aveo-pre14a_20210609.htm

 

 

 

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 Pursuant to §240.14a-12

AVEO PHARMACEUTICALS, INC.

(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 the appropriate box):

No fee required.

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1)

Title of each class of securities to which transaction applies:

(2)

Aggregate number of securities to which transaction applies:

(3)

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

(4)

Proposed maximum aggregate value of transaction:

(5)

Total fee paid:

Fee paid previously with preliminary materials.

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

(1)

Amount previously paid:

(2)

Form, Schedule or Registration Statement No.:

(3)

Filing Party:

(4)

Date Filed:

 

 


 

Notice of 2021 Annual Meeting of Stockholders

 

 

 

 

 

 

 

  DATE AND TIME

  

Wednesday, June 9, 2021, at 10:00 a.m., Eastern Time

 

 

  PLACE

  

Virtually at www.proxydocs.com/AVEO (the “Meeting Website”)

 

There is no physical location for the annual meeting.

 

 

 

  ITEMS OF BUSINESS  

  

  

Elect seven directors, each to serve for a one-year term expiring at our 2022 Annual Meeting of Stockholders and until his or her successor is duly elected and qualified.

 

  

  

Approve an amendment to the AVEO Pharmaceuticals, Inc. 2019 Equity Incentive Plan to increase the number of shares of common stock reserved for issuance thereunder.

 

  

  

Approve the amendment and restatement of the 2010 Employee Stock Purchase Plan to increase the number of shares of common stock reserved for issuance thereunder from 76,400 to 576,400 and to make certain other changes.

 

  

  

Approve an advisory vote on executive compensation.

 

  

  

Ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2021.

 

 

 

 

  

Stockholders will also act on any other business that may properly come before the annual meeting or any adjournment thereof.

 

 

  RECORD DATE

 

  

Stockholders of record at the close of business on April 15, 2021 are entitled to vote at the annual meeting and at any adjournment or postponement thereof.

 

 

  PROXY VOTING

  

It is important you vote your shares so they are counted at the annual meeting. You can vote your shares over the Internet at the web address included in the Notice of Internet Availability of Proxy Materials and included in the proxy card (if you received a proxy card), by telephone through the number included in the proxy card (if you received a proxy card), or by signing and dating your proxy card (if you received a proxy card) and mailing it in the prepaid and addressed envelope.

 

Michael Bailey

President and Chief Executive Officer

AVEO Pharmaceuticals, Inc.

30 Winter Street

Boston, Massachusetts 02108

April [●], 2021 

Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on June 9, 2021: The Notice of 2021 Annual Meeting and Proxy Statement and 2020 Annual Report are available as of today’s date, [●], 2021, at www.proxydocs.com/AVEO.

 

 


 

 

Virtual Meeting Format: Due to COVID-19-related public health restrictions and for the safety and well-being of our stockholders, the 2021 annual meeting will be conducted virtually. You will be able to attend the annual meeting, as well as vote and submit questions during the meeting, by visiting www.proxydocs.com/AVEO and entering your control number. To attend the annual meeting, you must register in advance. Please refer to the additional logistical details in the accompanying proxy statement for more information on how to participate in the annual meeting.

Participation in the meeting is limited due to the capacity of the host platform, and access to the meeting will be accepted on a first come, first served basis. Electronic entry to the meeting will begin at 9:45 a.m., Eastern Time, and the meeting will begin promptly at 10:00 a.m., Eastern Time. If you have difficulty accessing the annual meeting through the Meeting Website, please call the technical support number provided in the registration email.

A list of registered stockholders will be available to record stockholders during the annual meeting at the Meeting Website.

 

 

 

 

 

 

 

 

 

 

 

HOW TO VOTE

 

 

 

Please refer to the following proxy materials or the information forwarded by your bank, broker or other holder of record to see which voting methods are available to you.

BY INTERNET
www.proxypush.com/AVEO

BY PHONE
1-866-230-6355

BY MAIL
If you requested paper copies of your proxy materials, sign, date and return the proxy card in the postage-paid envelope provided

VIRTUALLY
You can attend the annual meeting and vote virtually (advance registration required), even if you gave a proxy in advance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

TABLE OF CONTENTS

 

PROXY STATEMENT

 

1

 

 

 

 

IMPORTANT INFORMATION ABOUT THE ANNUAL MEETING AND VOTING

 

1

 

 

 

 

HOUSEHOLDING OF ANNUAL MEETING MATERIALS

 

7

 

 

 

 

OWNERSHIP OF OUR COMMON STOCK

 

7

 

 

 

 

PROPOSAL 1—ELECTION OF DIRECTORS

 

9

 

 

 

 

CORPORATE GOVERNANCE

 

17

 

 

 

 

 

General

 

17

 

 

 

 

 

Composition of our Board of Directors

 

17

 

 

 

 

 

Board Determination of Independence

 

18

 

 

 

 

 

Role of the Board

 

19

 

 

 

 

 

The Board’s Role in Risk Oversight

 

20

 

 

 

 

 

Board and Committee Meetings

 

20

 

 

 

 

 

Director Attendance at Annual Meeting of Stockholders

 

21

 

 

 

 

 

Board Committees

 

21

 

 

 

 

 

Director Nomination Process

 

23

 

 

 

 

 

Communicating with the Independent Directors

 

24

 

 

 

 

 

Compensation Determination Process

 

24

 

 

 

 

REPORT OF THE AUDIT COMMITTEE

 

26

 

 

 

 

 

Principal Accountant Fees and Services

 

26

 

 

 

 

 

Audit Committee Pre-Approval Policies and Procedures

 

27

 

 

 

 

CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS

 

28

 

 

 

 

 

Policies and Procedures for Related Person Transactions

 

28

 

 

 

 

 

Related Person Transactions

 

29

 

 

 

 

EXECUTIVE AND DIRECTOR COMPENSATION

 

30

 

 

 

 

 

Compensation Discussion and Analysis

 

30

 

 

 

 

 

Summary Compensation Table for the Years Ended December 31, 2020 and 2019

 

44

 

 

 

 

 

Grants of Plan-Based Awards for the Year Ended December 31, 2020

 

45

 

 

 

 

 

Outstanding Equity Awards at December 31, 2020

 

46

 

 

 

 

 

Option Exercises

 

47

 

 

 

 

 

Pay Ratio of Chief Executive Officer to Median Employee

 

47

 

 

 

 

 

Employment Agreements and Severance Arrangements

 

48

 

 

 

 

 

Potential Payments and Benefits Upon Termination and a Change in Control

 

49

 

 

 

 

 

Equity Compensation Plan Information

 

51

 

 

 

 

 

Compensation Committee Interlocks and Insider Participation

 

51

 

 

 

 

 

Director Compensation

 

51

i

 


 

 

 

 

 

REPORT OF THE COMPENSATION COMMITTEE

 

54

 

 

 

 

PROPOSAL 2—APPROVAL OF AN AMENDMENT TO THE 2019 EQUITY INCENTIVE PLAN, AS AMENDED

 

55

 

 

 

 

PROPOSAL 3—APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE 2010 EMPLOYEE STOCK PURCHASE PLAN, AS AMENDED

 

69

 

 

 

 

PROPOSAL 4—ADVISORY VOTE ON EXECUTIVE COMPENSATION

 

75

 

 

 

 

PROPOSAL 5—RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

77

 

 

 

 

OTHER MATTERS

 

78

 

 

 

 

STOCKHOLDER PROPOSALS

 

78

 

 

 

 

APPENDIX A

 

A-1

 

 

 

 

APPENDIX B

 

B-1

 

 

ii

 


 

AVEO PHARMACEUTICALS, INC.

30 WINTER STREET

BOSTON, MASSACHUSETTS 02108

 

PROXY STATEMENT

for the 2021 Annual Meeting of Stockholders to be held on June 9, 2021

This Proxy Statement and the accompanying proxy card are being furnished in connection with the solicitation of proxies by the board of directors of AVEO Pharmaceuticals, Inc. for use at the Annual Meeting of Stockholders to be held virtually on Wednesday, June 9, 2021 at 10:00 a.m., Eastern Time, at www.proxydocs.com/AVEO (the “Meeting Website”), and at any adjournment thereof. In order to attend, you must register in advance at the Meeting Website. Upon completing your registration, you will receive further instructions via email, including your unique links that will allow you access to the meeting and will permit you to submit questions. Except where the context otherwise requires, references to “we,” “us,” “our,” “our company”, the “Company” and similar terms refer to AVEO Pharmaceuticals, Inc. and its consolidated subsidiaries.

All properly submitted proxies will be voted in accordance with the instructions contained in those proxies. If no instructions are specified, the proxies will be voted in accordance with the recommendation of our board of directors with respect to each of the matters set forth in the accompanying Notice of 2021 Annual Meeting of Stockholders.

On or about April 30, 2021, we are mailing to our stockholders of record as of April 15, 2021 a Notice of Internet Availability of Proxy Materials, including this Proxy Statement and our 2020 Annual Report to Stockholders on Form 10-K, instead of paper copies of these documents. The Notice contains instructions on how to access those documents over the Internet. The Notice also contains instructions on how you may receive a paper copy of our proxy materials, including this Proxy Statement, our 2020 Annual Report to Stockholders on Form 10-K and a form of proxy card or voting instruction card.

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on June 9, 2021:

This Proxy Statement and our 2020 Annual Report to Stockholders on Form 10-K are available for viewing, printing and downloading at www.proxydocs.com/AVEO.

A copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, as filed with the U.S. Securities and Exchange Commission (the “SEC”), except for exhibits, will be furnished without charge to any stockholder upon written request to AVEO Pharmaceuticals, Inc., 30 Winter Street, Boston, Massachusetts 02108, Attention: Corporate Secretary. Copies of exhibits, if any, are also available upon written request to the preceding address and upon the payment of an appropriate processing fee.  This Proxy Statement and our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 are also available on the SEC’s website at www.sec.gov.

IMPORTANT INFORMATION ABOUT THE ANNUAL MEETING AND VOTING

Q.Why did I receive these proxy materials?

A.We are providing these proxy materials to you, as a stockholder of record of AVEO Pharmaceuticals, Inc., in connection with the solicitation by our board of directors of proxies to be voted at our 2021 Annual Meeting of Stockholders to be held virtually at the Meeting Website on Wednesday, June 9, 2021 at 10:00 a.m., Eastern Time. As a stockholder of record of AVEO Pharmaceuticals, Inc. as of April 15, 2021, you are invited to attend our annual meeting and are entitled and requested to vote on the proposals described in this proxy statement. In order to attend, you must register in advance at

1

 


 

www.proxydocs.com/AVEO. Upon completing your registration, you will receive further instructions via email, including your unique links that will allow you access to the meeting and will permit you to submit questions.

Q.What is the purpose of the annual meeting?

A.At the annual meeting, stockholders will consider and vote on the following matters:

1.To elect seven directors, each to serve for a one-year term expiring at our 2022 Annual Meeting of Stockholders and until his or her successor is duly elected and qualified;

2.To approve an amendment to the AVEO Pharmaceuticals, Inc. 2019 Equity Incentive Plan, which we refer to as the 2019 Equity Incentive Plan, to increase the number of shares available for issuance under the plan;

3.To approve the amendment and restatement of the AVEO Pharmaceuticals, Inc. 2010 Employee Stock Purchase Plan, which we refer to as the 2010 Employee Stock Purchase Plan, to increase the number of shares available for issuance under the plan from 76,400 to 576,400 and to make certain other changes;

4.To approve a non-binding advisory vote on executive compensation; and

5.To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2021.

Stockholders will also act on any other business that may properly come before the meeting, or any adjournment thereof.

Q.Who can vote at the annual meeting?

A.To be entitled to vote, you must have been a stockholder of record at the close of business on April 15, 2021, the record date for determining our stockholders entitled to vote at our annual meeting. There were 34,360,775 shares of our common stock outstanding and entitled to vote at the annual meeting as of the record date.

Q.How many votes do I have?

A.Each share of our common stock that you own as of the record date will entitle you to one vote on each matter considered at the annual meeting.

Q.How do I vote?

A.Submit a Proxy: If you are the “record holder” of your shares, meaning that you own your shares in your own name and not through a bank, brokerage firm or other nominee, you may submit a proxy to cause your shares to be present and voted at the annual meeting:

(1)Submit a Proxy Over the Internet: Go to the website of our tabulator at www.proxypush.com/AVEO. Use the vote control number printed on the Notice (or your proxy card) to access your account and submit a proxy to vote your shares. You must specify how you want your shares voted.  If you do not specify how you want your shares voted, your Internet proxy will not be completed, and you will receive an error message. Your shares will be voted according to your instructions.

(2)Submit a Proxy by Telephone: Call 1-866-230-6355, toll free from the United States, Canada and Puerto Rico, and follow the recorded instructions. You will need to have the Notice (or your proxy card) in hand when you call. You must specify how you want your shares voted and confirm your proxy to vote your shares as instructed at the end of the call, or your telephonic proxy cannot be completed. Your shares will be voted according to your instructions.

2

 


 

(3)Submit a Proxy by Mail: If you received a printed copy of the proxy materials, complete and sign your enclosed proxy card and mail it in the enclosed postage prepaid envelope to Mediant Communications, P.O. Box 8016, Cary, NC 27512-9903. Mediant Communications must receive the proxy card not later than June 8, 2021, the day before the annual meeting, for your mailed proxy to be valid and your shares to be voted at the annual meeting. Your shares will be voted according to your instructions. If you return your proxy card but do not specify how you want your shares voted on any particular matter, they will be voted in accordance with the recommendations of our board of directors.

(4)At Virtual Meeting: You may vote online while attending the meeting virtually at the Meeting Website and following the instructions for stockholder voting. In order to attend, you must register in advance at the Meeting Website. Upon completing your registration, you will receive further instructions via email, including your unique links that will allow you access to the meeting and will permit you to submit questions.

If your shares are held in “street name,” meaning they are held for your account by a bank, brokerage firm or other nominee, you are deemed to be the beneficial owner of your shares. The intermediary that holds the shares for you is considered the record holder for the purposes of voting at the meeting. As the beneficial owner, you have the right to instruct your intermediary as to how to vote the shares held in your account by following the instructions contained on the voting instruction card provided to you by the intermediary. Your intermediary is required to vote the shares it holds on your behalf according to your instructions. The proxy materials, as well as voting and revocation instructions, should be forwarded to you by the intermediary that holds your shares. To cause your shares to be voted at the annual meeting, you will need to follow the instructions that your intermediary provides you. Many intermediaries solicit voting instructions over the Internet or by telephone.

