vice President, Finance and Chief Financial Officer of Phoenix
International Life Sciences Inc. of Montreal, Canada, which was acquired by MDS Inc. in 1999. Mr. Caloz was a partner at Rooney,
Greig, Whitrod, Filion & Associates of Saint Laurent, Quebec, Canada, a firm of Chartered Accountants specializing in research
and development and high-tech companies, from 1983 to 1993. Mr. Caloz, a Chartered Professional Accountant and Chartered Accountant,
holds a degree in Accounting from York University, Toronto, Canada.
EXECUTIVE
COMPENSATION
Summary
Compensation Table
The
following table presents summary information concerning all compensation paid or accrued by us for services rendered in all capacities
during 2019 and 2018 by Steven A. Kriegsman and John Y. Caloz, who served as our principal executive officer and principal financial
officer, respectively, during the year ended December 31, 2019 (collectively, the “named executive officers”):
Summary
Compensation Table
Name
and Principal Position
|
|
Year
|
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Option
Awards
($)
(1)
|
|
|
All
Other
Compensation
($)(2)
|
|
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven A. Kriegsman
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief
Executive Officer
|
|
2019
|
|
|
|
850,000
|
|
|
|
190,000
|
|
|
|
654,000
|
|
|
|
13,700
|
|
|
|
1,707,700
|
|
|
|
2018
|
|
|
|
850,000
|
|
|
|
150,000
|
|
|
|
—
|
|
|
|
13,700
|
|
|
|
1,013,700
|
|
John Y. Caloz
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Financial
Officer and Treasurer
|
|
2019
|
|
|
|
400,000
|
|
|
|
100,000
|
|
|
|
76,300
|
|
|
|
—
|
|
|
|
576,300
|
|
|
|
2018
|
|
|
|
400,000
|
|
|
|
100,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
500,000
|
|
(1)
|
The
values shown in this column represent the aggregate grant date fair value of equity-based awards granted during the fiscal
year, inclusive of Mr. Kriegsman’s restricted stock award, in accordance with ASC 718, “ Share Based-Payment.”
The fair value of the stock options at the date of grant was estimated using the Black-Scholes option-pricing model, based
on the assumptions described in Note 10 of the Notes to Financial Statements included in the 2019 Annual Report.
|
|
|
(2)
|
Represents
life insurance premiums.
|
2019
Grants of Plan-Based Awards
In
2019, we granted stock options to our named executive officers under our 2019 Stock Incentive Plan as follows:
2019
Grants of Plan-Based Awards
Name
|
|
Grant
Date
|
|
All
Other
Option
Awards
(#
of CytRx
Shares)
|
|
|
Note
|
|
|
Exercise
Price of
Option
Awards
($/Share)
|
|
|
Grant
Date Fair Value of Stock and Option Awards ($)
|
|
Steven A. Kriegsman
|
|
12/13/2019
|
|
|
3,000,000
|
|
|
|
(1
|
)
|
|
$
|
0.26
|
|
|
$
|
654,000
|
|
Chief Executive
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John Y. Caloz
|
|
12/13/2019
|
|
|
350,000
|
|
|
|
(1
|
)
|
|
$
|
0.26
|
|
|
$
|
76,300
|
|
Chief Financial
Officer and Treasurer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
These
options were fully vested on the grant date.
|
No
stock options nor restricted stock were granted in 2018.
2000
Long-Term Incentive Plan, 2008 Stock Incentive Plan and the 2019 Stock Incentive Plan
The
purpose of our 2000 Long-Term Incentive Plan, or 2000 Plan, our 2008 Stock Incentive Plan, or 2008 Plan, and our 2019 Stock Incentive
Plan, or 2019 Plan, is to promote our success and enhance our value by linking the personal interests of our employees, officers,
consultants and directors to those of our stockholders. The 2000 Plan was originally adopted by our board of directors on August
24, 2000 and by our stockholders on June 7, 2001, with certain amendments to the Plan having been subsequently approved by our
Board of Directors and stockholders. On May 11, 2009, our board of directors approved an amendment to the 2000 Plan to allow for
a one-time stock option re-pricing program for our employees. The 2008 Plan was adopted by our board of directors on November
21, 2008 and by our stockholders on July 1, 2009 with certain amendments to that Plan having been subsequently approved by our
board of directors and stockholders. The 2019 Plan was adopted by our board of directors on November 15, 2019.
2000
Plan, the 2008 Plan and the 2019 Plan Descriptions
The
2000 Plan, the 2008 Plan, and the 2019 Plan, or the Plans, are administered by the Compensation Committee of our board of directors.
