UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
|
Filed by the Registrant ☒
|
| |
Filed by a Party other than the Registrant
☐
|
Check the appropriate box:
|
☐
|
Preliminary Proxy Statement
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
☐
|
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
☒
|
Definitive Proxy Statement
|
|
☐
|
Definitive Additional Materials
|
|
☐
|
Soliciting Material under §240.14a-12
|
|
ARBUTUS BIOPHARMA CORPORATION
|
|
(Name of Registrant as Specified in its Charter)
|
|
|
|
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
|
Payment of Filing Fee (Check all boxes that apply):
|
☒
|
| |
No fee required
|
|
☐
|
| |
Fee paid previously with preliminary materials
|
|
☐
|
| |
Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11
|
ARBUTUS BIOPHARMA CORPORATION
701 Veterans Circle
Warminster, Pennsylvania 18974, United States
(267) 469-0914
April 10, 2024
Dear Shareholder:
You are cordially invited to attend Arbutus Biopharma Corporation’s 2024 Annual General and Special Meeting of Shareholders to be held on Wednesday, May 22, 2024 (the “Annual Meeting”). The Annual Meeting will begin at 10:00 a.m. (Eastern Daylight Time) and will be held solely by means of live audio webcast online at http://www.virtualshareholdermeeting.com/ABUS2024. The enclosed Notice and Management Proxy Circular and Proxy Statement describe the matters to be presented at the Annual Meeting.
Whether or not you plan to virtually attend the Annual Meeting, please vote as soon as possible to ensure that your shares will be represented and voted at the Annual Meeting. Due to voting rules that may prevent your bank or broker from voting your uninstructed shares on a discretionary basis in the election of directors and other non-routine matters, it is important that you cast your vote.
We look forward to seeing you at the Annual Meeting.
|
|
| |
Sincerely,
|
|
|
| |
|
|
|
| |
Frank Torti, M.D.
|
|
|
| |
Chairman of the Board of Directors
|
ARBUTUS BIOPHARMA CORPORATION
701 Veterans Circle
Warminster, Pennsylvania 18974, United States
(267) 469-0914
NOTICE OF 2024 ANNUAL GENERAL AND SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD WEDNESDAY, MAY 22, 2024
Dear Shareholders of Arbutus Biopharma Corporation:
NOTICE IS HEREBY GIVEN that the 2024 Annual General and Special Meeting of Shareholders (the “Annual Meeting”) of Arbutus Biopharma Corporation, a British Columbia corporation (“Arbutus”, the “Company”, “we”, “us”, and “our”), will be held on Wednesday, May 22, 2024 at 10:00 a.m. (Eastern Daylight Time) solely by means of live audio webcast online at www.virtualshareholdermeeting.com/ABUS2024, for the following purposes:
|
1.
|
ELECTION OF DIRECTORS
. To elect the seven (7) director nominees of Arbutus named in the accompanying Management Proxy Circular and Proxy Statement each to serve until the 2025 Annual General Meeting of Shareholders or until his or her qualified successor has been duly elected or appointed;
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
2.
|
APPROVAL OF AN AMENDMENT TO THE ARBUTUS BIOPHARMA CORPORATION 2016 OMNIBUS SHARE AND INCENTIVE PLAN
. To approve an amendment to the Arbutus Biopharma Corporation 2016 Omnibus Share and Incentive Plan, as supplemented and amended (the “2016 Plan”), to (a) increase the aggregate number of common shares authorized for issuance thereunder by 9,500,000 common shares and (b) increase the aggregate number of common shares that may be issued pursuant to incentive stock options granted thereunder by 9,500,000 common shares;
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
3.
|
ADVISORY VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
. To approve, on a non-binding advisory basis, the compensation of our named executive officers as disclosed in the accompanying Management Proxy Circular and Proxy Statement (commonly referred to as a “Say on Pay” vote);
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
4.
|
APPROVAL OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
. To approve the appointment of Ernst Young LLP (“EY”) as our independent registered public accounting firm for the fiscal year ending December 31, 2024;
|
|
5.
|
RECEIVE ANNUAL FINANCIAL STATEMENTS
. To receive our audited consolidated financial statements for the year ended December 31, 2023, and the report of the independent registered public accounting firm thereon; and
|
|
6.
|
ANY OTHER BUSINESS
. To transact such other business as may properly come before the Annual Meeting, or at any adjournments or postponements thereof.
|
Your vote is important. Even if you plan to attend the virtual Annual Meeting, we urge you to submit your proxy or voting instructions as soon as possible. For specific instructions on how to vote your shares, please refer to the “
Questions and Answers About the Proxy Materials and Voting
” section of the accompanying Management Proxy Circular and Proxy Statement and the Notice.
|
|
| |
BY ORDER OF THE BOARD OF DIRECTORS
|
|
|
| |
|
|
|
| |
Frank Torti, M.D.,
|
|
|
| |
Chairman of the Board of Directors
|
|
April 10, 2024
|
| |
|
ARBUTUS BIOPHARMA CORPORATION
701 Veterans Circle
Warminster, Pennsylvania 18974, United States
(267) 469-0914
MANAGEMENT PROXY CIRCULAR AND PROXY STATEMENT
2024 ANNUAL GENERAL AND SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON WEDNESDAY, MAY 22, 2024
This Management Proxy Circular and Proxy Statement (the “Proxy Statement/Circular”) is furnished in connection with the solicitation of proxies by the management of Arbutus Biopharma Corporation, a British Columbia corporation, for use at the 2024 Annual General and Special Meeting of Shareholders, or at any adjournments or postponements thereof (the “Annual Meeting”), to be held on Wednesday, May 22, 2024 at the time and place and for the purposes set forth in the “Notice of Internet Availability of Proxy Materials” (the “Notice”) and this Proxy Statement/Circular.
In accordance with rules and regulations adopted by the U.S. Securities and Exchange Commission (the “SEC”), our Board has elected to furnish our Proxy Statement/Circular and Annual Report to Shareholders by providing access to those documents via the Internet instead of mailing printed copies. As a result, we will begin mailing the Notice to our Shareholders on or about April 10, 2024, which will contain instructions on how Shareholders can access our proxy materials over the Internet and cast their vote via the Internet, by telephone or by mail. You received the Notice if you owned our common shares at the close of business on March 25, 2024 (the “Record Date”), and that entitles you to vote at the Annual Meeting. The Notice will also contain instructions on how Shareholders can receive a printed copy of the proxy materials at no charge.
In this Proxy Statement/Circular, references to “the Company,” “Arbutus,” “we,” and “our” refer to Arbutus Biopharma Corporation and its consolidated subsidiary, unless the context indicates otherwise. “Common Shares” means our common shares without par value, and “Preferred Shares” means our preferred shares without par value. Unless otherwise indicated, the statistical and financial data contained in this Proxy Statement/Circular are as of December 31, 2023. These proxy materials describe the matters on which our Board would like you to vote and contain information that we are required to provide to you under the SEC’s rules when we solicit your proxy.
Whether or not you plan to attend the virtual Annual Meeting, we urge you to promptly submit your proxy card or voting instructions. Your promptness in voting will assist in the expeditious and orderly processing of the proxies and in ensuring that a quorum is present at the Annual Meeting. If you vote your proxy or voting instructions, you may nevertheless attend the Annual Meeting and vote your Common Shares at the Annual Meeting if you wish. Please note, however, that if your Common Shares are held of record by your broker, bank or other nominee and you wish to vote at the Annual Meeting, you must follow the instructions provided to you by that organization. If you want to revoke your instructions at a later time prior to the vote for any reason, you may do so in the manner described in this Proxy Statement/Circular.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING TO BE HELD ON MAY 22, 2024. Our Proxy Statement/Circular, Annual Report on Form 10-K for the year ended December 31, 2023, and proxy card are available at www.ProxyVote.com, our website, www.arbutusbio.com, the SEC’s website at www.sec.gov, and under our profile at www.sedarplus.ca.
What is the purpose of this Proxy Statement/Circular and the 2023 Annual Report to Shareholders?
Our Board is soliciting your proxy to vote at the Annual Meeting, which will be held solely by means of live audio webcast online at www.virtualshareholdermeeting.com/ABUS2024, on Wednesday, May 22, 2024, at 10:00 a.m. (Eastern Daylight Time). This Proxy Statement/Circular contains important information about the matters to be voted on at the Annual Meeting, the voting process, the compensation of our directors and certain of our executive officers, corporate governance matters, and certain other required information. Our 2023 Annual Report to Shareholders, which consists of our Annual Report on Form 10-K for the year ended December 31, 2023 (the “Annual Report”), contains information about our business, our audited financial statements and other important information that we are required to disclose under the SEC’s rules.
As many of our Shareholders may be unable to virtually attend the Annual Meeting, proxies are solicited to give each Shareholder an opportunity to vote on all matters that will properly come before the Annual Meeting. References in this Proxy Statement/Circular to the Annual Meeting include any adjournments or postponements of the Annual Meeting.
How can I access the proxy materials for the Annual Meeting?
Shareholders may access the proxy materials, which include the Notice, the Proxy Statement/Circular (including a form of proxy card) and our Annual Report, on our website, www.arbutusbio.com, the SEC’s website at www.sec.gov and under our profile at www.sedarplus.ca. Alternatively, Shareholders may request to receive a printed set of the proxy materials. Instructions on how to request a printed copy may be found in the Notice. In addition, Shareholders may request to receive proxy materials in printed form by mail or electronically by email on an ongoing basis. We encourage Shareholders to take advantage of the availability of the proxy materials on the Internet to help reduce the environmental impact of the Annual Meeting.
Who is entitled to vote at the Annual Meeting, and how many votes do I have?
Only holders of Common Shares as of the close of business on the Record Date are entitled to vote at the Annual Meeting, or any adjournment or postponement thereof, in the manner and subject to the procedures described in this Proxy Statement/Circular and the proxy card.
At the close of business on the Record Date, 180,174,930 of our Common Shares were issued and outstanding. Each Shareholder entitled to vote at the Annual Meeting may cast one vote for each Common Share held on all matters to come before the Annual Meeting. Cumulative voting for directors is not permitted.
How can I vote?
The answer depends on whether you are a Shareholder of record or a beneficial owner.
If you are a Shareholder of record
, which means that you owned your Common Shares directly (that is, you held shares that show your name as the registered shareholder) on the Record Date, your proxy is being solicited directly by the Board, and you may vote at the Annual Meeting or by proxy whether or not you attend the Annual Meeting virtually.
|
•
|
To vote over the Internet
, go to www.ProxyVote.com and follow the online voting instructions and refer to your control number provided on the Notice. Or, using a smartphone or tablet, scan the QR Code on the Notice to vote on www.ProxyVote.com. Internet voting is available 24 hours a day.
|
|
•
|
To vote at the Annual Meeting
, please go to www.virtualshareholdermeeting.com/ABUS2024 and enter your control number (which is located on the Notice). If you use your control number to log in to the Annual Meeting, any vote you cast at the Annual Meeting will revoke any proxy you previously submitted. If you do not wish to revoke or change a previously submitted proxy, you should not vote during the Annual Meeting.
|
|
•
|
To vote by Mail
, you must request a paper copy of the proxy materials (which will be provided free of charge and include a proxy card); please promptly complete, sign and return your proxy card in the return envelope enclosed with the proxy materials to ensure that it is received prior to the closing of the polls at the Annual Meeting.
|
|
•
|
To vote by Telephone,
call 1-800-690-6903 (toll free in North America) and follow the instructions and refer to your control number provided on your Notice.
|
1
Internet and telephone votes must be submitted no later than 11:59 pm Eastern Daylight Time on May 21, 2024. The Chair of the Annual Meeting may waive the proxy cut-off without notice. If the proxy is not dated, it will be deemed to be submitted seven calendar days after the date on which it was mailed to you.
If you are a beneficial owner
, which means that you owned your Common Shares indirectly (that is, you held your shares in “street name” in a brokerage account or by another nominee holder) on the Record Date, a Notice or voting instruction card has been provided to you by your broker, bank or other nominee describing how to vote your Common Shares. If you received a voting instruction card, you can vote by completing and returning the voting instruction card. You may also be able to vote by proxy over the Internet, by telephone, by mail (if you properly request a paper copy of these proxy materials) or at the Annual Meeting, depending upon the voting instruction card.
If you wish to vote at the Annual Meeting, go to www.virtualshareholdermeeting.com/ABUS2024 and enter your control number that was included in the Notice or voting instruction card. Once properly admitted to the Annual Meeting, you will be able to vote your shares by following the instructions that will be available on the Annual Meeting website. If you did
not
receive a control number with the Notice or voting instruction card, you may
not
vote your shares at the Annual Meeting unless you obtain a valid “legal proxy” from the bank, broker or other nominee that holds your shares, giving you the right to vote the shares at the Annual Meeting. Please contact your bank, broker or other nominee at least five days before the Annual Meeting and obtain a legal proxy to be able to participate in or vote at the Annual Meeting.
Why is the Annual Meeting online, and will I have the same participation rights as I would have at an in-person annual meeting?
By hosting the Annual Meeting online, we are able to communicate more effectively with our Shareholders, enable increased attendance and participation from locations around the world, reduce costs and increase overall efficiency and safety for us and our Shareholders. The virtual Annual Meeting has been designed to provide the same rights to participate as you would have at an in-person meeting. If you plan to attend the Annual Meeting virtually, you will need your control number included on the Notice.
In addition to voting online during the Annual Meeting or changing a vote you may have submitted previously by following the methods described herein, Shareholders who attend the Annual Meeting and log in using their control number will have an opportunity to submit questions in writing during a portion of the Annual Meeting. Instructions for submitting a question during the Annual Meeting will be provided on the Annual Meeting website at www.virtualshareholdermeeting.com/ABUS2024. We will endeavor to answer as many submitted questions as time permits; however, we reserve the right to exclude questions regarding topics that are not pertinent to Annual Meeting matters or company business or are inappropriate. If we receive substantially similar questions, we will group such questions together and provide a single response to avoid repetition. Any questions that are appropriate and pertinent to the Annual Meeting but cannot be answered during the Annual Meeting due to time constraints will be answered by our Investor Relations department as soon as practicable after the Annual Meeting.
Guests, including Shareholders who do not log in using their unique control number, may listen to the live audio webcast of the virtual Annual Meeting. Guests are not able to vote or ask questions at the Annual Meeting. In order to attend the Annual Meeting as a guest, log in online at www.virtualshareholdermeeting.com/ABUS2024, select “guest,” and then complete the online registration form.
The Annual Meeting will begin promptly at 10:00 a.m. (Eastern Daylight Time). Log-in will begin at 9:45 a.m. (Eastern Daylight Time), and you should allow ample time for the log-in procedures. It is important that you remain connected to the Internet for the duration of the Annual Meeting to vote when balloting commences. It is your responsibility to ensure that you remain connected.
What should I do if I need technical support during the Annual Meeting?
The Annual Meeting platform is fully supported across browsers and devices running the most updated version of applicable software and plugins. Attendees should ensure they have a strong Internet connection, allow plenty of time to log in, and can hear the streaming audio prior to the start of the Annual Meeting.
If you experience any technical difficulties accessing the Annual Meeting or during the Annual Meeting, please call the toll-free number that will be available on our Annual Meeting website for assistance. We will have technicians ready to assist you with any technical difficulties you may have beginning 15 minutes prior to the start of the Annual Meeting through its conclusion. Additional information regarding matters addressing technical and logistical issues, including technical support during the Annual Meeting, will be available on the Annual Meeting website.
2
Can I change my vote or revoke my proxy?
Yes, you may revoke your proxy at any time before the Annual Meeting. If you are a Shareholder of record, you may revoke your proxy by (1) submitting a new vote on the Internet or by telephone or by submitting another properly completed proxy card with a later date than your original card, but no later than 11:59 pm Eastern Daylight Time on May 21, 2024 or (2) attending and voting at the Annual Meeting (note that simply attending the Annual Meeting will not, by itself, revoke your proxy). We will count your vote in accordance with the last instructions we receive from you prior to the closing of the polls, whether your instructions are received by mail, via the Internet, over the telephone or at the Annual Meeting. If you are a beneficial owner and wish to change your vote, you must follow the procedures required by your broker, bank, or other nominee.
What is a “broker non-vote”?
If you are a beneficial owner of Common Shares, you must provide your broker, bank, or other nominee with instructions for how to vote your shares for Proposal Nos. 1, 2, 3 and 4 for your Common Shares to be counted. As a beneficial owner, you have the right to direct your broker, bank, or other nominee on how to vote your Common Shares. If you do not provide voting instructions, your shares will not be voted on any proposal for which the broker does not have discretionary authority to vote. This is called a “broker non-vote.”