If your shares are held in “street name,” and you would like to vote during the meeting, you must register at www.proxydocs.com/AVEO using the control number provided by your broker, bank or other nominee that holds your shares, the registered name on your account and the name of your broker, bank or other nominee, and to follow the instructions on the Meeting Website to submit your vote.

Q.Can I change my vote?

A.If your shares are registered directly in your name, you may revoke your proxy before the annual meeting. You may also revoke any previously submitted proxy by attending the annual meeting and voting in person at the annual meeting. To do so, you must do one of the following:

(1)Submit a new proxy over the Internet or by telephone as instructed above. Only your latest Internet or telephone proxy will be voted at the annual meeting.

(2)Sign a new proxy and submit it by mail to Mediant Communications, P.O. Box 8016, Cary, NC 27512-9903. Mediant Communications must receive the proxy card no later than June 8, 2021. Only your latest dated proxy will be voted at the annual meeting.

(3)Attend the virtual annual meeting and vote online as instructed above. Attending the annual meeting alone, without submitting a new proxy, will not revoke any previously submitted proxy.

(4)Give our Corporate Secretary written notice before the meeting or prior to the taking of the vote at the meeting that you want to revoke your previously submitted proxy.   

If your shares are held in “street name,” you may submit new voting instructions by contacting your bank, brokerage firm or other nominee. You may also vote virtually at the annual meeting, which will have the effect of revoking any previously submitted voting instructions, if you obtain a legal proxy from the record holder of your shares as described in the answer to the question “How do I vote?” above.

3

 


 

Q.Will my shares be voted if I do not return my proxy?

A.If your shares are registered directly in your name, your shares will not be voted if you do not submit a proxy over the Internet, by telephone or by mail or vote virtually at the annual meeting.

If your shares are held in “street name,” your bank, brokerage firm or other nominee under certain circumstances may vote your shares if you do not return your voting instructions. Banks, brokerage firms or other nominees can vote customers’ shares for which they have not received voting instructions on discretionary matters.  However, your bank, brokerage firm or other nominee will not be allowed to vote your shares on non-discretionary matters. If you do not return voting instructions to your bank, brokerage firm or other nominee to vote your shares, your bank, brokerage firm or other nominee may, on discretionary matters, either vote your shares or leave your shares unvoted.

Your bank, brokerage firm or other nominee cannot vote your shares on any matter that is considered non-discretionary. Proposal 1, the election of directors; Proposal 2, the approval of an amendment to the 2019 Equity Incentive Plan; Proposal 3, the approval of the amendment and restatement of the 2010 Employee Stock Purchase Plan; and Proposal 4, a non-binding advisory vote on executive compensation, are considered non-discretionary matters. If you do not instruct your bank, brokerage firm or other nominee how to vote with respect to these matters, your bank, brokerage firm or other nominee may not vote with respect to these proposals and those votes will be counted as “broker non-votes.” “Broker non-votes” are shares that are held in “street name” by a bank, brokerage firm or other nominee that indicates on its proxy that it does not have or did not exercise discretionary authority to vote on a particular matter. Proposal 5, the ratification of the appointment of our independent registered public accounting firm, is considered a discretionary matter, and your bank, brokerage firm or other nominee may vote on this discretionary matter even if it does not receive instructions from you, so long as it holds your shares in its name. We encourage you to provide voting instructions to your bank, brokerage firm or other nominee. This ensures that your shares will be voted at the annual meeting according to your instructions. You should receive directions from your bank, brokerage firm or other nominee about how to submit your voting instructions to them.

Q.How many shares must be represented to hold the annual meeting?

A.To hold the annual meeting, our bylaws require stockholders holding a majority of our shares issued and outstanding as of the record date, and entitled to vote at the meeting, to be present in person or represented by proxy. This is called a quorum. For purposes of determining whether a quorum exists, we count as present any shares for which a proxy has been submitted over the Internet, by telephone, or by completing and submitting a proxy by mail, or that are virtually represented at the meeting. Further, for purposes of establishing a quorum only, we will count a stockholder’s shares as present even if the stockholder votes (or submits a proxy with instructions to vote) on fewer than all of the proposals or to abstain. In addition, we will count as present shares held in “street name” by banks, brokerage firms or other nominees who indicate on their proxies that they do not have authority to vote those shares on Proposals 1, 2, 3 and 4. If a quorum is not present, we expect to adjourn the annual meeting until we obtain a quorum.

Q.What vote is required to approve each matter and how are votes counted?

A.Proposal 1—Election of Directors

The seven nominees for director to receive the highest number of votes FOR election will be elected as directors. This is called a plurality. Proposal 1 is considered a non-discretionary matter. Therefore, if your shares are held by your bank, brokerage firm or other nominee in “street name” and you do not provide voting instructions with respect to your shares, your bank, brokerage firm or other nominee cannot vote your shares on Proposal 1. Shares held in “street name” by banks, brokerage firms or other nominees who indicate on their proxies that they do not have authority to vote the shares on Proposal 1

4

 


 

will not be counted as votes FOR or WITHHELD from any nominee. As a result, such “broker non-votes” will have no effect on the voting on Proposal 1. You may:

 

vote FOR all nominees;

 

vote FOR a particular nominee or nominees and WITHHOLD your vote from the other nominees; or

 

WITHHOLD your vote from all nominees.

Votes that are withheld will not be included in the vote tally for the election of directors and will not affect the results of the vote.

Proposal 2—Approval of an Amendment to the 2019 Equity Incentive Plan

To approve Proposal 2, stockholders holding a majority of the votes cast on the matter and voting FOR or AGAINST the proposal must vote FOR the proposal. Proposal 2 is considered a non-discretionary matter. Therefore, if your shares are held by your bank, brokerage firm or other nominee in “street name” and you do not provide voting instructions with respect to your shares, your bank, brokerage firm or other nominee cannot vote your shares on Proposal 2. Shares held in “street name” by banks, brokerage firms or other nominees who indicate on their proxies that they do not have authority to vote the shares on Proposal 2 will not be counted as votes FOR or AGAINST the proposal and also will not be counted as votes cast or shares voting on the proposal. If you ABSTAIN from voting on Proposal 3, your shares will not be voted FOR or AGAINST the proposal and also will not be counted as votes cast or shares voting on the proposal. As a result, “broker non-votes” and votes to ABSTAIN will have no effect on the outcome of Proposal 2.

Proposal 3—Approval of the Amendment and Restatement of the 2010 Employee Stock Purchase Plan

To approve Proposal 3, stockholders holding a majority of the votes cast on the matter and voting FOR or AGAINST the proposal must vote FOR the proposal. Proposal 3 is considered a non-discretionary matter. Therefore, if your shares are held by your bank, brokerage firm or other nominee in “street name” and you do not provide voting instructions with respect to your shares, your bank, brokerage firm or other nominee cannot vote your shares on Proposal 3. Shares held in “street name” by banks, brokerage firms or other nominees who indicate on their proxies that they do not have authority to vote the shares on Proposal 3 will not be counted as votes FOR or AGAINST the proposal and also will not be counted as votes cast or shares voting on the proposal. If you ABSTAIN from voting on Proposal 3, your shares will not be voted FOR or AGAINST the proposal and also will not be counted as votes cast or shares voting on the proposal. As a result, “broker non-votes” and votes to ABSTAIN will have no effect on the outcome of Proposal 3.

Proposal 4—Advisory Vote on Executive Compensation

Our board of directors is holding a non-binding advisory vote regarding the compensation of our named executive officers, as described in the “Executive and Director Compensation” section of this proxy statement, including the executive compensation tables and accompanying narrative disclosures therein. To approve Proposal 4, stockholders holding a majority of the votes cast on the matter and voting FOR or AGAINST the proposal must vote FOR the proposal. Proposal 4 is considered a non-discretionary matter. Therefore, if your shares are held by your bank, brokerage firm or other nominee in “street name” and you do not provide voting instructions with respect to your shares, your bank, brokerage firm or other nominee cannot vote your shares on Proposal 4. Shares held in “street name” by banks, brokerage firms or other nominees who indicate on their proxies that they do not have authority to vote the shares on Proposal 4 will not be counted as votes FOR or AGAINST the proposal and also will not be counted as votes cast or shares voting on the proposal. If you ABSTAIN from voting on Proposal 4, your shares will

5

 


 

not be voted FOR or AGAINST the proposal and also will not be counted as votes cast or shares voting on the proposal. As a result, “broker non-votes” and votes to ABSTAIN will have no effect on the outcome of Proposal 4.

The proposal is advisory and non-binding in nature, but our compensation committee and board of directors will take into account the outcome of the vote when considering future executive compensation arrangements.

Proposal 5—Ratification of Appointment of Independent Registered Public Accounting Firm

To approve Proposal 5, stockholders holding a majority of the votes cast on the matter and voting FOR or AGAINST the proposal must vote FOR the proposal. Proposal 5 is considered a discretionary matter. Therefore, if your shares are held by your bank, brokerage firm or other nominee in “street name” and you do not provide voting instructions with respect to your shares, your bank, brokerage firm or other nominee may vote your shares on Proposal 5. If you ABSTAIN from voting on Proposal 5, your shares will not be voted FOR or AGAINST the proposal and also will not be counted as votes cast or shares voting on the proposal. As a result, votes to ABSTAIN will have no effect on the outcome of Proposal 5.

Although stockholder approval of our audit committee’s appointment of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2021 is not required, we believe that it is advisable to give stockholders an opportunity to ratify this appointment. If this proposal is not approved at the annual meeting, our audit committee will reconsider its appointment of Ernst & Young LLP as our independent registered public accounting firm.

Q.How does the board of directors recommend that I vote on the proposals?

A.Our board of directors recommends that you vote:

FOR the election of each of the seven nominees to serve on our board of directors, each to serve for a one-year term expiring at our 2022 Annual Meeting of Stockholders and until his or her successor is duly elected and qualified;

FOR the approval of an amendment to the 2019 Equity Incentive Plan to increase the number of shares available for issuance under the plan;

FOR the approval of amendments to the 2010 Employee Stock Purchase Plan to increase the number of shares available for issuance under the plan from 76,400 to 576,400 and to make certain other changes;

FOR the approval of the non-binding advisory vote on the compensation of our named executive officers; and

FOR the ratification of the selection of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2021.

Q.Are there other matters to be voted on at the annual meeting?

A.We do not know of any other matters that may come before the annual meeting. If any other matters are properly presented at the annual meeting, the persons named in the accompanying proxy intend to vote, or otherwise act, in accordance with their judgment on the matter.

Q.Where can I find the voting results?

A.We plan to report the voting results in a Current Report on Form 8-K filed with the SEC within four business days following the date of our annual meeting.

6

 


 

Q.What are the costs of soliciting these proxies?

A.We will bear the cost of soliciting proxies. We have retained Morrow Sodali LLC to assist us in solicitation of proxies for an aggregate fee of approximately $7,500, plus reasonable out-of-pocket expenses. In addition to solicitation by mail, our directors, officers and employees may solicit proxies by telephone, e-mail, facsimile and in person without additional compensation. We may reimburse banks, brokerage firms or other nominees holding stock in their names, or in the names of their nominees, for their expenses in sending proxies and proxy material to beneficial owners.

HOUSEHOLDING OF ANNUAL MEETING MATERIALS

Some banks, brokerage firms and other nominee record holders may be participating in the practice of “householding” proxy statements, annual reports to stockholders, and notices of Internet availability of proxy materials. This means that only one copy of such materials may have been sent to multiple stockholders in your household. We will promptly deliver a separate copy of any such document to you upon written or oral request to AVEO Pharmaceuticals, Inc., 30 Winter Street, Boston, Massachusetts 02108, Attention: Corporate Secretary, telephone: (857) 400-0101. If you want to receive separate copies of the proxy statement, annual report to stockholders, or notices of Internet availability of proxy materials in the future, or if you are receiving multiple copies and would like to receive only one copy per household, you should contact your bank, brokerage firm or other nominee record holder, or you may contact us at the above address and phone number.

OWNERSHIP OF OUR COMMON STOCK

Unless otherwise provided below, the following table sets forth information regarding beneficial ownership of our common stock as of April 15, 2021 by:

 

each person, or group of affiliated persons, known to us to be the beneficial owner of 5% or more of the outstanding shares of our common stock;

 

each of our current directors and director nominees;

 

our executive officers that are named in the “Summary Compensation Table for the Years Ended December 31, 2020 and 2019” included elsewhere in this proxy statement; and

 

all of our current directors and executive officers as a group.

The number of shares of common stock beneficially owned by each person or entity is determined in accordance with the applicable rules of the SEC and includes voting or investment power with respect to shares of our common stock. The information is not necessarily indicative of beneficial ownership for any other purpose. Unless otherwise indicated in the table or in the footnotes to the table below, to our knowledge, all persons named in the table have sole voting and investment power with respect to their shares of common stock, except to the extent authority is shared by spouses under community property laws. The inclusion herein of any shares as beneficially owned does not constitute an admission of beneficial ownership.

The column entitled “Percentage of Shares Beneficially Owned” is based on a total of 34,360,775 shares of our common stock outstanding as of April 15, 2021. Except as otherwise set forth below, the address of each beneficial owner is c/o AVEO Pharmaceuticals, Inc., 30 Winter Street, Boston, Massachusetts 02108.

