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 (Amendment No. )
_________________________________________
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
AKERO THERAPEUTICS, 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 all boxes that apply):
No fee required
☐ Fee paid previously with preliminary materials
☐ Fee computed on table in exhibit required by Item 25(b) per Securities Exchange Act of 1934 Rules 14a-6(i)(1) and 0-11
AKERO THERAPEUTICS, INC.
601 Gateway Boulevard, Suite 350
South San Francisco, CA 94080
NOTICE OF 2023 ANNUAL MEETING OF STOCKHOLDERS
To be held June 23, 2023
Notice is hereby given that the 2023 Annual Meeting of Stockholders, or Annual Meeting, of Akero Therapeutics, Inc., which will be held online on June 23, 2023 at 9:00 a.m. Eastern Time. You may attend the meeting virtually via the Internet at www.virtualshareholdermeeting.com/AKRO2023, where you will be able to vote electronically and submit questions. You will need the 16-digit control number included with these proxy materials to attend the Annual Meeting. The purpose of the Annual Meeting is the following:
The proposal for the election of directors relates solely to the election of class I directors nominated by the Board of Directors.
Only Akero Therapeutics, Inc. stockholders of record at the close of business on April 24, 2023, will be entitled to vote at the Annual Meeting and any adjournment or postponement thereof.
You can find more information on each of the matters to be voted on at the Annual Meeting, including information regarding the nominees for election to our board of directors, in the accompanying proxy statement. The board of directors recommends a vote “FOR” the election of each of the two nominees for class I directors and “FOR” the ratification of the appointment of our independent registered public accounting firm for the fiscal year ending December 31, 2023.
Whether or not you expect to attend the Annual Meeting online, please complete, sign, date and return the enclosed proxy card as promptly as possible in the postage-prepaid envelope provided to ensure your representation and the presence of a quorum at the Annual Meeting. Alternatively, you may vote your shares on the Internet by visiting www.proxyvote.com or by telephone by calling 1-800-690-6903 and following the recorded instructions by 11:59 p.m. EST on June 22, 2023. If you vote your shares on the Internet or by telephone, you will need to enter the 16-digit control number provided on your proxy card or voting instruction form. Your vote is important regardless of the number of shares you own. If you attend the Annual Meeting online, you may vote your shares during the Annual Meeting virtually via the Internet even if you previously voted your proxy. Your proxy is revocable in accordance with the procedures set forth in the proxy statement. If your shares are held in “street name,” that is, held for your account by a broker or other nominee, you will receive instructions from the holder of record that you must follow for your shares to be voted.
By order of the Board of Directors, |
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/s/ Andrew Cheng |
Andrew Cheng, M.D., Ph.D. |
President and Chief Executive Officer |
South San Francisco, California
April 28, 2023
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Public Accounting Firm for the Fiscal Year Ending December 31, 2023 |
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Proposal 3 — Non-Binding Advisory Vote on Compensation of our Named Executive Officers |
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AKERO THERAPEUTICS, INC.
601 Gateway Boulevard, Suite 350
South San Francisco, CA 94080
PROXY STATEMENT
FOR THE 2023 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JUNE 23, 2023
This proxy statement contains information about the 2023 Annual Meeting of Stockholders, or the Annual Meeting, of Akero Therapeutics, Inc., which will be held online on June 23, 2023 at 9:00 a.m. Eastern Time. You may attend the Annual Meeting virtually via the Internet at www.virtualshareholdermeeting.com/AKRO2023, where you will be able to vote electronically and submit questions. The board of directors of Akero Therapeutics, Inc. is using this proxy statement to solicit proxies for use at the Annual Meeting. In this proxy statement, the terms “Akero,” “we,” “us,” and “our” refer to Akero Therapeutics, Inc. The mailing address of our principal executive offices is Akero Therapeutics, Inc., 601 Gateway Boulevard, Suite 350, South San Francisco, California 94080.
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 this proxy statement. You may revoke your proxy at any time before it is exercised at the meeting by giving our corporate secretary written notice to that effect.
