jnp-10ka_20171231.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K/A

(Amendment No. 1)

 

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2017

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File number 1-10352

 

Juniper Pharmaceuticals, Inc.

(Exact name of registrant as specified in its charter)

 

 

Delaware

59-2758596

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

 

33 Arch Street

Boston, Massachusetts

02110

(Address of principal executive offices)

(Zip Code)

 

Registrant’s telephone number, including area code:

(617) 639-1500

Securities registered pursuant to Section 12(b) of the Act:

 

Common Stock, $0.01 par value

NASDAQ Global Select Market

(Title of each class)

(Name of exchange on which registered)

 

Securities registered pursuant to Section 12(g) of the Act: None

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes      No  

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes      No  

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes      No  

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

Emerging growth company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  ☐    No  

The aggregate market value of Common Stock held by non-affiliates of the registrant on June 30, 2017, the last business day of the registrant’s most recently completed second fiscal quarter, based on the adjusted closing price on that date of $5.05, was $52,653,764.

The number of shares of Common Stock of Juniper Pharmaceuticals, Inc. issued and outstanding as of March 2, 2018 is 10,975,208.

Explanatory Note

The purpose of this amendment is to include the information required by Part III of Form 10-K, which was omitted from Juniper Pharmaceutical, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017, as originally filed on March 9, 2018. Except as otherwise expressly set forth in this amendment, no portion of the Annual Report on Form 10-K filed on March 9, 2018 is being amended or updated by this amendment.

 

 


 

Table of contents

 

 

 

 

Page

Part III

 

 

 

 

 

 

 

Item 10

 

Directors, Executive Officers and Corporate Governance

3

Item 11

 

Executive Compensation

7

Item 12

 

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

29

 

 

 

 

Item 13

 

Certain Relationships and Related Transactions and Director Independence

31

Item 14

 

Principal Accountant Fees and Services

31

 

 

 

 

Part IV

 

 

 

 

 

 

 

Item 15

 

Exhibits and Financial Statement Schedules

32

Item 16

 

Form 10-K Summary

36

 

 

 

 

SIGNATURES

37

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PART III

Item 10.

Directors, Executive Officers and Corporate Governance

The Board in General

The Board is currently comprised of eight members, each of whose current term of office as a director expires at our 2018 annual meeting of stockholders. The Board can fill vacancies and newly created directorships, as well as provide for a greater or lesser number of directors.

Biographical information with respect to our directors is provided in the table below.

There are no arrangements or understandings between any of our directors and any other persons pursuant to which such director was selected as a director. There are no family relationships among any of the executive officers and directors of the Company.

 

Name

 

Position with the Company

 

Age

 

Director Since

Dr. Cristina Csimma

 

Director

 

59

 

2010

James A. Geraghty

 

Chairman of the Board

 

63

 

2015

Jennifer Good

 

Director

 

53

 

2017

Dr. Mary Ann Gray

 

Director

 

65

 

2016

Ann Merrifield

 

Director

 

67

 

2015

Richard Messina

 

Director

 

55

 

2018

Dr. Nikin Patel

 

Director and Chief Operating Officer

 

45

 

2013

Alicia Secor

 

Director and Chief Executive Officer

 

55

 

2016

Cristina Csimma, PharmD, MHP has been a director of the Company since September 2010. She serves on the Board of Directors of Neuralstem, Inc. (nervous system diseases). She has also been Executive Chair of Exonics Therapeutics, Inc. (a rare disease company), November 2016 to November 2017, and has been engaged in strategic advisory roles with the biopharmaceutical and venture capital industries, as well as government and patient organizations. She was also a board director at Vtesse Inc. (a rare disease company) from January 2015 until its acquisition in March 2017.  Dr. Csimma was a President and the founding Chief Executive Officer of Cydan Development, Inc. (therapeutics for orphan diseases) from November 2012 until April 2014, and was a director of the company from November 2012 through December 2014. Prior to that she served as Vice President, Drug Development, of Virdante Pharmaceuticals, Inc., from January 2009 to May 2011. She was a principal of Clarus Ventures, LLC (life sciences venture capital) from 2006 through 2008. She held clinical development roles at Wyeth Research (pharmaceuticals) from 2000 to 2006, at Genetics Institute from 1988 to 2000, and was a Clinical Pharmacist with Dana-Farber Cancer Institute from 1983 to 1988.

Dr. Csimma has also served in advisory roles including the National Institutes of Health’s External Oversight Committee for the Blueprint Neurotherapeutics Network since January 2015, the Rockefeller University’s Robertson Therapeutics Development Fund Review Committee since January 2014, the National Institutes of Health’s Executive Oversight Board for NeuroNext since January 2013 and the Muscular Dystrophy Association’s Scientific Advisory Board for MDA Venture Philanthropy since December 2008.  Dr. Csimma has also served on the Treat-NMD Advisory Committee for Therapeutics from July 2009 through the present.  Dr. Csimma holds a B.S. and Doctor of Pharmacy degrees from the Massachusetts College of Pharmacy and Allied Health Sciences, and a Master of Health Professions from Northeastern University.

Qualifications: Dr. Csimma has extensive experience in drug development, fund raising and company building in the biopharmaceutical industry, and venture capital, and has led global programs in multiple therapeutic areas.

James A. Geraghty has served as a member of the Board since May 2015, and was elected Chairman of the Board in July 2015. From May 2013 to October 2016, Mr. Geraghty served as an Entrepreneur in Residence at Third Rock Ventures, a leading biotech venture and company-formation fund. From April 2011 to December 2012, Mr. Geraghty served as Senior Vice President, North America Strategy and Business Development at Sanofi (pharmaceuticals), which he joined upon its acquisition of Genzyme Corporation (“Genzyme”).  Mr. Geraghty spent the 20 prior years at Genzyme, where his roles included Senior Vice President International Development, President of Genzyme Europe, and General Manager of Genzyme’s cardiovascular business. Mr. Geraghty has served as Chairman of the Board of Idera Pharmaceuticals (biotechnology) since 2013, and as a member of the board of directors of Voyager Therapeutics, Inc. (gene therapy) since 2014. Mr. Geraghty is also a member of the Fulcrum Therapeutics, Inc., of Pieris

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Pharmaceuticals, and of the BIO Ventures for Global Health boards. He started his career in healthcare strategy consulting at Bain and Company.

Mr. Geraghty holds a J.D. from Yale Law School, M.S. from the University of Pennsylvania and a B.A. from Georgetown University.

Qualifications: Mr. Geraghty is an industry leader with 30 years of strategic and leadership experience, including more than 20 years as a senior member of executive teams at biotechnology companies developing and commercializing innovative therapies.

Jennifer Good has been a director of the Company since September 2017. Ms. Good is the co-founder of Trevi Therapeutics (“Trevi”) and has served as a director as well as the Company’s President and Chief Executive Officer since inception in 2011, raising financing through Series C capital and overseeing the development of Nalbuphine ER into Phase 3 development. Prior to founding Trevi, Ms. Good held various positions at Penwest Pharmaceuticals Co. from 1997 to 2010 including President and Chief Executive Officer, Chief Operating Officer and Chief Financial Officer, where she successfully led the transition of a publicly traded life sciences company from a development stage company to generating annual revenues in excess of $50 million with strong profitability. The Company was acquired by its strategic partner in 2010.

Ms. Good received a Bachelor of Business Administration degree with a Concentration in Accounting from Pacific Lutheran University in 1987 and is a Certified Public Accountant licensed by the State of Washington, although her license is currently inactive. Ms. Good is a board member of the Friedreich's Ataxia Research Alliance (FARA), which is a patient advocacy group advancing treatments for the cure of Friedreich's Ataxia. Ms. Good serves on FARA’s Executive, Business Development and Finance Committees. Ms. Good is also the Treasurer for a non-profit organization, Newtown Youth and Family Services, which provides mental health services and programs to support the community.

Qualifications: Ms. Good has a background in executive operations, with expertise in financial strategy and business development.