 

7

 


 

Name and Address of Beneficial Owner

 

Number of

Common

Shares

Beneficially

Owned

 

 

Common

Stock

Underlying

Warrants

Exercisable

Within 60

Days

 

 

Common

Stock

Underlying

Options

Exercisable

Within 60

Days

 

 

Total

Equity

Securities

Beneficially

Owned

 

 

Percentage

of Shares

Beneficially

Owned

 

Holders of more than 5% of our voting securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Entities affiliated with New Enterprise Associates(1) 1954 Greenspring Drive, Suite 600, Timonium, MD 21093

 

 

3,952,958

 

 

 

1,036,269

 

 

 

 

 

 

4,989,227

 

 

 

14.1

%

Directors and Named Executive Officers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Kenneth Bate

 

 

375

 

 

 

 

 

 

34,452

 

 

 

34,827

 

 

 

0.1

%

Anthony Evnin

 

 

41,852

 

(2)

 

12,953

 

 

 

34,452

 

(3)

 

89,258

 

 

 

0.3

%

Robert Young

 

 

1,896

 

(4)

 

 

 

 

35,427

 

 

 

37,323

 

 

 

0.1

%

Gregory Mayes

 

 

 

 

 

 

 

 

11,495

 

 

 

11,495

 

 

 

0.0

%

Scarlett Spring

 

 

 

 

 

 

 

 

8,994

 

 

 

8,994

 

 

 

0.0

%

Corinne Epperly

 

 

 

 

 

 

 

 

3,470

 

 

 

3,470

 

 

 

0.0

%

Kevin Cullen

 

 

 

 

 

 

 

 

1,387

 

 

 

1,387

 

 

 

0.0

%

Michael Bailey

 

 

31,885

 

 

 

5,181

 

 

 

470,556

 

 

 

507,622

 

 

 

1.5

%

Erick Lucera

 

 

 

 

 

 

 

 

26,037

 

 

 

26,037

 

 

 

0.1

%

Michael Needle

 

 

2,590

 

 

 

2,590

 

 

 

145,139

 

 

 

150,320

 

 

 

0.4

%

Karuna Rubin

 

 

 

 

 

 

 

 

96,018

 

 

 

96,018

 

 

 

0.3

%

Michael Ferraresso

 

 

 

 

 

 

 

 

63,570

 

 

 

63,570

 

 

 

0.2

%

All current executive officers and directors as a group (12 persons)

 

 

78,598

 

 

 

20,725

 

 

 

930,997

 

 

 

1,030,321

 

 

 

3.0

%

 

*Represents beneficial ownership of less than one percent of our outstanding common stock.

(1)This information is derived from information regarding our common stock in a Schedule 13D/A filed with the SEC by Growth Equity Opportunities Fund IV, LLC, or GEO IV, on June 24, 2020. The shares of common stock are held directly by GEO IV and indirectly held by New Enterprise Associates 15, L.P., or NEA 15, the sole member of GEO IV; NEA Partners 15, L.P., or NEA Partners 15, the sole general partner of NEA 15; NEA 15 GP, LLC, or NEA 15 GP, the sole general partner of NEA Partners 15, and the individual managers of NEA 15 GP (NEA 15, NEA Partners 15, NEA 15 GP and the individual managers of NEA 15 GP being collectively referred to as the Indirect Reporting Persons). The individual managers of NEA 15 GP are Peter J. Barris, Forest Baskett, Anthony A. Florence, Jr., Mohamad Makhzoumi, Josh Makower, David M. Mott, Scott D. Sandell and Peter W. Sonsini. Each of the Indirect Reporting Persons disclaims beneficial ownership of the shares held by GEO IV other than those shares which such person owns of record, and except to the extent of its or his pecuniary interest therein. According to GEO IV, as of June 24, 2020, GEO IV had sole voting power over 5,424,009 shares of common stock, shared voting power over 0 shares of common stock, sole dispositive power over 5,424,009 shares of common stock and shared dispositive power over 0 shares of common stock. On April 8, 2021, all 434,783 warrants purchased in connection with the April 2019 public offering of our common stock expired.

(2)Consists of (a) 10 shares of common stock held by Venrock Entrepreneurs Fund Management III, LLC, or VEFM III and (b) 41,841 shares of common stock held directly by Dr. Anthony Evnin. Dr. Evnin is a partner of VR Management, LLC, an affiliate of VEFM III. Dr. Evnin expressly disclaims beneficial ownership over all shares held by or on behalf of VEFM III, except to the extent of his indirect pecuniary interest therein. The address of VEFM III is c/o Venrock, 3340 Hillview Avenue, Palo Alto, CA 94304.

(3)Includes 1,250 shares of common stock issuable upon exercise of options held by Dr. Evnin on behalf and for the sole benefit of VR Management, LLC.

(4)Consists of (a) 1,795 shares of common stock held by Dr. Young and (b) 100 shares of common stock held by Dr. Young’s wife.

8

 


 

PROPOSAL 1—ELECTION OF DIRECTORS

The board of directors is currently set at eight members.  Dr. Robert Young will not be standing for re-election and his term will expire at the Annual Meeting. Upon the completion of Dr. Young’s term, the size of the board will automatically be reduced to seven members. The persons named in the accompanying proxy will vote to elect Mr. Bailey, Mr. Bate, Dr. Cullen, Dr. Epperly, Dr. Evnin, Mr. Mayes, and Ms. Spring as directors unless you indicate otherwise on your proxy. Each of the nominees is currently a member of our board of directors.

If they are elected, each of the nominees will hold office until our 2022 Annual Meeting of Stockholders and until his or her successor is duly elected and qualified. Each of the nominees has indicated his or her willingness to serve, if elected; however, if any nominee should be unable to serve, the shares of common stock represented by proxies may be voted for a substitute nominee designated by our board of directors.

There are no family relationships between or among any of our officers or directors.

Below are the names, ages and certain other information regarding the business experience, qualifications, attributes and skills of each of the nominees for director. Information with respect to the number of shares of common stock beneficially owned by each of these individuals, directly or indirectly, as of April 15, 2021 appears above under the heading “Ownership of Our Common Stock.”

 

 

 

Vote

OUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE NOMINEES AS DIRECTOR

 

 

 

9

 


 

Our 2021 Director Nominees

Age: 55

 

Director since: 2015

 

2020 attendance:

100%

Michael Bailey

 

Qualifications

We believe Mr. Bailey’s qualifications to serve on our board of directors include his service as our chief executive officer, his executive leadership roles at global pharmaceutical and biotechnology companies and his significant experience in oncology commercialization, clinical development, corporate finance, business development and corporate strategy.

Other Public Boards

Education

   IMV Inc. (since July 2020)

   B.S. in Psychology from St. Lawrence University

   M.B.A. from The Mendoza College of Business at the University of Notre Dame.

Experience

Mr. Bailey has served as our president and chief executive officer and as a director since January 6, 2015. Mr. Bailey joined our company in September 2010 as our chief commercial officer and was named our chief business officer in June 2013. Prior to joining our company, Mr. Bailey served as senior vice president, business development and chief commercial officer at Synta Pharmaceuticals Corp., a biopharmaceutical company focused on research, development and commercialization of oncology medicines, from August 2008 to September 2010. From 1999 to 2008, Mr. Bailey worked at ImClone Systems Incorporated, a biopharmaceutical company focused on the development and commercialization of treatments for cancer patients. During his nine-year tenure at ImClone, he was responsible for commercial aspects of the planning and launch of ERBITUX® (cetuximab) across multiple oncology indications, as well as new product planning for the ImClone development portfolio, which included CYRAMZA® (ramucirumab) and PORTRAZZA® (necitumumab). In addition, Mr. Bailey was a member of the strategic leadership committees for ImClone and its North American and worldwide partnerships and led its commercial organization, most recently as senior vice president of commercial operations. Prior to his role at ImClone, Mr. Bailey managed the cardiovascular new products development portfolio at Genentech, Inc., a biotechnology company, from 1997 to 1999. Mr. Bailey started his career in the pharmaceutical industry as part of Smith-Kline Beecham’s executive marketing development program, where he held a variety of commercial roles from 1992 to 1997, including sales, strategic planning, and product management.

 

10

 


 

Age: 70

 

Director since: 2007

 

Chairman since: 2021

 

Independent

 

Committees:

• Audit, Chair

• Compensation

 

2020 attendance:

96%

Kenneth Bate

 

Qualifications

We believe Mr. Bate’s qualifications to serve on our board of directors as chairman include his operating, finance, commercial, transactional and senior management experience in the industry, such as his experience as chief executive officer of Archemix and NitroMed, as head of commercial operations and chief financial officer at Millennium Pharmaceuticals, and as chief financial officer and vice president of sales and marketing at Biogen, as well as his experience serving on the board of directors of other public life sciences companies, such as Cubist Pharmaceuticals, BioMarin Pharmaceutical and Vanda Pharmaceuticals.

Other Public Boards

Education

   Catabasis Pharmaceuticals, Inc. (since 2014)

   Genocea Biosciences, Inc. (since 2014)

   Epizyme, Inc. (since 2014)

   Madrigal Pharmaceuticals, Inc. (since 2016)

   Cubist Pharmaceuticals, Inc. (2003-2016)

   BioMarin Pharmaceutical Inc. (2012-2017)

   Vanda Pharmaceuticals Inc. (2015-2018)

   B.A. in Chemistry from Williams College

   M.B.A. from The Wharton School of the University of Pennsylvania

Experience

Mr. Bate currently serves as an independent consultant. Prior to serving as an independent consultant, Mr. Bate was the president and chief executive officer of Archemix Corp., a private biopharmaceutical company, a position he held from April 2009 through December 2011. From 2006 to April 2009, he served in various positions at NitroMed, Inc., a public pharmaceutical company, most recently as president and chief executive officer. From 2002 to 2005, Mr. Bate served as head of commercial operations and chief financial officer at Millennium Pharmaceuticals, Inc., a biopharmaceutical company. Prior to joining Millennium Pharmaceuticals, Mr. Bate co-founded JSB Partners, LLC, a banking and advisory services firm for biopharmaceutical and life sciences companies. From 1990 to 1996, Mr. Bate was employed with Biogen, Inc., a public biotechnology company, first as its chief financial officer and then as head of the commercial organization responsible for launching its multiple sclerosis business. 

 

11

 


 

Age: 64

 

Director since: 2021

 

Independent

 

Committees:

N/A*

 

2020 attendance:

N/A

 

* Our board of directors expects to appoint Dr. Cullen to one or more Committees in connection with its next regularly scheduled meeting.

Kevin Cullen, M.D.

 

Qualifications

We believe that Dr. Cullen’s qualifications to serve on our board of directors include his extensive leadership in cancer research as the Marlene and Stewart Greenebaum Distinguished Professor in Oncology, his service as a director of the Program in Oncology at the University of Maryland School of Medicine, his service as director of the University of Maryland Marlene and Stewart Greenebaum Comprehensive Cancer Center, his service on the National Cancer Advisory Board, as well as his service as chairman of the board of the American Cancer Society and his accomplished background as a physician.

Education

 

   A.B. in Biology from Dartmouth College

   M.D. from Harvard Medical School

 

Experience

Dr. Cullen currently serves as the Marlene and Stewart Greenebaum Distinguished Professor in Oncology and director of the Program in Oncology at the University of Maryland School of Medicine. He also serves as the director of the University of Maryland Marlene and Stewart Greenebaum Comprehensive Cancer Center, a position he has held since January 2004. In addition to the positions he holds at the University of Maryland, Dr. Cullen serves on the scientific advisory committees for the Cancer Centers of University of Minnesota, Case Western Reserve University, The Ohio State University Comprehensive Cancer Center, and Johns Hopkins University. In 2011, he was appointed by President Obama to the National Cancer Advisory Board. Dr. Cullen’s previous experience was as interim director of the Lombardi Cancer Center at Georgetown University from October 2000 to September 2002 and professor of medicine, oncology, and otolaryngology at Georgetown University School of Medicine from July 2002 to January 2004.

 

12

 


 

Age: 43

 

Director since: 2021

 

Independent

 

Committees:

• Compensation

• Nominating and Governance

 

2020 attendance:

N/A

Corinne Epperly, M.D., M.P.H.

 

Qualifications

We believe that Dr. Epperly’s qualifications to serve on our board of directors include her deep oncology experience as a physician and scientist blending medicine and business with a proven track record in oncology drug development and launches, commercial and medical strategy, marketing, M&A, and operations gained at Iovance Biotherapeutics, VBL Therapeutics, Bristol Myers Squibb, Goldman Sachs, and the National Cancer Institute of the NIH.

Education

   B.Sc. in Biochemistry and Biology from the University of Virginia

   M.D. from the University of North Carolina Chapel Hill

   M.P.H. from the University of North Carolina Chapel Hill

Experience

From 2019 to 2020, Dr. Epperly served as senior vice president of strategy and operations at Iovance Biotherapeutics, Inc., a public clinical-stage immuno-oncology company, leading clinical operations overseeing all clinical trials, developing and implementing business strategy to advance drug development including clinical trial design, global business development, and the commercial operating model for the launch of tumor infiltrating lymphocytes. Previously, from 2017 to 2018, she served as the chief operating officer at Vascular Biogenics Ltd., a public biopharmaceutical focused on cancer treatments, where she helped lead corporate strategy, financing and business development, designed a U.S. commercial operating model and marketing plan, and supported immuno-oncology clinical drug development. Prior to these roles, Dr. Epperly held the positions of Hepatocellular Carcinoma Medical Launch Lead from June 2017 to March 2017, Glioblastoma Commercial Launch Lead from March 2017 to March 2016 and OPDIVO & YERVOY Safety Management Lead from March 2016 to March 2015 at Bristol Myers Squibb and, prior to joining Bristol Myers Squibb, equity analyst in Global Pharmaceutical and Biotechnology Investment Research at Goldman Sachs International.

 

13

 


 

Age: 80

 

Director since: 2002

 

Independent

 

Committees:

• Audit

• Compensation, Chair

 

2020 attendance:

86%

Anthony Evnin, Ph.D.

 

Qualifications

We believe Dr. Evnin’s qualifications to sit on our board of directors include his substantial experience as an investor in, and director of, numerous biopharmaceutical companies, including Infinity Pharmaceuticals and Constellation Pharmaceuticals and his experience as a board member of world renowned hospitals and research universities such as Memorial Sloan Kettering Cancer Center and The Rockefeller University.

Other Public Boards

Education

   Infinity Pharmaceuticals, Inc. (since 2006)

   Cantel Medical Corp. (since 2016)

   Constellation Pharmaceuticals, Inc. (2008-2020)

   Juno Therapeutics, Inc. (2014-2018)

   A.B. from Princeton University

   Ph.D. in Chemistry from the Massachusetts Institute of Technology

Experience

Dr. Evnin has been a partner at Venrock, a venture capital firm, where he focuses largely on life sciences investments and, in particular, biotechnology investments, since 1975. He also serves on the boards of Redpin Therapeutics, Inc. and Bridge Medicines LLC, both private biopharmaceutical companies. Dr. Evnin’s previous experience was as a manager of business development at Story Chemical Corporation and a research scientist at Union Carbide Corporation. Dr. Evnin is a trustee emeritus of The Rockefeller University and of Princeton University, a trustee of The Jackson Laboratory, a member of the Boards of Overseers and Managers of Memorial Sloan Kettering Cancer Center, a director of the New York Genome Center, and a member of the board of directors of the Albert and Mary Lasker Foundation.