Brokers, banks, or other nominees will have this discretionary authority with respect to “routine” matters; however, they will not have this discretionary authority with respect to “non-routine” matters. Proposal Nos. 1, 2 and 3 are considered “non-routine” matters, while Proposal No. 4 to approve the appointment of EY as our independent registered public accounting firm for the fiscal year ending December 31, 2024 is considered a “routine” matter. Therefore, if you are a beneficial owner of Common Shares and do not provide voting instructions, your shares will not be voted on Proposal Nos. 1, 2 and 3 and a broker non-vote will occur on these matters. In the event of a broker non-vote, such beneficial owners’ shares will be included in determining whether a quorum is present, but otherwise will not be counted as having been voted in respect of any such matter. Thus, a broker non-vote will make a quorum more readily obtainable, but a broker non-vote will not otherwise affect the outcome of a vote on a proposal that requires a majority of the votes cast. Because Proposal No. 4 is a “routine” matter, your broker, bank, or other nominee will be permitted to exercise its discretion on this proposal, which means there will be no broker non-votes on this matter.
How many shares must be present or represented to conduct business at the Annual Meeting?
To transact business at the Annual Meeting, a quorum of Common Shares must be present either in person (including via remote communication) or by proxy. Under our Articles, as amended, a quorum for the transaction of business at the Annual Meeting is at least two people who are, or who represent by proxy, one or more Shareholders who, in the aggregate, hold at least 33 1/3% of the issued Common Shares entitled to be voted at the Annual Meeting. Abstentions and broker non-votes will be counted as present for purposes of determining a quorum at the Annual Meeting. If a quorum is not present, the Annual Meeting will be adjourned until a quorum is obtained.
What am I being asked to vote on, and what vote is required to approve each proposal?
|
•
|
Proposal No. 1: To elect seven (7) director nominees named in this Proxy Statement/Circular, each to serve until the 2025 Annual General Meeting of Shareholders or until his or her qualified successor has been duly elected or appointed (“Proposal No. 1”)
. Votes may be cast:
FOR ALL
nominees,
WITHHOLD ALL
with respect to all nominees, or
FOR ALL EXCEPT
with respect to one or more nominees. Under our majority voting policy, each director nominee must receive more “FOR” votes than “WITHHOLD” votes for their appointment to be immediately approved. In an uncontested election, any nominee who receives a greater number of “WITHHOLD” votes from his or her election than votes “FOR” such election is required to tender his or her resignation to our Board promptly following the vote. Our Board (excluding any director that has tendered a resignation) will consider the director’s offer to resign and decide whether or not to accept it within 90 days of receiving the final voting results of the Annual Meeting. Our majority voting policy is more fully described below under “
Statement on Corporate Governance — Director Election and Majority Voting Policy.
” Broker non-votes and abstentions will have no effect on the outcome of this Proposal No. 1.
|
|
•
|
Proposal No. 2: To approve an amendment to the 2016 Plan to (a) increase the aggregate number of Common Shares authorized for issuance thereunder by 9,500,000 Common Shares and (b) increase
|
3
the aggregate number of Common Shares that may be issued pursuant to incentive stock options granted thereunder by 9,500,000 Common Shares (“Proposal No. 2”)
. Votes may be cast:
FOR
,
AGAINST
or
ABSTAIN
. The approval of this Proposal No. 2 requires a majority of the votes cast at the Annual Meeting. For purposes of determining the number of votes cast, only the Common Shares voting “FOR” or “AGAINST” are counted. As such, abstentions are not treated as votes cast and are not counted in the determination of the outcome of this Proposal No. 2. Abstentions will be counted for purposes of determining whether a quorum is present at the Annual Meeting. Broker non-votes will have no effect on the outcome of this Proposal No. 2.
|
•
|
Proposal No. 3: To approve, on a non-binding advisory basis, the compensation of our named executive officers (“Proposal No. 3”)
. Votes may be cast:
FOR
,
AGAINST
or
ABSTAIN
. The approval of this Proposal No. 3 requires a majority of the votes cast at the Annual Meeting. For purposes of determining the number of votes cast, only the Common Shares voting “FOR” or “AGAINST” are counted. As such, abstentions are not treated as votes cast and are not counted in the determination of the outcome of this Proposal No. 3. Abstentions will be counted for purposes of determining whether a quorum is present at the Annual Meeting. Broker non-votes will have no effect on the outcome of this proposal. Although this is an advisory vote, our Board will consider the results of the advisory vote when considering future decisions related to such proposal.
|
|
•
|
Proposal No. 4: To approve the appointment of EY as our independent registered public accounting firm for the fiscal year ending December 31, 2024 (“Proposal No. 4”)
. Votes may be cast:
FOR
,
AGAINST
or
ABSTAIN
. The approval of this Proposal No. 4 requires a majority of the votes cast at the Annual Meeting. For purposes of determining the number of votes cast, only the Common Shares voting “
FOR
” or “
AGAINST
” are counted. As such, abstentions are not treated as votes cast and are not counted in the determination of the outcome of this Proposal No. 4. Abstentions will be counted for purposes of determining whether a quorum is present at the Annual Meeting. Broker non-votes will not occur in connection with this proposal because your broker, bank or other nominee has discretionary voting authority to vote shares on the approval of independent registered public accounting firms under stock exchange rules without specific instructions from the beneficial owners.
|
Our Board recommends that each Shareholder votes “
FOR ALL
” for Proposal No. 1 and “
FOR
” Proposal Nos. 2, 3 and 4.
See the
“Proposals
” section of this Proxy Statement/Circular for information on these proposals. We will also consider any other business that is properly brought before the Annual Meeting or any adjournments or postponements thereof. We are not aware of any other business to be acted upon at the Annual Meeting. If you grant a proxy, the person named as proxy holder, Michael J. McElhaugh, or failing him, J. Christopher Naftzger, will have the discretion to vote your shares on any additional matters properly presented for a vote at the Annual Meeting or any adjournments or postponements thereof. Your proxy holder will have the authority to appoint a substitute to act as proxy. If, for any reason, any of the director nominees is not available as a candidate for director, the person named as proxy holder will vote your proxy for such other candidate or candidates as may be nominated by our Board.
How will proxies be exercised?
The Common Shares represented by proxy will be voted or withheld from voting in accordance with your instructions. With respect to any amendments or variations in any of the Proposals, or any other matters which may properly come before the Annual Meeting, the Common Shares will be voted by a proxyholder in his sole discretion.
Where you submit a properly executed proxy card but do not specify a vote on a proposal shown in the Proxy Statement/Circular, a nominee of management acting as proxyholder will vote the Common Shares as if you had specified a vote “
FOR ALL
” with respect to Proposal No. 1 and “
FOR
” with respect to each of Proposal Nos. 2, 3 and 4.
What does it mean if I receive more than one Notice or proxy card?
This means that you own Common Shares that are registered under more than one account. For example, you may own some Common Shares directly as a Shareholder of record and other Common Shares as a beneficial owner through a broker, bank, or other nominee, or you may own Common Shares through more than one such organizations. You should provide voting instructions for all accounts referenced to vote all the Common Shares you own.
4
How will proxies be solicited and who will pay the cost of the proxy solicitation?
The solicitation of proxies will be primarily by mail, but our directors, officers, and regular employees may also solicit proxies personally or by telephone. We will not pay our directors, officers, or employees any additional compensation for these services. We will bear all costs of the solicitation, including all printing, handling, and mailing of the Annual Meeting materials. We have arranged for your broker, bank, or other nominee to forward the Annual Meeting materials to beneficial owner of our Common Shares held of record by those organizations and we may reimburse them for their reasonable fees and disbursements in that regard.
Who will count the votes, and is my vote confidential?
Votes will be counted by the scrutineer appointed for the Annual Meeting. Proxy instructions, ballots, and voting tabulations that identify individual Shareholders are handled in a manner that protects your voting privacy. Your vote will not be disclosed either within our organization or to third parties, except (1) as necessary to meet applicable legal requirements, (2) to allow for the tabulation of votes and certification of the vote, and (3) to facilitate a successful proxy solicitation.
How can I find out the results of the voting at the Annual Meeting?
Preliminary voting results will be announced at the Annual Meeting. Final voting results will be filed with the Canadian provincial securities regulatory authorities on SEDAR at www.sedarplus.ca, and will also be published in a Current Report on Form 8-K filed with the SEC on EDGAR at www.sec.gov within four business days of the Annual Meeting.
How can I make a Shareholder proposal for the 2025 Annual General Meeting of Shareholders?
If you want to propose a matter for consideration at our 2025 Annual General Meeting of Shareholders, then that proposal must be received at our registered office at 25th Floor, Toronto Dominion Bank Tower, 700 West Georgia Street, Vancouver, British Columbia, V7Y 1B3 (with a copy to our Secretary at 701 Veterans Circle, Warminster, Pennsylvania 18974, United States) and in compliance with the requirements set forth below.
For a Shareholder proposal to be eligible under the British Columbia Business Corporations Act (“BCBCA”), the proposal must be received at our registered office no later than February 22, 2025. In addition, it must be in writing, accompanied by the requisite declarations and signed by the submitter and qualified Shareholders who at the time of signing are the registered or beneficial owners of shares that, in the aggregate: (a) constitute at least 1% of our issued Common Shares that have the right to vote at general meetings; or (b) have a fair market value in excess of C$2,000. For the submitter or a qualified Shareholder to be eligible to sign the proposal, that Shareholder must have been the registered Shareholder or beneficial owner entitled to vote at our annual general meetings for an uninterrupted period of at least two years before the date the proposal is signed.
For a Shareholder proposal to be eligible under Rule 14a-8 of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), such Shareholder must submit the proposal, along with proof of ownership of our Common Shares, no later than December 11, 2024. This date will change if the date of the 2025 Annual General Meeting of Shareholders is more than 30 calendar days earlier or later than May 22, 2025.
A Shareholder wishing to nominate an individual to be a director, other than pursuant to a requisition of a general meeting made pursuant to the BCBCA or a Shareholder proposal made pursuant to the BCBCA provisions described above, is required to comply with Section 13.9 of the Articles. Section 13.9 of the Articles provides, inter alia, that proper written notice of any such director nomination (the “Nomination Notice”) for an annual general meeting of Shareholders must be provided to our Secretary at 701 Veterans Circle, Warminster, Pennsylvania 18974, United States, not less than 30 nor more than 65 days prior to the date of the annual general meeting of Shareholders; provided, however, that in the event that the annual general meeting of Shareholders is to be held on a date that is less than 50 days after the date (the “Notice Date”) on which the first public announcement of the date of the annual general meeting was made, the Nomination Notice must be provided no later than the close of business on the tenth day following the Notice Date. The foregoing is merely a summary of provisions contained in Section 13.9 of the Articles, is in addition to any other requirements under applicable laws, is not comprehensive and is qualified by the full text of such provisions. The full text of such provisions is set out in Section 13.9 of the Articles, as amended, copies of which are filed as Exhibits 3.1 and 3.2 to our Annual Report on Form 10-K for the year ended December 31, 2023, which can be found under our profile at www.sedarplus.ca or www.sec.gov.
5
In addition to satisfying the foregoing advance notice requirements under our Articles, to comply with the universal proxy rules under the Exchange Act, Shareholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide written notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than March 24, 2025, which is the first business day following the 60
th
day prior to the one-year anniversary date of the Annual Meeting.
It is recommended that Shareholders submitting proposals utilize certified mail with return receipt requested to provide proof of timely receipt. The Chair of the Annual Meeting reserves the right to reject, rule out of order or take other appropriate action with respect to any proposal that does not comply with these and other applicable requirements, including conditions set forth in our Articles and conditions established by the SEC.
Whom should I contact if I have questions concerning the Proxy Statement/Circular or voting?
If you have questions concerning the information contained in this Proxy Statement/Circular, you may contact us by letter, phone or through our website as follows:
Arbutus Biopharma Corporation
Attn: Gloria Pichii
701 Veterans Circle
Warminster, Pennsylvania 18974, United States
Phone: 267.469.0914
Website: http://www.arbutusbio.com/
6
Our Board currently consists of seven (7) directors. The term of office of each of the current directors will end immediately before the election of directors at the Annual Meeting. Unless the director’s office is earlier vacated in accordance with the provisions of the BCBCA and our Articles, each director elected will hold office until immediately before the election of new directors at the next annual general meeting of our Shareholders and, if no director is then elected, until a qualified successor is duly elected or appointed.
Upon the recommendation of our Corporate Governance and Nominating Committee, our Board has nominated the following individuals to serve until the 2025 Annual General Meeting of Shareholders and until their respective successors are duly elected and qualified: Daniel Burgess, Richard C. Henriques, Keith Manchester, M.D., Michael J. McElhaugh, James Meyers, Melissa V. Rewolinski, Ph.D, and Frank Torti, M.D.
Drs. Torti and Manchester were each initially designated as nominees to our Board pursuant to rights Roivant Sciences Ltd. (“Roivant”) had in connection with its ownership of certain of our Preferred Shares. However, such rights expired on October 16, 2021 in connection with the automatic conversion of Preferred Shares held by Roivant into Common Shares.
Shareholders may also nominate individuals for election to our Board in accordance with our Articles and the BCBCA, as more fully described below under
“Corporate Governance - Director Nominations.”
We are not aware that any of our nominees will be unable or unwilling to serve as one of our directors; however, should we become aware of such an occurrence before the election of directors takes place at the Annual Meeting, if the persons named in the accompanying proxy are appointed as proxyholders, it is intended that the discretionary power granted under such proxy will be used by the proxyholders to vote in their discretion for a substitute nominee or nominees.
Biographical information and the attributes, skills and experience of each nominee that led our Corporate Governance and Nominating Committee and Board to determine that such nominee should serve as a director are discussed in the
“Executive Officer and Directors”
section of this Proxy Statement/Circular.
Vote Required and Recommendation of our Board
Under our Majority Voting Policy, each director nominee must receive more “FOR” votes than “WITHHOLD” votes for his or her appointment to be immediately approved. Our Majority Voting Policy is more fully described below under
“Corporate Governance - Director Election and Majority Voting Policy.”
Unless directed otherwise by a Shareholder, or such authority is withheld, the individuals named in the accompanying proxy intend to vote the Common Shares for which either of them is appointed proxyholder “FOR” each director nominee whose name is set forth herein.
Our Board recommends that our Shareholders vote FOR ALL of the director nominees.
7
Background
Our Board believes that equity incentives are important tools in motivating the performance of our officers, employees, and directors. We believe our success depends largely upon our ability to attract, retain, and motivate the highly skilled talent and personnel we need and expect to make important contributions to our business. We accomplish this by providing our employees with meaningful equity ownership opportunities. The life sciences market is highly competitive, and our results are largely attributable to the talents, expertise, efforts, and dedication of our employees. Our compensation program, including the granting of equity compensation, is a crucial way we not only attract and recruit new employees, but also how we retain our most experienced and skilled employees. We are often competing for highly skilled talent with many companies that have evergreen provisions in their equity incentive plans, which provide for annual additions of new shares eligible for grant to current and prospective future employees. We do not have an evergreen provision in our equity plan that provides for an annual increase of new shares to grant and, as such, we are required to request Shareholders to approve a total share pool that will sustain our equity incentive program, and this request is intended to do so.
During 2022, and for all previous years, equity incentives for all our employees were in the form of stock options. Beginning in 2023, all employees received a mix of stock options and restricted stock units. We believe offering a mix of equity awards enhances our ability to attract, retain and motivate our employees.
Equity Burn Rate
The following table provides detailed information regarding the activity related to our equity incentive plans and weighted average Common Shares outstanding for the fiscal year ended December 31, 2023.
|
Stock options granted
|
| |
5,082,640
|
|
Restricted stock units granted
|
| |
1,344,550
|
|
Total number of Common Shares underlying equity grants
|
| |
6,427,190
|
|
Weighted-average Common Shares outstanding
|
| |
165,960,379
|
|
Annual equity burn rate
(1)
for 2023
|
| |
3.9%
|
|
(1)
|
Equity burn rate is calculated by dividing the sum of the number of Common Shares underlying equity awards granted during the period by the weighted-average total number of Common Shares outstanding during the period.
|
|
Total restricted stock units outstanding
|
| |
2,132,635
|
|
Total shares subject to outstanding stock option awards
|
| |
21,163,168
|
|
Weighted-average exercise price of stock options outstanding
|
| |
$3.32
|
|
Weighted-average remaining term of stock options outstanding
|
| |
7.4 years
|
|
Total shares available to grant
|
| |
3,108,772
|
|
Total Common Shares outstanding
|
| |
180,174,930
|
|
Dilution
(2)
|
| |
14.7%
|
|
(2)
|
Dilution is calculated by dividing the sum of the number of Common Shares subject to outstanding awards and the total number of Common Shares remaining available for grant by the total number of Common Shares outstanding.
|
8
(the “Compensation Committee”), our Board has approved, subject to Shareholder approval, an amendment to the 2016 Plan to (a) increase the aggregate number of Common Shares authorized for issuance under the 2016 Plan by 9,500,000 Common Shares and (b) increase the aggregate number of Common Shares that may be issued pursuant to incentive stock options granted thereunder by 9,500,000 Common Shares. Our Board believes that equity awards provide an important incentive for our employees, including our executive officers, and our directors to remain with us, to motivate them to help achieve our corporate objectives and to align their interests with those of our Shareholders. Our Board voted to approve the amendment to the 2016 Plan to ensure that we have sufficient capacity under the 2016 Plan to continue to provide appropriate equity incentives.