Mary Ann Gray, Ph.D. has been a director of the Company since March 2016. Since 2003, Dr. Gray has served as President of Gray Strategic Advisors, LLC, which provides strategic advice to both public and private biotechnology companies. Previously, she spent three and a half years with the Federated Kaufmann Fund focusing on both public and private healthcare investments. Prior to joining the Kaufmann Fund, Dr. Gray was a sell-side biotechnology analyst for nine years with Kidder Peabody, Dillon Read and Raymond James. She also held scientific positions at Schering Plough and NeoRx (oncology specialty pharmaceuticals). Since 2010, Dr. Gray has served on the board of directors of Senomyx, Inc. (“Senomyx”) (biotechnology flavor ingredients). Until December 2017, she served on the board of directors of Galena Pharmaceuticals (cancer immunotherapy).  Until 2016, she also served on the boards of Acadia Pharmaceuticals, Inc. (“Acadia”) (CNS disorders) and TetraLogic Pharmaceuticals Corporation (“TetraLogic”) (oncology and infectious disease therapeutics). At Senomyx she is the chairman of the compensation committee and lead independent director, and at Galena she was a member of the nominating and governance committee and audit committee chair. At Acadia she served as chairman of the audit committee and also served on the compensation committee. Dr. Gray previously served on the board of directors of Dyax Corp., beginning in 2001, and served as its lead director from 2010 until its acquisition by Shire plc (specialty biopharmaceuticals) in January 2016. Earlier in her career, Dr. Gray managed pre-clinical toxicology studies for the National Cancer Institute through Battelle Memorial Institute and worked in the hospital laboratory.

Dr. Gray holds a B.S. from the University of South Carolina and a Ph.D. in Pharmacology from the University of Vermont where she focused on novel chemotherapeutic agents for the treatment of cancer. She did post-doctoral work at Northwestern University Medical School and Yale University School of Medicine.

Qualifications: Dr. Gray has a strong dual background as a scientist and financial analyst and portfolio manager in the biotechnology industry, as well as public company board experience.

Ann Merrifield has been a director of the Company since July 2015. She was the President and Chief Executive Officer of PathoGenetix, Inc. (genomics technology), from December 2012 to July 2014. PathoGenetix, Inc. filed for Chapter 7 bankruptcy in July 2014. Prior to joining PathoGenetix, Inc., Ms. Merrifield served an 18-year tenure at Genzyme (now owned by Sanofi S.A.), a diversified, global biotechnology company. During her time at Genzyme, Ms. Merrifield served, among other roles, as Senior Vice President, Business Excellence, President of Genzyme Biosurgery, and President of Genzyme Genetics. Prior to joining Genzyme, Ms. Merrifield was a Partner at Bain and Company (global strategy consulting) and an Investment Officer at Aetna Life & Casualty.

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She is also a director of Flexion Therapeutics (non-opioid pain therapies), Chair of the board of InVivo Therapeutics (spinal cord injury), and is a trustee of a portfolio of MassMutual investment funds.

Ms. Merrifield earned a B.A. in Zoology and a Master of Education from the University of Maine, and an M.B.A from the Amos Tuck School of Business at Dartmouth College.

Qualifications: Ms. Merrifield is a seasoned business executive with broad-ranging strategy development and leadership experience in the biotech sector as well as substantial corporate board experience.

Richard Messina has been a director of the Company since March 2018. Mr. Messina is the Founder, President and Chief Executive Officer of The Benchmark Company, LLC, an investment banking and financial advisory firm. Mr. Messina founded The Benchmark Company, LLC, in 1988.

Mr. Messina holds a B.A. from the University of Massachusetts, Amherst.

Qualifications: Mr. Messina has been a long-term shareholder in the company and has broad investment experience.

Nikin Patel, Ph.D., MRPharmS co-founded Juniper Pharma Services Ltd. (f/k/a Molecular Profiles, Ltd.) and served as its Chief Executive Officer from 1998 until April 2015, at which time he was named Chief Operating Officer of Juniper Pharmaceuticals, Inc. and President of Juniper Pharma Services Ltd. Dr. Patel joined our Board in September 2013, when Juniper Pharma Services was acquired by us. Dr. Patel is also a co-founder of Locate Therapeutics Ltd. (a specialist regenerative medicine and device company) and was a director from 2001 through 2014.

Dr. Patel holds a first class honours degree and Ph.D. in Pharmacy from the University of Nottingham, and is a Member of the Royal Pharmaceutical Society (MRPharmS).

Qualifications: Dr. Patel has over 20 years of management and technical experience centered on pharmaceutical development. His leadership was recognized externally through the U.K.’s most prestigious industry accolade, the Queen’s Award for Enterprise, won by Molecular Profiles in both 2007 and 2011 in the Innovation category.

Alicia Secor has served as the Company’s Chief Executive Officer and President since August 2016.  Previously, she served as the Chief Commercial Officer of Zafgen Inc., a biopharmaceutical company, from January 2014 to July 2016. From August 2013 to October 2013, she served as Senior Vice President and Chief Operating Officer of Synageva BioPharma Corp., a biotechnology company. Previously, from November 1998 to July 2013, Ms. Secor spent 15 years at Genzyme, where she held various leadership positions, most recently as Vice President and General Manager of Metabolic Diseases, a global business with five marketed products, including two products for orphan diseases. Prior to this role, she was Vice President and General Manager of Biosurgical Specialties, a surgical device business focused on adhesion prevention and other novel applications for biomaterials. Prior to Genzyme, Ms. Secor held positions at Alkermes, Inc. in business development, at Centocor, Inc. (a Johnson & Johnson Company) in clinical and commercial operations, and began her career at Pfizer Inc. as a hospital-based sales representative. Ms. Secor also serves as a member of the Board of Directors for the Foundation for Prader-Willi Research. Ms. Secor is a director on the Board of GW Pharmaceuticals plc, and also serves as a member of the Board of Directors for the Foundation for Prader-Willi Research. She received her M.B.A. from Northeastern University, and her B.S. in Healthcare Administration from the University of New Hampshire.

Qualifications: Ms. Secor has a wide-ranging business background, including cross-functional and senior leadership roles in the pharmaceutical and healthcare industry with particular experience in biopharmaceuticals, biotechnology and drug development.

Executive Officers

Our executive officers as of April 27, 2018 are as follows:

 

Name

 

Age

 

Position with the Company

Alicia Secor

 

55

 

President and Chief Executive Officer

Jeffrey Young

 

45

 

Chief Financial Officer

Dr. Nikin Patel

 

45

 

Chief Operating Officer

 

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Officers serve at the discretion of the Board. There is no family relationship between any of the executive officers or between any of the executive officers and the Company’s directors. There is no arrangement or understanding between any executive officer and any other person pursuant to which the executive officer was selected.

Alicia Secor. For Ms. Secor’s biography, please see above under “The Board in General.”

Jeffrey Young. Mr. Young has served as our Chief Financial Officer since January 2017.  Mr. Young brings over 20 years of financial leadership in the life sciences sector to Juniper, most recently serving as Chief Financial Officer and Treasurer of OvaScience, Inc. a global fertility company focused on new treatment options for women, which he joined in September 2014. Before OvaScience, Mr. Young served as Chief Financial Officer and Treasurer of Transmedics, Inc. from August 2013 to August 2014, leading the finance, accounting, tax and treasury functions. Prior to Transmedics, Mr. Young was Chief Financial Officer and Treasurer at Lantheus Medical Imaging, Inc., an international corporation, from September 2008 to August 2013. While at Lantheus, he was responsible for multiple functions, including finance, accounting, customer service, tax and treasury. Before Lantheus, Mr. Young served as Chief Accounting Officer, Vice President of Finance and Treasurer at Critical Therapeutics Inc. from 2005 to 2008, and managed the company’s transition during its acquisition by Cornerstone BioPharma. Earlier in his career, Mr. Young held finance roles at PerkinElmer, Inc. and began his career as a Certified Public Accountant at PricewaterhouseCoopers LLP. Mr. Young holds a B.S. in Business Administration from Georgetown University.

Dr. Nikin Patel. For Dr. Patel’s biography, please see above under “The Board in General.”