The Compensation Committee has the power, authority and discretion to:
|
●
|
designate
participants;
|
|
|
|
|
●
|
determine
the types of awards to grant to each participant and the number, terms and conditions of any award;
|
|
|
|
|
●
|
establish,
adopt or revise any rules and regulations as it may deem necessary or advisable to administer the Plan; and
|
|
|
|
|
●
|
make
all other decisions and determinations that may be required under, or as the Compensation Committee deems necessary or advisable
to administer, the Plan.
|
Awards
under the 2000 Plan
The
2000 Plan expired on August 6, 2010, and thus no shares are available for future grant under the 2000 Plan.
Awards
under the 2008 Plan
The
2008 Plan expired on November 20, 2018, and thus no shares are available for future grant under the 2008 Plan.
Awards
under the 2019 Plan
The
following is a summary of description of financial instruments that may be granted to participants in our 2019 Plan by the Compensation
Committee of our board of directors.
Stock
Options. The Compensation Committee is authorized to grant only and non-qualified stock options. The terms of any incentive
stock option must meet the requirements of Section 422 of the Internal Revenue Code. The exercise price of an option may not be
less than the fair market value of the underlying stock on the date of grant, and no option may have a term of more than 10 years
from the grant date.
Restricted
Stock. The Compensation Committee may make awards of restricted stock, which will be subject to forfeiture to us and other
restrictions as the Compensation Committee may impose.
Stock
Bonus Awards. The Compensation Committee may make awards of stock bonus awards in consideration for past services actually
rendered, which will be subject to repurchase by us and such other terms as the Compensation Committee may impose.
Limitations
on Transfer; Beneficiaries. Stock Option awards under the 2019 Plan may generally not be transferred or assigned by participants
other than by will or the laws of descent and distribution. Awards of Restricted Stock or Stock Bonus awards may be transferred
or assigned only upon such terms and conditions as set forth in the award agreement or as determined by the Compensation Committee
in its discretion.
Acceleration
Upon Certain Events. In the event of a “Corporate Transaction” as defined in the 2019 Plan, all outstanding options
will become fully vested, subject to the holder’s consent with respect to incentive stock options, and exercisable and all
restrictions on all outstanding awards will lapse. Unless the surviving or acquiring entity assumes the awards in the Corporate
Transaction or the stock award agreement provides otherwise, the stock awards will terminate if not exercised at or prior to the
Corporate Transaction.
Termination
and Amendment
Our
board of directors or the Compensation Committee may, at any time and from time to time, terminate or amend the 2019 Plan without
stockholder approval; provided, however, that our board or the Compensation Committee may condition any amendment on the approval
of our stockholders if such approval is necessary or deemed advisable with respect to tax, securities or other applicable laws,
policies or regulations. No termination or amendment of the Plans may adversely affect any award previously granted without the
written consent of the participants affected. The Compensation Committee may amend any outstanding award without the approval
of the participants affected, except that no such amendment may diminish or impair the value of an award.
Holdings
of Previously Awarded Equity
Equity
awards held as of December 31, 2019 by each of our named executive officers were issued under our 2000 Plan, the 2008 Plan and
our 2019 Plan. The following table sets forth outstanding equity awards held by our named executive officers as of December 31,
2019:
2019
Outstanding Equity Awards at Fiscal Year-End
|
|
Option
Awards
|
|
|
|
|
Number
of Securities Underlying Unexercised Options (#)
|
|
|
|
|
|
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Option
Exercise
Price ($)
|
|
|
Option
Expiration Date
|
|
Steven A. Kriegsman
|
|
|
3,000,000
|
(1)
|
|
|
—
|
|
|
|
0.26
|
|
|
12/12/29
|
|
President and Chief
Executive Officer
|
|
|
138,889
|
(1)
|
|
|
69,445
|
|
|
|
1.75
|
|
|
12/14/27
|
|
|
|
|
645,995
|
(4)
|
|
|
129,199
|
|
|
|
n/a
|
|
|
n/a
|
|
|
|
|
208,334
|
|
|
|
—
|
|
|
|
2.58
|
|
|
12/14/26
|
|
|
|
|
166,666
|
|
|
|
—
|
|
|
|
14.64
|
|
|
12/14/25
|
|
|
|
|
100,000
|
|
|
|
—
|
|
|
|
12.90
|
|
|
12/09/24
|
|
|
|
|
154,167
|
(3)
|
|
|
—
|
|
|
|
27.96
|
|
|
12/09/23
|
|
|
|
|
12,363
|
|
|
|
—
|
|
|
|
14.76
|
|
|
3/07/23
|
|
|
|
|
83,334
|
|
|
|
—
|
|
|
|
10.98
|
|
|
12/10/22
|
|
|
|
|
23,810
|
|
|
|
—
|
|
|
|
13.02
|
|
|
12/11/21
|
|
|
|
|
17,858
|
|
|
|
—
|
|
|
|
42.42
|
|
|
12/14/20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John Y. Caloz
|
|
|
350,000
|
(1)
|
|
|
—
|
|
|
|
0.26
|
|
|
12/12/29
|
|
Chief Financial
Officer and Treasurer
|
|
|
38,889
|
(1)
|
|
|
19,444
|
|
|
|
1.75
|
|
|
12/14/27
|
|
|
|
|
58,333
|
|
|
|
—
|
|
|
|
2.58
|
|
|
12/14/26
|
|
|
|
|
50,000
|
|
|
|
—
|
|
|
|
14.64
|
|
|
12/14/25
|
|
|
|
|
33,334
|
|
|
|
—
|
|
|
|
12.90
|
|
|
12/14/24
|
|
|
|
|
25,000
|
(3)
|
|
|
—
|
|
|
|
27.96
|
|
|
12/09/23
|
|
|
|
|
16,667
|
|
|
|
—
|
|
|
|
10.98
|
|
|
12/10/22
|
|
|
|
|
4,762
|
|
|
|
—
|
|
|
|
13.02
|
|
|
12/11/21
|
|
|
|
|
1,191
|
|
|
|
—
|
|
|
|
42.42
|
|
|
12/14/20
|
|
(1)
|
These
options vest in 36 equal monthly installments, subject to the named executive officer’s remaining in our continuous
employ through such dates. All stock options held by Mr. Kriegsman provide for (a) vesting, in full, of the stock options
in the event of, and upon, FDA approval to market aldoxorubicin and in the event of the termination of his employment by us
without “cause” or due to his “disability,” his resignation for “good reason” or his death
and (b) the extended exercisability for their full term of all vested options in the event of the termination of his employment
other than a termination by us with “cause” or his resignation without “good reason.”