Our Annual Report to Stockholders on Form 10-K for the fiscal year ended December 31, 2022 (the “2022 Annual Report”) and this proxy statement and proxy card are first being mailed to stockholders on or about April 28, 2023.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be Held on June 23, 2023
This proxy statement and our 2022 Annual Report to Stockholders are available for viewing, printing and downloading at www.proxyvote.com
A copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as filed with the SEC, except for exhibits, will be furnished without charge to any stockholder upon written request to Akero Therapeutics, Inc. 601 Gateway Boulevard, Suite 350, South San Francisco, California 94080, Attention: Corporate Secretary. This proxy statement and our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 are also available on the SEC’s website at www.sec.gov.
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GENERAL INFORMATION
Why are you holding a virtual Annual Meeting?
We have implemented the virtual format in order to facilitate stockholder attendance at our Annual Meeting. We have designed our virtual format to enhance, rather than constrain, stockholder access, participation and communication. For example, the virtual format allows stockholders to communicate with us in advance of, and during, the Annual Meeting so they can ask questions of our board of directors or management.
How do I attend and participate in the Annual Meeting online?
To attend and participate in the Annual Meeting, stockholders will need to access the live audio webcast of the meeting. To do so, stockholders of record will need to visit www.virtualshareholdermeeting.com/AKRO2023 and use their control number provided in the proxy card to access this website, and beneficial owners of shares held in street name will need to follow the same instructions.
You will need the 16-digit control number included on your proxy card or voting instruction form, as applicable.
Will I be able to ask questions during the Annual Meeting?
If you are a stockholder and wish to submit a question during the Annual Meeting, you may log into the meeting, and submit a question in the “Ask A Question” field. Our Annual Meeting will be governed by the Annual Meeting’s Rules of Conduct, which will address the ability of stockholders to ask questions during the meeting and rules for how questions will be recognized and addressed. The Annual Meeting’s Rules of Conduct will be available www.virtualshareholdermeeting.com/AKRO2023 during the Annual Meeting.
If you do not have your 16-digit control number, you will be able to access and listen to the Annual Meeting but you will not be able to vote your shares or submit questions during the Annual Meeting.
The live audio webcast of the Annual Meeting will begin promptly at 9:00 a.m. Eastern Time. We encourage stockholders to access the webcast before the Annual Meeting’s start time. Online check-in will begin, and stockholders may begin submitting written questions, at 8:45 a.m. Eastern Time, and you should allow ample time for the check-in procedures.
How can I get help if I have trouble checking in or listening to the meeting online?
We will have technicians ready to assist you with any technical difficulties you may have accessing the virtual meeting or submitting questions. If you encounter any difficulties accessing the virtual meeting during the check-in or meeting time, please call the technical support number that will be posted on the Virtual Shareholder Meeting log in page.
When are this proxy statement and the accompanying materials scheduled to be sent to stockholders?
The proxy materials, including this proxy statement, a proxy card for shares held in street name (i.e. held for your account by a broker of other nominee), or voting instruction card and Akero’s 2022 Annual Report, are being mailed to stockholders on or about April 28, 2023. These materials are also available for viewing, printing and downloading on the Internet at www.proxyvote.com. You will need the 16-digit control number included on your proxy card to access these materials.
Who is soliciting my vote?
Our board of directors is soliciting your vote for the Annual Meeting, including at any adjournments or postponements of the meeting.
When is the record date for the Annual Meeting?
The record date for determination of stockholders entitled to vote at the Annual Meeting is the close of business on April 24, 2023.
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How many votes can be cast by all stockholders?
There were 48,422,688 shares of our common stock, par value $0.0001 per share, outstanding on April 24, 2023, all of which are entitled to vote with respect to all matters to be acted upon at the Annual Meeting. Each stockholder of record is entitled to one vote for each share of our common stock held by such stockholder. None of our shares of undesignated preferred stock were outstanding as of April 24, 2023.
What is the difference between a “stockholder of record” and a beneficial owner of shares held in “street name?”
Stockholder of Record. If you own shares that are registered directly in your name with our transfer agent, Computershare Trust Company, N.A., then you are considered a “stockholder of record” of those shares. For these shares, your set of proxy materials has been sent to you directly by us. You may vote your shares by proxy prior to the Annual Meeting by following the instructions contained on the enclosed proxy card.