Audit Committee

The current members of our Audit Committee are Dr. Mary Ann Gray (Chair), Jennifer Good and James A. Geraghty.

The committee meets at regularly scheduled times during the year and on an ad hoc basis as business needs necessitate. In 2017 the committee held seven meetings. The primary function of the Audit Committee is to oversee Juniper’s reporting processes on behalf of the Board and to report the results of its activities to the Board. The Audit Committee’s duties and responsibilities are to, among other things:

 

Select a qualified firm to serve as the independent registered public accounting firm to audit our financial statements;

 

Help ensure the independence and performance of the independent registered public accounting firm;

 

Discuss the scope and results of the audit with the independent registered public accounting firm, and review, with management and the independent registered public accounting firm, our operating results;

 

Review financial press releases;

 

Develop procedures for employees to submit concerns anonymously about questionable accounting or audit matters;

 

Review and address conflicts of interests of the Company’s directors and executive officers;

 

Review materials to identify and address the status of major risks to the Company;

 

Review related party transactions;

 

Obtain and review a report by the independent registered public accounting firm at least annually, that describes our internal control procedures, any material issues with such procedures and any steps taken to deal with such issues; and

 

Approve (or, as permitted, pre-approve) all audit and all permissible non-audit service to be performed by the independent registered public accounting firm.

The Audit Committee acts pursuant to the Audit Committee Charter. While the Audit Committee has the powers and responsibilities set forth in its charter, it is not the responsibility of the Audit Committee to plan or conduct audits, or to determine that Juniper’s financial statements are complete and accurate or are in compliance with generally accepted accounting principles. This is the responsibility of management and the Company’s independent registered public accounting firm.

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All of the members of the Audit Committee have been determined by the Board to be independent within the meaning of the applicable Nasdaq Marketplace Rules and Section 10A-3(b)(1) of the Exchange Act of 1934, as amended (the “Exchange Act”). The Company has identified Dr. Gray as an “audit committee financial expert” as that term is defined under applicable regulations of the SEC.

Code of Business Conduct and Ethics

The Board has adopted a Code of Business Conduct and Ethics that applies to all of our directors, executive officers (including our Chief Executive Officer and our Chief Financial Officer), and employees of the Company. Our Code of Business Conduct and Ethics is posted on our corporate website, www.juniperpharma.com under “Investor Relations”.  We will provide an electronic or paper copy of this document free of charge upon request. If, in the future, we should amend our Code of Business Conduct and Ethics or grant a waiver to our Chief Executive Officer or our Chief Financial Officer with respect to our Code of Business Conduct and Ethics, then we will post the amendment or a description of the waiver in the “Investor Relations” section of our corporate website, www.juniperpharma.com, or in a Current Report on Form 8-K.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act of 1934 (the “Exchange Act”), and the rules issued thereunder, requires our directors and executive officers and beneficial owners of more than 10% of the outstanding shares of our equity securities to file reports of ownership and changes in beneficial ownership of our equity securities with the SEC. Copies of these reports are furnished to the Company. The Company is required to identify any of those individuals who failed to file such reports on a timely basis. Based solely on our review of the copies of such reports furnished to us, and representations from the persons subject to Section 16(a) of the Exchange Act with respect to our Company, we believe that during 2017 all of our executive officers, directors, and 10% stockholders complied with the Section 16(a) requirements.

Item 11.

Executive Compensation

 

Compensation Discussion and Analysis

Introduction

Our Compensation Committee provides assistance to the Board in fulfilling its responsibility to oversee the creation and administration of executive compensation programs and practices. Responsibilities of the Compensation Committee include, among other things:

 

Reviewing and determining the compensation of the Company’s Chief Executive Officer and other executive officers;

 

Reviewing and approving of the Company’s management incentive compensation policies and programs; and

 

Reviewing and approving equity compensation programs for the Company’s employees, directors and consultants, including grants of options, restricted stock and other awards thereunder.

The Compensation Committee acts pursuant to the Compensation Committee Charter. This Charter can be found on our corporate website, www.juniperpharma.com.

The current members of our Compensation Committee are Ann Merrifield (Chair), Dr. Cristina Csimma and Jennifer Good. Each of these individuals has been determined by the Board to be independent within the meaning of the applicable Nasdaq Marketplace Rules.

The Compensation Committee meets at regularly scheduled times during the year and on an ad hoc basis as business needs necessitate. In 2017, the Compensation Committee held nine meetings. The Compensation Committee has the authority under its charter to retain, direct and oversee the work of compensation consultants and legal counsel to provide guidance on matters related to executive compensation and other related matters; provided, however, that the Compensation Committee must take into account certain independence factors outlined in the Nasdaq Marketplace Rules in making their selections. The Committee engaged Radford, an Aon plc company, (“Radford”) as its executive compensation consultant to provide executive and non-employee director compensation consulting services.  The Compensation Committee determined that Radford is independent under applicable Nasdaq rules and that their work did not raise any conflicts of interest. Radford did not provide any services to the Company in 2017, other than to the Compensation Committee.

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Risk Assessment

The Compensation Committee regularly undertakes a qualitative assessment of the extent to which the Company’s compensation program encourages or may aggravate or mitigate unnecessary or excessive risk-taking behavior by executive officers. The Compensation Committee has concluded that the Company’s executive compensation program maintains an appropriate balance between risks and rewards and it does not believe that our compensation programs are reasonably likely to have a material adverse effect on us.

Executive Compensation Philosophy and Objectives

Our compensation program for the individuals named in the Summary Compensation Table (the “named executive officers”) is designed and implemented based on our pay-for-performance compensation philosophy. Our named executive officers for 2017 were Alicia Secor, President and Chief Executive Officer; Jeffrey Young, Chief Financial Officer; Dr. Nikin Patel, Chief Operating Officer; and Dr. Bridget A. Martell, former Chief Medical Officer.

Effective September 18, 2017, Dr. Martell resigned as our Chief Medical Officer.

We strive to adhere to our pay-for-performance philosophy by differentiating the pay and rewards of our executive officers based on their demonstrated performance and potential to contribute to the long-term success of the Company. Competing for talent in the rapidly changing and increasingly competitive pharmaceutical industry is both challenging and critical to our success. We need and want the best people to be excited and motivated to work at Juniper and to understand that their rewards are driven by the Company’s performance and by their individual contributions to the Company’s performance. The quality of the Company’s talent is a key component of long-term stockholder value.

We have established a total rewards framework that supports our compensation philosophy through the following objectives:

 

affording our executives a competitive total rewards opportunity comparable to executives in similar positions at organizations with which we compete for executive talent;

 

allowing us to attract and retain executives who can perform and succeed in our fast-paced and challenging environment; and

 

delivering compensation in a cost-efficient manner that aligns employees’ rewards with stockholders’ long-term interests.

Compensation Program Elements and Pay Level Determination

The Compensation Committee undertakes discussions and assessments of compensation-related programs and the performance of management throughout the year. Early in the Company’s fiscal year, the Compensation Committee reviews and recommends base salaries, annual cash incentive bonuses, and equity incentives for all executive officers based on the prior year’s performance, which are then approved by all non-employee directors.

As part of the review process, the Chief Executive Officer provides to the Compensation Committee an individual assessment of the major accomplishments of each other executive officer over the prior year and recommends compensation for each such executive officer to the Compensation Committee. The Compensation Committee evaluates the performance of our Chief Executive Officer and recommends to the non-employee members of the Board for their approval all compensation elements and amounts to be awarded to our Chief Executive Officer. Our Chief Executive Officer and our Chief Operating Officer, who are members of the Board, do not participate in Board decisions relating to their compensation. The key metrics we use to measure the performance of our executive officers can be grouped into the following categories:

 

Financial—We evaluate measures of our financial performance such as revenue, expense management and cash flow metrics.

 

Operational—We evaluate operational measures to determine that the Company is operating effectively and efficiently.

 

Clinical—We evaluate clinical measures to assess progress in developing and bringing new drugs to market.