On March 25, 2024, the closing price of our Common Shares on the Nasdaq Global Select Market was $2.49 per share.
Summary of the Material Terms of the 2016 Plan
The following summary describes the material terms of the 2016 Plan and provides a general description of the U.S. federal income tax consequences applicable to certain transactions involving awards under the 2016 Plan. The following description of certain features of the 2016 Plan is qualified in its entirety by reference to the full text of (x) Amendment No. 6 to the 2016 Plan and (y) the 2016 Plan, each of which are filed as
Annex A
to this Proxy Statement/Circular.
Administration
The 2016 Plan is administered by our Compensation Committee, or such other committee designated by our Board to administer the 2016 Plan and comprised of members as specified under the 2016 Plan (the “2016 Plan Committee”). Our Board will fill vacancies on and from time to time may remove or add members to the 2016 Plan Committee, and the 2016 Plan Committee will be so constituted to permit awards granted under the 2016 Plan to be exempt from Section 16(b) of the Exchange Act.
Subject to the express provisions of the 2016 Plan, the 2016 Plan Committee has authority to administer and interpret the 2016 Plan, including the authority to determine who is eligible to participate in the 2016 Plan and to whom and when awards are granted under the 2016 Plan, to grant awards, to determine the number of Common Shares subject to awards and the exercise or purchase price of such shares under an award, to establish and verify the extent of satisfaction of any performance criteria applicable to awards, to prescribe and amend the terms of the agreements evidencing awards made under the 2016 Plan, and to make other determinations deemed necessary or advisable for the administration of the 2016 Plan. Also, subject to the requirements of applicable corporate laws, and any limitations under applicable stock exchange rules, the 2016 Plan Committee also has the power to delegate to officers the authority to grant and determine the terms and conditions of awards granted under the 2016 Plan. These delegated officers shall not be permitted to grant awards to any person subject to Rule 16b-3 under the Exchange Act.
Common Shares Available for Awards
If the proposed amendment to the 2016 Plan is approved by our Shareholders, then, subject to adjustment as provided for in the 2016 Plan, the aggregate number of Common Shares that will be reserved for issuance under the 2016 Plan will be 33,500,000. If any Common Shares covered by an award or to which an award relates are not purchased or are forfeited or are reacquired by us (including any awards that are settled in cash), or if an award otherwise terminates or is cancelled without delivery of any Common Shares, then the number of Common Shares counted against the aggregate number of Common Shares available under the 2016 Plan with respect to such award, to the extent of any such forfeiture, reacquisition by us, termination or cancellation, will again be available for granting awards under the 2016 Plan. Notwithstanding the foregoing, the following Common Shares will not again become available for issuance under the 2016 Plan: (w) any Common Shares which would have been issued upon any exercise of an option but for the fact that the exercise price was paid by a “net exercise” or any Common Shares tendered in payment of the exercise price of an option; (x) any Common Shares withheld by us or Common Shares tendered to satisfy any tax withholding obligation with respect to an award under the 2016 Plan; (y) Common Shares covered by a share-settled stock appreciation right (“SAR”) issued under the 2016 Plan that are not issued in connection with settlement in Common Shares upon exercise; or (z) Common Shares that are repurchased by us using option exercise proceeds.
9
Eligibility
Participants under the 2016 Plan are limited to employees, officers, non-employee directors, consultants, independent contractors, or advisors providing services to us or our affiliates, or any such person to whom an offer of employment or engagement with us or any of our affiliates is extended.
In determining to whom awards will be granted and the nature of such each award, the 2016 Plan Committee may consider the nature of the services rendered by the respective participant, their present and potential contributions to our success or such other factors as the 2016 Plan Committee, in its discretion, deems relevant.
As of March 25, 2024, we had 72 employees and six non-employee directors who would be eligible to participate in the 2016 Plan.
General Terms and Conditions of Awards
Nonqualified Stock Options
The 2016 Plan Committee may grant nonqualified stock options under the 2016 Plan which do not meet the requirements of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), and which will be subject to the following terms and conditions. The option exercise price per share will be determined by the 2016 Plan Committee but will not be less than 100% of the “fair market value” of the Common Shares on the date of grant of such option, with limited exceptions. The term “fair market value” means either: (a) if the Common Shares are listed on any established stock exchange, the price of one Common Share at the close of the regular trading session of such market or exchange on such date, as reported by The Wall Street Journal or a comparable reporting service, or, if no sale of Common Shares shall have occurred on such date, on the next preceding date on which there was a sale of Common Shares; or (b) if the Common Shares are not so listed on any established stock exchange, the average of the closing “bid” and “asked” prices quoted by the OTC Bulletin Board, the National Quotation Bureau, or any comparable reporting service on such date or, if there are no quoted “bid” and “asked” prices on such date, on the next preceding date for which there are such quotes for a Common Share; or (c) if the Common Shares are not publicly traded as of such date, the per share value of a Common Share, as determined by our Board, or any duly authorized committee of our Board, in its sole discretion, by applying principles of valuation with respect thereto.
The exercise price of an option may be paid through various means specified by the 2016 Plan Committee, including in cash, Common Shares (actually or by attestation), other securities, other awards or other property, or any combination thereof. With limited exceptions (legal prohibition on exercise, black-out periods, and lock-up agreements) for which a thirty-day extension is provided, every option which has not been exercised within ten years of its date of grant will lapse upon the expiration of the ten-year period, unless it has lapsed at an earlier date as determined by the 2016 Plan Committee.
Incentive Stock Options
The 2016 Plan Committee may grant incentive stock options under the 2016 Plan that meet the requirements of Section 422 of the Code. The current aggregate number of Common Shares that may be issued under all incentive stock options under the 2016 Plan is 24,000,000 Common Shares. If the proposed amendment to the 2016 Plan is approved by our Shareholders, then the aggregate number of Common Shares that may be issued under all incentive stock options under the 2016 Plan will be 33,500,000 Common Shares. Under the 2016 Plan, the aggregate fair market value, determined at the time the option is granted, of the Common Shares with respect to which incentive stock options are exercisable for the first time by any participant during any calendar year (under the plan and any of our other incentive stock option plans) may not exceed $100,000, or any other limit as may be prescribed by the Code from time to time. The option exercise price per share will be determined by the 2016 Plan Committee but will not be less than 100% of the “fair market value” of the Common Shares on the date of grant of such option. In the case of a grant of an incentive stock option to a participant who, at the time such option is granted, owns stock possessing more than 10% of the combined voting power of all classes of our stock, the option exercise price per share under such option will not be less than 110% of the “fair market value” of the Common Shares on the date of grant of such option and such option will expire and no longer be exercisable no later than five years from the date of grant of such option.
SARs
The 2016 Plan Committee may grant SARs under the 2016 Plan. Subject to the express provisions of the 2016 Plan and as discussed in this paragraph, the 2016 Plan Committee has discretion to determine the grant value,
10
term, methods of exercise, dates of exercise, methods of settlement and any other terms and conditions of any SAR. The grant value of each SAR granted under the 2016 Plan will be determined by the 2016 Plan Committee and will be equal to or greater than the closing market price of a Common Share on the date of grant of the SAR, provided, however, that if the SAR being granted is in substitution for a SAR previously granted by an entity that is acquired by or merged with us, the grant value of such SAR may be lower than the closing market price of a Common Share on the date of grant of the SAR. Every SAR which has not been exercised within ten years of its date of grant will lapse upon the expiration of such ten-year period, unless it has lapsed at an earlier date as determined by the 2016 Plan Committee.
Restricted Stock and Restricted Stock Units
The 2016 Plan Committee may grant restricted stock or restricted stock units under the 2016 Plan. Restricted stock and restricted stock units will be subject to such restrictions as the 2016 Plan Committee may impose (including, without limitation, any limitation on the right to vote a share of restricted stock or the right to receive any dividend or other right or property with respect thereto), which restrictions may lapse separately or in combination at such time or times, in such installments or otherwise as the 2016 Plan Committee may deem appropriate.
Any restricted stock granted under the 2016 Plan shall be issued at the time such awards are granted and may be evidenced in such manner as the 2016 Plan Committee may deem appropriate. In the case of restricted stock units, no Common Shares shall be issued at the time such awards are granted. Upon the lapse or waiver of restrictions and the restricted period relating to restricted stock units evidencing the right to receive Common Shares, such Common Shares shall be issued and delivered to the holder of the restricted stock units.
Except as otherwise determined by the 2016 Plan Committee, if a director resigns or is removed or if the employment of an employee holding restricted stock or restricted stock units terminates during the applicable restricted period, the restricted stock and/or restricted stock units held by such director or employee will be forfeited and reacquired by us.
Dividend Equivalents
The holder of a dividend equivalent will be entitled to receive payments (in cash, shares, other securities, or other property) equivalent to the amount of cash dividends paid by us to our Shareholders, with respect to the number of shares determined by the 2016 Plan Committee. Dividend equivalents will be subject to other terms and conditions determined by the 2016 Plan Committee, but the 2016 Plan Committee may not (i) grant dividend equivalents in connection with options SARs or other awards the value of which is based solely on an increase in the value of the Common Shares after the date of grant of such award or (ii) pay a dividend equivalent with respect to an award prior to the date on which all condition or restrictions on such award have been satisfied, waived or lapsed. In no event will any dividends or dividend equivalents be paid with respect to an award until the award has vested.
Performance Awards
The 2016 Plan Committee may grant performance awards under the 2016 Plan. Each performance award will confer upon the participant the opportunity to earn future payments tied to the achievement of one or more performance criteria during such performance periods as the 2016 Plan Committee shall establish.
Transferability
Except as otherwise may be provided by the 2016 Plan Committee in its discretion, and subject to such additional terms and conditions as it determines, no award (other than fully vested and unrestricted Common Shares issued pursuant to any award) and no right under any such award shall be transferable by a participant other than by will or by the laws of descent and distribution, and no award (other than fully vested and unrestricted Common Shares issued pursuant to any award) or right under any such award may be pledged, alienated, attached or otherwise encumbered, and any purported pledge, alienation, attachment or encumbrance thereof shall be void and unenforceable against us or any of our affiliates.
Change in Control Provisions
Upon a Change in Control (as defined in the 2016 Plan), except as otherwise provided in an applicable award agreement or in another written agreement with a participant, the parties to the Change in Control may agree that awards will be assumed, continued, or substituted for by the successor entity, with appropriate adjustments as to the
11
number and kind of shares and prices subject to the award. Except as otherwise provided in an applicable award agreement or in another written agreement with a participant, if, within 12 months following a Change in Control in which a participant’s awards are assumed, continued or substituted for by the successor entity, the participant’s status as a service provider is terminated without Cause (as defined in the 2016 Plan) by us or one of our affiliates (or a successor company of us or such affiliate), then all of the participant’s outstanding awards will become fully vested and exercisable as of the moment immediately prior to such termination.
In the event awards are not assumed, continued, or substituted for by the successor entity in a Change in Control, upon the Change in Control, the 2016 Plan and all awards will terminate. In the event of such termination, except as otherwise may be provided in an applicable award agreement or in another written agreement with a participant, all options and SARs with time-based vesting conditions or restrictions will become fully exercisable as of the effective time of the Change in Control, all other awards with time-based vesting conditions or restrictions will become fully vested and nonforfeitable as of the effective time of the Change in Control, and all awards with conditions and restrictions relating to the attainment of performance goals will be deemed to vest and become nonforfeitable as of the effective time of the Change in Control assuming the higher of (i) achievement of all relevant performance goals at the “target” level (pro-rated based upon the length of time within the performance period that elapsed prior to the Change in Control) or (ii) actual achievement as of a date reasonably proximal to the date of the consummation of the Change in Control. For purposes of clause (ii) of the preceding sentence, if, based on the discretion of the 2016 Plan Committee or the Board, actual achievement is not determinable, the relevant performance goals will be deemed to have been achieved at the “target” level (pro-rated based upon the length of time within the performance period that elapsed prior to the Change in Control). In addition, in the event of such termination, the 2016 Plan Committee or the Board will have the option, in its sole discretion, (a) to make or provide for a payment, in cash or in kind, to participants holding options and SARs equal to the difference between the per share consideration paid in the Change in Control transaction and the exercise price or grant price, as applicable, of the options or SARs and/or (b) to provide that each participant will be permitted, within a specified period of time prior to the Change in Control, to exercise all outstanding options and SARs, to the extent then exercisable. For purposes of clause (a) of the preceding sentence, if the exercise price or grant price, as applicable, of any option or SAR is equal to or greater than the per share consideration paid in the Change in Control transaction, the 2016 Plan Committee or the Board may, in its sole discretion, cancel the option or SAR without the payment of consideration for the cancellation of the award. The 2016 Plan Committee or the Board will also have the option, in its sole discretion, to make or provide for a payment, in cash or in kind, to holders of other awards in an amount equal to the per share consideration paid in the Change in Control transaction multiplied by the number of vested shares subject to the award.
Amendment and Termination
No awards may be granted pursuant to the 2016 Plan after the ten-year anniversary of the effective date of the 2016 Plan. Except to the extent Shareholder approval or participant consent is required as provided by the 2016 Plan, our Board may amend, modify, or terminate the plan.
The 2016 Plan Committee may amend, modify, or terminate an outstanding award, provided, however, that, except as expressly provided in the 2016 Plan, the 2016 Plan Committee may not, without the participant’s written consent, amend, modify or terminate an outstanding award that materially and adversely alters or impairs the terms or conditions of an award previously granted to a participant. Without limiting the foregoing, the 2016 Plan provides that our Board may amend, suspend, terminate, or discontinue the Plan, and the 2016 Plan Committee may amend or alter any previously granted award, as applicable, without obtaining the approval of our Shareholders to:
|
•
|
amend the eligibility for, and limitations or conditions imposed upon, participation in the 2016 Plan;
|
|
•
|
amend any terms relating to the granting or exercise of awards, including but not limited to terms relating to the amount and payment of the exercise price, or the vesting, expiry, assignment or adjustment of awards, or otherwise waive any of our conditions or rights under any outstanding award, prospectively or retroactively;
|
|
•
|
make changes that are necessary or desirable to comply with applicable laws, rules, regulations and policies of any applicable governmental entity or stock exchange (including amendments to awards necessary or desirable to avoid any adverse tax results under Code Section 409A), and no action taken to comply shall be deemed to impair or otherwise adversely alter or impair the rights of any holder of an award or beneficiary thereof; or
|
|
•
|
amend any terms relating to the administration of the 2016 Plan, including the terms of any administrative guidelines or other rules related to the 2016 Plan.
|
12
Under the 2016 Plan, prior approval of our Shareholders are required for any amendment to the 2016 Plan or an award thereunder that would:
|
•
|
require Shareholder approval under the rules or regulations of the SEC, the Nasdaq Stock Market LLC (“Nasdaq”) or any other securities exchange that are applicable to us;
|
|
•
|
increase the number of Common Shares authorized under the 2016 Plan as specified under the 2016 Plan;
|
|
•
|
increase the number of Common Shares or value subject to the limitations contained in the 2016 Plan;
|
|
•
|
permit repricing of options or SARs, which is prohibited by the 2016 Plan;
|
|
•
|
permit the award of options or SARs at a price less than 100% of the fair market value of a Common Share on the date of grant of such option or SAR, contrary to the provisions of the 2016 Plan; or
|
|
•
|
increase the maximum term permitted for options or SARs as specified under the 2016 Plan.
|
Certain U.S. Federal Income Tax Consequences
The following is a summary of the principal U.S. federal income tax consequences generally applicable to awards made under the 2016 Plan. The summary does not contain a complete analysis of all the potential tax consequences relating to awards granted under the 2016 Plan, including state, local or foreign tax consequences. This summary is intended for the information of our Shareholders considering how to vote at the Annual Meeting and not as tax guidance to participants in the 2016 Plan. This summary is not intended or written to be used, and cannot be used, for the purposes of avoiding taxpayer penalties. Tax consequences are subject to change, and a taxpayer’s particular situation may be such that some variation in application of the described rules is applicable. Accordingly, participants are advised to consult their own tax advisors with respect to the tax consequences of participating in the 2016 Plan.
Nonqualified Stock Options
A participant will not be deemed to have received taxable income upon the grant of a nonqualified stock option. Upon the exercise of a nonqualified stock option, a participant generally will be deemed to have received taxable ordinary income in an amount equal to the excess of the fair market value of the Common Shares received on the date of exercise over the option price.
Upon the exercise of a nonqualified stock option, we will ordinarily be entitled to a deduction for federal income tax purposes in an amount equal to the amount included in income by the participant as a result of such exercise, subject to the limitations of Section 162(m) of the Code and our compliance with applicable reporting requirements. This deduction will be available to us in the tax year in which the participant recognizes the income.
The income arising from a participant who is an employee exercising a nonqualified stock option will be treated as compensation income for income and payroll tax withholding purposes, and the 2016 Plan Committee may allow the participant to satisfy the tax withholding obligation by withholding a portion of the shares that would otherwise be delivered upon exercise. The basis of shares received upon the exercise of a nonqualified stock option will be the option exercise price paid plus the amount recognized by the participant as taxable income attributable to such shares as a result of the exercise. Gain or loss recognized by the participant on a subsequent disposition of any such shares will be capital gain or loss if such shares constitute a capital asset in the hands of the participant. A participant’s holding period will commence on the date of exercise.