|
|
|
(2)
|
These
options vest in equal bi-monthly installments, subject to the named executive officer’s remaining in our continuous
employ through such dates.
|
|
|
(3)
|
The
options were re-priced from $14.34 to $27.96 on June 1, 2015, with no change to the expiration date of the options.
|
|
|
(4)
|
Represents
restricted stock fully-vested at December 31, 2019. On December 15, 2017, Mr. Kriegsman was granted 387,597 shares of restricted
stock, which vest over three years in equal amounts. On December 15, 2016, Mr. Kriegsman was granted 387,597 shares of restricted
stock, which vest over three years in equal annual amounts.
|
Employment
Agreements and Potential Payment upon Termination or Change in Control
Employment
Agreement with Steven A. Kriegsman
On
December 13, 2019, CytRx entered into a First Amendment to Amended and Restated Employment Agreement with Mr. Kriegsman pursuant
to his continued employment as Chief Executive Officer. The employment agreement, as amended, will expire on December 31, 2024
but will automatically renew following the expiration date for successive additional one-year periods, unless either Mr. Kriegsman
or we elect not to renew it.
Under
his employment agreement, Mr. Kriegsman is currently entitled to receive a base salary of $850,000. Our board of directors (or
its Compensation Committee) reviews the base salary annually and may increase (but not decrease) it in its sole discretion. In
addition to his annual salary, Mr. Kriegsman is eligible to receive an annual bonus as determined by our board of directors (or
its Compensation Committee) in its sole discretion, but not to be less than $150,000, and Mr. Kriegsman received a grant of fully-vested
stock options to purchase 3,000,000 shares of Common Stock in connection with the First Amendment. In addition, Mr. Kriegsman,
during his lifetime, and thereafter to his heirs, is entitled to receive payments equal to ten percent (10%) of the gross
milestone and royalty payments received by the Company from Orphazyme A/S (or its successor or assigns) in respect of Arimoclomol
and the covered diseases of (i) Niemann-Pick disease Type C (NPC), (ii) Amyotrophic Lateral Sclerosis (ALS), (iii) Gaucher
disease, (iv) Sporadic Inclusion Body Myositis (sIBM), and (v) any other diseases where Arimoclomol is used, including in combination
with another molecular entity, in each case, following the sale of certain assets relating to the Company’s molecular
chaperone regulation technology to Orphazyme pursuant to the Asset Purchase Agreement, dated May 13, 2011, less any applicable
tax withholdings.
Mr.
Kriegsman is eligible to receive additional grants of options to purchase shares of our common stock. The number and terms of
those options, including the vesting schedule, will be determined by our board of directors (or its Compensation Committee) in
its sole discretion. In his employment agreement, however, we have agreed that all stock options held by Mr. Kriegsman will provide
for (a) vesting, in full, of the stock options in the event of, and upon, FDA approval to market aldoxorubicin and in the event
of the termination of Mr. Kriegsman’s employment by us without “cause” or due to his “disability,”
his resignation for “good reason” or his death and (b) the extended exercisability for their full term of all vested
options in the event of the termination of his employment by us without “cause,” his resignation for “good reason,”
due to his disability or his death.
In
Mr. Kriegsman’s employment agreement, we have agreed that, if he is made a party, or threatened to be made a party, to a
suit or proceeding by reason of his service to us, we will indemnify and hold him harmless from all costs and expenses to the
fullest extent permitted or authorized by our certificate of incorporation or bylaws, or any resolution of our board of directors,
to the extent not inconsistent with Delaware law. We also have agreed to advance to Mr. Kriegsman such costs and expenses upon
his request if he undertakes to repay such advances if it ultimately is determined that he is not entitled to indemnification
with respect to the same. These employment agreement provisions are not exclusive of any other rights to indemnification to which
Mr. Kriegsman may be entitled and are in addition to any rights he may have under any policy of insurance maintained by us.