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The Compensation Committee considers the recommendations of the Chief Executive Officer and other information (including each executive’s significant accomplishments, external competitiveness, Company performance, progress towards strategic objectives, and internal equity among executive officers) and applies its knowledge and discretion to determine, or recommend to the non-employee members of the Board for approval, the compensation for each executive officer.

Public Company Peer Group

To understand external competitiveness, the Compensation Committee compares each element of total compensation against a peer group of publicly traded pharmaceutical and biotechnology companies. At the Compensation Committee’s request, Radford undertook a review of the Company’s peer group and provided recommendations to the Compensation Committee based on their findings. Based, in part, on Radford’s recommendations, the Compensation Committee revised the Company’s peer group, based on the following key factors: market capitalization, industry focus defined as commercial biotechnology and pharmaceutical companies, stage of development (defined as a mix of Phase 2 and Phase 3 and marketed products), revenue, and number of employees. Adverum Biotechnologies, Inc., Corium International, Inc., Dicerna Parmaceuticals, Inc., Ignyta, Inc. and Peregrine Pharmaceuticals Inc. were additions to the 2017 peer group replacing Athersys, Inc., Cytokinetics, Incorporated, and OncoGenex Pharmaceuticals, Inc., each of which was removed due to market capitalization that had moved well outside of the Company’s comparable range.

The Compensation Committee, with Radford’s input and advice, approved the following companies as our public company peer group for 2017:

 

Adverum Biotechnologies Inc.

 

ADVM

Alimera Sciences, Inc.

 

ALIM

Antares Pharma, Inc.

 

ATRS

Assembly Biosciences, Inc.

 

ASBM

Argos Therapeutics, Inc.

 

ARGS

Athersys, Inc.

 

ATHX

BioDelivery Sciences International, Inc.

 

BDSI

Caladrius BioSciences, Inc. (formerly NeoStem, Inc.)

 

CLBS

Codexis, Inc.

 

CDXS

Corium International, Inc.

 

CORI

CTI BioPharma Corp.

 

CTIC

Dicerna Pharmaceuticals, Inc.

 

DRNA

Elite Pharmaceuticals, Inc.

 

ELTP

Endocyte, Inc.

 

ECYT

Ignyta, Inc.

 

RXDX

Ocera Therapeutics Inc.

 

OCRX

Pain Therapeutics, Inc.

 

PTIE

Paratek Pharmaceuticals, Inc. (formerly Transcept Pharmaceuticals, Inc.)

 

PRTK

Peregrine Pharmaceuticals Inc.

 

PPHM

Rigel Pharmaceuticals, Inc.

 

RIGL

XOMA Corporation

 

XOMA

Zogenix, Inc.

 

ZGNX

The Role of Stockholder “Say-on-Pay” Votes

As required by Section 14A of the Exchange Act, the Company provides its stockholders with the opportunity to cast an annual advisory vote to approve the compensation of our named executive officers. At the Company’s 2017 Annual Meeting, approximately 61% of the votes cast at that meeting voted in favor of the proposal. The Compensation Committee regularly reviews all elements of compensation to ensure that we remain competitive in the market and to ensure that overall compensation, including the mix of stock and cash, is aligned with our business objectives, our performance and the interests of our stockholders. In particular, to enhance our commitment to performance-based compensation, we added time and performance-based restricted stock unit awards to our equity compensation program in 2017 and, in 2017, we granted our executive officers a mix of stock options subject to time-based vesting, restricted stock units subject to time-based vesting and restricted stock unit awards that vest only if we achieve certain specified objective performance criteria. With these changes, we believe that our stockholders will generally approve of and continue to support our core compensation principles and our executive compensation program. The Compensation Committee will continue to

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consider changes to our executive compensation program as appropriate in response to input from stockholders and evolving factors such as the business environment and competition for talent.

Components of our Executive Compensation Program

Total compensation for our named executive officers generally consists of a mix of cash and equity awards. Base salaries and annual incentive bonuses are paid in cash. Long-term incentives are provided in the form of stock option awards and restricted stock units subject to both time- and performance-based vesting. Named executive officers are also eligible to participate in our employee benefits programs on the same terms as other employees.

Each primary component of compensation and the purpose of such element is summarized in the table below.

 

Component

  

Purpose/Description

 

 

 

Base salary

  

Competitive fixed income for performance of day-to-day responsibilities.

 

 

Annual incentive bonus

  

Rewards achievement of annual goals that support short-term (annual) business objectives.

 

 

Equity compensation

  

Fosters a culture of ownership, aligns compensation with stockholder interests, promotes long-term retention with the Company and incentivizes operational success and long-term value creation for our stockholders. Consists primarily of stock options and restricted stock units subject to both time and performance-based vesting.

 

 

 

Benefits

  

Standard employee benefits, such as health, dental, vision, short- and long-term disability, and life insurance.

 

 

Retirement benefits

  

Standard employee 401(k) Plan. The Company’s safe harbor non-elective contribution to the savings plan is in the amount equal to 3% of base salary up to the statutory maximum.

 

 

Perquisites

  

None.

While the general mix of each compensation component is considered in the design of our total compensation program, the Compensation Committee and the Board do not target a specific mix of pay either in their program design or in compensation determinations. By design, our executive officers have more variability in their compensation than non-executives, to more closely tie their compensation to the Company’s overall performance. The Compensation Committee considers each element of total compensation offered by the Company against each element of total compensation provided by our peer group companies.

Base Salary

We pay our executive officers base salaries to provide a baseline level of compensation that is both competitive with the external market and our peer group, and commensurate with each executive officer’s past performance, experience, responsibilities, and skills. The base salary levels of our executive officers may be increased from time to time to recognize external competitive compensation levels, internal pay equity, and individual contributions and performance.

Generally, the Compensation Committee compares our executive officers’ base salaries with base salaries of individuals in comparable positions at the peer group companies. In connection with determining or recommending the base salary levels for the Company’s executive officers, the Compensation Committee compares their total target cash compensation (i.e., base salary plus target annual bonus) to total target cash compensation of individuals in comparable positions at the peer group companies.

10

 


 

The 2017 base salaries of each of our named executive officers were as follows:

 

Name and principal position

 

2016 Base

 

 

2017 Base

 

 

% change

 

 

Alicia Secor

 

$

410,000

 

 

$

459,200

 

 

12%

 

 

President and Chief Executive

   Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jeffrey Young(1)

 

N/A

 

 

$

355,000

 

 

NA

 

 

Senior Vice President, Finance, Chief Financial Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

and Treasurer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dr. Nikin Patel (2)

 

$

253,163

 

 

$

310,137

 

 

23%

 

(3)

Chief Operating Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dr. Bridget A. Martell

 

$

320,000

 

 

$

360,000

 

 

13%

 

 

Former Chief Medical Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Mr. Young joined the Company in January 2017.

(2)

The amount shown for Dr. Patel represents his 2016 and 2017 base salary designated in British pound (£205,218 and £229,884, respectively) and converted to U.S. dollars for purposes of this table, using an exchange rate as of December 31, 2016 and 2017 of 1.23363 and 1.34912, respectively.

(3)

The percentage increase is in part attributable to foreign exchange rate fluctuations. The actual percentage increase in GBP is 12%, and this increase is in part balanced out by a decrease in Dr. Patel’s target bonus level from 55% to 45%.

The 2017 base salaries for our Chief Executive Officer, Chief Operating Officer and Chief Medical Officer were below the 50th percentile for comparable positions at peer group companies. The 2017 base salaries for our Mr. Young, Chief Financial Officer, was at the 50th percentile for comparable positions at peer group companies.

Annual Cash Incentive Bonuses

We maintain an annual cash incentive program (the “Incentive Plan”), the purpose of which is to motivate and reward the attainment of annual Company and individual performance goals. For our named executive officers, annual incentive opportunities, which are expressed as a percentage of base salary, can range from 0% to 150% of targeted levels, depending on the attainment of pre-established Company base performance goals and individual goals for the particular year, or up to 200% if certain specified stretch Company performance goals were achieved. In order for any named executive officer to be eligible to receive an annual incentive bonus, the Company must achieve at least 50% of the pre-established target corporate goals (as described below).