Beneficial Owners of Shares Held in Street Name. If you own shares that are held in a brokerage account or by a bank, trust or other nominee or custodian, then you are considered the beneficial owner of those shares, which are held in “street name.” With respect to these shares, your set of proxy materials has been forwarded to you by that organization. The organization holding your account is considered the stockholder of record for purposes of voting at the Annual Meeting. As the beneficial owner, you have the right to instruct that organization 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 that organization.
How do I vote?
If you are a stockholder of record, there are several ways for you to vote your shares.
Even if you plan to participate in our virtual Annual Meeting, we recommend that you also vote by proxy so that your vote will be counted if you later decide not to participate in the Annual Meeting. If you submit a proxy via the Internet or by telephone, your voting instructions authorize the proxy holders in the same manner as if you signed, dated, and returned your proxy card. If you submit a proxy via the Internet or by telephone, you do not need to return your proxy card.
If you are a street name stockholder, you will receive voting instructions from your broker, bank or other nominee. You must follow the voting instructions provided by your broker, bank or other nominee in order to instruct your broker, bank or other nominee on how to vote your shares. Street name stockholders should generally be able to vote by returning an instruction card, or by telephone or on the Internet. However, the availability of telephone and Internet voting will depend on the voting process of your broker, bank or other nominee. As discussed above, if you are a street name stockholder, you may not vote your shares on your own behalf at the Annual Meeting unless you obtain a legal proxy from your broker, bank or other nominee.
Voting by Proxy
If you will not be attending the Annual Meeting, you may vote by proxy. You can vote by proxy over the Internet by following the instructions provided in the enclosed proxy card. Proxies submitted by mail must be received before the start of the Annual Meeting.
If you complete and submit your proxy before the Annual Meeting, the persons named as proxies will vote the shares represented by your proxy in accordance with your instructions. If you submit a proxy without giving voting instructions, your shares will be voted in the manner recommended by the board of directors on all matters presented in this proxy statement, and as the persons named as proxies may determine in their discretion with respect to any other matters properly presented at the Annual Meeting. You
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may also authorize another person or persons to act for you as proxy in a writing, signed by you or your authorized representative, specifying the details of those proxies’ authority. The original writing must be given to each of the named proxies, although it may be sent to them by electronic transmission if, from that transmission, it can be determined that the transmission was authorized by you.
If any other matters are properly presented for consideration at the Annual Meeting, including, among other things, consideration of a motion to adjourn the Annual Meeting to another time or place (including, without limitation, for the purpose of soliciting additional proxies), the persons named in your proxy and acting thereunder will have discretion to vote on those matters in accordance with their best judgment. We do not currently anticipate that any other matters will be raised at the Annual Meeting.
How do I revoke my proxy?
You may revoke your proxy by (1) following the instructions on the Notice and entering a new vote by mail that we receive before the start of the Annual Meeting or over the Internet by the cutoff time of 11:59 p.m. Eastern Time on June 22, 2023, (2) attending and voting at the Annual Meeting (although attendance at the Annual Meeting will not in and of itself revoke a proxy), or (3) by filing an instrument in writing revoking the proxy or another duly executed proxy bearing a later date with our Corporate Secretary. Any written notice of revocation or subsequent proxy card must be received by our Corporate Secretary prior to the taking of the vote at the Annual Meeting. Such written notice of revocation or subsequent proxy card should be hand delivered to our Corporate Secretary or sent to our principal executive offices at Akero Therapeutics, Inc., 601 Gateway Boulevard, Suite 350, South San Francisco, California 94080, Attention: Corporate Secretary.
If a broker, bank, or other nominee holds your shares, you must contact such broker, bank, or nominee in order to find out how to change your vote.
How is a quorum reached?
Our Amended and Restated Bylaws, or bylaws, provide that a majority of the shares entitled to vote, present in person or represented by proxy, will constitute a quorum for the transaction of business at the Annual Meeting.