 

14

 


 

Age: 52

 

Director since: 2019

 

Independent

 

Committees:

• Compensation

• Nominating and Governance

 

2020 attendance:

82%

Gregory Mayes

 

Qualifications

We believe Mr. Mayes’ qualifications to serve on our board of directors include his substantial experience as an executive and director of multiple biopharmaceutical and other life sciences companies.

Other Public Boards

Education

   OncoSec Medical Incorporated (2018-2019)

   Receptor Life Sciences, Inc. (2020-Present)

   B.S. in Advertising and Political Science from Syracuse University

   J.D. from the Temple University School of Law

Experience

Mr. Mayes is the president and chief executive officer of Antios Therapeutics since 2020. From 2017 to August 2020, Mr. Mayes was president and chief executive officer of Engage Therapeutics, Inc., a privately held specialty biopharmaceutical company, which he founded in January 2017. From 2013 to 2016, Mr. Mayes served as executive vice president and chief operating officer of Advaxis, Inc., a public biotechnology company focused on the development of immune-oncology therapies. Mr. Mayes also served on the board of Advaxis, Inc. from March 2016 to April 2017. Prior to joining Advaxis, Inc., Mr. Mayes served as executive vice president of Dendreon Corporation, a public biotechnology company. From 2010 to 2012, Mr. Mayes was the president and general counsel of Unigene Laboratories, Inc. where he primarily led out-licensing efforts for its oral peptide drug delivery platform. He also served on the board of Unigene Laboratories, Inc. from 2012 to 2013. Prior to these roles, Mr. Mayes served as general counsel and chief compliance officer at ImClone Systems Corporation, a wholly owned subsidiary of Eli Lilly & Company, and as senior counsel at AstraZeneca Pharmaceuticals, LP., and practiced law at Morgan, Lewis & Bockius LLP.

 

15

 


 

Age: 57

 

Director since: 2019

 

Independent

 

Committees:

• Audit

• Nominating and Governance

 

2020 attendance:

82%

Scarlett Spring

 

Qualifications

We believe Ms. Spring’s qualifications to serve on our board of directors include her extensive experience in leadership of national sales and commercial divisions of global biopharmaceutical companies, as well as her extensive experience as a director and executive in healthcare and other highly regulated organizations, such as at the Republic Bank of Arizona.

Education

   B.A. in Marketing from the University of Texas at Austin

   M.B.A. from Pepperdine University

Experience

Ms. Spring is the co-founder and chief executive officer of TapRoot Interventions & Solutions, Inc., a privately held software company, which she co-founded in March 2019. From August 2010 to December 2018, Ms. Spring served as president and chief commercial officer for VisionGate, Inc., a privately held biopharmaceutical company. Prior to these roles, Ms. Spring served at Merck & Co., Inc., a public pharmaceutical company, and AstraZeneca Pharmaceuticals, LP, a subsidiary of AstraZeneca plc, a public biopharmaceutical company, in national sales and commercial leadership roles. Ms. Spring also previously served as executive vice president and chief operating officer of the Greater Phoenix Economic Council from 2008 to 2010. She currently serves as a member of the board of directors of Republic Bank of Arizona, the Arizona Bioscience Board and Risk Capital Committee of the Flinn Foundation, and the Arizona Sports and Tourism Authority.


16

 


 

CORPORATE GOVERNANCE

General

We believe that good corporate governance is important to ensure that our company is managed for the long-term benefit of our stockholders. This section describes key corporate governance practices that we have adopted. We have adopted a code of business conduct and ethics, which applies to all of our officers, directors and employees, as well as charters for our audit committee, our compensation committee and our nominating and governance committee, and corporate governance guidelines. We have posted copies of our code of business conduct and ethics and corporate governance guidelines, as well as each of our committee charters, on the Corporate Governance page of the Investors section of our website, www.aveooncology.com, which you can access free of charge. We intend to disclose on our website any amendments to, or waivers from, our code of business conduct and ethics that are required to be disclosed by law or Nasdaq listing standards.

Composition of our Board of Directors

Our board currently consists of eight members, but the board has the authority to increase or decrease that size depending on an assessment of its needs and other relevant circumstances at any given time.

Our nominating and governance committee and our board of directors consider a broad range of factors when selecting nominees. We strive to identify candidates who will further the interests of our stockholders. Among other things, we expect that all of our directors will have the following experience and traits:

 

reputation for integrity, honesty and adherence to high ethical standards;

 

demonstrated business acumen, experience and ability to exercise sound judgments in matters that relate to the current and long-term objectives of the Company and a willingness and ability to contribute positively to the decision-making process of the Company;

 

a commitment to understand the Company and its industry;

 

an interest in and ability to understand the sometimes conflicting interests of the various constituencies of the Company, which include stockholders, employees, customers, governmental units, creditors and the general public, and to act in the interests of all stockholders; and

 

should not have, nor appear to have, a conflict of interest that would impair the nominee’s ability to represent the interests of all the Company’s stockholders and to fulfill the responsibilities of a director.

In addition, every nominee must have sufficient time and availability to devote to the Company’s affairs.

17

 


 

In building our board, we also believe that the following skills and experiences, while not exhaustive, are helpful in ensuring that our directors collectively possess the skills and backgrounds necessary for us to execute on our strategic plans and to exercise the board’s oversight responsibilities on behalf of our stockholders. Skills and experiences shown below are generally reflective of the individual having worked in the area, rather than experience obtained as a director in the relevant field.

Skill/Experience

Bailey

Bate

Cullen

Epperly

Evnin

Mayes

Spring

Young

CEO Experience

 

 

Clinical Development

 

Drug Commercialization

 

 

 

 

Finance / Accounting

 

 

 

Regulatory

 

 

 

 

 

 

Healthcare Industry

Investor Experience

 

 

 

Business Development /

Strategic Transactions

 

 

Legal / Compliance

 

 

 

 

 

 

 

Science / Research

 

 

 

 

Board Determination of Independence

The Nasdaq Listing Rules requires a majority of a listed company’s board of directors to be comprised of independent directors within one year of listing. In addition, Nasdaq Listing Rules require that, subject to specified exceptions, each member of a listed company’s audit, compensation and nominating and governance committees be independent directors and, in the case of all members of the audit committee, satisfy the independence criteria set forth in Rule 10A-3 under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”), and, in the case of all members of the compensation committee, satisfy the independence criteria set forth in Rule 10C-1 under the Exchange Act. Under Rule 5605(a)(2), a director will only qualify as an “independent director” if, in the opinion of our board of directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In order to be considered independent for purposes of Rule 10A-3, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee: (1) accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries; or (2) be an affiliated person of the listed company or any of its subsidiaries. In addition, in affirmatively determining the independence of any director who will serve on a company’s compensation committee, Rule 10C-1 under the Exchange Act requires that a company’s board of directors consider all factors specifically relevant to determining whether a director has a relationship to such company which is material to that director’s ability to be independent from management in connection with the duties of a compensation committee member, including, but not limited to: (1) the

18

 


 

source of compensation of the director, including any consulting, advisory or other compensatory fee paid by such company to the director; and (2) whether the director is affiliated with the company or any of its subsidiaries or affiliates.

Our board of directors annually reviews the composition of our board of directors and its committees and the independence of each director. In 2021, based upon information provided by each director concerning his or her background, employment and affiliations, including family relationships, our board of directors determined that none of Mr. Bate, Dr. Epperly, Dr. Cullen, Dr. Evnin, Mr. Mayes, Ms. Spring or Dr. Young, representing seven of our eight directors, has a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors is an “independent director” as that term is defined under Rule 5605(a)(2) of the Nasdaq Listing Rules. In making such determinations, the board of directors considered the relationships that each such non-employee director has with our company and other facts and circumstances the board of directors deemed relevant in determining independence, including the beneficial ownership of our capital stock by each non-employee director.

Role of the Board

Our board of directors is responsible for establishing broad corporate policies and reviewing our overall performance. The primary responsibility of our board is to oversee the management of our company and, in doing so, serve the best interests of our company and our stockholders. Our board selects, evaluates and provides for the succession of executive officers and, pursuant to recommendations by our nominating and governance committee and subject to stockholder election, selects directors. It reviews and approves corporate objectives and strategies, and evaluates significant policies and proposed major commitments of corporate resources. Our board also participates in decisions that have a potential major economic impact on our company. Management keeps our directors informed of company activity through regular communication, including written reports and presentations at board and committee meetings.

In February 2021, our board of directors designated Mr. Bate, an independent director within the meaning of Nasdaq Listing Rules (see “Board Determination of Independence” above), to serve as the chairman of our board of directors. Pursuant to our corporate governance guidelines, Mr. Bate’s functions and duties as chairman include, but are not limited to, the following:

 

chairing any meeting of the independent directors in executive session;

 

meeting with any director who is not adequately performing his or her duties as a member of the board or any committee;

 

facilitating communications between other members of the board and chief executive officer;

 

approving the agenda for each board meeting and determining the need for special meetings of the board;

 

consulting with the chief executive officer on matters relating to corporate governance and board performance;

 

providing input to the nominating and governance committee on the selection of new director candidates;

 

extending the invitation to a new director candidate to join the board of directors;

 

determining the frequency and length of board meetings; and

 

monitoring communications from shareholders and other interested parties and providing copies or summaries of such communications to other directors as he considers appropriate.

19

 


 

We do not currently have a policy as to whether the same person should serve as both the chief executive officer and the chairman of the board. However, our board has determined that the roles of chairman and chief executive officer should be separate at the current time. Our board decided to separate the roles of chairman and chief executive officer because it believes that leadership structure offers the following benefits:

 

Increasing the independent oversight of the Company and enhancing our board’s objective evaluation of our chief executive officer.

 

Freeing the chief executive officer to focus on Company operations instead of board administration.  

 

Providing the chief executive officer with an experienced sounding board.  

 

Providing greater opportunities for communication between stockholders and our board.  

 

Enhancing the independent and objective assessment of risk by our board.  

 

Providing an independent spokesman for the Company.  

The Board’s Role in Risk Oversight

We face a number of risks in our business, including risks related to: clinical research and development; regulatory reviews, approvals and oversight; intellectual property filings, prosecution, maintenance and challenges; the establishment and maintenance of strategic alliances; manufacturing; commercialization including pricing and competition; the ability to access additional funding for our business; stockholder litigation; and other risks, including those described under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020. Our management is responsible for the day-to-day management of the risks that we face, while our board of directors, as a whole and through its committees, has responsibility for the oversight of risk management.

Our board administers its risk oversight function directly and through its three committees. Our chairman meets regularly with our chief executive officer and other executive officers to discuss strategy and risks facing our company. Members of our executive team attend at least quarterly board meetings and are available to address any questions or concerns raised by the board on risk management and other related matters. Each quarter, the board of directors receives presentations from members of senior management on strategic matters involving our business. In addition, the audit committee periodically discusses with management our risk exposures in the areas of financial reporting, internal controls, cybersecurity risks and compliance with legal and financial regulatory requirements, their potential impact on our company and the steps we take to manage them. The compensation committee assists the board in fulfilling its oversight responsibilities with respect to the management of risks arising from our compensation policies and programs. The nominating and governance committee assists the board in fulfilling its oversight responsibilities with respect to the management of risks associated with board organization, membership and structure, succession planning for our directors and executive officers, and corporate governance.

Board and Committee Meetings

Each director is expected to make reasonable efforts to attend all board and applicable committee meetings. Attendance rates will be taken into account by the nominating and governance committee and the board when they assess directors for re-nomination to the board.

The full board of directors met 17 times in formal meetings during 2020, in addition to holding frequent calls and informal sessions. Each director attended (virtually or in person) at least 80% of the aggregate meetings of the board (held while such person was a director) and meetings held by all committees of the board on which such person served.

20

 


 

Director Attendance at Annual Meeting of Stockholders

Our corporate governance guidelines provide that directors are responsible for attending annual meetings. Each of our then-current directors attended the 2020 Annual Meeting of Stockholders.

Board Committees

As described below, our board of directors has established three committees: audit, compensation and nominating and governance. The board of directors may establish other committees from time to time. All members of all three board committees are independent directors. The charters for the audit, compensation, and nominating and governance committees are available on www.aveooncology.com. Each such committee reviews its respective charter at least annually. The members of each committee are appointed by our board upon recommendation of our nominating and governance committee.  

Audit Committee

 

Members:

• Kenneth Bate (Chair)

• Anthony Evnin

• Scarlett Spring

• Robert Young*

 

* Dr. Young is not a director nominee up for re-election at the Annual Meeting.

The Audit Committee’s responsibilities include:

   appointing, approving the compensation of, and assessing the independence of the independent registered public accounting firm;

   overseeing the work of the independent registered public accounting firm, including through the receipt and consideration of reports from such firm;

   reviewing and discussing with management and the independent registered public accounting firm our annual and quarterly financial statements and related disclosures;

   monitoring our internal control over financial reporting, disclosure controls and procedures and code of business conduct and ethics;

   overseeing our internal audit function, if any;

   discussing our risk management policies;

   establishing policies regarding hiring employees from the independent registered public accounting firm and procedures for the receipt and retention of accounting-related complaints and concerns;

   meeting independently with our internal auditing staff, if any, independent registered public accounting firm and management;

   reviewing and approving or ratifying any related person transactions;

   preparing the audit committee report required by SEC rules;

   reviewing all related person transactions for potential conflicts of interest and approving all appropriate transactions; and

   reviewing quarterly earnings releases.

Meetings in 2020: 6

Independence:
Our board of directors has determined that each member of the audit committee meets the heightened independence requirements for audit committee members prescribed by the SEC and Nasdaq, and that each has sufficient knowledge in financial and auditing matters to serve on the Audit Committee.