Actual payouts under the Incentive Plan are recommended by the Compensation Committee to the Board based on achievement of corporate goals, overall individual performance, and the broad discretion of the Compensation Committee and the Board. Our corporate goals are discussed at the beginning of each year by management and the Compensation Committee and are approved by the Compensation Committee and the Board.

The extent to which corporate goals are achieved is assessed by the Compensation Committee with input from the Chief Executive Officer and other members of management. The Compensation Committee and the Board consider the following in determining cash bonuses:

 

The extent to which base and stretch corporate goals are achieved or exceeded;

 

The overall success of the Company throughout the year as determined by factors such as progress in key programs, execution of the strategic plan, and share price; and

 

For executive officers other than the Chief Executive Officer, achievement of individual performance goals.

11

 


 

2017 Annual Cash Incentive Bonuses

Bonus targets for 2017 for Ms. Secor, Mr. Young and Drs. Patel and Martell were 60%, 45%, 45% and 40% of their base salaries, respectively.

 

The following table summarizes the Company’s goals for 2017 and the Compensation Committee’s determination with respect to the achievement level of each such goal.

 

Company Goal

 

Weight

 

 

Achievement

 

Financial Goals

 

 

 

 

 

 

 

 

Establish an IVR product partnership with a company by the end of 2017

 

 

20

%

 

 

0

%

Complete 2017 with no new material weaknesses identified through implementation and maintenance of robust financial processes

 

 

10

%

 

 

10

%

Operational Goals

 

 

 

 

 

 

 

 

Achieve a specified service revenue and GP target for 2017*

 

 

15

%

 

 

18

%

Deliver target of at least 99% for Crinone sub-lots against the initial firm 4-month forecast received from Merck

 

 

15

%

 

 

17

%

Clinical Goals

 

 

 

 

 

 

 

 

Qualify and secure a second source of EVA medical grade

 

 

10

%

 

 

0

%

Define go-forward decision by year-end for JNP-0201 and JNP-0301 supported by either a successful US PIND meeting for JNP-0201 or FDA endorsement of clinical development protocol design for JNP-0301

 

 

15

%

 

 

15

%

Confirm validation of IVR technology by using a successful formulation in a positive sheep study (PK and Tolerability)

 

 

15

%

 

 

15

%

Total

 

 

100

%

 

 

75

%

Stretch Goals

 

 

 

 

 

 

 

 

Complete 2 inbound non-IVR asset transactions

 

 

25

%

 

 

0

%

IND submission for one IVR pipeline program

 

 

25

%

 

 

0

%

Total including Stretch Goals

 

 

150

%

 

 

75

%

 

*

The above-described metrics include highly sensitive data. We do not disclose the specific target levels for this metric because we believe that such disclosure would result in competitive harm to our Company. Revealing this metrics could potentially reveal insights about our commercialization plans and research and other objectives that our competitors could use against us in the marketplace for similar pharmaceutical products. We believe each of these target levels were designed to be challenging but attainable under assumed conditions if we had what we considered to be a successful year.

The Compensation Committee recognized the Company’s achievement of the 2017 goals at 75% in the aggregate, which was more than the required 50% minimum achievement level for corporate goals.  

In the case of Ms. Secor, 100% of bonus eligibility is based on achievement of the corporate goals.  For the other executive officers, 80% of bonus eligibility is based on achievement of the corporate goals and the other 20% of bonus eligibility is determined based on achievement of individual performance goals.  Individual performance goals were established for each of the other named executive officers in the first quarter of 2017.

The individual performance goals for Mr. Young were as follows: (i) ensure robust internal control process and compliance with all necessary Public Company Accounting Oversight Board requirements by December 31, 2017; (ii) ensure that (a) identified material weaknesses are remediated and (b) no new material weaknesses are identified at December 31, 2017; (iii) financial process and reporting improvement; (iv) establish a cohesive international finance team; and (v) develop and hire top talent to effectively service the Company. The individual performance goals for Dr. Patel were as follows: (i) determine the path forward and options for future Nottingham facility site; (ii) establish Crinone capacity requirements to 2020 and implement changes to ensure sufficient capacity to deliver on current Merck contract requirements, and (iii) invest in ongoing executive development. In the case of

12

 


 

each Mr. Young and Dr. Patel, the Compensation Committee determined that these individual performance goals were achieved at the 100% level. Dr. Martell resigned effective September 18, 2017 and was not eligible to receive a cash incentive bonus for 2017.

The 2017 annual cash incentive bonus targets and the actual annual cash incentive payments made to the named executive officers based upon achievement of the corporate and individual goal described above were as follows:

 

Name

 

Position

 

2017 Target Annual

Incentive Bonus Target

 

 

 

2017 Annual Incentive

Bonus Paid

 

 

Alicia Secor

 

President and Chief Executive Officer

 

$

275,520

 

 

 

$

206,640

 

 

Jeffrey Young

 

Senior Vice President, Finance, Chief Financial Officer and Treasurer

 

$

159,750

 

 

 

$

127,801

 

 

Dr. Nikin Patel

 

Chief Operating Officer

 

$

139,458

 

(1)

 

$

114,545

 

(2)

Dr. Bridget A. Martell

 

Chief Medical Officer

 

$

144,000

 

 

 

 

 

(3)

 

(1)

The amount shown for Dr. Patel represents a target amount that was designated in British pound (£103,448) and converted to U.S. dollars for purposes of this table, using an exchange rate as of February 28, 2018 of 1.3841 U.S. dollars for each British pound.

(2)

The amount shown for Dr. Patel represents a target amount that was designated in British pound (£82,758) and converted to U.S. dollars for purposes of this table, using an exchange rate as of February 28, 2018 of 1.3841 U.S. dollars for each British pound.

(3)

Dr. Martell resigned as the Company’s Chief Medical Officer effective September 18, 2017 and was not eligible to receive a cash incentive bonus for 2017.

Equity Compensation

An equity compensation program is provided to all executives and certain key employees to foster a culture of ownership, align compensation with stockholder interests, and promote long-term retention with the Company. Each year the Compensation Committee determines the types of awards to be used for equity compensation. In doing so, the Compensation Committee considers the ability of each type of award to achieve key compensation objectives (such as employee retention, motivation, and attraction), the needs of the business, competitive market practices, dilution, and expense constraints, as well as tax and accounting implications.

Stock options awarded under the Juniper Pharmaceuticals, Inc. Amended and Restated 2015 Long-Term Performance Plan (the “2015 Plan”) must have an exercise price equal to or greater than the fair market value (i.e., the closing price) of the Company’s Common Stock on the Nasdaq Global Market on the date of grant. Stock option grants are normally approved at Board and Compensation Committee meetings that are scheduled up to a year in advance. Scheduling decisions are made without regard to anticipated financial reporting dates or other major announcements by the Company.

Newly hired employees, including executive officers, may be granted equity awards effective on the first day of employment, with such equity awards granted in the form of stock options having an exercise price set at the fair market value (i.e., the closing price) of our Common Stock on the Nasdaq Global Market on the employment start date. Our employees’ start dates are scheduled without regard to anticipated financial reporting dates or other major announcements by the Company.

We have historically made an annual grant of stock options at the time of the annual review of each executive’s performance, usually in February or early March of each year. Stock option grants typically vest over four years to provide an incentive for employees to remain with the Company and to increase stockholder value.

The Compensation Committee determined, based on its review of overall compensation practices, and equity compensation practices specifically, and with input from Radford, to modify its equity compensation structure for 2017 to enhance our commitment to performance-based compensation and a pay-for-performance philosophy.  Accordingly, in 2017, the Compensation Committee granted grant equity awards in the form of time-based stock options, time-based restricted stock units and performance-based restricted stock units.  The performance conditions are long-term in nature, where achievement criteria are difficult to achieve and if achieved deliver stockholder value.  We also consider stock options to be performance-based as they have value only if and to the extent that the Company’s stock price increases.  The value of restricted stock units is also dependent on the price of our Common Stock, which further incentivizes executive officers to increase stockholder value.