Incentive Stock Options
Participants will not be deemed to recognize taxable income upon the grant or exercise of an incentive stock option. If a participant makes no disqualifying disposition of the Common Shares received upon exercise within the one year period beginning after the transfer of such Common Shares to the participant nor within two years from the date of grant of the incentive stock option, and if the participant at all times from the date of the grant of the incentive stock option to a date three months before the date of exercise has been an employee of ours, any gain recognized on the disposition of the Common Shares acquired upon exercise will be long-term capital gain. The difference between the fair market value of the Common Shares at the time of exercise and the exercise price will, however, be an item of tax preference, and may subject a participant to the alternative minimum tax. We will not be entitled to any deduction with respect to the grant or exercise of the incentive stock option or the transfer of Common Shares acquired upon exercise.
13
If the participant makes a disqualifying disposition of the Common Shares before the expiration of the one or two year holding periods described above, the participant will be deemed to have received taxable ordinary income at the time of such disposition to the extent that the fair market value of the Common Shares at the time of exercise, or, if less, the amount realized on such disposition, exceeds the exercise price. To the extent that the amount realized on such disposition exceeds the fair market value of the Common Shares at the time of exercise, such excess will be taxed as capital gain if the Common Shares is otherwise a capital asset in the hands of the participant. To the extent the participant recognizes ordinary income on a disqualifying disposition of the Common Shares, we may be entitled to a deduction for federal income tax purposes in an amount equal to the ordinary income recognized by the participant, subject to the limitations of Section 162(m) of the Code and our compliance with applicable reporting requirements.
SARs
A participant will not be deemed to have received taxable income upon the grant or vesting of a SAR. Upon the exercise of a SAR, a participant generally will be deemed to have received income, taxable for federal income tax purposes at ordinary income rates, equal to the fair market value at the time of exercise of any Common Shares received plus the amount of any cash received, and we will ordinarily be entitled to a deduction for federal income tax purposes equal to the amount of ordinary income recognized by the participant as a result of such exercise, subject to the limitations of Section 162(m) of the Code and our compliance with applicable reporting requirements.
The income arising from a participant who is an employee exercising a SAR will be treated as compensation income for withholding tax purposes and the 2016 Plan Committee may allow the participant to satisfy the tax withholding obligation by withholding a portion of the shares that would otherwise be delivered upon exercise. The basis of shares received upon the exercise of a SAR will equal the fair market value of the shares at the time of exercise. Gain or loss recognized by the participant on a subsequent disposition of any such shares will be capital gain or loss if such shares constitute a capital asset in the hands of the participant.
Restricted Stock
The federal income tax consequences of the issuance of restricted stock will depend upon whether the participant elects to be taxed at the time of grant of the restricted stock under Section 83(b) of the Code. If no election is made, the participant will not be deemed to have received taxable income upon the grant of restricted stock, but rather recognition of income will be postponed until such time as the restrictions on the shares of restricted stock lapse. At that time, the participant will be deemed to have received taxable ordinary income in an amount equal to the fair market value of the restricted stock when the restrictions lapse. If a Section 83(b) election is made, the participant will be deemed to have received taxable ordinary income at the time of the grant of the restricted stock equal to the fair market value of the shares of restricted stock at that time determined without regard to any of the restrictions on the shares, and the participant will not recognize ordinary income on the lapse of the restrictions.
We will ordinarily be entitled to a deduction for federal income tax purposes in the taxable year in which the participant recognizes any ordinary income as a result of the lapse of restrictions on the restricted stock or as a result of a Section 83(b) election, subject to the limitations of Section 162(m) of the Code and our compliance with applicable reporting requirements. The amount of the deduction will equal the amount of ordinary income recognized by the participant. In the case of employees, such income will be treated as compensation income for income and payroll tax withholding purposes, and the 2016 Plan Committee may allow the participant to satisfy the tax withholding obligation by withholding a portion of the shares whose restrictions have lapsed. The basis of any shares received will equal the amount recognized by the participant as taxable income attributable to such shares as a result of the lapse of restrictions on the restricted stock or as a result of a Section 83(b) election. Gain or loss recognized by the participant on a subsequent disposition of any such shares will be capital gain or loss if such shares constitute a capital asset in the hands of the participant. For purposes of determining the holding period of any such shares, there will be included only the period beginning at the time the restrictions lapse or, if a Section 83(b) election is made, at the time of grant.
Restricted Stock Units
A participant will not be deemed to have received taxable income upon the grant of restricted stock units. The participant will be deemed to have received taxable ordinary income at such time as shares are distributed to the participant. Upon the distribution of shares to a participant with respect to restricted stock units, we will ordinarily be entitled to a deduction for federal income tax purposes in an amount equal to the taxable ordinary income recognized by the participant, subject to the limitations of Section 162(m) of the Code and our compliance with
14
applicable reporting requirements. In the case of employees, such income will be treated as compensation income for income and payroll tax withholding purposes, and the 2016 Plan Committee may allow the participant to satisfy the tax withholding obligation by withholding a portion of the shares that would otherwise be delivered. The basis of the shares of Common Shares received will equal the amount of taxable ordinary income recognized by the participant upon receipt of such shares. Gain or loss recognized by the participant on a subsequent disposition of any such shares will be capital gain or loss if such shares constitute a capital asset in the hands of the participant. A participant’s holding period will commence on the date the shares are distributed to the participant.
Section 409A of the Code
The 2016 Plan Committee intends to administer and interpret the 2016 Plan and all award agreements in a manner designed to satisfy the requirements of Section 409A of the Code and to avoid any adverse tax results thereunder to a holder of an award.
Clawback or Recoupment
All awards under the 2016 Plan will be subject to any applicable policy, law, rule or regulation or applicable stock exchange rule, including, without limitation, Section 304 of the Sarbanes-Oxley Act of 2002, Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act and any applicable stock exchange listing rule adopted pursuant thereto, including our Incentive Compensation Recovery Policy, a copy of which can be found attached as Exhibit 97 to our Annual Report on Form 10-K for the year ended December 31, 2023. Awards may be granted with additional clawback or recoupment conditions or provisions as may be determined by the 2016 Plan Committee.
New Plan Benefits
The issuance of any awards under the 2016 Plan will be at the discretion of the 2016 Plan Committee. In addition, the benefit of any awards granted under the 2016 Plan will depend on numerous factors, including the fair market value of our Common Shares on future dates, among other things. Therefore, it is not possible to determine the amount or form of any award that will be granted to any individual in the future.
Prior Grants Under the 2016 Plan
The following table sets forth, with respect to the individuals and groups named below, the aggregate number of shares subject to restricted stock units and options previously granted under the 2016 Plan (whether or not outstanding, vested or forfeited, as applicable) as of December 31, 2023. The price per share of our common shares as of such date was $2.50, based on the closing price as of December 29, 2023.
|
Name
|
| |
Shares
Underlying
Restricted Stock
Units
|
|
|
Shares of Common
Stock Underlying
Stock Options
(1)
|
Named Executive Officers
|
|
|
|
|
|
|
William H. Collier
|
|
|
216,500
|
|
|
2,740,863
|
Michael McElhaugh
|
|
|
83,700
|
|
|
1,055,318
|
Michael J. Sofia, Ph.D.
|
|
|
82,200
|
|
|
1,258,700
|
Elizabeth Howard, Ph.D.
|
|
|
69,700
|
|
|
1,003,700
|
Director Nominees
|
|
|
|
|
|
|
Frank Torti, M.D.
|
|
|
—
|
|
|
206,000
|
Daniel Burgess
|
|
|
—
|
|
|
206,000
|
Richard C. Henriques
|
|
|
—
|
|
|
206,000
|
Keith Manchester
|
|
|
—
|
|
|
206,000
|
James Meyers
|
|
|
—
|
|
|
206,000
|
Melissa V. Rewolinski, Ph.D.
|
|
|
—
|
|
|
110,000
|
All current executive officers as a group (5 persons)
|
|
|
273,800
|
|
|
3,929,718
|
All current non-employee directors as a group (6 persons)
|
|
|
—
|
|
|
1,140,000
|
All current and former employees, including current officers who are not executive officers, as a group
|
|
|
784,550
|
|
|
9,882,127
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
(1)
|
This table excludes stock options previously granted to employees and directors under the 2011 Plan. The 2011 Plan expired pursuant to its 10-year term in June 2021.
|
15
Proposed Amendment to 2016 Plan
Our Board has approved, and recommends for adoption by our Shareholders, an amendment to the 2016 Plan to (a) increase the aggregate number of Common Shares reserved for issuance under the 2016 Plan from 24,000,000 Common Shares to 33,500,000 Common Shares and (b) increase the aggregate number of Common Shares that may be issued pursuant to incentive stock options granted thereunder from 24,000,000 Common Shares to 33,500,000 Common Shares.
The effectiveness of the proposed amendment to our 2016 Plan is contingent upon Shareholder approval. If our Shareholders do not approve the amendment, the existing version of our 2016 Plan will remain in effect, unchanged.
Vote Required and Recommendation of our Board
The approval of this Proposal No. 2 requires a majority of the votes cast at the Annual Meeting. For purposes of determining the number of votes cast, only the Common Shares voting “FOR” or “AGAINST” will be counted.
Our Board recommends that our Shareholders vote FOR Proposal No. 2 to approve the amendment to the 2016 Plan to (a) increase the aggregate number of Common Shares reserved for issuance under the 2016 Plan by 9,500,000 Common Shares and (b) increase the aggregate number of Common Shares that may be issued pursuant to incentive stock options granted thereunder by 9,500,000 Common Shares.
16
PROPOSAL NO. 3 – ADVISORY VOTE TO APPROVE THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS
Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and Section 14A of the Exchange Act, we are conducting an advisory vote on the compensation paid to our named executive officers. This proposal, commonly known as “say-on-pay,” gives our Shareholders the opportunity to express their views on our named executive officers’ compensation. The vote is advisory, and, therefore, it is not binding on our Board, our Compensation Committee, or us. Nevertheless, our Compensation Committee will consider the outcome of the vote when considering future executive compensation decisions. As a result of our last “say-on-frequency” vote, which occurred at the 2021 Annual General and Special Meeting, we will hold this advisory “say-on-pay” vote annually.
Our executive compensation program is designed to attract, motivate, and retain our named executive officers, each of whom is critical to our success. Our Board believes that our executive compensation program is well tailored to retain and motivate key executives while recognizing the need to align our executive compensation program with the interests of our Shareholders and our “pay-for-performance” philosophy. Our Compensation Committee continually reviews the compensation programs for our named executive officers to ensure they achieve the desired goals of aligning our executive compensation structure with our Shareholders’ interests and current market practices.
We encourage our Shareholders to read the “Summary Compensation Table” and other related compensation tables and narrative disclosures in the “Executive Compensation” section of this Proxy Statement/Circular, which describe the 2023 compensation of our named executive officers.
We are asking our Shareholders to approve, on an advisory basis, the compensation of our named executive officers as disclosed in this Proxy Statement/Circular pursuant to Item 402 of Regulation S-K, including the compensation tables and the narrative disclosures that accompany the compensation tables.
Vote Required and Recommendation of our Board
The approval of this Proposal No. 3 requires a majority of the votes cast at the Annual Meeting. For purposes of determining the number of votes cast, only the Common Shares voting “FOR” or “AGAINST” will be counted. Because this is an advisory vote, there is no minimum approval necessary; however, our Board will consider the results of this advisory vote when considering future decisions related to such proposal.
Our Board recommends that our Shareholders vote FOR Proposal No. 3 to approve the compensation of the Company’s named executive officers.
17
The Audit Committee has reappointed, subject to Shareholder approval, EY to serve as our independent registered public accounting firm and to audit our financial statements for the fiscal year ending December 31, 2024. Management requests that our Shareholders approve the appointment of EY. If the appointment of EY is not approved by the Shareholders, EY shall continue to serve as our independent registered public accounting firm until a successor is appointed.
EY was our independent registered public accounting firm for the fiscal year ended December 31, 2023. EY is expected to have a representative attend the Annual Meeting to be available to respond to appropriate questions and to make a statement if he or she desires.
Information regarding the fees paid to our independent registered public accounting firm in 2023 and 2022 and our pre-approval policies relating to such fees is discussed in the
“Independent Registered Public Accounting Firm”
section of this Proxy Statement/Circular.
Vote Required and Recommendation of our Board
The approval of this Proposal No. 4 requires a majority of the votes cast at the Annual Meeting. For purposes of determining the number of votes cast, only the Common Shares voting “FOR” or “AGAINST” will be counted.
Our Board recommends that our Shareholders vote FOR the approval of the appointment of EY as our independent registered public accounting firm for the fiscal year ending December 31, 2024.
If any other matters are properly presented for consideration at the Annual Meeting, including, among other things, consideration of a motion to adjourn the Annual Meeting to another time or place in order to solicit additional proxies in favor of the recommendation of our Board, the designated proxyholders intend to vote the shares represented by the proxies appointing them on such matters in accordance with the recommendation of our Board, and the authority to do so is included in the proxy.
As of the date of this Proxy Statement/Circular, our Board knows of no other matters which are likely to come before the Annual Meeting.
18
Board Composition
Our Board currently consists of seven (7) directors. The term of office of each of the current directors will end immediately before the election of directors at the Annual Meeting. Unless the director’s office is earlier vacated in accordance with the provisions of the BCBCA and our Articles, each director elected will hold office until immediately before the election of new directors at the next annual general meeting of our Shareholders and, if no director is then elected, until a qualified successor is duly elected or appointed.
Executive Officers and Director Nominees
Our executive officers and director nominees, their positions with the Company and their ages as of March 25, 2024, are as follows:
|
Name
|
| |
Age
|
| |
Position(s)
|
|
Michael J. McElhaugh*
|
| |
50
|
| |
Interim President and Chief Executive Officer, and Director
|
|
David C. Hastings
|
| |
62
|
| |
Chief Financial Officer
|
|
J. Christopher Naftzger
|
| |
57
|
| |
General Counsel, Chief Compliance Officer, and Secretary
|
|
Michael J. Sofia, Ph.D.
|
| |
66
|
| |
Chief Scientific Officer
|
|
Karen Sims, M.D., Ph.D.
|
| |
53
|
| |
Chief Medical Officer
|
|
Frank Torti, M.D.*†
|
| |
45
|
| |
Chairman of our Board
|
|
Daniel Burgess*+
^
|
| |
62
|
| |
Director
|
|
Richard C. Henriques*+†
|
| |
68
|
| |
Director
|
|
Keith Manchester, M.D.*
^
|
| |
55
|
| |
Director
|
|
James Meyers*+
^
†
|
| |
59
|
| |
Director
|
|
Melissa V. Rewolinski, Ph.D.*†
|
| |
54
|
| |
Director
|
|
*
|
Nominee for election to our Board
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
+
|
Member of the Audit Committee
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
^
|
Member of the Corporate Governance and Nominating Committee
|
|
†
|
Member of the Executive Compensation and Human Resources Committee
|
19
Michael J. McElhaugh, Interim President and Chief Executive Officer and Director.
Mr. McElhaugh joined Arbutus in July 2014 and has served as our Interim President, Chief Executive Officer, and Director since January 2024. Prior to this, Mr. McElhaugh served as our Chief Operating Officer from November 2022 to December 2023 and as our Chief Business Officer from December 2018 to October 2022. Mr. McElhaugh has more than 20 years of scientific, strategic, transactional, and commercial experience spanning various operating roles within the pharmaceutical industry. Mr. McElhaugh joined Arbutus when it merged with OnCore Biopharma where he was a co-founder and served as its Chief Operating Officer. Previously, from March 2012 to May 2014 he was the Director, Hepatitis C Worldwide Commercialization at Bristol-Meyers Squibb. Prior to Bristol-Myers Squibb, Mr. McElhaugh was the Director, Business Development and Market Analytics at Pharmasset, Inc. and remained in that role following the acquisition by Gilead Sciences Inc. Mr. McElhaugh also held various positions at Viropharma, Inc. and at Merck and Co., Inc. Mr. McElhaugh received his B.S. degree from St. Joseph’s University, his M.S. degree from Thomas Jefferson University and his M.B.A. degree from the Johnson Graduate School of Management at Cornell University. Our Board believes Mr. McElhaugh’s many years of experience in the life sciences industry, as well as his perspective as a founder and long-time employee of Arbutus, qualifies him to serve on our Board.
Daniel Burgess, Director.