Financial experts:
Our Board of Directors has determined Kenneth Bate is an “audit committee financial expert,” as defined in the applicable SEC rules.

 

21

 


 

Compensation Committee

 

Members:

• Anthony Evnin (Chair)

• Kenneth Bate

• Corinne Epperly (since January 2021)

• Gregory Mayes

The Compensation Committee’s responsibilities include:

   annually reviewing and approving corporate goals and objectives relevant to our chief executive officer’s and our other executive officers’ compensation;

   reviewing and making recommendations to our board with respect to the compensation of our chief executive officer;

   reviewing and approving, or making recommendations to our board with respect to, the compensation of our other executive officers;

   overseeing an evaluation of our senior executives;

   overseeing and administering our cash and equity incentive plans;

   reviewing and making recommendations to our board with respect to director compensation;

   reviewing and discussing annually with management our “Compensation Discussion and Analysis” disclosure required by SEC rules; and

   preparing the annual compensation committee report required by SEC rules.

Meetings in 2020: 4 

Independence:
Our board of directors has determined that each member of the compensation committee meets the heightened independence requirements for compensation committee members prescribed by Nasdaq.

 

G Nominating and Governance Committee

 

Members:

• Robert Young* (Chair)

• Corinne Epperly (since January 2021)

• Gregory Mayes

• Scarlett Spring

 

As Dr. Young is not a director nominee up for re-election at the Annual Meeting, the board of directors intends to appoint a new nominating and governance committee chair following the election of directors at the Annual Meeting.  

The Nominating and Governance Committee’s responsibilities include:

   identifying individuals qualified to serve as members of our board;

   recommending to our board the persons to be nominated for election as directors and to each of our board’s committees;

   reviewing and making recommendations to our board with respect to management succession planning;

   developing and recommending to our board corporate governance guidelines;

   developing and recommending to our board continuing educational programs regarding corporate governance and other pertinent topics; and

   overseeing an annual evaluation of our board.

Meetings in 2020: 2

Independence:

We believe that the composition of our nominating and governance committee meets the requirements for independence under current Nasdaq and SEC rules and regulations.

22

 


 

Director Nomination Process

Our nominating and governance committee is responsible for identifying individuals qualified to serve as directors, consistent with criteria approved by our board, and recommending the persons to be nominated for election as directors, except where we are legally required by contract, law or otherwise to provide third parties with the right to nominate.

The process followed by our nominating and governance committee to identify and evaluate director candidates includes requests to board members and others for recommendations, meetings from time to time to evaluate biographical information and background material relating to potential candidates and interviews of selected candidates by members of the nominating and governance committee and our board.

Each of Corinne Epperly, M.D. and Kevin Cullen, M.D. were appointed by our board as a director in January 2021 and April 2021, respectively. Dr. Epperly was introduced to the Board and recommended as a director candidate by Mr. Bailey and Mr. Lucera. Dr. Cullen was introduced to the Board and recommended as a director candidate by Dr. Young. At the annual meeting, stockholders will be asked to consider the election of Dr. Epperly and Dr. Cullen, who have been nominated for election as directors by stockholders for the first time. 

Criteria and Diversity

In considering whether to recommend any particular candidate for inclusion in our board’s slate of recommended director nominees, our nominating and governance committee applies criteria that include the candidate’s integrity, business acumen, knowledge of our business and industry, experience, absence of conflicts of interest and ability to act in the interests of all stockholders. Our nominating and governance committee also considers the board’s current composition in evaluating any candidate, such as diversity of gender, race and national origin, education, professional experience and differences in viewpoints and skills. Our corporate governance guidelines specify that the value of diversity on the board should be considered by the nominating and governance committee in the director identification and nomination process. The committee does not assign specific weights to particular criteria; however, our board and nominating and governance committee believe that it is essential that the board members represent diverse viewpoints, and we are actively seeking to identify board candidates that will contribute to the diversity of the board. We believe that the backgrounds and qualifications of our directors, considered as a group, should provide a composite mix of experience, knowledge and abilities that will allow our board to promote our strategic objectives and fulfill its responsibilities to our stockholders.

The director biographies appearing above under “Proposal 1—Election of Directors” indicate each nominee’s experience, qualifications, attributes and skills that led our board to conclude that each director should serve as a member of our board. Our board believes that the nominees have all had substantial achievement in their professional and personal pursuits, and possess the background, talents and experience that will contribute to the best interests of our company and to long-term stockholder value.

Stockholder Nominations

Stockholders may recommend individuals to our nominating and governance committee for consideration as potential director candidates by submitting names of the proposed candidates, together with appropriate biographical information, background materials and information that would be required to solicit a proxy under federal securities law and, if the stockholder is not a stockholder of record, a statement as to whether the stockholder or group of stockholders making the recommendation has beneficially owned more than 5% of our common stock for at least a year as of the date such recommendation is made, to the nominating and governance committee, c/o Danielle Holland, Secretary, AVEO Pharmaceuticals, Inc., 30 Winter Street, Boston, Massachusetts 02108. The recommendation must be delivered to the Secretary prior to the same deadline for director nominations not for inclusion in the proxy materials, as described in the procedures set forth in our bylaws and described below under the heading “Stockholder Proposals.” Assuming that appropriate biographical and background material has

23

 


 

been provided on a timely basis, the committee will evaluate stockholder-recommended candidates by following substantially the same process, and applying substantially the same criteria, as it follows for candidates submitted by others. Stockholders also have the right under our bylaws to nominate director candidates directly, without any action or recommendation on the part of the committee or the board, by following the procedures set forth in our bylaws and described below under the heading “Stockholder Proposals.”

Communicating with the Independent Directors

Our board of directors will give appropriate attention to written communications that are submitted by stockholders, and will respond if and as appropriate. The chairman, subject to advice and assistance from our company’s legal counsel, is primarily responsible for monitoring communications from stockholders and for providing copies or summaries to the other directors as the chairman considers appropriate.

Communications are forwarded to all directors if they relate to important substantive matters and include suggestions or comments that the chairman considers to be important for the directors to know. In general, communications relating to governance and long-term corporate strategy are more likely to be forwarded than communications relating to ordinary business affairs and personal grievances.

Stockholders who wish to send communications on any topic to our board should address such communications to the Board of Directors, c/o Danielle Holland, Secretary, AVEO Pharmaceuticals, Inc., 30 Winter Street, Boston, Massachusetts 02108.

Compensation Determination Process

Role of Compensation Committee

The compensation committee seeks to ensure that our executive compensation program is properly rewarding and motivating our executive officers while aligning their goals with our business strategy and the interests of our stockholders. To do this, our compensation committee conducts an annual review of the aggregate level of our executive compensation and the mix of elements used to compensate our executive officers and historic compensation levels, including prior equity awards. In connection with this annual review, our chief executive officer makes recommendations to the compensation committee with respect to annual base salary adjustments and any equity grants and cash bonuses for himself and the other executives.

When setting executive compensation opportunities, the compensation committee considers the Company’s achievement of specific clinical, regulatory, corporate development and financial milestones and the executive’s contribution to such achievements.

Role of Chief Executive Officer in Compensation Decisions

Our chief executive officer typically evaluates the performance of other executive officers and other employees, along with the performance of the Company as a whole, against previously determined objectives, on an annual basis and makes recommendations to the compensation committee with respect to annual base salary adjustments and any equity grants and cash bonuses for the other executives. The compensation committee exercises its own independent discretion in approving compensation for all executive officers and assessing corporate performance against the pre-established objectives. The chief executive officer is not present during deliberations or voting with respect to his own compensation.

24

 


 

Our board of directors has delegated to our chief executive officer, in his capacity as a director and as the sole member of an option subcommittee of the board, authority to make equity awards under our 2019 Equity Incentive Plan to employees that are not executive officers and consultants, at exercise prices equal to the closing price of our common stock on the date of grant and subject to vesting provisions and other conditions specified by our board and the compensation committee. In addition, the compensation committee has authority to delegate its responsibilities to additional subcommittees or individual committee members.

Role of Independent Compensation Consultant

The compensation committee retains the services of third-party, independent executive compensation consultants from time to time, as it sees fit, in connection with the establishment of compensation programs and related policies. The compensation committee has engaged Radford, an Aon Hewitt company, which we refer to as Radford, as its independent consultant since 2011. Total fees paid to Radford in 2020 were approximately $97,420. Radford was engaged to assist and advise on all aspects of compensation program design and pay setting, including, but not limited to, the following services:

 

providing the compensation committee information on compensation-related trends and developments in the marketplace;

 

informing the compensation committee of regulatory developments relating to executive compensation practices;

 

advising the compensation committee on appropriate peer companies for compensation pay levels and design practices, as well as relative performance comparisons;

 

assessing the executive compensation structure to confirm that no design elements encourage excessive risk taking;

 

assessing the relationship between executive compensation and corporate performance; and

 

advising on market trends in the industry, including the impact of the COVID-19 pandemic on compensation program design.

The compensation committee has assessed the independence of Radford under the applicable SEC and Nasdaq Listing Rules and concluded that the continued engagement of Radford did not raise any conflict of interest and did not adversely affect Radford’s independence.


25

 


 

REPORT OF THE AUDIT COMMITTEE

Our audit committee has reviewed our audited financial statements for the year ended December 31, 2020 and discussed them with our management and our independent registered public accounting firm, Ernst & Young LLP.

Our audit committee has also received from, and discussed with, Ernst & Young LLP various communications that Ernst & Young LLP is required to provide to our audit committee, including the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (the “PCAOB”) and the SEC.

In addition, Ernst & Young LLP provided our audit committee with the written disclosures and the letter required by the applicable requirements of the PCAOB regarding Ernst & Young LLP's communications with the audit committee concerning independence, and the audit committee has discussed with Ernst & Young LLP their independence.

Based on the review and discussions referred to above, our audit committee recommended to our board of directors that our financial statements audited by Ernst & Young LLP be included in our Annual Report on Form 10-K for the year ended December 31, 2020.

By the audit committee of the board of directors of AVEO Pharmaceuticals, Inc.

Kenneth Bate, Chair

Anthony Evnin

Scarlett Spring

Robert Young

Principal Accountant Fees and Services

The following table summarizes the fees of Ernst & Young LLP, our independent registered public accounting firm, billed to us for each of the last two years.

 

Fee Category

 

2020

 

 

2019

 

Audit Fees(1)

 

$

864,000

 

 

$

746,000

 

Audit-Related Fees

 

 

 

 

 

 

Tax Fees(2)

 

$

22,000

 

 

$

31,000

 

All Other Fees

 

 

 

 

 

 

Total Fees

 

$

886,000

 

 

$

777,000

 

 

(1)“Audit Fees” in each of 2020 and 2019 include fees for the integrated audit of our annual financial statements and the effectiveness of our internal control over financial reporting, the review of the interim financial statements included in our quarterly reports on Form 10-Q, and fees in connection with our public securities offerings, including registration statements, comfort letters and consents.

(2)“Tax Fees” in each of 2020 and 2019 include fees for tax advice and tax services primarily related to: (i) miscellaneous federal and state tax consulting, (ii) international tax consulting and (iii) tax compliance with domestic and foreign tax returns.

All such accountant services and fees were pre-approved by our audit committee in accordance with the “Audit Committee Pre-Approval Policies and Procedures” described below.

26

 


 

Audit Committee Pre-Approval Policies and Procedures

Our audit committee has adopted policies and procedures relating to the approval of all audit and non-audit services that are to be performed by our independent registered public accounting firm. This policy generally provides that we will not engage our independent registered public accounting firm to render audit or non-audit services unless the service is specifically approved in advance by our audit committee.

From time to time, our audit committee may pre-approve specified types of services that are expected to be provided to us by our independent registered public accounting firm during the next twelve months. Any such pre-approval is detailed as to the particular service or type of services to be provided and is also generally subject to a maximum dollar amount.


27

 


 

CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS

Policies and Procedures for Related Person Transactions

Our board of directors has adopted written policies and procedures for the review of any transaction, arrangement or relationship in which we are a participant, the amount involved exceeds $120,000 and one of our executive officers, directors, director nominees or 5% stockholders (or their respective immediate family members), each of whom we refer to as a “related person,” has a direct or indirect material interest.

If a related person proposes to enter into such a transaction, arrangement or relationship, which we refer to as a “related person transaction,” the related person must report the proposed related person transaction to our corporate counsel. The policy calls for the proposed related person transaction to be reviewed and, if deemed appropriate, approved by the audit committee of our board of directors. Whenever practicable, the reporting, review and approval will occur prior to entry into the transaction. If advance review and approval is not practicable, the audit committee will review, and, in its discretion, may ratify the related person transaction. The policy also permits the chair of the audit committee to review and, if deemed appropriate, approve proposed related person transactions that arise between committee meetings, subject to ratification by the committee at its next meeting. Any related person transactions that are ongoing in nature will be reviewed annually.

A related person transaction reviewed under the policy will be considered approved or ratified if it is authorized by the audit committee after full disclosure of the related person’s interest in the transaction. As appropriate for the circumstances, the committee will review and consider:

 

the related person’s interest in the transaction;

 

the approximate dollar value of the transaction;

 

the approximate dollar value of the related person’s interest in the transaction without regard to the amount of any profit or loss;

 

whether the transaction was undertaken in the ordinary course of our business;

 

whether the terms of the transaction are no less favorable to us than terms that could have been reached with an unaffiliated third party;

 

the purpose of, and the potential benefits to us of, the transaction; and

 

any other information regarding the related person transaction or the related person in the context of the proposed transaction that would be material to investors in light of the circumstances of the particular transaction.

The audit committee may approve or ratify the transaction only if the committee determines that, under all of the circumstances, the transaction is in or is not inconsistent with the best interests of our company. The audit committee may impose any conditions on the related person transaction that it deems appropriate.

28

 


 

In addition to the transactions that are excluded by the instructions to the SEC’s related person transaction disclosure rule, our board of directors has determined that the following transactions do not create a material direct or indirect interest on behalf of related persons and, therefore, are not related person transactions for purposes of this policy:

 

interests arising solely from the related person’s position as a director or an executive officer of another entity (whether or not the person is also a director of such entity), that is a participant in the transaction, where (a) the related person and all other related persons own in the aggregate less than a 10% equity interest in such entity, (b) the related person and his or her immediate family members are not involved in the negotiation of the terms of the transaction and do not receive any special benefits as a result of the transaction, and (c) the amount involved in the transaction is less than the greater of $200,000 or 5% of the annual consolidated gross revenues of the entity receiving payment under the transaction; or

 

transactions that involve compensation (a) to an executive officer if the compensation has been approved, or recommended to our board of directors for approval, by our compensation committee or a group of independent directors of our company performing a similar function, or (b) to a director for services as a director of our company if such compensation will be reported pursuant to applicable securities laws; or

 

a transaction that is specifically contemplated by provisions of our charter or bylaws.