In determining the equity awards for 2017, the Compensation Committee concluded as follows: (1) the value of equity awards should be comparable to those provided by our peer group of companies; (2) the aggregate grants should be limited, so as not

13

 


 

to exceed a predetermined dilution effect; and (3) the grants to executive officers should be within a range that is appropriate from a Company-wide internal fairness perspective.

Based on these determinations, on March 3, 2017, Ms. Secor was granted an option to purchase 127,500 shares of Common Stock, 26,200 restricted stock units subject to time-based vesting and 50,000 restricted stock units subject to performance-based vesting; Mr. Young was granted 25,000 restricted stock units subject to performance-based vesting; Dr. Patel was granted an option to purchase 53,000 shares, 11,000 restricted stock units subject to time-based vesting and 25,000 restricted stock units subject to performance-based vesting; and Dr. Martell was granted an option to purchase 74,900 shares of Common Stock, 15,500 restricted stock units subject to time-based vesting and 30,000 restricted stock units subject to performance-based vesting.  On April 11, 2017, following an additional review of Dr. Patel’s compensation, Dr. Patel was granted an additional option to purchase 10,000 shares of Common Stock and an additional 5,000 restricted stock units subject to performance-based vesting.

On January 3, 2017, in connection with his hire, Mr. Young received an inducement grant of an option to purchase 170,000 shares of the Company’s Common Stock, which vests over four years from the grant date, with 25% of the shares subject to the option vesting on each of the first four anniversaries of the grant date.

Each of the stock options and time-based restricted stock units granted to the named executive officers vests over four years from the grant date, with 25% of the shares underlying the award vesting on each of the first four anniversaries of the grant date.  Performance-based restricted stock units are earned and vest upon the Compensation Committee’s certification of achievement of the specific performance criteria by defined dates as follow:

 

Vesting Percentage

  

Performance Condition

 

Achievement Date

 

 

 

 

25%

  

Execution of a strategic ‘new-product’ related transaction

December 31, 2017

 

 

 

20%

  

Successful completion of a targeted financing

December 31, 2017

 

 

 

20%

  

Confirmation of successful drug delivery, as measured by human clinical data which confirms the product can deliver an adequate dose of drug, with the IVR technology in human clinical trial for a commercially relevant indication

December 31, 2018

 

 

 

 

20%

  

Execution of Merck KGaA extension contract

December 31, 2018

 

 

 

15%

  

Targeted organic revenue growth of Juniper Pharma Services Limited (UK)*

December 31, 2019

*The above-described metrics include highly sensitive data. We do not disclose the specific target levels for this metric because we believe that such disclosure would result in competitive harm to our Company. Revealing this metrics could potentially reveal insights about our commercialization plans and research and other objectives that our competitors could use against us in the marketplace for similar pharmaceutical products. We believe each of these target levels were designed to be a stretch to achieve.

Upon the Compensation Committee’s certification in February 2018 of achievement of execution of the extension of the Merck KGaA contract in January 2018, 20% of these restricted stock units vested. The performance conditions with an achievement date of December 31, 2017 were not achieved and therefore the portion of those awards attributable to those performance criteria expired as of December 31, 2017. Dr. Martell’s restricted stock units subject to performance-based vesting expired upon her resignation from the Company on September 18, 2017.

Benefits and Perquisites

All named executive officers are eligible for the standard benefits that are offered to other full-time employees of the Company. For U.S. employees, these standard benefits include health, dental, vision, and life insurance, and both short- and long-term disability. UK employees receive health insurance and life insurance.

In addition, the Company offers a 401(k) plan to its U.S. employees and contributes a safe harbor non-elective contribution in an amount equal to 3% of the employee’s base salary up to the statutory maximum. UK employees are entitled to a matching 3% retirement plan contribution (of gross annual salary) from the Company.

The Company does not provide perquisites for our executive officers.

14

 


 

Compensation Policy Implementation in 2018

As noted elsewhere in this Compensation Discussion and Analysis section, the Compensation Committee believes that it is important when making compensation decisions to be informed as to the current practices of comparable, publicly-held companies. The Compensation Committee engaged Radford as executive compensation consultants to provide executive and non-employee director compensation consulting services.

At the Compensation Committee’s request, Radford undertook a review of the Company’s peer group and provided recommendations to the Compensation Committee based on their findings. Based, in part, on Radford’s recommendations, the Compensation Committee revised the Company’s peer group for 2018, based on the following key factors: market capitalization, industry focus defined as biotechnology and pharmaceutical companies and contract development companies, stage of development (defined as a mix of Preclinical, Phase 1, 2 and Phase 3 and marketed products), revenue, and number of employees.

The Compensation Committee, with Radford’s input and advice, approved the following 19 companies as our 2018 peer group:

 

Adverum Biotechnologies, Inc. (ADVM)

 

Dicerna Pharmaceuticals, Inc. (DRNA)

Antares Pharma, Inc. (ATRS)

  

Elite Pharmaceuticals, Inc. (ELTP)

Applied Genetic Technologies Corp. (AGTC)

  

Endocyte, Inc. (ECYT)

Arrowhead Pharmaceuticals, Inc. (ARWR)

  

Fate Therapeutics, Inc. (FATE)

Assembly BioSciences, Inc. (ASMB)

 

NanoViricides (NNVC)

aTyr Pharma, Inc. (LIFE)

  

Orgenesis, Inc. (ORGS)

BioDelivery Sciences International, Inc. (BDSI)

  

Peregrine Pharmaceuticals, Inc. (PPHM)

Caladrius Biosciences, Inc. (CLBS)

  

Pfenix Inc. (PFNX)

Codexis, Inc. (CDXS)

 

Regulus Therapeutics Inc. (RGLS)

Dicerna Pharmaceuticals, Inc. (DRNA)

  

Zogenix, Inc. (ZGNX)

Following its review of the executive compensation paid by the Company’s peer group companies and other survey information provided by Radford with respect to compensation paid by biopharmaceutical and contract development companies generally, the Compensation Committee determined that an increase in the base salaries and bonus targets of our named executive officers was advisable. Accordingly, the Compensation Committee approved the following base salaries for 2018: Ms. Secor—$477,600 (25th percentile of peer group); Mr. Young—$369,200 (50th percentile of peer group); and Dr. Patel—£239,079 (50th percentile of peer group).

The 2018 target cash bonuses for the named executive officers for 2018 remain unchanged their 2017 target bonus amounts: Ms. Secor—60% (75th percentile); Mr. Young—45% (75th percentile) and Dr. Patel—45% (75th percentile).

In February 2018, the Compensation Committee approved the following equity award grants to our executive officers:  Ms. Secor—an option to purchase 110,000 shares of Common Stock and 50,500 restricted stock units subject to time-based vesting; Mr. Young—an option to purchase 40,000 shares of Common Stock and 18,400 restricted stock units subject to time-based vesting; and Dr. Patel— an option to purchase 40,000 shares of Common Stock and 18,400 restricted stock subject to time-based vesting.  

 

Termination or Change of Control

We are party to employment agreements with each of Ms. Secor, Mr. Young and Dr. Patel and were party to an employment agreement with Dr. Martell during her employment with the Company. The employment agreements provide for payments to be made to the executives if their employment is terminated under certain circumstances. We believe employment agreements can be important components of our effort to recruit and retain senior executives, particularly for companies at our stage of development and in our relatively high-risk industry.

In addition, our 2015 Plan provides for the acceleration and vesting of equity awards granted under the plan in the event of a Change of Control.  A Change in Control, as defined in the employment agreements, is the consummation of (A) any consolidation or merger of the Company resulting in a change of greater than 50% in the ownership of the Company, (B) sale or other transfer of all or substantially all of the assets of the Company and (C) any “person”  shall become the beneficial owner of securities of the Company representing 50% or more of the combined voting power of the Company’s then outstanding securities having the right to vote in an election of the Board. The acceleration is either single-trigger or double-trigger depending on when the award was granted, and whether any provision is made for the assumption or substitution of awards in the event of a Change of Control. Pursuant to the terms

15

 


 

of the award agreements governing such awards, performance-based restricted stock units granted in 2017 accelerate upon a Change of Control.