Under the General Corporation Law of the State of Delaware, shares that are voted “abstain” or “withheld” and broker “non-votes” are counted as present for purposes of determining whether a quorum is present at the Annual Meeting. If a quorum is not present, the meeting may be adjourned until a quorum is obtained. There were 48,422,688 shares of common stock outstanding and entitled to vote on April 24, 2023, our record date. Therefore, a quorum will be present if 24,211,345 shares of our common stock are present in person or represented by executed proxies timely received by us at the Annual Meeting.
How is the vote counted?
Under our bylaws, any proposal other than an election of directors is decided by a majority of the votes properly cast for and against such proposal, except where a larger vote is required by law or by our Amended and Restated Certificate of Incorporation, or certificate of incorporation, or bylaws. Abstentions and broker “non-votes” are not included in the tabulation of the voting results on any such proposal and, therefore, do not have an impact on such proposals. A broker “non-vote” occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that item, and has not received instructions from the beneficial owner.
If your shares are held in “street name” by a brokerage firm, your brokerage firm is required to vote your shares according to your instructions. If you do not give instructions to your brokerage firm, the brokerage firm will still be able to vote your shares with respect to “discretionary” items, but will not be allowed to vote your shares with respect to “non-discretionary” items. Each of Proposal 1 and Proposal 3 is a “non-discretionary” item. If you do not instruct your broker how to vote with respect to this proposal, your broker may not vote for this proposal, and those shares will be counted as broker “non- votes.” Proposal No. 2 is considered to be a discretionary item, and your brokerage firm will be able to vote on this proposal even if it does not receive instructions from you.
Proposal 1 — Election of three Class I director nominees
To be elected, the directors nominated via Proposal 1 must receive a plurality of the votes properly cast on the election of directors, meaning that the director nominees receiving the most votes will be elected. Shares voting “withheld” and broker non-votes have no effect on the election of directors.
Proposal 2 — Ratification of selection of Deloitte & Touche LLP as our independent registered public accounting firm
The approval of Proposal 2 requires that the votes properly cast FOR must exceed the votes properly cast AGAINST this proposal. Shares voting “abstain” and broker non-votes, if any, will have no effect on the outcome of Proposal 2.
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Proposal 3 — Non-binding advisory vote on named executive officer compensation
For the non-binding advisory vote on named executive officer compensation, the votes properly cast FOR must exceed the votes properly cast AGAINST to approve, on a non-binding advisory basis, the compensation of our named executive officers. Only FOR and AGAINST votes will affect the outcome. Abstentions and broker non-votes will have no effect on the outcome of Proposal 3. Because this vote is advisory and not binding on us, our board of directors or our compensation committee in any way, our board of directors and compensation committee may decide that it is in our and our stockholders’ best interests to compensate our named executive officers in an amount or manner that differs from what is approved by our stockholders, but our board of directors and compensation committee will take into account the outcome of the vote when considering future executive compensation matters.
Who pays the cost for soliciting proxies?
We are making this solicitation and will pay the entire cost of preparing and distributing our proxy materials and soliciting votes. If you choose to access the proxy materials or vote over the Internet, you are responsible for any Internet access charges that you may incur. Our officers and employees may, without compensation other than their regular compensation, solicit proxies through further mailings, personal conversations, facsimile transmissions, e-mails, or otherwise. We have hired Broadridge Financial Solutions, Inc. to assist us in the distribution of proxy materials described above. Proxy solicitation expenses that we will pay include those for preparation, mailing, returning, and tabulating the proxies.
How may stockholders submit matters for consideration at an annual meeting?
The required notice must be in writing and received by our corporate secretary at our principal executive offices not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting. However, in the event that the date of the annual meeting is advanced by more than 30 days, or delayed by more than 60 days, from the first anniversary of the preceding year’s annual meeting, or if no annual meeting were held in the preceding year, a stockholder’s notice must be so received no earlier than the 120th day prior to such annual meeting and not later than the close of business on the later of (a) the 90th day prior to such annual meeting and (b) the tenth day following the day on which notice of the date of such annual meeting was mailed or public disclosure of the date of such annual meeting was made, whichever first occurs. In addition, to comply with the universal proxy rules, stockholders who intend to solicit proxies for the Company’s 2024 annual meeting of stockholders in support of director nominees other than the Company’s nominees must provide notice by the same deadline noted herein to submit a notice of matters to be considered at an annual meeting of stockholders. Such notice must comply with the additional requirements of Rule 14a-19(b).