Mr. Burgess has served as a director since March 2017. He is currently Chairman and Chief Executive Officer of Pulmocide Ltd. He also serves as a Venture Partner at SV Health Investors, is Chairman of the Board of Nabriva Therapeutics plc and Cidara Therapeutics (Nasdaq: CDTX) and several private biotechnology companies. Mr. Burgess is also Chairman of the Joint Oversight Board of CARB-X, a global non-profit partnership dedicated to addressing issues of anti-bacterial resistance. Prior to his current roles, Mr. Burgess was President and CEO of Rempex Pharmaceuticals, a company he co-founded in 2011 and subsequently sold to the Medicines Company in December 2013 and was acting Chief Executive Officer of Therini Bio, Inc. (2020-2021). Prior to Rempex, Mr. Burgess was President and Chief Executive Officer of Mpex Pharmaceuticals, Inc., which was acquired by Aptalis Pharma Inc. in 2011. Mr. Burgess holds a B.A. in economics from Stanford University and an M.B.A. from Harvard Business School. Our Board believes Mr. Burgess’ board, senior management and financial experience at a variety of public and private biotechnology companies and his extensive time in the anti-infective field, allows him to provide our Board with critical perspectives and qualifies him to serve on our Board.
Richard C. Henriques, Director.
Mr. Henriques has served as a director since December 2014. He is currently a Senior Fellow at the University of Pennsylvania with a focus on impact investing. He formerly served as Chief Financial Officer for the Bill Melinda Gates Foundation from 2010 to 2014. In this role, Mr. Henriques was responsible for finance and accounting, financial planning and analysis, strategic planning, measurement and evaluation, program related investments and information technology. Mr. Henriques’ background includes more than 25 years working at Merck Co., Inc. (NYSE: MRK). During this time, he served as Senior Vice President of Finance for Global Human Health, Vice President and Corporate Controller, and Principal Accounting Officer, among other roles. Mr. Henriques currently serves as a member of the board of directors for the International Vaccine Institute, The Franklin Institute, Heritage Conservancy, Delaware Canal 21 (dedicated to preserving the 60 mile Delaware Canal), and Fisherman’s Mark (providing social services in Lambertville, NJ). He also serves on the board of Cabaletta Bio (Nasdaq: CABA), which is focused on discovery and development of therapies for B cell-mediated autoimmune diseases. He holds a B.A. in Oriental Studies from the University of Pennsylvania and an M.B.A. with a concentration in Finance from The Wharton School. Our Board believes Mr. Henriques’ experience at Merck and other organizations allows him to provide our Board with critical perspectives on finance, accounting, and internal controls issues, which qualifies him to serve on our Board.
Keith Manchester, M.D., Director.
Dr. Manchester has served as a director since March 2015. Dr. Manchester is a partner and the Head of Life Sciences for QVT Financial LP (“QVT”), an investment firm, where he has been employed since 2005. He focuses on investments in life sciences companies. Dr. Manchester also serves as a director of Kriya Therapeutics, Inc., Roivant Sciences Ltd. (Nasdaq: ROIV) and Roivant Sciences, Inc. Dr. Manchester previously served as a director of Myovant Sciences Ltd. (NYSE: MYOV) and on the Supervisory Board of Medigene AG (OTCMKTS: MDGEF). Prior to joining QVT, Dr. Manchester was Vice President of Business Development from 2002 to 2004 and Director of Business Development from 2000 to 2002 at Applied Molecular Evolution, Inc., a biotechnology company. From 1999 to 2000, Dr. Manchester was an associate at Vestar Capital Partners, a private equity firm. From 1997 to 1999, Dr. Manchester was an investment banker in the healthcare group
20
at Goldman, Sachs Co. Dr. Manchester received his A.B. degree from Harvard College and his M.D. degree from Harvard Medical School. Our Board believes Dr. Manchester’s training in medicine and his business development experience, which enable him to provide our Board with insights on clinical trials, product development and strategic priorities, qualifies him to serve on our Board.
James Meyers, Director.
Mr. Meyers has served as a director since October 2018. He also serves as a Board Member for CytomX Therapeutics (Nasdaq: CTMX) and Sangamo Therapeutics (Nasdaq: SGMO). In November 2020, Mr. Meyers became President and Chief Executive Officer of IntraBio Ltd., a privately held biopharmaceutical company with a late-stage drug pipeline that includes treatment for genetic and neurodegenerative diseases. In addition, Mr. Meyers has served as a Senior Advisor to the Boston Consulting Group since January 2019, and has served as a Senior Advisor to Gilead Sciences, Inc. (“Gilead”) (Nasdaq: GILD) since his retirement from Gilead in February 2018. During his tenure at Gilead, Mr. Meyers was one of a relatively small group of executives who were instrumental in transitioning the company from an innovative start-up to one of the most successful biopharmaceutical organizations in the world. Prior to his advisory role, Mr. Meyers served as Gilead’s Executive Vice President of Worldwide Commercial Operations, responsible for all commercial activities including pricing and market access. Mr. Meyers also led some of the most important and successful product launches in the history of the biopharmaceutical industry, most notably in the therapeutics areas of HCV and HIV. Prior to Gilead, Mr. Meyers served in roles of increasing responsibility at both Zeneca Pharmaceuticals and Astra U.S.A. Mr. Meyers also serves on the Board of Pulmocide Ltd., a privately held biopharmaceutical company focusing on the discovery and development of inhaled medicine for the treatment of life-threatening fungal and viral infections of the respiratory tract. Mr. Meyers received his B.A. in Economics from Boston College. Our Board believes Mr. Meyers’ experiences in the biopharmaceutical and healthcare industry, which allows him to contribute valuable input to our Board on our strategic and business affairs, qualifies him to serve on our Board.
Melissa V. Rewolinski, Ph.D., Director.
Dr. Rewolinski has served as a director since July 2023. Dr. Rewolinski has served as principal of MVR Consulting since August 2018, where she specializes in providing counsel to small and mid-size biotechnology and pharmaceutical companies. Earlier she held several senior level research and development positions for Intercept, rising to Senior Vice President, Head of Technical Operations, and was a member of the Executive Team. Previously, she served as Senior Director, Development for Amira Pharmaceuticals, and before that as a Chemical Development Group Leader and a Pharmaceutical Sciences Project Team Leader for Pfizer Global RD. Dr. Rewolinski began her career at Pharmacia Upjohn as a post-doctoral research scientist. She currently serves as a board member for American Type Culture Collection (ATCC) and served as a member of the board of directors of Lannett Company, Inc. from July 2019 to July 2023. Dr. Rewolinski earned a doctorate degree in organic chemistry and Bachelor of Science degree in chemistry, magna cum laude, from Rice University. Our Board believes Dr. Rewolinski’s experiences in the biotechnology and pharmaceutical industries and her research and development experience qualifies her to serve on our Board.
The following are brief biographies of our current executive officers:
Michael J. McElhaugh, Interim President and Chief Executive Officer and Director.
Please refer to the immediately preceding section for Mr. McElhaugh’s biographical information.
David C. Hastings, Chief Financial Officer.
Mr. Hastings has served as our Chief Financial Officer since June 2018. Mr. Hastings has close to 30 years of executive finance and operational experience with biotech and pharmaceutical companies in various stages of development, including commercial. Mr. Hastings spent the majority of his career at Incyte Corporation (a life sciences company with a focus on oncology), where he served as Chief Financial Officer and Executive Vice President. During his time there, Mr. Hastings oversaw all financial aspects as Incyte transitioned from research and development to commercialization following the launch of Jakafi
®
(ruxolitinib). Mr. Hastings also previously served as Vice President, Chief Financial Officer and Treasurer of ArQule Inc., where he played an important role in ArQule’s transition into a drug discovery and development organization, and in two strategic acquisitions, including the purchase of Cyclis Pharmaceuticals Inc. Most recently, Mr. Hastings served as the Chief Financial Officer and Senior Vice President of Unilife Corporation (a medical device company) from 2015 to 2017 and as its Chief Accounting Officer and Treasurer from 2016 to 2017. Mr. Hastings was an executive officer of Unilife Corporation when it filed for voluntary bankruptcy in April 2017. Mr. Hastings currently serves on the board of directors and chairs the Audit Committees of Scynexis, Inc. (Nasdaq: SCYX). Mr. Hastings received a B.A. in Economics from the University of Vermont.
21
J. Christopher Naftzger, General Counsel, Chief Compliance Officer and Secretary.
Mr. Naftzger has served as our General Counsel, Chief Compliance Officer and Secretary since July 2023. Prior to joining Arbutus, Mr. Naftzger served as Interim-CEO, General Counsel and Corporate Secretary of Nabriva Therapeutics plc (Nasdaq: NBRV), a commercial-stage antibiotic company, from January 2023 to July 2023, and where he held various roles, including General Counsel and Corporate Secretary and Vice President, Deputy General Counsel and Assistant Secretary, since January 2017. Mr. Naftzger also has served as General Counsel and Corporate Secretary of Krystal Biotech (Nasdaq: KRYS), a gene therapy company, and Vice President, General Counsel, Chief Compliance Officer, and Secretary of Unilife Medical Solutions, a developer and manufacturer of drug delivery systems. He has held senior in-house counsel positions with Chesapeake Corporation and Koch Industries and was a corporate partner with Blank Rome LLP in Washington, DC. Mr. Naftzger obtained his undergraduate degree from Hampden-Sydney College and his law degree from the Willamette University College of Law.
Michael J. Sofia, Ph.D., Chief Scientific Officer.
Dr. Sofia has served as our Chief Scientific Officer since 2015. Dr. Sofia has won the Lasker-Debakey Clinical Medical Research Award for his outstanding discovery, contribution, and achievement in the field of medicine. Dr. Sofia has also won the Economist’s 2015 Innovation Award in the Bioscience category for developing a rapid cure for hepatitis C virus infection (HCV). Dr. Sofia was one of OnCore’s co-founders and served as its Chief Scientific Officer and Head of Research and Development since July 2014. He previously served as President and a member of its board of directors from May 2012 to August 2014. Since April 2012, Dr. Sofia has been a professor at the Baruch S. Blumberg Institute and since March 2013, Dr. Sofia has been an adjunct professor at the Drexel University School of Medicine. Previously, Dr. Sofia was the Senior Vice-President, Chemistry, Site Head and then Senior Advisor at Gilead Sciences, Inc. from January 2012 to December 2012. Prior to that, Dr. Sofia was the Senior Vice-President, Chemistry at Pharmasset, Inc. from August 2005 to January 2012 where he was responsible for the discovery of sofosbuvir, which ultimately resulted in the acquisition of Pharmasset by Gilead for $11 billion. From 1999 to 2005, Dr. Sofia served as a Group Director, New Leads Chemistry at Bristol-Myers Squibb. From 1993 to 1999, Dr. Sofia established and directed the research programs at Transcell Technologies, first as Director of Chemistry and then as Vice-President of Research. Dr. Sofia received his B.A. degree from Cornell University, his Ph.D. degree from the University of Illinois at Urbana-Champaign and was an NIH postdoctoral fellow at Columbia University.
Dr. Karen Sims, M.D., Ph.D., Chief Medical Officer.
Dr. Sims has served as our Chief Medical Officer since July 2023. Dr. Sims joined Arbutus in April 2017 and has held positions of increasing seniority, including serving as Vice President, Clinical Development, before her promotion to Chief Medical Officer. Dr. Sims is a board-certified infectious disease physician with more than 13 years of industry experience in conducting and overseeing early stage through global Phase 2 clinical trials. Prior to joining Arbutus, Dr. Sims held multiple positions during her seven-year tenure at Bristol-Myers Squibb (NYSE: BMY). Most recently she served as Medical Director in the Virology and Immunoscience therapeutic areas where she oversaw Phase 1 and 2 trials in the HCV direct-acting antiviral program and several HIV discovery programs, as well as support for HIV marketed products. Previously, Dr. Sims was an Attending Physician and Instructor in Medicine at the Hospital of the University of Pennsylvania, with a focus on solid organ transplant infectious disease, HIV clinical care and translational research in lung transplantation. Dr. Sims obtained her BS in Biological Psychology at Bates College, her PhD in Neuroscience from the University of Pennsylvania, and received her MD from the University of Pennsylvania School of Medicine. Dr. Sims completed her Internal Medicine and Infectious Diseases training at the Hospital of the University of Pennsylvania.
Arrangements Between Officers, Directors and Director Nominees
Except as set forth below, there are no arrangements or understandings between any of our executive officers, directors or director nominees pursuant to which any such person was appointed, elected or nominated, as applicable.
Drs. Torti and Manchester initially were appointed to serve on our Board in connection with Roivant’s previous right to designate for nomination up to three directors pursuant to our Articles. For more information, see the
“Corporate Governance – Roivant Designees”
section of this Proxy Statement/Circular.
No Family Relationships
There are no family relationships between any of our executive officers, directors, or director nominees.
22
Overview
We believe in building a strong governance foundation. As a Canadian company publicly listed on a U.S. stock exchange, we are subject to the rules and regulations of the SEC, the listing standards of Nasdaq, and the rules and policies of the Canadian provincial securities regulators. The following disclosure of our approach to corporate governance outlines the various procedures, policies, and practices that we and our Board have implemented to address all of the foregoing requirements and, where appropriate, reflect current best practices.
Board Independence and Oversight
Our Board assumes responsibility for our stewardship. The mandate of our Board is to supervise the management of our business and affairs. Our Board delegates day-to-day managerial responsibilities to management, and any responsibility not delegated to senior management or to a committee of the Board remains with the full Board. Our Board has adopted formal Corporate Governance Guidelines, the text of which is attached to this Proxy Statement/Circular as
Exhibit A
.
Our Board is currently composed of seven (7) directors, and Shareholders are being asked at the Annual Meeting to re-elect each of these directors.
Independent directors (according to the applicable standards of the SEC, Nasdaq and the rules and regulations of the Canadian provincial securities regulatory authorities) are as follows: Dr. Torti, Mr. Burgess, Mr. Henriques, Dr. Manchester, Mr. Meyers and Dr. Rewolinski. In connection with its assessment, our Board considered (i) each director’s beneficial ownership of our Common Shares reported in the
“Stock Ownership of Directors, Officers and Principal Shareholders”
section of this Proxy Statement/Circular, (ii) the agreements and transactions reported in the
“Related Party Transactions”
section of this Proxy Statement, (iii) with respect to Drs. Torti and Manchester, their affiliation with certain beneficial owners of more than 5% of our Common Shares (please refer to the biographies of the current directors in the
“Executive Officers and Directors”
section of this Proxy Statement/Circular for details regarding the affiliation of Drs. Torti and Manchester with Roivant) and their original election and/or nomination to our Board on behalf of such Shareholders. Our Board has also determined that each member of our Audit Committee, Compensation Committee and Corporate Governance and Nominating Committee meets the independence requirements applicable to those committees as prescribed by applicable rules and regulations of Nasdaq and the SEC.
Mr. McElhaugh, our Interim President and Chief Executive Officer, is not independent as a result of being one of our officers. Further information on our directors is set out in the biography of each director under the heading “
Executive Officers and Directors.
” Each biography also outlines the director’s relevant experience and expertise.
Board Leadership
Our entire Board is responsible for our overall governance. Our Chairman, Dr. Torti, is independent of management. At this time, our Board believes that separation of the positions of Chairman and Chief Executive Officer reinforces the independence of our Board from management, creates an environment that encourages objective oversight of management’s performance and enhances the effectiveness of our Board as a whole.
Risk Assessment
One of the key functions of our Board is informed oversight of our enterprise risk management process. Our Board does not have a standing risk management committee, but directly oversees risk management, as well as through various standing committees that address risks inherent in their respective areas of oversight. Our Board is responsible for monitoring and assessing strategic risk exposure, and our Audit Committee has the responsibility to consider and discuss our major financial risk exposures and the steps our management has taken to monitor and control these exposures, including guidelines and policies to govern the process by which risk assessment and management is undertaken. The Audit Committee also monitors compliance with legal and regulatory requirements. Our Corporate Governance and Nominating Committee monitors the effectiveness of our corporate governance practices. Our Compensation Committee assesses and monitors whether any of our compensation policies and practices have the potential to encourage excessive risk-taking, and whether our compensation policies and practices are reasonably likely to have a material adverse effect on us.
23
Chief Executive Officer Evaluation
In reviewing and recommending the compensation of our Chief Executive Officer, our Compensation Committee reviews and recommends to our Board the corporate goals and objectives of our business relevant thereto, and evaluates the Chief Executive Officer’s performance in light of those corporate goals and objectives and makes a recommendation to our Board regarding the Chief Executive Officer’s compensation based on, in part, such evaluation. Our Board then reviews and approves the corporate objectives that our Chief Executive Officer is responsible for meeting and such corporate objectives form a key reference point for the annual review and assessment of our Chief Executive Officer’s performance, which is performed by the independent directors on our Board.
Director Orientation and Continuing Education
New Board members receive a director’s orientation including reports on our strategic plans and our significant financial, accounting and risk management issues. In addition, the orientation for our directors involves meeting with our senior management and an interactive introductory discussion about us, providing the directors with an opportunity to ask questions.
Director Nominations
Our Corporate Governance and Nominating Committee has the primary responsibility for establishing criteria for Board membership and identifying, evaluating, reviewing, and recommending qualified candidates to serve on our Board.