If
his employment agreement is not renewed by us or by Mr. Kriegsman, or in the event we terminate Mr. Kriegsman’s employment
without “cause” (as defined), or if Mr. Kriegsman terminates his employment with “good reason” (as defined),
in either case whether during or following the term of his employment agreement (i) we have agreed to pay Mr. Kriegsman a lump-sum
equal to his salary and prorated minimum annual bonus through to his date of termination, plus his salary and minimum annual bonus
for a period of three years after his termination date, or until the expiration of the employment agreement, whichever is later,
(ii) he will be entitled to immediate vesting of all stock options or other awards based on our equity securities, and (iii) he
will also be entitled to continuation of his life insurance premium payments and continued participation in any of our health
plans through to the later of the expiration of the amended and restated employment agreement or three years following his termination
date. Mr. Kriegsman will have no obligation in such events to seek new employment or offset the severance payments to him by any
compensation received from any subsequent reemployment by another employer.
Under
Mr. Kriegsman’s employment agreement, he and his affiliated company, The Kriegsman Group LLC, are to provide us during the
term of his employment with the first opportunity to conduct or take action with respect to any acquisition opportunity or any
other potential transaction identified by them within the biotech, pharmaceutical or health care industries and that is within
the scope of the business plan adopted by our board of directors. Mr. Kriegsman’s employment agreement also contains confidentiality
provisions relating to our trade secrets and any other proprietary or confidential information, which provisions shall remain
in effect for five years after the expiration of the employment agreement with respect to proprietary or confidential information
and for so long as our trade secrets remain trade secrets.
Potential
Payment in Connection with Change in Control for Steven A. Kriegsman
Mr.
Kriegsman’s employment agreement contains no provision for payment to him upon the event of a change in control of the company.
If, however, a change in control (as defined in our 2000 Plan or our 2008 Plan) occurs and within two years after the date on
which the change in control occurs, Mr. Kriegsman’s employment is terminated by us without “cause” or by him
for “good reason” (each as defined in his employment agreement), in either case, whether during or following the term
of his employment agreement, then, in addition to the severance benefits described above, Mr. Kriegsman would be entitled to continued
participation, for a period of thirty-six months that commences on the date of termination, of health plan benefits and with COBRA
benefits commencing thereafter. To the extent that any payment or distribution of any type by us to or for the benefit of Mr.
Kriegsman resulting from the termination of his employment is or will be subject to the excise tax imposed under Section 4999
of the Internal Revenue Code of 1986, as amended, we have agreed to pay Mr. Kriegsman, prior to the time the excise tax is payable
with respect to any such payment (through withholding or otherwise), an additional amount that, after the imposition of all income,
employment, excise and other taxes, penalties and interest thereon, is equal to the sum of (i) the excise tax on such payments
plus (ii) any penalty and interest assessments associated with such excise tax.
Employment
Agreement with John Y. Caloz
John
Y. Caloz is employed as our Chief Financial Officer and Treasurer pursuant to an employment agreement dated as of January 8, 2020
that is to expire on December 31, 2020. Mr. Caloz is paid an annual base salary of $400,000 and is eligible to receive an annual
bonus as determined by our board of directors (or our Compensation Committee) in its sole discretion. In the event we terminate
Mr. Caloz’s employment without cause (as defined), we have agreed to pay him a lump-sum equal to his accrued but unpaid
salary and vacation, plus an amount equal to six months’ salary under his employment agreement.
We
agree in Mr. Caloz’s employment agreement that if we do not offer to renew or extend his employment agreement, and that
his employment had not theretofore been terminated, we will continue to pay him his annual salary thereunder during the period
commencing upon expiration of his employment agreement and ending on June 30, 2021.
Quantification
of Termination Payments and Benefits
The
table below reflects the amount of compensation to each of our named executive officers in the event of termination of such executive’s
employment without “cause” or his resignation for “good reason,” termination following a change in control
and termination upon the executive’s death of permanent disability. The named executive officers are not entitled to any
payments other than accrued compensation and benefits in the event of their voluntary resignation. The amounts shown in the table
below assume that such termination was effective as of December 31, 2019, and thus includes amounts earned through such time,
and are estimates only of the amounts that would be payable to the executives. The actual amounts to be paid will be determined
upon the occurrence of the events indicated.