A further discussion of the potential payments to be made to our named executive officers upon the termination of their employment and/or a Change of Control is set forth below under the heading “Payments upon Termination or Change of Control.”

 

Share Ownership Guidelines for Executive Officers

The Board adopted guidelines for executive officers to own and hold, at a minimum, that number of shares of the Company’s Common Stock having a market value of at least one times, or two times in the case of the Chief Executive Officer, the officer’s base salary on or prior to the later of (i) five years after the date of original adoption of the guidelines or (ii) five years after becoming an executive officer. For purposes of these guidelines, stock ownership includes shares held outright by the executive officer or his or her immediate family members who share a household, shares of restricted stock held by the executive officer and shares subject to vested stock options held by the executive officer. Each executive officer should make incremental progress toward the ownership goal over the course of the applicable period. The Board believes that these ownership expectations are an important tool in aligning the interests of the Company’s executive officers with the long-term interests of stockholders. All executive officers are currently meeting or are working to achieve these guidelines within the applicable phase-in period time period.

Tax Considerations

We have not provided or agreed to provide any of our executive officers with a gross-up or other reimbursement for tax amounts they might pay pursuant to Section 4999 or Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”). Sections 280G and 4999 of the Code provide that executive officers, directors who hold significant stockholder interests and certain other service providers could be subject to significant additional taxes if they receive payments or benefits in connection with a change in control of our Company that exceed certain limits, and that we or our successor could lose a deduction on the amounts subject to the additional tax. Section 409A also imposes additional significant taxes on the individual in the event that an employee, director or service provider receives “deferred compensation” that does not meet the requirements of Section 409A.

Generally, Section 162(m) of the Code disallows a federal income tax deduction for public company compensation in excess of $1 million paid for any fiscal year to “covered employees” of the Company. With respect to taxable years before January 1, 2018, compensation in excess of $1 million was exempt from this deduction limit if it qualified as “performance-based compensation” within the meaning of Section 162(m).  In 2017, the Compensation Committee endeavored to structure compensation to maintain deductibility under Section 162(m) of the Code to the extent practicable while maintaining the ability to provide a competitive compensation program for our named executive officers.

Recently-enacted tax legislation, effective for taxable years beginning after December 31, 2017, (1) expands the scope of Section 162(m) such that all named executive officers are “covered employees” and anyone who was a named executive officer in any year after 2016 will remain a covered employees for as long as he or she (or his or her beneficiaries) receive compensation from the Company and (2) eliminates the exception to the deduction limit for commission-based compensation and performance-based compensation except with respect to certain grandfathered arrangements in effect as of November 2, 2017 that are not subsequently materially modified.  Accordingly, compensation paid to our named executive officers in excess of $1 million will not be deductible unless it qualifies for the transition relief applicable to certain arrangements in place as of November 2, 2017, as described above.

The Compensation Committee believes that stockholder interests are best served if the Committee retains maximum flexibility to design executive compensation programs that meet stated business objectives. For these reasons, the Compensation Committee, while considering tax deductibility as a factor in determining executive compensation, may not limit such compensation to those levels that will be deductible, particularly in light of the elimination of the expansion of the covered employee group and the elimination of the exception for performance-based compensation.

 


16

 


 

Executive and Director Compensation

2017 Summary Compensation Table

 

Name and principal position

 

Year

 

Salary

($)

 

 

Bonus (1) ($)

 

 

Stock

Awards(2)

($)

 

 

Option

Awards(3)

($)

 

 

 

 

Non-Equity

Incentive Plan

Compensation(4)

($)

 

 

All Other

Compensation(5)

($)

 

 

Total

($)

 

Alicia Secor (6)

 

2017

 

 

459,200

 

 

 

 

 

 

134,930

 

 

 

307,932

 

 

 

 

 

206,640

 

 

 

15,622

 

 

 

1,124,324

 

President and Chief Executive

   Officer

 

2016

 

 

170,883

 

 

 

65,127

 

(7)

 

 

 

 

1,047,305

 

 

(12

)

 

56,391

 

 

 

4,613

 

 

 

297,014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jeffrey Young

 

2017

 

 

350,563

 

 

 

45,000

 

(8)

 

 

 

 

448,457

 

 

(12

)

 

127,801

 

 

 

10,517

 

 

 

982,338

 

Senior Vice President, Finance, Chief Financial Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

and Treasurer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dr. Nikin Patel (9)

 

2017

 

 

310,029

 

 

 

 

 

 

56,650

 

 

 

146,886

 

 

 

 

 

114,545

 

 

 

9,892

 

 

 

638,002

 

Chief Operating Officer

 

2016

 

 

253,157

 

 

 

5,612

 

 

 

 

 

243,594

 

 

 

 

 

89,786

 

 

7,527

 

 

 

356,082

 

 

 

2015

 

 

271,270

 

 

 

 

 

 

 

 

106,432

 

 

 

 

 

169,085

 

 

8,138

 

 

 

448,493

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dr. Bridget A. Martell (10)

 

2017

 

 

256,500

 

 

 

 

 

 

79,825

 

 

 

198,301

 

 

 

 

 

 

 

 

217,525

 

(11)

 

752,151

 

Former Chief Medical Officer

 

2016

 

320,040

 

 

5,120

 

 

 

 

 

243,594

 

 

 

 

81,920

 

 

13,094

 

 

 

420,174

 

 

 

2015

 

 

284,649

 

 

 

 

 

 

 

 

 

205,353

 

 

 

 

106,400

 

 

 

7,000

 

 

 

398,049

 

 

 

 

(1)

Amounts reported for 2016 include a discretionary bonus paid to the named executive officers in recognition of over-achievement for the Crinone supply goal and services revenue goals for 2016.

(2)

This column represents the grant date fair values of the restricted stock units awarded in 2017, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“ASC Topic 718”). For performance-based restricted stock units, the value reported reflects the value of the award at the grant date based upon the probable outcome of the performance condition. The value of the awards at the grant date assuming that the highest level of the performance conditions will be achieved would be $257,500 for Ms. Secor, $128,750 for Mr. Young, $149,000 for Dr. Patel and $154,500 for Dr. Martell. As of December 31, 2017, none of the performance conditions were deemed probable. See Note 2 to the consolidated financial statements included in our 2017 Annual Report, as filed on March 9, 2018, regarding the assumptions underlying the valuation of our equity awards.

(3)

This column represents the grant date fair values of the stock options awarded in 2017, 2016 and 2015, computed in accordance with ASC Topic 718. For Dr. Martell, the amount also includes the incremental fair value of $17,406 attributable to the modification of option awards held by Dr. Martell at the time of her termination of employment to extend the post-termination exercise period for such awards to the earlier of 180 days following termination of expiration of the award. See Note 2 to the consolidated financial statements included in our 2017 Annual Report, as filed on March 9, 2018, regarding the assumptions underlying the valuation of our equity awards.

(4)

This column represents incentive compensation earned under the Company’s Incentive Plan. See “Compensation Discussion and Analysis—2017 Annual Cash Incentive Bonuses” for information concerning the determination of these awards.

(5)

Except as otherwise noted, the amounts reported in this column include the Company’s safe harbor non-elective contribution to the named executive officers’ 401(k) savings account, or a pension plan in the case of Dr. Patel, in the amount equal to 3% of eligible compensation.

(6)

Ms. Secor was appointed President and Chief Executive Officer effective August 1, 2016. Her 2016 annualized base salary was $410,000.

(7)

The amount reported represents a $60,000 sign-on bonus payment made to Ms. Secor pursuant to the terms of her employment agreement.

(8)

The amount reported represents a $45,000 sign-on bonus payment made to Mr. Young pursuant to the terms of his employment agreement.