All nominations proposed by the Corporate Governance and Nominating Committee must receive the approval of our Board. Prior to recommending candidates to serve on our Board, the Corporate Governance and Nominating Committee:
|
(a)
|
considers what competencies and skills our Board, as a whole, should possess. In doing so, the Corporate Governance and Nominating Committee recognizes that the particular competencies and skills required for one company may not be the same as those required for another;
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
(b)
|
assesses what competencies and skills each existing Board member possesses, considering that no one director is likely to have all the competencies and skills required by our Board, rather, each individual makes their own contribution. Attention shall also be paid to the personality and other qualities of each director, as they may ultimately determine the Board dynamic;
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
(c)
|
assesses what competencies and skills each nominee will bring to our Board and whether such nominee can devote sufficient time and resources to his or her duties as a Board member; and
|
|
(d)
|
considers each candidate’s independence, skills, experience and other characteristics in the context of the needs and composition of our Board, including diversity.
|
|
•
|
as to each person whom the Shareholder proposes to nominate for election as a director: (A) the name, age, business address and residential address of the person; (B) the principal occupation or employment of the person, and the principal occupation or employment of the person for the past five years; (C) the citizenship of such person; (D) the class or series and number of shares in our share capital which are controlled or which are owned beneficially or of record by the person as of the record date for the meeting of Shareholders (if such date shall then have been made publicly available and shall have occurred) and as of the date of such notice; and (E) any other information relating to the person that would be required to be disclosed in a dissident’s proxy circular in connection with solicitations of proxies for election of directors pursuant to the BCBCA and the applicable securities laws of Canada; and
|
24
|
•
|
as to the nominating Shareholder giving the notice, full particulars regarding any proxy, contract, agreement, arrangement or understanding pursuant to which such nominating Shareholder has a right to vote or direct the voting of any of our shares and any other information relating to such nominating Shareholder that would be required to be made in a dissident’s proxy circular in connection with solicitations of proxies for election of directors pursuant to the BCBCA and the applicable securities laws of Canada.
|
We may require any proposed nominee to furnish such other information as may reasonably be required by us to determine the eligibility of such proposed nominee to serve as an independent director or that could be material to a reasonable Shareholder’s understanding of the independence, or lack thereof, of such proposed nominee. Shareholders wishing to propose a director candidate must also comply with the advance notice deadlines found in Section 13.9 of our Articles, and more fully described above under “
How can I make a Shareholder proposal for the 2025 Annual General Meeting of Shareholders.
”
In addition to suggesting a director candidate, a Shareholder may also nominate a director candidate for election. A Shareholder wishing to nominate an individual to be a director, other than pursuant to a requisition of a general meeting made pursuant to the BCBCA, is required to comply with Section 13.9 of the Articles. Section 13.9 of the Articles provides, inter alia, that proper written notice of any such director nomination (the “Nomination Notice”) for an annual general meeting of Shareholders must be provided to our Secretary not less than 30 nor more than 65 days prior to the date of the annual general meeting of Shareholders; provided, however, that in the event that the annual general meeting of Shareholders is to be held on a date that is less than 50 days after the date (the “Notice Date”) on which the first public announcement of the date of the annual general meeting was made, the Nomination Notice must be provided no later than the close of business on the tenth day following the Notice Date. The foregoing is merely a summary of provisions contained in Section 13.9 of the Articles and is not comprehensive and is qualified by the full text of such provisions. The full text of such provisions is set out in Section 13.9 of the Articles, as amended, copies of which are attached as Exhibits 3.1 and 3.2 to our Annual Report on Form 10-K for the year ended December 31, 2023, which can be found under our profile at www.sedarplus.ca or www.sec.gov.
In addition to satisfying the foregoing advance notice requirements under our Articles, to comply with the universal proxy rules under the Exchange Act, Shareholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide written notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than March 24, 2025, which is the first business day following the 60
th
day prior to the one-year anniversary date of the Annual Meeting.
Director Election and Majority Voting Policy
Our Board believes that each of its members should carry the confidence and support of our Shareholders. To this end, our Articles allow for a majority voting policy. Our Shareholders originally approved the majority voting policy in 2013 and it was subsequently amended in March 2018 and August 2020. In an uncontested election of directors, Shareholders may vote in favor of, or withhold their vote from, each nominee director. If, with respect to any nominee, the number of votes withheld for a particular nominee exceeds the number of votes in favor of the nominee, then for purposes of our policy, the nominee shall be considered not to have received the support of our Shareholders, even though duly elected as a matter of corporate law.
A person elected as a director who is considered under this test not to have the confidence of Shareholders is expected to immediately submit to our Board his or her resignation in accordance with our Majority Voting Policy. Our Board (excluding any director that has tendered a resignation) will consider the director’s offer to resign and decide whether or not to accept it. In making its decision, our Board will consider all factors deemed relevant by the members of our Corporate Governance and Nominating Committee and our Board, including:
|
•
|
the stated reasons why Shareholders withheld votes from the election of the resigning director;
|
|
•
|
the length of service and the qualifications of the resigning director;
|
|
•
|
the resigning director’s contributions to us; and
|
|
•
|
the effect that such resignation(s) may have on our Board’s ability to: (i) effectively continue fulfilling its responsibility for the stewardship of our organization and the enhancement of shareholder value; and (ii) our ability to comply with any applicable governance rules and policies.
|
25
Within 90 days following the applicable meeting of Shareholders, our Board will, upon recommendation of our Corporate Governance and Nominating Committee and the other factors set forth above, decide whether to accept or not accept the resignation of that director. Following our Board’s decision on the resignation, our Board will promptly disclose, via press release, its decision whether to accept the resigning director’s resignation offer including the reasons for rejecting the resignation offer, if applicable. If a resignation is accepted, our Board may, in accordance with the provisions of the Articles and the BCBCA, appoint a new director to fill any vacancy created by the resignation, reduce the size of our Board, leave any vacancy open until the next annual general meeting of our Shareholders, call a special meeting of our Shareholders at which there will be presented nominees to fill any vacancies, or any combination of the above. Our Majority Voting Policy is available on our website at www.arbutusbio.com.
Director Terms
Directors are elected annually. Unless the director’s office is earlier vacated in accordance with the provisions of the BCBCA and our Articles, each director elected will hold office until immediately before the election of new directors at the next annual general meeting of our Shareholders or, if no director is then elected, until a successor is elected or appointed.
Director Term Limits
Our Board has not adopted term limits for our directors. In terms of mechanisms for Board renewal, the Corporate Governance and Nominating Committee has the mandate and responsibility to annually review, discuss and assess the performance of our Board. This assessment includes an evaluation of our Board’s contribution as a whole and effectiveness in serving our best interests and the best interests of our Shareholders; specific areas in which our Board and/or management believe contributions could be improved; the appropriate size of our Board, with a view to facilitating effective decision making; and overall Board composition and makeup. The Corporate Governance and Nominating Committee also has the primary responsibility for evaluating, reviewing, and considering the recommendation for nomination of new candidates to our Board as well as incumbent directors for re-election to our Board.
Diversity
The Corporate Governance and Nominating Committee has the primary responsibility for establishing criteria for Board membership and identifying, evaluating, reviewing, and recommending qualified candidates to serve on our Board.
Our Board’s Corporate Governance Guidelines do not specifically contemplate diversity or the level of representation of women on our Board in identifying and nominating candidates for election or re-election to our Board. However, as noted above under “
Director Nominations
,” prior to recommending candidates to serve on our Board, the Corporate Governance and Nominating Committee shall, among other things, consider each candidate’s independence, skills, experience, and other characteristics in the context of the needs and composition of our Board, including diversity. Further, our Corporate Governance Guidelines emphasize that our Board is committed to consideration of diversity and inclusion and, accordingly, the assessment of our Board’s composition and director candidates should consider diversity of race, ethnicity, gender, age, education, cultural backgrounds, and professional experiences. As of the Record Date, we have one female representative on our Board, Dr. Rewolinski.
Our Board’s Corporate Governance Guidelines do not specifically contemplate the level of representation of women in executive officer positions when making executive officer appointments. However, our Corporate Governance Guidelines do stipulate that our Board is responsible for evaluating the integrity of the Chief Executive Officer and other executive officers, and direct the Chief Executive Officer and other executive officers to promote a culture of integrity throughout our organization. As of the Record Date, we have one female executive officer, Dr. Karen Sims.
26
The table below provides certain highlights of the composition of our Board members. Each of the categories listed in the below table has the meaning as it is used in Nasdaq Rule 5605(f)(1).
| |
Board Diversity Matrix (as of April 10, 2024)
|
| ||||||||||||
| |
Board Size:
|
| ||||||||||||
| |
Total Number of Directors
|
| |
7
|
| |||||||||
| |
|
| |
Female
|
| |
Male
|
| |
Non-Binary
|
| |
Did not Disclose Gender
|
|
| |
Gender:
|
| ||||||||||||
| |
Directors
|
| |
1
|
| |
4
|
| |
—
|
| |
2
|
|
| |
Number of Directors who Identify in Any of the Categories Below:
|
| ||||||||||||
| |
African American or Black
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
| |
Alaskan Native or Native American
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
| |
Asian
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
| |
Hispanic or Latinx
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
| |
Native Hawaiian or Pacific Islander
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
| |
White
|
| |
—
|
| |
5
|
| |
—
|
| |
—
|
|
| |
Two or More Races or Ethnicities
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
| |
LGBTQ+
|
| |
—
|
| |||||||||
| |
Did Not Disclose Demographic Background
|
| |
2
|
| |||||||||
Committees of our Board
To assist in the discharge of its responsibilities, our Board currently has three standing committees: the Audit Committee, the Executive Compensation and Human Resources Committee and the Corporate Governance and Nominating Committee, each of which is composed entirely of independent directors.
In addition to our formal, standing committees, our Board may from time-to-time appoint additional committees to address specific issues.
Audit Committee
The members of our Audit Committee are Mr. Henriques (Chairman), Mr. Meyers and Mr. Burgess, each of whom is a non-employee member of our Board. Our Board has determined that each of the members of our Audit Committee is financially literate and has financial expertise (as is currently defined under the applicable SEC rules). In addition, our Board has determined that each of Messrs. Henriques and Burgess qualifies as an “audit committee financial expert” under the rules of the SEC. Our Board has determined that each member of our Audit Committee is an independent member of our Board under the current requirements of Nasdaq and the rules and regulations of the SEC and Canadian provincial securities regulatory authorities.
Our Audit Committee is responsible for acting on behalf of our Board in fulfilling our Board’s oversight responsibilities with respect to: (i) our corporate accounting, financial reporting practices and audits of financial statements; (ii) our systems of internal accounting and financial controls; (iii) the quality and integrity of our financial statements and reports; and (iv) the qualifications, independence and performance of any firm or firms of certified public accountants or independent chartered accountants engaged as our independent registered public accounting firm. Our independent registered public accounting firm reports directly to our Audit Committee.
Specific responsibilities of our Audit Committee include but are not limited to:
|
•
|
overseeing the work of our independent registered public accounting firm engaged for the purpose of preparing or issuing an independent registered public accounting firm’s report or performing other audit, review or attest services for us;
|
|
•
|
evaluating the performance, and assessing the qualifications, of our independent registered public accounting firm for the purpose of preparing or issuing an independent registered public accounting firm report or performing other audit, review or attest services;
|
27
|
•
|
subject to the appointment of our independent registered public accounting firm in accordance with applicable corporate formalities, determining and approving the engagement of, and compensation to be paid to, our independent registered public accounting firm;
|
|
•
|
determining and approving the engagement, prior to the commencement of such engagement, of, and compensation for, our independent registered public accounting firm and to perform any proposed permissible non-audit services;
|
|
•
|
reviewing our financial statements and management’s discussion and analysis of financial condition and results of operations and recommending to our Board whether or not such financial statements and management’s discussion and analysis of financial condition and results of operations should be approved by our Board and whether the financial statements should be included in our annual report;
|
|
•
|
conferring with our independent registered public accounting firm and with our management regarding the scope, adequacy and effectiveness of internal financial reporting controls in effect;
|
|
•
|
establishing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls or auditing matters and the confidential and anonymous submission by our employees of concerns regarding questionable accounting or auditing matters;
|
|
•
|
reviewing, overseeing and approving, in advance, related-party transactions and reviewing other issues arising under our Code of Business Conduct for Directors, Officers, Employees, Contractors and Consultants and similar policies;
|
|
•
|
reviewing and overseeing our privacy, information technology and security and cybersecurity risk exposures, including: (i) the potential impact of those exposures on the Company’s business, financial results, operations and reputation; (ii) the programs and steps implemented by management to monitor and mitigate any exposures; (iii) the Company’s information governance and information security policies and programs; (iv) disclosures regarding cybersecurity governance and incident reporting; and (v) major legislative and regulatory developments that could materially impact the Company’s privacy, data security and cybersecurity risk exposure; and
|
|
•
|
reviewing and discussing with our management and independent registered public accounting firm, as appropriate, our guidelines and policies with respect to risk assessment and risk management, including our major financial risk exposures and investment and hedging policies and the steps taken by our management to monitor and control these exposures.
|
A copy of our Audit Committee’s charter is available on our website at www.arbutusbio.com.
Both our independent registered public accounting firm and management periodically meets privately with our Audit Committee.
Executive Compensation and Human Resources Committee
The members of the Compensation Committee are Mr. Meyers (Chairman), Mr. Henriques, Dr. Torti and Dr. Rewolinski. Our Board has determined that each of the members of the Compensation Committee has the appropriate experience for their Committee responsibilities based on their prior senior roles in our industry. Our Board has determined that each member of our Compensation Committee is independent.
Our Compensation Committee is responsible for acting on behalf of our Board in: (i) reviewing and recommending the compensation of our Chief Executive Officer to our Board for approval; (ii) reviewing and recommending to our Board or approving compensation for our other executive officers; (iii) administering our equity compensation plans, including approving all grants and awards under such plans; (iv) fulfilling our Board’s oversight responsibilities with respect to our overall compensation policies, plans and programs; and (v) performing other activities related to our compensation plans and structure, including preparing and reviewing any disclosure on executive compensation included in our annual proxy statement or information circular in accordance with applicable rules and regulations promulgated by the SEC and the Canadian provincial securities regulatory authorities.
Specific responsibilities of our Compensation Committee include but are not limited to:
|
•
|
reviewing and recommending to our Board for its approval, the salary, bonus, equity compensation and any other compensation and terms of employment of our Chief Executive Officer;
|
28
|
•
|
approving, as applicable, or reviewing and recommending to our Board for its approval, the salary levels, bonus plans and structures and payments thereunder and other forms of compensation policies, plans and programs for our executive officers (not including our Chief Executive Officer);
|
|
•
|
reviewing and approving the terms of any employment agreements, severance arrangements, change of control protections and any other compensatory arrangements for our executive officers (not including our Chief Executive Officer);
|
|
•
|
from time to time reviewing and recommending to our Board our overall compensation plans and structure, including without limitation incentive compensation and equity-based plans;
|
|
•
|
recommending to our Board for its approval the compensation for non-executive Board members, including any retainers, committee and committee chair fees and/or equity compensation;
|
|
•
|
administering our equity compensation plans, pension plans, and similar programs, including the adoption, amendment and termination of such plans and any sub-plans thereof, establishing guidelines, interpreting plan documents, selecting participants, approving grants and awards, or exercising such other power and authority as may be permitted or required under such plans;
|
|
•
|
reviewing with management all executive compensation disclosure before we publicly disclose this information; and
|
|
•
|
reviewing, discussing and assessing annually the committee’s own performance and the adequacy of the committee’s charter.
|
Only independent, non-employee members of our Board participate in the review and approval of the executive compensation actions described above. A copy of our Compensation Committee’s charter is available on our website at www.arbutusbio.com.
The agenda for each meeting of the Compensation Committee is developed by the chair of the Compensation Committee in consultation with our Chief Executive Officer. The Compensation Committee meets regularly in executive session. From time to time, various members of management and other employees as well as outside advisors or consultants may be invited by the Compensation Committee to make presentations, to provide financial or other background information or advice or to otherwise participate in Compensation Committee meetings. No officer may participate in, or be present during, any deliberations or determinations of the Compensation Committee regarding the compensation for such officer or employee. Our Chief Executive Officer provides recommendations to our Compensation Committee with respect to executive and employee compensation, other than his own compensation. The Compensation Committee takes into consideration our Chief Executive Officer’s input in granting annual bonuses or equity awards and setting compensation levels.
The charter of the Compensation Committee grants the Compensation Committee full access to all our books, records, facilities, and personnel, as well as authority to obtain, at our expense, advice, and assistance from internal and external legal, accounting, or other advisors and consultants and other external resources that the Compensation Committee considers necessary or appropriate in the performance of its duties. In particular, the Compensation Committee has the authority to retain compensation consultants to assist in its evaluation of executive and director compensation, including the authority to approve the consultant’s reasonable fees and other retention terms.