Termination
Payments and Benefits
|
|
|
|
Termination
w/o Cause or, for Mr. Kriegsman, for Good Reason
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Benefit
|
|
Before
Change in Control ($)
|
|
|
After
Change in Control ($)
|
|
|
Death
($)
|
|
|
Disability
($)
|
|
|
Change
in Control
($)
|
|
Steven A. Kriegsman
|
|
Severance Payment (4)
|
|
|
6,800,000
|
|
|
|
6,800,000
|
|
|
|
6,800,000
|
|
|
|
6,800,000
|
|
|
|
—
|
|
Chief Executive Officer
|
|
Stock Options (1)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
Health Insurance (2)
|
|
|
210,000
|
|
|
|
210,000
|
|
|
|
210,000
|
|
|
|
210,000
|
|
|
|
—
|
|
|
|
Life Insurance (2)
|
|
|
109,300
|
|
|
|
109,300
|
|
|
|
—
|
|
|
|
109,300
|
|
|
|
—
|
|
|
|
Bonus
|
|
|
1,200,000
|
|
|
|
1,200,000
|
|
|
|
1,200,000
|
|
|
|
1,200,000
|
|
|
|
—
|
|
|
|
Tax Gross Up (3)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
John Y. Caloz
|
|
Severance Payment (4)
|
|
|
200,000
|
|
|
|
400,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Chief Financial Officer
|
|
Stock Options (1)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
Health Insurance
|
|
|
—
|
|
|
|
—
|
|
|
|
22,500
|
|
|
|
22,500
|
|
|
|
—
|
|
(1)
|
Represents
the aggregate value of stock options that vest and become exercisable immediately upon each of the triggering events listed
as if such events took place on December 31, 2019, determined by the aggregate difference between the stock price as of December
31, 2019 and the exercise prices of the underlying options.
|
|
|
(2)
|
Represents
the cost as of December 31, 2019 for benefits provided to Mr. Kriegsman for a period of eight years.
|
(3)
|
This
table reflects the terms of Mr. Kriegsman’s amended and restated employment agreement dated as of December 13, 2019.
Mr. Kriegsman’s employment agreement provides that if a change in control (as defined in our 2000 Plan or our 2008 Plan)
occurs during the term of the employment agreement, and if, during the term and within three years after the date on which
the change in control occurs, Mr. Kriegsman’s employment is terminated by us without “cause” or by him for
“good reason” (each as defined in their respective employment agreement), then, to the extent that any payment
or distribution of any type by us to or for the benefit of Mr. Kriegsman resulting from the termination of his respective
employment is or will be subject to the excise tax imposed under Section 4999 of the Internal Revenue Code of 1986, as amended,
we will pay Mr. Kriegsman prior to the time the excise tax is payable with respect to any such payment (through withholding
or otherwise), an additional amount that, after the imposition of all income, employment, excise and other taxes, penalties
and interest thereon, is equal to the sum of (i) the excise tax on such payments plus (ii) any penalty and interest assessments
associated with such excise tax. Based on Mr. Kriegsman’s past compensation and the estimated payment that would result
from a termination of employment following a change in control, we have estimated that a gross-up payment would not be required.
“Good reason” as defined in Mr. Kriegsman’s employment agreement includes any change in Mr. Kriegsman’s
duties or title, as applicable, that are inconsistent with his respective positions. Mr. Kriegsman’s employment agreement
provides that, if the employment agreement is not renewed by us or by Mr. Kriegsman upon the expiration of its term on December
31, 2024, Mr. Kriegsman will be entitled to the termination payments and benefits described above.
|
|
|
(4)
|
Severance
payments are prescribed by our employment agreements with the named executive officer and represent a factor of their annual
base compensation of six months, except for Mr. Kriegsman, which is the later of December 2024, the expiration of his agreement,
plus three years.
|
COMPENSATION
OF DIRECTORS
We
use a combination of cash and stock-based compensation to attract and retain qualified candidates to serve on our board of directors.
Directors who also are employees of our company currently receive no compensation for their service as directors or as members
of board committees. In setting director compensation, we consider the significant amount of time that directors dedicate to the
fulfillment of their director responsibilities, as well as the competency and skills required of members of our board. The directors’
compensation schedule has been in place since December 2013. The directors’ annual compensation year begins with the annual
election of directors at the annual meeting of stockholders. The annual retainer year period has been in place for directors since
2003. Periodically, our board of directors reviews our director compensation policies and, from time to time, makes changes to
such policies based on various criteria the board deems relevant.
During
2019, our non-employee directors received a quarterly retainer of $6,000 (plus an additional $5,000 for the Chairmen of the Audit
and Compensation and Strategy Committees, and $1,500 for the Chairman of the Nomination and Governance Committee), a fee of $3,000
for each board meeting attended ($750 for board actions taken by unanimous written consent), $2,000 for each meeting of the Audit
Committee and Compensation Committee attended, and $1,000 for each meeting of the Nomination and Governance Committee meeting
attended. Non-employee directors who serve as the chairman of a board committee received an additional $2,000 for each meeting
of the Nomination and Governance Committee attended and an additional $2,500 for each meeting of the Audit, Compensation or Strategy
Committees attended. In 2019, we disbanded both the Nomination and Governance Committee and the Strategy Committee, to reduce
our expenses.