The policy provides that transactions involving compensation of executive officers shall be reviewed and approved by the compensation committee in the manner specified in its charter.

Related Person Transactions

On June 19, 2020, we completed a public offering of 9,725,000 shares of our common stock and options to purchase an aggregate of 11,000,000 shares of our common stock, at the public offering price of $5.25 per share, with total gross proceeds to us of approximately $51,100,000. An entity affiliated with New Enterprise Associates participated in this public offering by purchasing 1,428,571 shares of common stock at a total cost of approximately $7,500,000. At such time, entities affiliated with New Enterprise Associates (collectively) beneficially held more than 5% of our voting securities. In accordance with our related person transaction policy, the participation of this existing stockholder in the underwritten public offering was approved by the audit committee in connection with the offering.


29

 


 

EXECUTIVE AND DIRECTOR COMPENSATION

Compensation Discussion and Analysis

Our approach to executive compensation is guided by the following principles:

 

holding our executive officers accountable for results over the long term and maintaining integrity in all of the business dealings of our executive officers;

 

rewarding our executive officers for consistently strong execution; and

 

establishing a clear connection between rewards and performance.

These principles underlie our compensation program and, indeed, our entire culture. We seek to achieve financial strength by, among other things, linking compensation to performance goals, using equity as a key component of compensation, and continually reviewing and monitoring our compensation program.

Executive Summary

We are an oncology-focused biopharmaceutical company committed to delivering medicines that provide a better life for cancer patients. Our strategy is to focus our resources toward the development and commercialization of our product candidates in North America, while leveraging partnerships to support development and commercialization in other geographies. With the approval of our first commercial product, FOTIVDA® (tivozanib), in the United States, we have transitioned from a clinical development stage biopharmaceutical company to a commercial and clinical development stage biopharmaceutical company.

On March 10, 2021, the U.S. Food and Drug Administration approved FOTIVDA in the United States for the treatment of adult patients with relapsed or refractory advanced renal cell carcinoma following two or more prior systemic therapies. FOTIVDA is an oral, next-generation vascular endothelial growth factor receptor (“VEGFR”) tyrosine kinase inhibitor. The approval of FOTIVDA is based on our pivotal phase 3 randomized, controlled, multi-center, open-label clinical trial comparing tivozanib to an approved therapy, Nexavar® (sorafenib), in renal cell carcinoma (“RCC”) patients whose disease had relapsed or become refractory to two or three prior systemic therapies (the “TIVO-3 trial”). The approval is also supported by three additional trials in RCC and includes safety data from over 1,000 clinical trial subjects. FOTIVDA is now commercially available the United States.

FOTIVDA is also approved and commercialized through our development partner EUSA Pharma (UK) Limited in the United Kingdom, Germany, Spain and certain other countries in their territory, for the treatment of adult patients with advanced RCC who are VEGFR pathway inhibitor-naïve and are either untreated or who have failed prior therapy with interferon-alpha (IFN-a) or interleukin-2 (IL-2).

Based on FOTIVDA’s demonstrated anti-tumor activity, tolerability profile and reduction of regulatory T-cell production, we are studying FOTIVDA in combination with immune checkpoint inhibitors for the treatment of RCC and hepatocellular carcinoma in phase 2 clinical trials and we recently announced our entry into a collaboration with Bristol-Myers Squibb Company (“BMS”) to conduct a phase 3 study of FOTIVDA in combination with OPDIVO® (nivolumab), BMS’s anti-PD-1 therapy, in patients with advanced relapsed or refractory RCC following prior immunotherapy exposure.

Our pipeline of product candidates includes ficlatuzumab, a potent humanized immunoglobulin G1, or IgG1, monoclonal antibody that targets hepatocyte growth factor. We have previously reported promising early clinical data on ficlatuzumab in squamous cell carcinoma of the head and neck (“HNSCC”), pancreatic cancer and acute myeloid leukemia. We are currently conducting a randomized phase 2 confirmatory study of ficlatuzumab for the potential treatment of HNSCC.

30

 


 

Our pipeline of product candidates also includes worldwide rights to AV-380, a potent humanized IgG1 monoclonal antibody that targets growth differentiation factor 15. In December 2020, the FDA accepted our investigational new drug application (“IND”) for AV-380 for the potential treatment of cancer cachexia, and we have initiated a phase 1 clinical trial in healthy subjects.

Our earlier-stage pipeline under development includes AV-203 and AV-353, both as potential oncology treatments. AV-203 is a potent humanized IgG1 monoclonal antibody that targets ErbB3 (also known as HER3) to which we expect to regain worldwide rights in September 2021. AV-353 is a potent IgG1 monoclonal antibody that targets the Notch 3 pathway.

When making compensation decisions, the compensation committee considered the advancement of the new drug application (“NDA”) for FOTIVDA in the United States and related commercial launch preparations, the clinical and regulatory development of our product candidates and the need to retain key executives. The compensation committee has focused on retaining and incentivizing our key employees in ways that we believe are both meaningful to the employees, as well as aligned with the interests of our stockholders, including providing our executive officers with annual cash incentive bonuses and equity awards that are dependent on individual and corporate performance, as further described below. In setting compensation for 2021, the compensation committee has continued to focus on ensuring that executive compensation is in line with our peers in order to retain our management team and motivate them to continue to advance our pipeline.

At our 2020 annual meeting, we conducted an advisory vote on executive compensation. Approximately 85% of the votes cast were voted “FOR” approval of our executive compensation program as described and disclosed in the Compensation Discussion and Analysis section, compensation tables and narrative discussion in our 2020 proxy statement. The compensation committee considered the results of this advisory vote, together with the other factors and data discussed in this proxy statement, in determining executive compensation decisions and policies, and believes the result affirms stockholders’ support of our company’s approach to and structure of executive compensation. The compensation committee will continue to consider the outcome of our company’s say-on-pay votes when making future compensation decisions for our named executive officers.

Our Compensation Program Emphasizes Performance

We believe that the compensation of our named executive officers for 2020 was well-aligned with our executive compensation objectives and with our performance for the following reasons:

 

We provide cash bonuses that are 100% dependent upon company and individual performance goals. The cash bonus portion of our named executive officers’ compensation is not guaranteed. We ensure that the performance goals underlying the cash bonuses are aggressive, aligned with stockholders’ interest and results driven. Therefore, if our company or an individual does not perform at a level of excellence, the cash bonus can be zero.

 

We deliver a significant portion of our named executive officers’ target total direct compensation in the form of long-term incentive equity awards. Over the past several years, a significant portion of the total target value of the three primary elements of named executive officer compensation—base salaries, annual cash incentive awards and equity awards—was delivered in the form of long-term equity awards. The amounts disclosed in the executive compensation tables in this proxy statement generally reflect the grant-date fair value of stock option awards, but the actual economic value of stock option awards depends directly on the performance of our stock price over the period during which the awards vest and the period during which stock options may be exercised. Therefore, if stockholder value decreases over time, so does the value of the stock compensation. Our executive officers will only realize value when our stock price, and consequently stockholder value, increases.

31

 


 

 

We aim to attract and retain exceptional executives in an extremely competitive market. In making its recommendation and decisions, the compensation committee reviewed market and peer data, which includes competitive information relating to the mix and levels of compensation for executives in the life science industry. The compensation committee also considered the need to retain key executives and reward those executives who continued to perform at a high level through 2020.

Overview of our Executive Compensation

The following section discusses the principles underlying our policies and decisions with respect to the compensation of our executive officers that are named in the “Summary Compensation Table for the Years Ended December 31, 2020 and 2019”, whom we refer to as our “named executive officers”, and the most important factors relevant to an analysis of these policies and decisions.

Under applicable SEC rules, our named executive officers for 2020 were:

 

Michael Bailey, our president and chief executive officer;

 

Michael Needle, our chief medical officer; and

 

Karuna Rubin, our former senior vice president and general counsel.

Our compensation committee is responsible for establishing and administering our policies governing the compensation for our named executive officers, including salaries, annual cash incentives and equity incentive compensation. Our compensation committee consists of four independent, non-employee directors of our board, all of whom have extensive experience in our industry. Our compensation committee considers the recommendations of our chief executive officer when determining the appropriate mix of compensation for each of our executive officers, including our named executive officers. Our chief executive officer, however, does not participate in the determination of his own compensation. Although our compensation committee is empowered to approve the salaries, annual cash incentives and equity incentive compensation of certain of our named executive officers, (i) the members of our board of directors approve the salary, annual cash incentive and equity incentive compensation of our chief executive officer, based on the recommendation of the compensation committee, and (ii) the compensation committee typically requests that the members of our board of directors approve the salaries, annual cash incentives and equity incentive compensation of all of our other named executive officers based on the compensation committee’s recommendation.

We believe that the compensation of our named executive officers should be designed to focus executive behavior on the achievement of short-term corporate goals as well as long-term business objectives and strategies. We place significant emphasis on pay-for-performance compensation, which rewards our executives when we achieve certain specific regulatory, clinical, corporate development and financial milestones, thereby creating stockholder value. We use a combination of base salary, annual cash incentive compensation, long-term equity incentive compensation and a broad-based benefits program to create a competitive compensation package for our executive officers.

Objectives of our Executive Compensation Program

Our compensation committee has designed our overall executive compensation program to achieve the following objectives:

 

attract and retain talented and experienced executives;

 

motivate and reward executives whose knowledge, skills and performance are critical to our success;

32

 


 

 

provide a competitive compensation package that aligns the interests of our named executive officers and stockholders by including a significant variable component which is weighted heavily toward performance-based rewards;

 

ensure fairness among executive officers by recognizing the contributions each executive makes to our success; and

 

foster a shared commitment among executives by aligning their individual goals with our corporate goals and the creation of stockholder value.

Basis for Compensation Policies and Decisions

We use a mix of short-term compensation, consisting of base salaries and annual cash incentive awards, and long-term compensation, consisting of equity incentive compensation, to provide a total compensation structure that is designed to achieve our objectives.

In arriving at the amount and types of initial compensation for each of our named executive officers, we consider the following factors:

 

the individual’s particular background and circumstances, including prior relevant work experience and compensation paid prior to joining us and the uniqueness of the individual’s skills within the industry;

 

the individual’s role with us and the compensation paid to similar persons in the companies represented in the compensation data that we review (as further discussed below);

 

the demand for people with the individual’s specific expertise and experience at the time of hire;

 

performance goals and other expectations for the individual’s position;

 

comparison to other executives within our company having similar levels of expertise and experience; and

 

recommendations from our independent compensation consultant.

We reassess annually the compensation of our named executive officers and determine whether any adjustments should be made. In determining whether to adjust the compensation of any of our named executive officers, we generally take into account the following factors:

 

formal market data regarding base salary, cash incentives and equity compensation from a leading life science compensation survey of comparable biopharmaceutical and biotechnology companies;

 

the roles and responsibilities of our executives, including any increases or decreases in responsibilities; and

 

the contributions and performance of each named executive officer.

Our compensation committee retained an independent compensation consultant, Radford, to assist the compensation committee in developing our executive compensation for 2020 and 2021.

33

 


 

To assist in determining executive compensation in 2020, Radford and the compensation committee reviewed a peer group, which we refer to as the 2020 peer group, of publicly traded companies in the life sciences industry at a stage of development, market capitalization, geography and size comparable to ours, which companies the compensation committee believed were generally comparable to our company and against which the compensation committee believed we competed for executive talent. The compensation committee, in consultation with members of the Radford team, included the following companies in the 2020 peer group:

AcelRx Pharmaceuticals

Idera Pharmaceuticals

Stemline Therapeutics

Aldeyra Therapeutics

MEI Pharma

Syndax Pharmaceuticals

BioCryst Pharmaceuticals

Paratek Pharmaceuticals

Syros Pharmaceuticals

Calithera Biosciences

Progenics Pharmaceuticals

TG Therapeutics

Catalyst Pharmaceuticals

resTORbio

Verastem

Chiasma

Rigel Pharmaceuticals

 

Geron

Sesen Bio

 

In addition to the publicly available information with respect to our 2020 peer group companies, Radford gathered competitive market data from the 2019 Radford Global Life Sciences Survey of public biopharmaceutical companies with less than 100 employees and a market value between $100 million and $600 million, which we refer to as the 2019 Radford Global Life Sciences Survey. The survey included data from companies in the life sciences industry which the compensation committee believed were generally comparable to our company and against which the compensation committee believed we competed for executive talent.

To assist in determining executive compensation in 2021, Radford and the compensation committee reviewed a peer group, which we refer to as the 2021 peer group, of publicly traded companies in the life sciences industry at a stage of development, market capitalization, geography and size comparable to ours, which companies the compensation committee believed were generally comparable to our company and against which the compensation committee believed we competed for executive talent. The compensation committee, in consultation with members of the Radford team, included the following companies in the 2021 peer group:

Actinium Pharmaceuticals

G1 Therapeutics

Sesen Bio

Aldeyra Therapeutics

Geron

Strongbridge Biopharma

Aprea Therapeutics

Idera Pharmaceuticals

Syndax Pharmaceuticals

Calithera Biosciences

MEI Pharma

UroGen Pharma

CASI Pharmaceuticals

Odonate Therapeutics

Verastem

Chiasma

Rigel Pharmaceuticals

X4 Pharmaceuticals

In addition to the publicly available information with respect to our 2021 peer group companies, Radford gathered competitive market data from the 2020 Radford Global Life Sciences Survey of public biopharmaceutical companies with between 35 and 300 employees, less than $100 million in revenue and a market value between $100 million and $600 million, which we refer to as the 2020 Radford Global Life Sciences Survey, for our analysis of executive compensation in 2021.

Our compensation committee has concluded that our executive compensation program is effectively designed in light of our objectives and continues to be aligned with the interests of our stockholders and, therefore, determined not to make significant changes to the structure of our executive compensation program in 2021.