The Compensation Committee engaged Radford, a unit of Aon plc’s (“Aon”) Human Capital Solutions, a compensation consulting firm serving technology and life sciences companies, as its external compensation consultant during the fiscal year ended December 31, 2023 to provide comparative data on executive and non-employee director compensation practices in our industry and to advise the Compensation Committee on our executive, non-executive and non-employee director compensation and equity plan programs generally. The Compensation Committee retains the sole authority to direct, terminate or engage Radford’s services. Radford did not provide services to us other than consulting services related to these compensation matters, and we paid Radford an aggregate of $197,500 in 2023 for such compensation advisory services. A separate business owned by Aon performs insurance brokerage services for us, and in 2023 we paid Aon an aggregate of $1,078,851 for such insurance coverage and related services.
The Compensation Committee may delegate any or all of its administrative duties or responsibilities to any of our officers, to the extent consistent with our Articles and applicable laws and rules of markets in which our securities then trade. The Compensation Committee may also form and delegate authority to sub-committees.
29
Corporate Governance and Nominating Committee
The members of our Corporate Governance and Nominating Committee are Dr. Manchester (Chairman), Mr. Burgess and Mr. Meyers. Our Board has determined that each member of our Corporate Governance and Nominating Committee is an independent member of our Board under the current requirements of Nasdaq and as defined in the rules and regulations of the Canadian provincial securities regulatory authorities.
Our Corporate Governance and Nominating Committee is responsible for: (i) overseeing all aspects of our corporate governance functions on behalf of our Board as well as the Company’s activities relating to diversity, equity and inclusion matters; (ii) making recommendations to our Board regarding corporate governance, diversity, equity and inclusion issues; (iii) identifying, reviewing and evaluating candidates to serve as our directors and reviewing and evaluating incumbent directors; (iv) conducting an annual evaluation of our Board; (v) serving as a focal point for communication between such candidates, non-Committee directors and our management; (vi) recommending candidates to our Board; (vii) overseeing an evaluation of management succession planning; and (viii) making other recommendations to our Board regarding affairs relating to our directors.
Specific responsibilities of our Corporate Governance and Nominating Committee include but not limited to:
|
•
|
establishing criteria for Board membership and identifying, evaluating, reviewing and recommending qualified candidates to serve on our Board;
|
|
•
|
evaluating, reviewing and considering the recommendation for nomination of incumbent directors for re-election to our Board;
|
|
•
|
annually reviewing, discussing and assessing the performance of our Board, including Board committees, seeking input from senior management, the full Board and others;
|
|
•
|
recommending annually to our Board for its approval the Chair and membership of each committee;
|
|
•
|
ensuring that all new directors receive a comprehensive orientation and that all new directors fully understand the nature and operation of our business, the role of our Board and its committees, and the contribution that each new director is expected to make, including the commitment of time and resources;
|
|
•
|
overseeing periodic evaluations of management succession plans; and
|
|
•
|
developing and reviewing a set of corporate governance principles for us.
|
A copy of our Corporate Governance and Nominating Committee’s charter is available on our website at www.arbutusbio.com.
Our Board is responsible for approving nominees for election as directors. However, as is described above, our Corporate Governance and Nominating Committee is responsible for reviewing, soliciting and recommending nominees to our Board.
Roivant Designees
Drs. Torti and Manchester were initially designated as nominees to our Board pursuant to rights Roivant had in connection with its ownership of certain of our Preferred Shares. However, such rights expired on October 16, 2021 in connection with the automatic conversion of the Preferred Shares held by Roivant into Common Shares.
Board and Committee Meetings
During the fiscal year ended December 31, 2023, our Board held a total of 11 meetings (in person or by teleconference). Our Audit Committee, Compensation Committee, and Corporate Governance and Nominating Committee met a total of 5, 6, and 3 times, respectively. Each director attended at least 75% of the total number of meetings of our Board and committee meetings of which such director was a member during 2023.
Board Member Attendance at Annual Shareholder Meetings
Although we do not have a formal policy regarding director attendance at annual general meetings of Shareholders, directors are invited to attend these annual general meetings. None of our directors attended our 2023 Annual General and Special Meeting of Shareholders.
30
Corporate Governance Guidelines
In June 2021, our Board adopted corporate governance guidelines (the “Guidelines”) as a general framework to assist the Board in carrying out its oversight responsibilities and to serve our best interests, managed by or under the direction of our Board. The Guidelines are available on our website at www.arbutusbio.com. The Guidelines provide that the responsibilities of the Board include, among other things, strategic planning and budgeting, review of corporate performance, the appointing of a Chair of the Board and our executive officers, corporate disclosure, systems integrity, and reviewing material transactions. The Corporate Governance and Nominating Committee has primary responsibility for implementing the Guidelines and shall review the Guidelines no less than annually. The Guidelines may only be amended by our Board.
The Guidelines cover matters such as:
|
•
|
the composition and selection of our Board (including size and classes of our Board, as well as independence of our directors, leadership structure, board membership criteria and selection, other directorships and term limits);
|
|
•
|
specifics regarding meetings of our Board, including attendance at, frequency of, and preparation for such meetings;
|
|
•
|
specifics regarding committees of our Board, including the number and type of committees, independence of committee members, committee meetings and reports, and assignment and rotation of committee members;
|
|
•
|
leadership development, including CEO review and succession planning; and
|
|
•
|
other matters, including the fiduciary duties of our Board, risk oversight, director evaluations and compensation, director orientation and continuing professional development and interactions with third parties and independent advisers.
|
Code of Business Conduct for Directors, Officers, Employees, Contractors, and Consultants
We have adopted a code of business conduct for directors, officers, employees, contractors, and consultants (the “Code of Conduct”), which is available on our website at www.arbutusbio.com and also at www.sedarplus.ca. Our Board and management review and discuss from time to time the effectiveness of our Code of Conduct and any areas or systems that may be further improved. If we effect an amendment to, or waiver from, a provision of our Code of Conduct, we intend to satisfy our disclosure requirements by posting a description of such amendment or waiver on the website above. The inclusion of our website address in this Proxy Statement/Circular does not include or incorporate by reference the information on our website into this Proxy Statement/Circular.
We comply with the relevant provisions under the BCBCA that deal with conflicts of interest in the approval of agreements or transactions, and our Code of Conduct sets out additional guidelines in relation to conflict of interest situations. We, through directors’ and officers’ questionnaires and other systems, also gather and monitor relevant information in relation to potential conflicts of interest that one of our directors or executive officers may have. Where appropriate, our directors absent themselves from portions of Board and committee meetings to allow independent discussion.
We were founded on, and the business continues to be successful largely as a result of, a commitment to ethical conduct. Employees are regularly reminded about their obligations in this regard, and senior management demonstrates a culture of integrity and monitors employee compliance with our Code of Conduct.
Hedging and Pledging Prohibitions
Under our Insider Trading Policy, our directors, officers and employees (and such individuals’ immediate family members, other members of their household and entities they control) may not engage in any hedging or monetization transactions involving our securities, such as zero-cost collars and forward sale contracts, and may not hold our securities in a margin account or pledge our securities as collateral for a loan.
Our Insider Trading Policy also prohibits these covered individuals from purchasing financial instruments (including prepaid variable forward contracts, equity swaps, collars, and exchange funds), or otherwise engaging in transactions, that hedge or offset, or are designed to hedge or offset, any decrease in the market value of our securities. In addition, transactions in puts, calls or other derivative securities, on an exchange or in any other organized market, are prohibited.
31
Shareholder Communications with Directors
We communicate with our stakeholders through several channels including our website at www.arbutusbio.com. Shareholders can provide feedback to us in several ways, including email at ir@arbutusbio.com and through our website. Any communication sent by a Shareholder must state the number of Common Shares owned by such Shareholder making the communication. We will review each communication and will forward such communication to our Board, or to any individual director to whom the communication is addressed, unless the communication consists of general surveys and mailings to solicit business or advertise products; job applications or resumes; general questions and inquiries; or any material that is threatening, illegal or that does not relate to the responsibilities of our Board. All communications that relate to questionable accounting or auditing matters involving us should be addressed directly to our General Counsel who will in turn report it to the chair of our Audit Committee as set forth in our Whistleblower Policy, which can be obtained on our website at www.arbutusbio.com.
32
Our authorized share capital consists of an unlimited number of Common Shares and Preferred Shares, including 1,164,000 series A participating convertible Preferred Shares without par value. As of March 25, 2024, there were 180,174,930 Common Shares outstanding and no Preferred Shares outstanding.
The following table shows information regarding the beneficial ownership of our Common Shares as of March 25, 2024 by:
|
•
|
each of our Named Executive Officers (as defined below);
|
|
•
|
each of our directors;
|
|
•
|
all of our current directors and executive officers as a group; and
|
|
•
|
each person, or group of affiliated persons, known by us to own beneficially more than 5% of our Common Shares.
|
Beneficial ownership is determined in accordance with the rules of the SEC as indicated in the footnotes to the table below.
|
Name of Beneficial Owner
|
| |
Amount and
Nature of beneficial
Ownership
(1)
|
|
|
Percent
of
Class
(2)
|
Named Executive Officers and Directors
(3)
|
|
|
|
|
|
|
Michael J. Sofia, Ph.D.
(4)
|
|
|
2,824,940
|
|
|
1.6%
|
Michael J. McElhaugh
(5)
|
|
|
2,223,891
|
|
|
1.2%
|
William H. Collier
(6)
|
|
|
1,977,867
|
|
|
1.1%
|
Elizabeth Howard
(7)
|
|
|
1,000,136
|
|
|
*
|
Frank Torti, M.D.
(8)
|
|
|
206,000
|
|
|
*
|
Daniel Burgess
(9)
|
|
|
256,000
|
|
|
*
|
Richard C. Henriques
(10)
|
|
|
237,000
|
|
|
*
|
Keith Manchester, M.D.
(11)
|
|
|
275,915
|
|
|
*
|
James Meyers
(12)
|
|
|
206,000
|
|
|
*
|
Melissa V. Rewolinski, Ph.D.
|
|
|
—
|
|
|
*
|
All Directors and Officers (11 persons)
(13)
|
|
|
7,473,527
|
|
|
4.0%
|
Greater than 5% Shareholders (Not Listed Above)
|
|
|
|
|
|
|
Roivant
(14)
|
|
|
38,847,462
|
|
|
21.6%
|
Whitefort Capital Management, LP
(15)
|
|
|
13,197,062
|
|
|
7.3%
|
Blackrock, Inc.
(16)
|
|
|
10,390,300
|
|
|
5.8%
|
Two Seas Capital LP
(17)
|
|
|
9,041,927
|
|
|
5.0%
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
*
|
Represents less than 1% of the outstanding Common Shares.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
(1)
|
Beneficial ownership is determined in accordance with Rule 13d-3 under the Exchange Act. A person or group is deemed to be the beneficial owner of any Common Shares over which such person or group has sole or shared voting or investment power, plus any shares which such person or group has the right to acquire beneficial ownership of within 60 days of March 25, 2024, whether through the exercise of options or otherwise. Unless otherwise indicated in the footnotes, each person or entity identified in the table has sole voting and investment power with respect to all shares shown as beneficially owned by them, subject to applicable community property laws.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
(2)
|
The beneficial ownership percentage is calculated for each person or group separately because Common Shares subject to options or other rights to acquire our Common Shares that are currently exercisable or exercisable within 60 days of March 25, 2024 are considered outstanding only for the purpose of calculating the percentage ownership of the person or group holding such options or other rights but not for the purpose of calculating the percentage ownership of any other person or group. As a result, the beneficial ownership percentage for each person or group is calculated by dividing (x) the number of shares reported in the table as beneficially owned by such person or group, by (y) 180,174,930 Common Shares (which represents the number of Common Shares that were outstanding as of March 25, 2024) plus the number of shares that such person or group has the right to acquire beneficial ownership of within 60 days of March 25, 2024 as indicated in the footnotes below.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
(3)
|
The address for each of our executive officers and directors is c/o Arbutus Biopharma Corporation, 701 Veterans Circle, Warminster, Pennsylvania 18974, United States.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
(4)
|
Consists of 1,570,083 Common Shares and 1,336,957 stock options exercisable within 60 days of March 25, 2024.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
(5)
|
Consists of 1,421,093 Common Shares and 898,698 stock options exercisable within 60 days of March 25, 2024.
|
|
(6)
|
Consists of 1,977,867 stock options exercisable within 60 days of March 25, 2024.
|
33
|
(7)
|
Consists of 1,000,136 stock options exercisable within 60 days of March 25, 2024.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
(8)
|
Consists of 206,000 stock options exercisable within 60 days of March 25, 2024.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
(9)
|
Consists of 256,000 stock options exercisable within 60 days of March 25, 2024.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
(10)
|
Consists of 1,000 Common Shares and 236,000 stock options exercisable within 60 days of March 25, 2024.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
(11)
|
Consists of 275,915 stock options exercisable within 60 days of March 25, 2024.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
(12)
|
Consists of 206,000 stock options exercisable within 60 days of March 25, 2024.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
(13)
|
Consists of 3,183,918 Common Shares and 7,615,339 stock options exercisable within 60 days of March 25, 2024.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
(14)
|
As reported on Schedule 13D/A filed with the SEC on October 20, 2021, Roivant Sciences Ltd. (“RSL”) directly owns and has voting and dispositive power over 38,847,462 Common Shares. RSL is governed by a board of directors consisting of Andrew Lo, Patrick Machado, Keith Manchester, M.D., Daniel Gold, Ilan Oren, Vivek Ramaswamy, Masayo Tada, James C. Momtazee and Matthew Gline. These individuals disclaim beneficial ownership with respect to such shares except to the extent of their pecuniary interest therein. The principal business address of RSL is Suite 1, 3
rd
Floor, 11-12 St. James’s Square, London SW1Y 4LB, United Kingdom.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
(15)
|
As reported on Schedule 13G/A filed with the SEC on February 12, 2024 by Whitefort Capital Management, LP “Whitefort Management”), David Salanic, and Joseph Kaplan. Whitefort Management acts as the investment manager of certain client accounts. Each of Mr. Salanic and Mr. Kaplan is a Co-Managing Partner of Whitefort Management. By virtue of these relationships, each of Whitefort Management, Mr. Salanic and Mr. Kaplan may be deemed to have voting and dispositive power with respect to Common Shares held in client accounts managed by Whitefort Management. The principal address for each of the reporting persons is 12 East 49
th
Street, 40
th
Floor, New York, NY 10017.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
(16)
|
As reported on Schedule 13G/A filed with the SEC on February 12, 2024. The address for the entities affiliated with BlackRock, Inc. is c/o BlackRock, Inc., 50 Hudson Yards, New York, NY 10001.
|
|
(17)
|
As reported on Schedule 13G/A filed with the SEC on February 14, 2024 by Two Seas Capital LP (“TSC”), Two Seas Capital GP LLC (“TSC GP”), and Sina Toussi. The Common Shares are held by Two Seas Global (Master) Fund LP (the “Global Fund”) and Two Seas LNP Opportunities (Master) Fund LP (the “Opportunities Fund”, and together with the Global Fund, the “Funds”). The principal business of TSC is providing investment advice as a registered investment adviser and serving as investment manager to the Funds and other advisory clients. As such, TSC has been granted investment discretion over portfolio investments, including our Common Shares, held by or for the account of the Funds, including the Funds’ voting and discretionary decisions. TSC GP serves as general partner of TSC. Sina Toussi serves as the Chief Investment Officer of TSC and Managing Member of TSC GP. 4,806,133 of the reported Common Shares are held by the Global Fund and 4,235,794 of the Common Shares are held by the Opportunities Fund. TSC may be deemed to have sole power to vote and sole power to dispose of the Common Shares held by the Funds, through its capacity as investment adviser of the Funds. TSC GP may be deemed to have sole power to vote and sole power to dispose of the Common Shares held by the Funds, through its capacity as general partner of TSC. Sina Toussi may be deemed to have sole power to vote and sole power to dispose of the Common Shares held by the Funds, through his capacity as Managing Member of TSC GP. The principal address for each of the reporting persons is 32 Elm Place, 3rd Floor, Rye, New York 10580.
|
34
Our named executive officers (“Named Executive Officers”) for the year ended December 31, 2023 were:
|
•
|
Michael J. McElhaugh, our Interim President and Chief Executive Officer, effective January 1, 2024, who served as our Chief Operating Officer for the year ended December 31, 2023;
|
|
•
|
William H. Collier, our former President and Chief Executive Officer, who retired as of December 31, 2023;
|
|
•
|
Michael J. Sofia, Ph.D., our Chief Scientific Officer; and
|
|
•
|
Elizabeth Howard, Ph.D., J.D., our former Executive Vice President, General Counsel, Chief Compliance Officer and Secretary.
|
The following table provides information regarding the compensation awarded to, earned by or paid to our Named Executive Officers for the years ended December 31, 2023 and 2022. Dr. Howard was not a named executive officer for the year ended December 31, 2022; accordingly, her compensation for such year is not included in the following table. All amounts are expressed in US dollars.
|
Name and Principal
Position
| | |
Year
|
| |
Salary
($)
| | |
Bonus
($)
| | |
Stock
Awards
($)
(1)
|
|
|
Option
Awards
($)
(2)
|
|
|
Non-Equity
Incentive Plan
Compensation
($)
(3)
|
|
|
All Other
Compensation
($)
(4)
|
|
|
Total ($)
|
William H. Collier
(5)
Former President and Chief Executive Officer
|
|
|
2023
|
|
|
637,100
|
|
|
—
|
|
|
627,850
|
|
|
1,897,476
|
|
|
—
|
|
|
223,558
|
|
|
3,385,984
|
|
2022
|
|
|
606,800
|
|
|
—
|
|
|
—
|
|
|
1,712,646
|
|
|
315,536
|
|
|
10,675
|
|
|
2,645,657
|
Michael McElhaugh
Current Interim President and Chief Executive Officer
|
|
|
2023
|
|
|
483,000
|
|
|
—
|
|
|
242,730
|
|
|
733,355
|
|
|
144,900
|
|
|
16,500
|
|
|
1,620,485
|
|
2022
|
|
|
448,750
|
|
|
—
|
|
|
—
|
|
|
708,610
|
|
|
147,200
|
|
|
10,675
|
|
|
1,315,235
|
Michael J. Sofia, Ph.D.