The
following table sets forth the compensation paid to our non-employee directors for 2019:
Director
Compensation Table
Name
(1)
|
|
Fees
Earned or Paid in Cash ($) (2)
|
|
|
Total
($)
|
|
Louis Ignarro, Ph.D., Lead
Director
|
|
|
106,250
|
|
|
|
106,250
|
|
Earl Brien, M.D., Director
|
|
|
46,750
|
|
|
|
46,750
|
|
Joel Caldwell, Director
|
|
|
80,750
|
|
|
|
80,750
|
|
(1)
|
Steven
A. Kriegsman does not receive additional compensation for his role as Chairman of the Board. For information relating to Mr.
Kriegsman’s compensation as Chief Executive Officer, see the Summary Compensation Table above.
|
(2)
|
The
amounts in this column represent cash payments made to Non-Employee Directors for annual retainer fees, committee and/or chairmanship
fees and meeting fees during the year.
|
PROPOSAL
2
APPROVAL
OF AMENDMENT TO OUR RESTATED CERTIFICATE OF INCORPORATION
TO
INCREASE THE AUTHORIZED SHARES OF COMMON STOCK
FROM
41,666,666 TO 51,666,666
Under
our Restated Certificate of Incorporation currently in effect, there are 41,666,666 shares of common stock and 833,333 shares
of preferred stock authorized for issuance, of which 50,000 shares have been designated Series B Junior Participating Preferred
Stock. On May 13, 2020, our Board of Directors approved an amendment to the Restated Certificate of Incorporation, subject to
stockholder approval, to increase the shares of common stock authorized for issuance by 10,000,000 shares, which would bring the
total number of common shares authorized for issuance to 51,666,666. The stockholders are asked to approve this amendment to the
Restated Certificate of Incorporation. The full text of the amendment is set forth as Annex A to this Proxy Statement.
Increase
in Common Stock
As
of May 31, 2020, there were 33,637,501 shares of common stock issued and outstanding. In addition, as of such date, approximately
7.8 million shares of common stock were reserved for issuance under our stock option plans and approximately 0.2 million shares
were reserved for issuance upon exercise of outstanding warrants. Accordingly, as of May 31, 2020, we had no shares of authorized
but unissued and unreserved common stock available for issuance. The holders of common stock have no preemptive or conversion
rights or other subscription rights.
The
purpose of the proposed increase in the number of authorized shares of common stock is to make additional shares available for
issuance by the Board of Directors as it deems appropriate or necessary. For example, such shares may be needed in the future
in connection with corporate opportunities such as acquiring another company or its business or assets, establishing a strategic
relationship with a corporate partner, raising additional capital for CytRx or Centurion BioPharma or stock compensation. The
Board of Directors has no present agreement, arrangement, plan or understanding, however, with respect to the issuance of any
such additional shares of common stock.
The
form of the proposed amendment to our certificate of incorporation to effect the Amendment Proposal will be substantially as set
forth on Annex A (subject to any changes required by applicable law) (the “Amendment”). If approved, the Amendment
will become effective at the time of filing with the Secretary of State of the State of Delaware. The additional shares of common
stock that would be authorized upon approval of the Amendment would have rights identical to our currently outstanding shares
of common stock. The approval of the Amendment and any future issuance of common stock would not affect the rights of the holders
of our currently outstanding common stock, except for effects incidental to the increase in the number of shares of our common
stock outstanding, such as dilution of the per share operating results and the voting rights of current holders of our common
stock.
Although
the Amendment is not intended as an anti-takeover provision, the additional shares of common stock ultimately could be used to
oppose a hostile takeover attempt or to delay or prevent a change in control or management of our company if the Board determines
that any such action is not in the best interests of the stockholders.
Vote
Required for Approval
The
Amendment to increase the authorized shares of common stock requires the affirmative vote of the holders of a majority of shares
of our common stock outstanding and entitled to vote at the Annual Meeting.
If
the Amendment is approved by the stockholders, the board of directors does not intend to solicit further stockholder approval
prior to the issuance of any additional shares of common stock, except as may be required by applicable law. Holders of our common
stock as such have no statutory preemptive rights with respect to issuances of common stock and are not entitled to dissenter’s
rights with respect to the Amendment.
THE
BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE AMENDMENT TO OUR RESTATED CERTIFICATE OF INCORPORATION
TO INCREASE THE AUTHORIZED SHARES OF COMMON STOCK FROM 41,666,666 TO 51,666,666
PROPOSAL
3
RATIFICATION
OF APPOINTMENT OF WEINBERG & CO AS OUR
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
Appointment
of Weinberg & Co (“Weinberg”)
Weinberg
was appointed to serve as our independent registered public accounting firm effective June 21, 2019 and audited our consolidated
financial statements for the year ended December 31, 2019. Previously, BDO USA, LLP (“BDO”), served that role and
audited our consolidated financial statements for the year ended December 31, 2018. Weinberg does not have and has not had any
financial interest, direct or indirect, in CytRx, and does not have and has not had any connection with CytRx except in its professional
capacity as our independent auditors.