(9)

The amounts shown for Dr. Patel (other than for bonus, stock awards and option awards) represent amounts that were paid in British pounds and converted to U.S. dollars using an exchange rate as of December 31, 2017, 2016 and 2015 of 1.3491, 1.2336 and 1.4802 U.S. dollars, respectively, for each British pound. The amount shown in the bonus column represents an amount that

17

 


 

were paid in British pounds and converted to U.S. dollars using an exchange rate as of the date it was paid, February 28, 2017, which was 1.24293 U.S. dollars, respectively, for each British pound.  The amounts shown for non-equity incentive plan compensation represent the amounts that were paid in British pounds and converted to U.S. dollars using an exchange rate as of the date they were paid, which was 1.3841 for his 2017 award, which was paid on February 28, 2018, 1.2429 for his 2016 award, which was paid on February 28, 2017, and 1.3877 for his 2015 award which was paid on February 29, 2016.

(10)

Dr. Martell resigned as Chief Medical Officer effective September 18, 2017. Her annualized base salary for 2017 was $360,000.

(11)

Includes cash severance payment of $180,000, vacation payout of $14,262, and continuation of medical and welfare benefits with a value of $12,957, each of which were paid pursuant to the terms of a separation agreement entered into with her in connection with her resignation.

(12)

Includes an inducement grant to Ms. Secor of an option to purchase 225,000 shares of Common Stock on July 20, 2016 and to Mr. Young of an option to purchase 170,000 shares of Common Stock on January 3, 2017.

Total Realized Compensation

To supplement the SEC-required disclosure in the 2017 Summary Compensation Table set forth above, we have included the additional table below, which shows “Total Realized Compensation,” representing the total compensation realized by each named executive officer in each of the years shown. Total compensation as calculated under SEC rules and, as shown in the 2017 Summary Compensation Table, includes several items that are driven by accounting assumptions, which are not necessarily reflective of compensation actually realized by the named executives in a particular year. The amounts reported in the Total Realized Compensation column differ substantially from the amounts reported in the Total column required under SEC rules and are not a substitute for those Total amounts. Total Realized Compensation represents: (1) Total compensation, as determined under applicable SEC rules, minus (2) the aggregate grant-date fair value of restricted stock units and stock option awards (as reflected in the Stock Awards and Option Awards columns), plus (3) the value realized in the applicable year from the vesting of restricted stock units and exercises of stock options.

 

 

 

 

 

Total Realized

 

Name and Principal Position

 

Year

 

Compensation

($)

 

Alicia Secor

 

2017

 

 

681,462

 

President and Chief Executive Officer

 

2016

 

 

297,014

 

 

 

 

 

 

 

 

Jeffrey Young

 

2017

 

 

533,881

 

Senior Vice President, Finance, Chief Financial Officer

 

 

 

 

 

 

and Treasurer

 

 

 

 

 

 

 

 

 

 

 

 

 

Dr. Nikin Patel(1)

 

2017

 

 

434,466

 

Chief Operating Officer

 

2016

 

 

356,082

 

 

 

2015

 

 

448,493

 

 

 

 

 

 

 

 

Dr. Bridget A. Martell(2)

 

2017

 

 

474,025

 

Former Chief Medical Officer

 

2016

 

 

420,174

 

 

 

2015

 

 

398,049

 

 

(1)

The amounts shown for Dr. Patel have been converted from British pounds to U.S. dollars using an exchange rate as of December 31, 2017, 2016 and 2015 of 1.3491, 1.2336 and 1.4802 U.S. dollars, respectively, for each British pound. Amounts paid to Dr. Patel for non-equity incentive plan compensation have been converted from British pounds to U.S. dollars using an exchange rate as of the dates of payment, February 28, 2018, February 28, 2017 and February 28, 2016, of 1.3841, 1.24293 and 1.38767 U.S. dollars, respectively, for each British pound.

(2)

Dr. Martell resigned as Chief Medical Officer effective September 18, 2017.

18

 


 

2017 Grants of Plan-Based Awards Table

The following table provides information about annual incentive bonus and equity awards granted to the named executive officers in 2017.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

All Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

All Other

 

 

Option

 

 

Exercise

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Estimated Future

 

 

Stock

 

 

Awards:

 

 

or Base

 

 

Grant Date

 

 

 

 

 

 

 

Estimated Possible Payouts Under

 

 

Payouts Under

 

 

Awards:

 

 

Number of

 

 

Price

 

 

Fair Value of

 

 

 

 

 

 

 

Non-Equity Incentive Plan Awards(1)

 

 

Equity Incentive

 

 

Number of

 

 

Securities

 

 

of Option

 

 

Stock and

 

 

 

 

 

 

 

Threshold

 

 

Target

 

 

Maximum

 

 

Plan Awards

 

 

Shares of Stock

 

 

Underlying

 

 

Awards

 

 

Option

 

Name

 

Grant Date

 

 

($)

 

 

($)

 

 

($)

 

 

Target (#)(2)

 

 

or Units (#)(3)

 

 

Options (#)(4)

 

 

($/share)(5)

 

 

Awards(6)

 

Alicia Secor

 

 

 

 

 

 

137,760

 

 

 

275,520

 

 

 

413,280

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3/3/2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

50,000

 

 

 

26,200

 

 

 

127,500

 

 

 

5.15

 

 

 

442,862

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jeffrey Young

 

 

 

 

 

 

95,850

 

 

 

159,750

 

 

 

239,625

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1/3/2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

170,000

 

 

 

5.60

 

 

 

448,457

 

 

 

3/3/2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

25,000

 

 

 

 

 

 

 

 

 

5.15

 

 

 

128,750

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dr. Nikin Patel(7)

 

 

 

 

 

85,894

 

 

 

143,157

 

 

 

194,872

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3/3/2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

25,000

 

 

 

11,000

 

 

 

53,000

 

 

 

5.15

 

 

 

184,653

 

 

 

4/11/2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,000

 

 

 

 

 

 

10,000

 

 

 

4.05

 

 

 

18,883

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dr. Bridget A. Martell (8)

 

 

 

 

 

 

86,400

 

 

 

144,000

 

 

 

216,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3/3/2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

30,000

 

 

 

15,500

 

 

 

74,900

 

 

 

5.15

 

 

 

278,126

 

 

(1)

These columns show the range of possible payouts for 2017 annual incentive compensation granted under the Incentive Plan. For a description of the 2017 annual incentive program, see “Compensation Discussion and Analysis—2017 Annual Cash Incentive Bonuses”. The actual amounts paid to our named executive officers under the 2017 annual incentive program were as follows – Ms. Secor, $206,640; Mr. Young, $127,801 and Dr. Patel, $114,545. Dr. Martell resigned effective September 18, 2017 and was not eligible to receive a cash incentive bonus for 2017.

(2)

Represents the number of shares underlying performance-based restricted stock units granted to the named executive officers in 2017.

(3)

Represents the number of shares underlying time-based restricted stock units that were granted to the named executive officers in 2017.

(4)

Represents the number of shares underlying stock option awards that were granted to the named executive officers in 2017.

(5)

The exercise price is the closing price on the Nasdaq Global Market on the date of grant.

(6)

These amounts represent the grant date fair value of the equity granted to the named executive officers in 2017, computed in accordance with the ASC Topic 718. See Note 2 to the consolidated financial statements included in our 2017 Annual Report as filed on March 9, 2018, regarding the assumptions underlying the valuation of our equity awards.

(7)

The amounts shown in the table above for Dr. Patel’s possible payouts under non-equity incentive plan awards have been converted from British pounds to U.S. dollars using an exchange rate as of February 28, 2018 of 1.3841 U.S. dollars for each British pound.

(8)

Dr. Martell resigned as Chief Medical Officer effective September 18, 2017.

 

19

 


 

Outstanding Equity Awards at 2017 Fiscal Year-End

The following table provides information on outstanding equity awards held by the named executive officers as of December 31, 2017. Each equity award is shown separately for each named executive officer. The vesting schedule for each award is shown following this table, based on the grant date.

 

 

 

Option Awards

 

Stock Awards

 

 

 

 

 

Number of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities

 

 

Number of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Underlying

 

 

Securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of

 

 

 

 

 

 

 

 

 

Unexercised

 

 

Underlying

 

 

Option