Chief Scientific Officer
|
|
|
2023
|
|
|
492,000
|
|
|
—
|
|
|
238,380
|
|
|
720,208
|
|
|
147,600
|
|
|
16,500
|
|
|
1,614,688
|
|
2022
|
|
|
468,000
|
|
|
—
|
|
|
—
|
|
|
619,775
|
|
|
149,760
|
|
|
10,675
|
|
|
1,248,210
|
Elizabeth Howard, Ph.D.
Former Executive Vice President, General Counsel, Chief Compliance Officer and Secretary
|
|
|
2023
|
|
|
227,423
|
|
|
—
|
|
|
202,130
|
|
|
610,654
|
|
|
—
|
|
|
802,516
|
|
|
1,842,723
|
|
2022
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
35
Narrative Disclosure to Summary Compensation Table
Currently, our executive compensation program principally consists of the following components: base salary, annual incentive cash bonus, long-term incentives in the form of stock options and restricted stock units, and health and retirement benefits generally available to all our employees. Additional details on the compensation package for Named Executive Officers are provided in the following sections.
2023 Base Salary
The Named Executive Officers are paid a base salary tied to their responsibilities in their role, their experience and past performance, and industry benchmarks. The annual base salaries for the Named Executive Officers for 2023 were $637,100 for Mr. Collier, $483,000 for Mr. McElhaugh, $492,000 for Dr. Sofia, and $438,000 for Dr. Howard.
Non-Equity Incentive Plan Compensation
At the beginning of each fiscal year, our Board establishes our corporate objectives after a recommendation by our Compensation Committee, which assigns each objective a quantitative weighting. After the end of each fiscal year and in consultation with management, our Compensation Committee recommends, and our Board determines, whether annual incentive cash bonuses are warranted given our fiscal year performance and overall financial condition. If bonuses are to be paid based upon our level of achievement of major corporate objectives, our policy is to pay them promptly after such determination.
Each Named Executive Officer has a target annual incentive cash bonus. For 2023, the target annual incentive cash bonus was 65% of annual base salary for our Chief Executive Officer and 40% of annual base salary for our other Named Executive Officers. For 2023, potential annual incentive cash bonuses for the Named Executive Officers could range from 0% to 125% of such Named Executive Officer’s target annual incentive cash bonus, depending on 2023 performance. The bonus payments for 2023 were based on performance against the corporate and personal objectives, consisting primarily of continued advancement of our HBV and coronavirus pipeline programs and other business objectives. Key objectives achieved during 2023 that were important in our Compensation Committee’s determination of bonus awards included progressing our Phase 2a clinical trials with imdusiran and initiating a Phase 1 clinical trial for AB-101. As a result of such 2023 performance, Mr. McElhaugh and Mr. Sofia each received an annual incentive cash bonus equal to 75% of such Named Executive Officer’s target bonus amount.
Long-Term Incentives — Stock Options and Restricted Stock Units
Stock options and restricted stock units are granted to reward individuals for current performance, as an incentive for future performance and to align the long-term interest of Named Executive Officers with Shareholders. Stock options and restricted stock units are granted under the 2016 Omnibus Share and Incentive Plan.
Stock options are generally awarded to Named Executive Officers at commencement of employment. Stock options and restricted stock units are generally awarded to Named Executive Officers annually thereafter after taking into consideration the results of a competitive analysis that benchmarks long-term incentive awards granted to executives in comparable positions at peer companies. The size of the grants for both the stock options and restricted stock units are adjusted based on each Named Executive Officer’s performance against pre-determined corporate and personal performance goals used for annual incentive cash bonuses. From time to time, stock options and restricted stock units may be granted to retain executives or for other special purposes. The exercise price for the stock options is the closing price of the Common Shares on the date of grant of the options.
For stock options granted to our Named Executive Officers during 2023, those awards vest (or remain eligible to vest) based on continued employment or service over a four-year period, with 1/48
th
of the shares subject to the option vesting in substantially equal monthly installments measured from one month following the grant date. For grants of restricted stock units to our Named Executive Officers during 2023, those awards vest (or remain eligible to vest) based on continued employment or service over a three-year period in three equal annual installments beginning one year from the grant date.
Retirement Benefits for Named Executive Officers
We do not have any pension or deferred compensation plans for our Named Executive Officers. We do, however, have a 401(k) plan for US employees whereby we match employee contributions up to 5% of base salary and bonus for 2023. For Canadian employees, we have a Registered Retirement Savings Plan (“RRSP”) whereby we match employee contributions up to 5% of base salary for 2023. The matching percentages are the same for all U.S. and Canadian employees and are not based on performance.
36
Health Care Plans
All salaried employees are eligible to receive health care coverage, paid vacation, term life insurance and disability insurance on the same terms.
Named Executive Officer Compensation for Fiscal Year 2023
Michael J. McElhaugh, Current Interim President and Chief Executive Officer, Former Chief Operating Officer
For fiscal 2023, Mr. McElhaugh served as the Chief Operating Officer, with an annual base salary of $483,000 and an annual incentive cash target of 40% of his annual base salary. In February 2024, Mr. McElhaugh received an annual incentive cash award of $144,900, which was equal to 30% of his annual salary for 2023, based on fiscal 2023 performance.
In February 2023, Mr. McElhaugh received a stock option award exercisable for 334,700 shares with an aggregate grant date fair value of $733,355. The option vests based on continued employment or service and becomes exercisable 1/48
th
each month over the four-year vesting period, has an exercise price of $2.90 and expires ten years from the grant date. In addition at such time, Mr. McElhaugh received a grant for 83,700 restricted stock units with an aggregate grant date fair value of $242,730, which vest (or remain eligible to vest) based on continued employment or service over a three-year period in three equal annual installments beginning one year from the grant date.
In 2023, Mr. McElhaugh also received $16,500 of 401(k) matching contributions.
Effective January 1, 2024, Mr. McElhaugh was promoted to Interim President and Chief Executive Officer and his annual base salary was increased to $515,000, and his annual incentive cash target was increased to 45% of his annual base salary. During the time Mr. McElhaugh is serving as the Company’s Interim President and Chief Executive Officer, he is entitled to an additional yearly stipend of $127,500, which shall be pro-rated monthly.
William H. Collier, Former President and Chief Executive Officer
For fiscal 2023, Mr. Collier’s annual base salary was $637,100 and his annual incentive cash target was 65% of his annual salary. In connection with his retirement effective December 31, 2023, Mr. Collier received a lump-sum, all-inclusive payment in the amount of $207,058, which represented 50% of his annual incentive cash target for 2023.
In February 2023, Mr. Collier received a stock option award exercisable for 866,000 shares with an aggregate grant date fair value of $1,897,476. The option vests based on continued employment or service and becomes exercisable 1/48
th
each month over the four-year vesting period, has an exercise price of $2.90 and expires ten years from the grant date. In addition, Mr. Collier received a grant for 216,500 restricted stock units with an aggregate grant date fair value of $627,850, which vest (or remain eligible to vest) based on continued employment or service over a three-year period in three equal annual installments beginning one year from the grant date.
In 2023, Mr. Collier also received $16,500 of 401(k) matching contributions.
Dr. Michael J. Sofia, Chief Scientific Officer
For fiscal 2023, Dr. Sofia’s annual base salary was $492,000 and his annual incentive cash target was 40% of his annual salary. In February 2024, Dr. Sofia received an annual incentive cash award of $147,600, which was equal to 30% of his annual salary for 2023, based on fiscal 2023 performance.
In January 2023, Dr. Sofia received a stock option award exercisable for 328,700 shares with an aggregate grant date fair value of $720,208. The option vests based on continued employment or service and becomes exercisable 1/48
th
each month over the four-year vesting period, has an exercise price of $2.90 and expires ten years from the grant date. In addition, Dr. Sofia received a grant for 82,200 restricted stock units with an aggregate grant date fair value of $238,380, which vest (or remain eligible to vest) based on continued employment or service over a three-year period in three equal annual installments beginning one year from the grant date.
In 2023, Dr. Sofia also received $16,500 of 401(k) matching contributions.
In January 2024, Dr. Sofia’s annual base salary was increased to $512,000.
37
Dr. Elizabeth Howard, Former Executive Vice President, General Counsel, Chief Compliance Officer and Secretary
For fiscal 2023, Dr. Howard’s annual base salary was $438,000 and her annual incentive cash target was 40% of her annual salary. Dr. Howard’s employment by Arbutus terminated on July 7, 2023 and she received a $747,240 severance payment in accordance with the terms of her employment agreement.
In January 2023, Dr. Howard received a stock option award exercisable for 278,700 shares with an aggregate grant date fair value of $610,654. The option vests based on continued employment or service and becomes exercisable 1/48
th
each month over the four-year vesting period, has an exercise price of $2.90 and expires ten years from the grant date. In addition, Dr. Howard received a grant for 69,700 restricted stock units with an aggregate grant date fair value of $202,130, which vest (or remain eligible to vest) based on continued employment or service over a three-year period in three equal annual installments beginning one year from the grant date.
In 2023, Dr. Howard also received $1,738 of 401(k) matching contributions.
Employment Agreements
Michael J. McElhaugh
On July 10, 2015, we entered into an employment agreement with Mr. McElhaugh (as amended, the “McElhaugh Agreement”), which provides that Mr. McElhaugh will be employed by Arbutus Biopharma Inc. (the “Subsidiary”), which is a subsidiary of Arbutus, and that his employment will continue until either the Subsidiary or Mr. McElhaugh terminates his employment in accordance with the terms of the McElhaugh Agreement. The McElhaugh Agreement provides that Mr. McElhaugh will receive an annual base salary, subject to annual increases as determined by the Chief Executive Officer, and an annual target bonus equal to 40% of Mr. McElhaugh’s base salary. In addition, the McElhaugh Agreement provides that Mr. McElhaugh will be entitled to participate in or receive benefits under the Subsidiary’s employee benefit plans as they may be adopted and amended from time to time, subject to the terms and conditions of those employee benefit plans. If Mr. McElhaugh’s employment is involuntarily terminated under certain circumstances, the Subsidiary would provide him with certain payments and benefits pursuant to the McElhaugh Agreement, as described below under “Additional Narrative Disclosure - Termination and Change of Control Benefits.”
On January 1, 2024, we entered into an amendment with Mr. McElhaugh to the McElhaugh Agreement in connection with his appointment as our Interim President and Chief Executive Officer, effective as of January 1, 2024 (the “McElhaugh Agreement Amendment”). Mr. McElhaugh’s annual base salary was increased to $515,000, and his target annual incentive cash bonus was increased to 45% of his annual base salary. The McElhaugh Agreement Amendment also provides that, during the time Mr. McElhaugh is serving as our Interim President and Chief Executive Officer, he is entitled to an additional yearly stipend of $127,500, which shall be pro-rated monthly.
William H. Collier
On June 13, 2019, we entered into an employment agreement with Mr. Collier (the “Collier Agreement”), which provided that Mr. Collier would be employed by Arbutus Biopharma Inc., and that his employment would continue until either party terminates Mr. Collier’s employment in accordance with the terms of the Collier Agreement. The Collier Agreement provided that Mr. Collier received an annual base salary, subject to annual increases as determined by the Board of Directors, and an annual target bonus equal to 65% of Mr. Collier’s base salary. In addition, the Collier Agreement provided that Mr. Collier would be entitled to participate in or receive benefits under Arbutus’ employee benefit plans as they may be adopted and amended from time to time, subject to the terms and conditions of those employee benefit plans.
On December 31, 2023, we entered into a separation agreement and release with Mr. Collier (the “Collier Separation Agreement”), relating to Mr. Collier’s retirement effective December 31, 2023. Pursuant to the Collier Separation Agreement, Mr. Collier received a lump-sum, all-inclusive payment in the amount of $207,058, less normal payroll taxes and deductions, representing 50% of his annual discretionary target bonus for 2023. In consideration of the foregoing payment, Mr. Collier executed and did not revoke a general release of claims in favor of us. Pursuant to the Collier Separation Agreement, Mr. Collier continues to be subject to the restrictive covenants and obligations set forth in the Collier Agreement, including covenants relating to confidentiality and work product, and restrictions on solicitation and competition following his separation date.
38
In addition, the parties entered into a Consulting Agreement, effective December 31, 2023 (the “Collier Consulting Agreement”), pursuant to which Mr. Collier will perform services as reasonably requested for a period of three (3) months, unless extended or earlier terminated by either party in accordance with the terms therein. In exchange for his services, Mr. Collier will receive a fee of $400 per hour. Additionally, during the term of the Collier Consulting Agreement, Mr. Collier’s restricted stock units and stock options granted pursuant to the Company’s equity incentive plans will continue to vest. Further, Mr. Collier will have ninety (90) days from the termination of the Collier Consulting Agreement to exercise any vested stock options.
Dr. Michael J. Sofia
On July 11, 2015, Arbutus Biopharma, Inc. entered into an Executive Employment Agreement with Dr. Sofia (the “Sofia Agreement”), which provides that Dr. Sofia will be employed, and that his employment will continue until either party terminates his employment in accordance with the terms of the Sofia Agreement. The Sofia Agreement provides that Dr. Sofia will receive an annual base salary, subject to annual increases as determined by the Chief Executive Officer, and an annual target bonus equal to 40% of Dr. Sofia’s base salary. In addition, the Sofia Agreement provides that Dr. Sofia will be entitled to participate in or receive benefits under Arbutus’ employee benefit plans as they may be adopted and amended from time to time, subject to the terms and conditions of those employee benefit plans. If Dr. Sofia’s employment is involuntarily terminated under certain circumstances, Arbutus would provide him with certain payments and benefits pursuant to the Sofia Agreement, as described below under “Additional Narrative Disclosure - Termination and Change of Control Benefits.”
Dr. Elizabeth Howard
On March 6, 2017, we entered into an employment agreement with Dr. Howard (the “Howard Agreement”), which provided that Dr. Howard would be employed by Arbutus Biopharma, Inc, and that her employment would continue until either party terminated her employment in accordance with the terms of the Howard Agreement. The Howard Agreement provided that Dr. Howard would receive an annual base salary, subject to annual increases as determined by the Chief Executive Officer, and an annual target bonus equal to 40% of Dr. Howard’s base salary. In addition, the Howard Agreement provided that Dr. Howard would be entitled to participate in or receive benefits under Arbutus’ employee benefit plans as they may be adopted and amended from time to time, subject to the terms and conditions of those employee benefit plans.
On July 7, 2023, we entered into a separation agreement and release with Dr. Howard (the “Howard Separation Agreement”), which sets forth the terms of Dr. Howard’s separation from us effective July 7, 2023. Pursuant to the Howard Separation Agreement, Dr. Howard received the following payments and benefits in connection with her separation: (i) a lump-sum, all-inclusive payment in the amount of $657,000, less normal payroll taxes and deductions, representing her 2023 base salary for a period of eighteen months; and (ii) a lump-sum, payment in the amount of $90,240, less normal payroll taxes and deductions, representing Dr. Howard’s prorated 2023 annual discretionary target bonus. In consideration of the foregoing payment, Dr. Howard executed and did not revoke a general release of claims in favor of us. Pursuant to the Howard Separation Agreement, Dr. Howard continues to be subject to the restrictive covenants and obligations set forth in the Howard Agreement, including covenants relating to confidentiality and work product, and restrictions on solicitation and competition following her separation date.
In addition, the parties entered into a Consulting Agreement, effective July 7, 2023 (the “Howard Consulting Agreement”), pursuant to which Dr. Howard will perform certain consulting services for a period of one (1) year, unless extended or earlier terminated by either party in accordance with the terms therein. In exchange for her services, Dr. Howard will receive a fee of $400 per hour. Additionally, during the term of the Howard Consulting Agreement, Dr. Howard’s stock options and restricted stock units granted pursuant to the Company’s equity incentive plans will continue to vest. Further, Dr. Howard will have ninety (90) days from the termination of the Howard Consulting Agreement to exercise any vested stock options.
39
Outstanding Equity Awards at Fiscal Year-End 2023
The following table provides information regarding all stock options and stock awards outstanding as of December 31, 2023, for each Named Executive Officer:
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||