Our
Audit Committee has reappointed Weinberg to serve as our independent registered public accounting firm for the year ending December
31, 2020. The ratification by our stockholders of the appointment of Weinberg is not required by law or by our Restated Bylaws.
Our board of directors, consistent with the practice of many publicly held corporations, is nevertheless submitting this appointment
for ratification by the stockholders. If this appointment is not ratified at the Annual Meeting, the Audit Committee intends to
reconsider its appointment of Weinberg. Even if the appointment is ratified, the Audit Committee in its sole discretion may direct
the appointment of a different independent registered public accounting firm at any time during the fiscal year if the Committee
determines that such a change would be in the best interests of CytRx and its stockholders.
Any
material non-audit services to be provided by Weinberg are subject to the prior approval of the Audit Committee. In general, the
Audit Committee’s policy is to grant such approval where it determines that the non-audit services are not incompatible
with maintaining the independent registered public accounting firm’s independence and there are cost or other efficiencies
in obtaining such services from the independent registered public accounting firm as compared to other possible providers.
We
expect that representatives of Weinberg will be present at the Annual Meeting, will have an opportunity to make a statement if
they so desire, and will be available to respond to appropriate questions.
Replacement
of Prior Accounting Firm
The
Company first engaged Weinberg as its independent registered public accounting firm effective June 21, 2019 upon the approval
of the Audit Committee of the Board of Directors, which dismissed BDO from that role. BDO’s reports on the Company’s
consolidated financial statements as of and for the fiscal years ended December 31, 2018 and 2017 did not contain an adverse opinion
or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles, except
that BDO’s report on the consolidated financial statements of the Company as of and for the years ended December 31, 2018
and 2017 contained a separate paragraph stating that “As discussed in Note 2 to the consolidated financial statements, the
Company changed its method for recognizing revenue from contracts with customers effective January 1, 2018 as a result of adopting
Accounting Standards Codification 606 – Revenue from Contracts with Customers”.
The
audit report of BDO on the effectiveness of internal control over financial reporting as of December 31, 2017 did not contain
any adverse opinion, nor was it qualified or modified as to uncertainty, audit scope, or accounting principles. BDO was not required
to report on the effectiveness of internal control over financial reporting as of December 31, 2018.
During
the fiscal years ended December 31, 2018 and 2017 and the subsequent interim period through the dismissal of BDO, there were (i)
no “disagreements” as that term is defined in Item 304(a)(1)(iv) of Regulation S-K, between the Company and BDO on
any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, any of which
that, if not resolved to BDO’s satisfaction, would have caused BDO to make reference to the subject matter of any such disagreement
in connection with its reports for such years and interim period and (ii) no reportable events within the meaning of Item 304(a)(1)(v)
of Regulation S-K during the two most recent fiscal years or the subsequent interim period.
During
the fiscal years ended December 31, 2018 and 2017 and the subsequent interim period prior to engaging Weinberg, neither the Company
nor anyone on its behalf had consulted with Weinberg regarding (i) the application of accounting principles to a specific transaction,
either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements
and neither a written report nor oral advice was provided to the Company that Weinberg concluded was an important factor considered
by the Company in reaching a decision as to any accounting, auditing, or financial reporting issue, (ii) any matter that was the
subject of a disagreement within the meaning of Item 304(a)(1)(iv) of Regulation S-K, or (iii) any reportable event within the
meaning of Item 304(a)(1)(v) of Regulation S-K.
Audit
Fees
The
fees for 2019 from Weinberg for professional services rendered in connection with the audit of our annual consolidated financial
statements and reviews of our unaudited consolidated financial statements for the periods ended June 30th and September
30th, 2019 were approximately $90,000. The fees from BDO for the review of our unaudited consolidated financial statements
for the period ended March 31, 2019 and for transitional fees were $29,900. The fees from BDO for professional services rendered
in connection with the audit of our annual consolidated financial statements and reviews of our unaudited consolidated financial
statements and Form S-3 registration statements for 2018 were $180,220.
All
Other Fees
No
other services were rendered by either Weinberg or BDO in either 2019 or 2018.
Tax
Fees
The
aggregate fees billed by Weinberg for professional services for tax compliance were $10,450 for 2019. The aggregate fees billed
by BDO for professional services for tax compliance were $1,360 for 2019.
The
aggregate fees billed by BDO for professional services for tax compliance, tax advice and tax planning were $35,165 for 2018.
Pre-Approval
Policies and Procedures
It
is the policy of our Audit Committee that all services to be provided by our independent registered public accounting firm, including
audit services and permitted audit-related and non-audit services, must be pre-approved by our Audit Committee. Our Audit Committee
pre-approved all services, audit and non-audit, provided to us by Weinberg and BDO for 2019 and 2018.
Vote
Required
The
affirmative vote of a majority of the shares of our common stock present in person or represented by proxy and entitled to be
voted on Proposal 3 at the Annual Meeting is required for approval of the Proposal.