In setting compensation for 2021, the compensation committee focused on ensuring that compensation was in line with our peers in order to retain and motivate our management team.

34

 


 

The Chief Executive Officer’s Role in the Compensation Process

The compensation committee has historically used, in addition to its own judgment and experience and the resources and tools described above, the recommendations of our chief executive officer as to the performance of each executive and as to the amount and type of compensation for such executive. Mr. Bailey, our chief executive officer, did not participate in the determination of his own compensation for 2020 or 2021.

Risk Considerations in our Compensation Program

Our compensation committee has discussed the concept of risk as it relates to our executive compensation program, and our compensation committee does not believe our executive compensation program encourages excessive or inappropriate risk taking. As described more fully below in “Executive Compensation Components,” we structure our pay to consist of both fixed and variable compensation to motivate our executives to produce superior short- and long-term results that are in our best interests and the best interests of our stockholders and that have the greatest potential to increase stockholder value. We have reviewed our compensation policies and programs with our compensation and audit committees and have concluded that any risks arising from our compensation policies and programs are not reasonably likely to have a material adverse effect on our company or business.

Executive Compensation Components

Our executive compensation program is primarily comprised of:

 

base salary;

 

annual cash incentive compensation; and

 

equity compensation.

Our compensation committee has not adopted a formal policy for allocating between long-term and short-term compensation, between cash and non-cash compensation or among the different forms of non-cash compensation. Instead, the compensation committee, after reviewing information provided by our compensation consultant, determines what it believes to be the appropriate and competitive level and mix of the various compensation components.

We generally strive to provide our named executive officers with a balance of short-term and long-term incentives to encourage consistently strong performance. While we believe that the annual cash incentive component of our compensation package encourages our executives to focus on our short-term performance, generally over a one-year period, we rely upon equity-based awards to encourage focus on our longer-term performance. In addition, we provide our executives with benefits that are available to all of our salaried employees, including medical, dental, group life and accidental death, dismemberment and long-term and short-term disability insurance, and matching contributions in our 401(k) plan.

Base Salary. Base salary is used to recognize the experience, skills, knowledge and responsibilities required of all our employees, including our named executive officers. Generally, we believe that executive base salaries should be targeted near the median of the range of salaries for executives in similar positions at comparable companies. When establishing base salaries for 2020 and 2021, our board of directors, upon the recommendation of our compensation committee, considered the overall economic environment, the company’s cash position, the degree to which our company achieved its business goals and objectives, the need to attract, motivate and retain key executives, and each individual’s performance. In addition, with respect to the base salaries of our named executive officers in 2020 and 2021, other than Mr. Bailey, our compensation committee considered the recommendations of Mr. Bailey in determining appropriate base salary levels.  

35

 


 

2020 Base Salaries

In February 2020, our board of directors, on the recommendation of the compensation committee, established the base salaries of our named executive officers for 2020, as set forth in the table below. The 2020 base salaries for our named executive officers were as follows:

 

Name

 

2020 Annual

Base

Salary ($)

 

 

Percentage

Increase in

Base Salary

From 2019

Base

Salary (%)

 

Michael Bailey

 

$

564,554

 

 

 

7.0

%

Michael Needle

 

$

451,858

 

 

 

3.5

%

Karuna Rubin (1)

 

$

374,597

 

 

 

8.5

%

 

(1)On January 21, 2021, we announced the departure of Ms. Rubin, senior vice president and general counsel, effective immediately.

2021 Base Salaries

In February 2021, our board of directors, on the recommendation of the compensation committee, established the base salaries of our named executive officers for 2021, as set forth in the table below. Radford recommended salary increases for 2021 for each of our named executive officers that were derived from the 50th percentile of comparable companies in the 2021 peer group and the 2020 Radford Global Life Sciences Survey. Our compensation committee made its recommendation to the board based on Radford’s recommendations, with adjustments based on the achievements of the named executive officers in 2020. The 2021 base salaries for our named executive officers are as follows:

 

Name

 

2021 Annual

Base

Salary ($)

 

 

Percentage

Increase in

Base Salary

From 2020

Base

Salary (%)

 

Michael Bailey

 

$

589,959

 

 

 

4.5

%

Michael Needle

 

$

467,673

 

 

 

3.5

%

Karuna Rubin (1)

 

$

374,597

 

 

 

0

%

 

(1)On January 21, 2021, we announced the departure of Ms. Rubin, senior vice president and general counsel, effective immediately.

Annual Cash Incentive Program. We have designed our annual cash incentive program to reward our named executive officers who continue to provide service to our company upon the achievement of specified annual corporate goals and, for our named executive officers other than our chief executive officer, individual goals which are approved in advance by our compensation committee and board of directors. Our annual cash incentive program emphasizes pay-for-performance and is intended to closely align executive compensation with achievement of specified operating results as the cash incentive amount is calculated on the basis of the percentage of individual or corporate goals achieved, respectively. The compensation committee communicates the cash incentive award criteria to such executive officers at the beginning of each fiscal year. The performance goals established by the compensation committee are based on the business strategy of our company and the objective of building stockholder value. There are three steps for determining whether, and the extent to which, an annual cash incentive award is payable to such executive officer. First, at the beginning of the fiscal year, the compensation committee determines the target annual cash incentive award for such executive officer based on a percentage of such officer’s annual base salary for that year. Second, at the beginning of the

36

 


 

fiscal year, the compensation committee establishes the specific performance goals that must be met in order for the officer to receive the award and the related weighting of each goal. Third, shortly after the end of the fiscal year, the compensation committee determines the extent to which these performance goals were met and the amount of the award. The board of directors considers, and if they deem appropriate, approves, the recommendation of the compensation committee with respect to each of these steps. Our compensation committee has the authority to make discretionary adjustments to our annual cash incentive program, including the ability to make additional awards based on our named executive officers’ performance and to modify the corporate and individual performance targets and the level of awards that our named executive officers receive in conjunction with their performance against the targets.

2020 Cash Incentive Program

In February 2020, the compensation committee established a target cash incentive payment for each of our named executive officers based on a percentage of their 2020 annual base salary as set forth below. These target cash incentive payments were based on percent target bonus cash incentives comparable to similar executives in the 2019 Radford Global Life Sciences Survey.  To arrive at the competitive market data, Radford blended this broad life sciences survey data with peer survey data from the 2020 peer group set at levels that approximated the 50th percentile of percent target executive cash bonus incentive compensation at those companies. For 2020, the target cash incentive payments and the cash incentive amounts paid to our named executive officers, taking into account the achievement of corporate goals and individual goals discussed below, were as follows:

 

Name

 

2020 Target

Annual

Cash

Incentive

Award($)

 

 

Cash

Incentive

Award Paid

for 2020

($)(1)

 

 

Cash

Incentive

Award as a

Percentage of

Target Cash

Incentive

Award (%)

 

Michael Bailey

 

$

310,505

 

 

$

440,761

 

 

 

141.95

%

Michael Needle

 

$

180,743

 

 

$

235,978

 

 

 

130.56

%

Karuna Rubin (2)

 

$

149,839

 

 

$

149,839

 

 

 

100.00

%

 

(1)The annual cash incentive awards for the year ended December 31, 2020 were paid in March 2021.

(2)On January 21, 2021, we announced the departure of Ms. Rubin, senior vice president and general counsel, effective immediately. In connection with Ms. Rubin’s departure, on January 25, 2021, we entered into an agreement pursuant to which she received a bonus of $149,839.00, as an annual bonus for the fiscal year 2020, which she would have been eligible for had she remained with us.

37

 


 

On March 10, 2021, upon the recommendation of the compensation committee, the board determined to award the achievement of the corporate goals under the annual cash incentive program for the year ending December 31, 2020 at 141.95% of their aggregate target level.  The goals as achieved in 2020 are set forth below:

 

2020 Corporate Goals

 

Target Score (%)

 

 

Actual Score (%)

 

 

Financial

 

 

 

 

 

 

 

 

 

Secure funds consistent with corporate objectives

 

 

 

 

 

 

 

 

 

 

(clinical, regulatory and commercial) that provide a cash runway into 2022

 

 

15

%

 

 

15

%

(1)

Tivozanib

 

 

 

 

 

 

 

 

 

File NDA and successfully respond to FDA information requests, gain a positive opinion from the Oncologic Drugs Advisory Committee of the FDA, secure commercial drug supply and prepare for commercialization

 

 

 

 

 

 

 

 

 

Initiate randomized IO combination study in RCC

 

 

 

 

 

 

 

 

 

Complete enrollment for Phase 2 portion of DEDUCTIVE trial in HCC

 

 

60

%

 

 

46

%

(2)

Pipeline

 

 

 

 

 

 

 

 

 

Submit AV-380 IND

 

 

 

 

 

 

 

 

 

Advance ficlatuzumab study to enable phase 3 decision

 

 

 

 

 

 

 

 

 

Complete a business development transaction to advance or monetize pipeline asset(s) inclusive of ficlatuzumab, AV-380 or AV-203

 

 

20

%

 

 

17.5

%

(3)

Corporate

 

 

 

 

 

 

 

 

 

Maintain and motivate organizational infrastructure to achieve corporate goals

 

 

5

%

 

 

5

%

(4)

Total

 

 

100

%

 

 

83.5

%

 

TIVO-3 Kicker

 

 

 

 

 

 

 

 

 

Positive TIVO-3 OS data (approval)

 

1.5X

 

 

1.7X

 

(5)

Total with TIVO-3 Kicker

 

 

 

 

 

 

141.95

%

 

 

(1)Financial: Our board of directors determined that we met the requirement for achieving this corporate goal. In 2020, we secured funding that extended our cash runway into 2022. Our cash runway was achieved through the combination of a nondilutive debt facility and milestones from partnerships, including regulatory milestone payment received from Kyowa Kirin Co., Ltd. (formerly Kirin Brewery Co., Ltd.) (“KKC”), pursuant to the August 2019 amendment to our license agreement with KKC (the “KKC Agreement”), the royalty and reimbursement milestone payments received from EUSA, and capital market offerings, including a public offering of our common stock in June 2020 and sales of common stock under our at-the-market facility.

(2)Tivozanib Development: Our board of directors determined that we achieved the portion of this corporate goal associated with the tivozanib NDA. In March 2020 we filed our NDA for tivozanib which was accepted for review by the FDA in June 2020. During the course of its review, the FDA notified us that it no longer planned to schedule an advisory meeting of the Oncologic Drugs Advisory Committee for tivozanib. The FDA submitted multiple information requests during the course of its review that we responded to in a timely and complete manner.

Our board of directors determined that we did not fully achieve the portion of this corporate goal associated with initiating an additional IO combination trial but acknowledged that we had substantially reached an agreement with BMS to conduct a combined therapy clinical trial (the “TiNivo-2 trial”) subsequent to approval of tivozanib. In January 2021, we entered into a clinical trial collaboration and supply agreement with BMS.

38

 


 

Our board of directors determined that we did not fully achieve the portion of this corporate goal associated with enrollment for the phase 2 portion of the DEDUCTIVE trial since we enrolled roughly 20% of our target enrollment goal.

(3)Pipeline: Our board of directors determined that we achieved the portion of this corporate goal associated with successfully filing an investigational new drug application (“IND”) for AV-380 in 2020. In December 2020, the FDA accepted our IND for AV-380 for the potential treatment of cancer cachexia.

Our board of directors also determined that we achieved the portion of this corporate goal associated with advancing the open-label, randomized phase 2 study in HNSCC, which completed enrollment in December of 2020, and will enable us to announce a phase 3 clinical trial decision for ficlatuzumab in the middle of 2021.

Our board of directors determined that we partially achieved the portion of this corporate goal associated with completing a transaction that monetized the pipeline by reaching an agreement with our partner Biodesix, Inc. to regain global rights to ficlatuzumab effective December 2020.

(4)Corporate: Our board of directors determined that we achieved the goal of maintaining and motivating the organizational infrastructure and noted the recruitment and hiring of key leadership and personnel in preparation for the commercial launch of FOTIVDA.

(5)Positive TIVO-3 OS Kicker: Our board of directors deferred their final decision on the achievement of this corporate goal until the outcome of the FDA decision in March 2021 on our NDA for tivozanib. On March 10, 2021, in advance of the scheduled PDUFA date of March 31, 2021, the FDA approved FOTIVDA in the United States for the treatment of adult patients with relapsed or refractory RCC following two or more prior systemic therapies. Our board of directors determined that we achieved this significant corporate goal and the achievement warranted a multiple of 1.7X rather than the proposed 1.5X kicker.

For 2020, the individual goals for each of our named executive officers (other than our chief executive officer) accounted for 20% of his or her performance incentive. The annual cash incentive payment for our chief executive officer is based solely on the achievement of our overall corporate goals described above. The individual goals for our other named executive officers are primarily related to the corporate goals for which they are most responsible and, to a lesser extent, individual development goals or department specific goals, subject to discretionary adjustments that our compensation committee deems appropriate. Our chief executive officer makes recommendations to the compensation committee as to the degree to which those named executive officers have satisfied their individual goals.

For 2020, Dr. Needle’s goals related to leading the clinical group; acting as our clinical representative in interactions with investigators, key opinion leaders, cooperative groups and partners to advance the development of our product candidates; leading the NDA submission to the FDA; and leading our clinical trials.

For 2020, Ms. Rubin’s goals related to leading the legal group; assuring compliance with securities and governance matters; managing litigation, intellectual property, contracts and other legal matters; and overseeing risk management compliance.

39

 


 

2021 Cash Incentive Program

In February 2021, the compensation committee established a target cash incentive payment for each of our named executive officers, except for Ms. Rubin who departed the Company on January 21, 2021, based on a percentage of their 2021 annual base salary as set forth below. These target cash incentive payments were based on target cash incentives comparable to similar executives in the 2019 Radford Global Life Sciences Survey.  To arrive at the competitive market data, Radford blended this broad life sciences survey data with peer survey data from the 2021 peer group set at levels that approximated the 50th percentile of target executive cash incentive compensation at those companies.