Recommendation
of the board of directors
THE
BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” RATIFICATION OF THE APPOINTMENT OF WEINBERG & CO
AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
STOCKHOLDER
PROPOSALS FOR 2021 ANNUAL MEETING
Under
SEC Rule 14a-8, any stockholder desiring to submit a proposal for inclusion in our proxy materials for our 2021 Annual Meeting
of Stockholders must provide the Company with a written copy of that proposal by no later than 120 days before the first anniversary
of the release of this Proxy Statement, or February 12, 2021. However, if the date of our 2021 Annual Meeting changes by more
than 30 days from the date on which our 2020 Annual Meeting is held, then the deadline would be a reasonable time before we begin
to print and send our proxy materials for our 2021 Annual Meeting. Notice of stockholder proposals submitted outside of SEC Rule
14a-8 must be received by the same date.
OTHER
MATTERS
Expenses
of Solicitation
We
are soliciting proxies on behalf of our board of directors. This solicitation is being made by mail and over the Internet, but
also may be made by telephone or in person. We and our directors, officers and employees may also solicit proxies in person, by
telephone or by other electronic means. These persons will not be compensated for these solicitation activities.
We
will ask banks, brokers and other institutions, nominees and fiduciaries to forward our proxy materials to their principals and
to obtain their authority to execute proxies and voting instructions and will reimburse them for their reasonable expenses.
Delivery
of Proxy Materials to Households
Some
banks, brokers, and other nominee record holders may be participating in the practice of “householding” proxy statements
and annual reports. This means that only one copy of this notice and Proxy Statement may have been sent to multiple stockholders
in your household. If you would prefer to receive separate copies of a Proxy Statement or annual report either now or in the future,
please contact your bank, broker or other nominee. Upon written request to us at CytRx Corporation, 11726 San Vicente Boulevard,
Suite 650, Los Angeles, California 90049, Attention: Corporate Secretary, or by telephone at 310-826-5648, we will promptly deliver
without charge, upon oral or written request, a separate copy of the proxy material to any stockholder residing at an address
to which only one copy was mailed. In addition, stockholders sharing an address can request delivery in the future of only a single
copy of annual reports or proxy statements if they are currently receiving multiple copies upon written or oral request to us
at the address and telephone number stated above.
Miscellaneous
Our
management does not intend to present any other items of business and is not aware of any matters other than those set forth in
this Proxy Statement that will be presented for action at the Annual Meeting. However, if any other matters properly come before
the Annual Meeting, the persons named in the enclosed proxy intend to vote the shares of our common stock that they represent
in accordance with their best judgment.
Annual
Report
Accompanying
this Proxy Statement is a copy of our Annual Report on Form 10-K, without exhibits, for the year ended December 31, 2019 filed
with the SEC. These accompanying materials constitute our annual report to stockholders. We will provide, without charge upon
written request, a further copy of our Annual Report on Form 10-K, including the financial statements and the financial statement
schedules. Copies of the Form 10-K exhibits also are available without charge. Stockholders who would like such copies should
direct their requests in writing to: CytRx Corporation, 11726 San Vicente Boulevard, Suite 650, Los Angeles, California 90049,
Attention: Corporate Secretary.
June
12, 2020
|
By
Order of the Board of Directors
|
|
|
|
/s/ John Y. Caloz
|
|
John
Y. Caloz
|
|
Chief
Financial Officer
|
ANNEX
A
CERTIFICATE
OF AMENDMENT
TO
RESTATED
CERTIFICATE OF INCORPORATION OF
CYTRX
CORPORATION
CytRx
Corporation, a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware
(the “Corporation”), DOES HEREBY CERTIFY as follows:
FIRST:
The Restated Certificate of Incorporation of the Corporation is hereby amended by deleting in its entirety the Fourth Article
and by replacing it with the following:
“FOURTH:
The total number of shares of all classes of stock that the corporation shall have the authority to issue is Fifty-Two Million
Four Hundred Ninety-Nine Thousand Nine Hundred Ninety-Nine (52,499,999), of which Fifty-One Million Six Hundred Sixty Six Thousand
Six Hundred Sixty-Six (51,666,666) shall be common stock, par value $.001 per share (the “Common Stock”), and Eight
Hundred Thirty-Three Thousand Three Hundred Thirty-Three (833,333) shall be preferred stock, par value $.01 per share (the “Preferred
Stock”).
The
Board of Directors is hereby authorized, subject to any limitations prescribed by law, to provide for the issuance of the shares
of Preferred Stock in series, and by filing a Certificate pursuant to the applicable law of the State of Delaware (hereinafter
referred to as a “Preferred Stock Designation”), to establish from time to time the number of shares to be included
in each such series, and to fix the designations, powers, preferences, and rights of the shares of each such series, any qualifications,
limitations or restrictions thereof.”
SECOND:
The foregoing amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of
the State of Delaware.
THIRD:
The foregoing amendment shall be effective upon filing with the Secretary of State of the State of Delaware.
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