 

Name

 

2021 Annual

Base Salary

($)

 

 

Target

Percentage

of 2021

Annual

Base Salary

(%)

 

 

2021 Target

Annual

Cash

Incentive

Award

($)

 

Michael Bailey

 

$

589,959

 

 

 

55

%

 

$

324,477

 

Michael Needle

 

$

467,673

 

 

 

40

%

 

$

187,069

 

Karuna Rubin (1)

 

$

374,597

 

 

 

%

 

 

 

 

(1)On January 21, 2021, we announced the departure of Ms. Rubin, senior vice president and general counsel, effective immediately.

In February 2021, our board of directors, upon the recommendation of our compensation committee, established the following corporate goals under the annual cash incentive program for the year ending December 31, 2021, as set forth below:

 

2021 Corporate Goals

 

Percentage of Annual

Cash Incentive

Award

Attributable to

Corporate Goals

 

Financial

 

 

 

 

Successfully launch tivozanib and meet 2021 sales goals

 

 

50

%

Pipeline

 

 

 

 

Secure partnership/collaboration for ficlatuzumab and complete manufacturing responsibilities required for 1Q22 Phase 3 trial start in HNSCC

 

 

 

 

Meet 2021 enrollment targets for TiNivo-2 Phase 3 Trial and complete DEDUCTIVE Phase 2 Trial enrollment

 

 

 

 

Successfully complete AV-380 Phase 1 SAD study

 

 

35

%

Corporate

 

 

 

 

Secure external funds, together with expected revenue, to fund corporate

 

 

 

 

 

objectives and provide a cash runway into 2023

 

 

 

 

Achieve organizational buildout and training for commercialization

 

 

15

%

Total

 

 

100

%

 

Our chief executive officer’s annual cash incentive award is based solely on the achievement of these corporate goals. The annual cash incentive awards for our other named executive officers are based on a combination of achievement of the corporate goals set forth above (80% of award) and individual goals that are also set annually (20% of award).

For 2021, Dr. Needle’s goals relate to supporting the commercial launch of FOTIVDA; leading our medical affairs group by presenting to customers, supervising the MSL program and supporting the material review committee and publication efforts; providing data, clinical and scientific leadership;

40

 


 

leading the clinical group and clinical trials, including supporting the planning, launch and enrollment of our clinical trials; supporting business development activities; and supporting the build out of the company.

On January 21, 2021, we announced the departure of Ms. Rubin, senior vice president and general counsel, effective immediately. As such, no 2021 goals were set for Ms. Rubin.

Equity Compensation.  We use stock options, including time-based and performance-based options, to attract, retain, motivate and reward our named executive officers. Through our equity-based grants, we seek to align the interests of our named executive officers with our stockholders, reward and motivate both short-term and long-term executive performance and provide an incentive for retention. Our decisions regarding the amount and type of equity incentive compensation, the allocation of equity and the relative weighting of these awards within total executive compensation have been based on market practices of similarly-situated companies.

We grant equity incentive awards to our employees, including our named executive officers, in connection with the commencement of their employment and, generally, on an annual basis, as part of our overall compensation program. Historically, all grants of equity awards to our named executive officers have been made by our board of directors at regularly scheduled meetings during the year upon the recommendation of our compensation committee. The exercise or purchase price of each stock option is equal to the fair market value of our common stock on the date of grant, which is generally the date of the board meeting approving such grant, the date of hire or such other date as the board may specify consistent with applicable law.  In addition to the factors set forth above, we also consider the number of shares subject to, and exercise prices of, our executive officers’ vested and unvested outstanding awards, as well as the vesting schedule of our executive officers’ unvested awards and the amount and percentage of total equity on a diluted basis held by our executive officers.

Vesting of options and restricted stock granted to our named executive officers fully accelerates if such officer is terminated without “cause” within 18 months following a change in control of us – see “Severance and Change in Control Benefits” below. Vesting ceases at termination of employment. Exercise rights, if applicable, cease shortly after termination of employment except in the case of death or disability. Prior to the exercise of an option, the holder has no rights as a stockholder with respect to the shares subject to such option, including voting rights or the right to receive dividends or dividend equivalent payments.

Our insider trading policy, which applies to all of our employees and directors, prohibits (i) pledging of our securities, including purchasing our securities on margin, margin accounts and pledges as collateral for a loan and (ii) hedging of our securities, including shorts sales of our securities and purchases or sales of puts, calls and other derivative securities. We do not have any equity ownership guidelines for our executive officers.

2020 Equity Compensation Awards

In February 2020, as part of the annual individual performance evaluations of our named executive officers, our board of directors, upon the recommendation of our compensation committee, granted to our named executive officers options to purchase shares of our common stock as set forth in the table below. Our compensation committee, with input from our consultant, Radford, analyzed the executive officer equity compensation practices of the 2020 peer group companies and the 2019 Radford Global Life Sciences Survey. The committee generally recommended awards that approximated the 50th percentile of executive equity incentive compensation at those companies, with adjustments that considered performance, retention and total compensation for each executive officer. The compensation committee considered the extended timeline of the tivozanib program and determined to use equity rather than cash retention in order to preserve the company’s cash and to continue to align executive and stockholder incentives.  The stock option awards to such named executive officers were granted with a term of 10

41

 


 

years and an exercise price of $5.60 per share. The options vest in equal monthly installments over four years, subject to the officer’s continued employment with our company.

 

Name

 

Total Number

of Shares of

Common Stock

Underlying

Time-Based

Options Granted

in 2020

 

Michael Bailey

 

 

120,000

 

Michael Needle

 

 

20,000

 

Karuna Rubin (1)

 

 

45,065

 

 

(1)On January 21, 2021, we announced the departure of Ms. Rubin, senior vice president and general counsel, effective immediately.

2021 Equity Compensation Awards

In February 2021, as part of the annual individual performance evaluations of our named executive officers, our board of directors, upon the recommendation of our compensation committee, granted options to our named executive officers to purchase shares of our common stock as set forth in the table below. Our compensation committee, with input from our consultant, Radford, analyzed the executive officer equity compensation practices of the 2021 peer group companies and the 2020 Radford Global Life Sciences Survey. The committee generally recommended awards that approximated the 50th percentile of executive equity incentive compensation at those companies, with adjustments that considered performance, retention and total compensation for each executive officer. The stock option awards to such named executive officers were granted with a term of 10 years and an exercise price of $9.12 per share, which was the closing price of our common stock on the date of grant. The options vest in equal monthly installments over four years, subject to the officer’s continued employment with our company.

 

Name

 

Total Number

of Shares of

Common Stock

Underlying

Time-Based

Options Granted

in 2021

 

Michael Bailey

 

 

275,000

 

Michael Needle

 

 

100,000

 

Karuna Rubin (1)

 

 

 

 

(1)On January 21, 2021, we announced the departure of Ms. Rubin, senior vice president and general counsel, effective immediately.

Other Benefits

We believe that establishing competitive benefit packages for all of our employees is an important factor in attracting and retaining highly qualified personnel. Named executive officers are eligible to participate in our employee benefit plans, such as medical, dental, group life and accidental death and dismemberment insurance and our 401(k) plan, in each case on the same basis as our other employees. Under our 401(k) plan, we match 50% on every dollar contributed by an employee up to a maximum of 5% of the employee’s salary. The match vests at 25% per year over four years. In addition, we have historically provided housing or commuting allowances to certain of our named executive officers, as described in this proxy statement, under their employment agreements in connection with relocation. We intend to

42

 


 

maintain our current benefits, although our compensation committee may amend or add to the benefits and perquisites made available to our named executive officers if it deems it advisable to do so.

Severance and Change in Control Benefits

Each of our named executive officers are entitled to receive severance benefits in connection with a termination of their employment, unless such termination is for cause.  If we undergo a change in control, our named executive officers are entitled to severance payments and immediate vesting of all equity awards if we terminate their employment without cause, or if they leave their employment with us for good reason (as such terms are defined in the Key Employee Change in Control Severance Benefit Plan), within 18 months of such change in control event. Our change in control benefits have been structured as “double trigger” benefits. This means that the change in control does not itself trigger benefits; rather, benefits are paid only if the employment of the executive is terminated during the specified period after the change in control. We believe a “double trigger” benefit maximizes stockholder value because it prevents an unintended windfall to executives in the event of a friendly change in control, while still providing executives with appropriate incentives to cooperate in negotiating any change in control in which they believe they may lose their jobs but which may be beneficial to stockholders.

We believe providing these benefits helps us compete for executive talent. After reviewing the practices of comparable companies, we believe that our severance and change in control benefits are generally in line with severance packages offered to executives by our peers.

Please refer to “Employment Agreements and Severance Arrangements” for a more detailed discussion of these benefits. We have also provided more information about these benefits, along with estimates of their value under various circumstances, under “—Potential Payments and Benefits Upon Termination and a Change in Control” below.

Tax and Accounting Considerations

Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), generally disallows a tax deduction for compensation in excess of $1.0 million paid in any taxable year to a company’s chief executive officer, chief financial officer, and other officers whose compensation is required to be reported to the company’s stockholders pursuant to the Exchange Act by reason of being among its three highest compensated officers. For taxable years beginning on or before December 31, 2017, certain compensation, including compensation paid to our chief financial officer and qualified performance-based compensation, was not subject to the deduction limitation. Pursuant to the Tax Cuts and Jobs Act, signed into law on December 22, 2017, or Tax Act, subject to certain transition rules, for taxable years beginning after December 31, 2017, the deduction limitation under Section 162(m) is expanded to apply to compensation in excess of $1.0 million paid in any taxable year to our chief financial officer, and the performance-based compensation exception to the deduction limitation under Section 162(m) is no longer available. As a result, for taxable years beginning after December 31, 2017, all compensation in excess of $1.0 million paid to the specified executives will not be deductible, unless grandfathered under transition guidance.

We account for equity compensation paid to our employees in accordance with Accounting Standards Codification (“ASC”) Topic 718, which requires us to measure and recognize compensation expense in our financial statements for all share-based payments based upon an estimate of their fair value over the service period of the award. We record cash compensation as an expense at the time the obligation is incurred.

43

 


 

Summary Compensation Table for the Years Ended December 31, 2020 and 2019

The following table sets forth information for the years ended December 31, 2020 and 2019 regarding compensation awarded to, earned by or paid to our named executive officers.

 

Name and Principal Position

 

Year

 

Salary ($)

 

 

Option

Awards ($)(1)

 

 

 

Non-Equity

Incentive Plan

Compensation ($)(2)

 

 

 

All Other

Compensation ($)(3)

 

 

Total ($)

 

Michael Bailey,

 

2020

 

$

564,554

 

 

$

524,280

 

 

 

$

440,761

 

 

 

$

70,263

 

 

$

1,599,858

 

Chief Executive Officer

 

2019

 

$

527,621

 

 

$

735,240

 

 

 

$

258,270

 

 

 

$

68,513

 

 

$

1,589,644

 

Michael Needle,

 

2020

 

$

451,858

 

 

$

129,960

 

 

 

$

235,978

 

 

 

$

12,275

 

 

$

830,071

 

Chief Medical Officer

 

2019

 

$

436,578

 

 

$

122,540

 

 

 

$

148,786

 

 

 

$

12,275

 

 

$

720,179

 

Karuna Rubin

 

2020

 

$

374,597

 

 

$

184,110

 

 

 

$

149,839

 

(4)

 

$

862

 

 

$

709,408

 

Senior Vice President and General Counsel

 

2019

 

$

345,251

 

 

$

276,113

 

 

 

$

127,328

 

 

 

$

787

 

 

$

749,479

 

 

(1)The amounts reported in the “Option Awards” column represent the grant date fair value of the stock options granted during 2020 and 2019, as computed in accordance with FASB ASC Topic 718, using a Black-Scholes valuation model. A key assumption in the Black-Scholes valuation model is the exercise price, which represents the closing stock price of our common stock on the date of grant. The closing stock price of our common stock on February 5, 2020, the respective date of grant for option awards made in 2020, was $5.60 per share. Our assumptions with respect to the valuation of option awards are set forth in note 8 to our audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020. Note that the amounts reported in this column reflect the accounting cost for these stock options and do not correspond to the actual economic value that may be received by the named executive officers from the stock options.

(2)Our compensation committee determined to pay Mr. Bailey, Ms. Rubin and Dr. Needle annual cash incentive awards equal to 141.95%, 100.00% and 130.56%, respectively, of such executive officer’s target award for performance in 2020. Our compensation committee determined to pay Mr. Bailey, Dr. Needle and Ms. Rubin annual cash incentive awards equal to 89%, 85% and 92%, respectively, of such executive officer’s target award for performance in 2019.

(3)Amounts in this column represent the sum of (i) any matching contributions made by us under our tax-qualified 401(k) Retirement Plan, (ii) any life insurance premiums paid on behalf of the executive officer, and (iii) a housing and commuting allowance for Mr. Bailey of $60,000 in each of 2020 and 2019.

(4)On January 21, 2021, we announced the departure of Ms. Rubin, senior vice president and general counsel, effective immediately. In connection with Ms. Rubin’s departure, on January 25, 2021, we entered into an agreement pursuant to which she received a bonus of $149,839.00, as an annual bonus for the fiscal year 2020, which she would have been eligible for had she remained with us.

44

 


 

Grants of Plan-Based Awards for the Year Ended December 31, 2020

The following table sets forth information for the year ended December 31, 2020 regarding grants of plan-based awards made during 2020 to our named executive officers.

 

 

 

 

 

Estimated

Future Payouts

Under Non-

Equity Incentive

Plan Awards

 

 

Estimated

Future Payouts

Under Equity

Incentive Plan Awards

 

All Other

Option Awards:

Number of

Securities

Underlying

 

 

 

Exercise

or Base

Price of

Stock and

Option

 

 

Grant Date

Fair Value

of Stock

and Option

 

Name

 

Grant

Date

 

Target

($)(1)

 

 

 

Target

(#)

 

 

Options

(#)(2)

 

 

 

Awards

($/sh)

 

 

Awards

($)(3)

 

Michael Bailey

 

2/5/2020

 

$

310,505

 

 

 

 

 

 

121,024

 

 

 

$

5.60

 

 

$

524,280

 

Michael Needle

 

2/5/2020

 

$

180,743

 

 

 

 

 

 

29,999

 

 

 

$

5.60

 

 

$

129,960

 

Karuna Rubin

 

2/5/2020

 

$

149,839

 

 

 

 

 

 

42,499

 

 

 

$

5.60