In addition, any stockholder proposal intended to be included in the proxy statement for the next annual meeting of our stockholders in 2024 must also satisfy the requirements of SEC Rule 14a-8 under the Securities Exchange Act of 1934, as amended, or the Exchange Act, and be received not later than December 30, 2023. If the date of the annual meeting is moved by more than 30 days from the date contemplated at the time of the previous year’s proxy statement, then notice must be received within a reasonable time before we begin to print and send proxy materials. If that happens, we will publicly announce the deadline for submitting a proposal in a press release or in a document filed with the SEC.
How can I know the voting results?
We plan to announce preliminary voting results at the Annual Meeting. Final voting results will be published in a Current Report on Form 8-K, or Form 8-K, that we expect to file with the SEC within four business days after the Annual Meeting. If final voting results are not available to us in time to file a Form 8-K within four business days after the Annual Meeting, we intend to file a Form 8-K to publish preliminary results and, within four business days after the final results are known to us, file an additional Form 8-K to publish the final results.
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OVERVIEW OF PROPOSALS
This Proxy Statement contains three proposals requiring stockholder action. Proposal 1 requests the election of three Class I directors to our board of directors. Proposal 2 requests the ratification of the appointment of Deloitte &Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023. Proposal 3 asks for consideration of and action upon a non-binding, advisory vote to approve the compensation of our named executive officers (“say-on-pay”).
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PROPOSAL 1 — ELECTION OF CLASS I DIRECTORS
Our board of directors currently consists of eight members. In accordance with the terms of our certificate of incorporation and bylaws, our board of directors is divided into three classes, class I, class II and class III, with members of each class serving staggered three-year terms. The members of the classes are divided as follows:
Upon the expiration of the term of a class of directors, directors in that class will be eligible to be elected for a new three-year term at the annual meeting of stockholders in the year in which their term expires.
Our certificate of incorporation and bylaws provide that the authorized number of directors may be changed only by resolution of our board of directors. Our certificate of incorporation also provides that our directors may be removed only for cause by the affirmative vote of the holders of at least two-thirds (2/3) of the outstanding shares then entitled to vote in an annual election of directors, and that any vacancy on our board of directors, including a vacancy resulting from an enlargement of our board of directors, may be filled only by vote of a majority of our directors then in office.
Our board of directors has nominated Andrew Cheng, M.D., Ph.D., Jane Henderson and Mark Iwicki for election as the class I directors at the Annual Meeting. The nominees are presently directors, and have indicated a willingness to continue to serve as directors, if elected. If the nominees become unable or unwilling to serve, however, the proxies may be voted for a substitute nominee selected by our board of directors.
Our Nominating and Corporate Governance Committee Policies and Procedures for Director Candidates, or the Director Guidelines, provide that the value of diversity should be considered in determining director candidates as well as other factors such as a candidate’s character, judgment, skills, education, expertise and absence of conflicts of interest. While our Director Guidelines do not specify assigned weights to particular criteria, our board of directors and nominating and corporate governance committee believe it is essential that members of our board of directors represent diverse viewpoints and 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 of directors to promote our strategic objectives and fulfill its responsibilities to our stockholders. Diversity includes race, ethnicity, age, and gender and is also broadly construed to take into consideration many other factors, including industry knowledge, operational experience, scientific and academic expertise and personal backgrounds.
The composition of our board of directors currently includes four individuals who are diverse under the Nasdaq listing rule regarding board diversity, as presented in the below Board Diversity Matrix. Under the Nasdaq listing rule, directors who self-identify as (i) female, (ii) an underrepresented minority, or (iii) LGBTQ+ are defined as being diverse.
Board Diversity Matrix
In addition to the information presented below regarding each of the nominees and continuing directors’ specific experience, qualifications, attributes and skills that our board of directors and our nominating and corporate governance committee considered in
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determining that he or she should serve as a director, we also believe that each of our directors has demonstrated business acumen, integrity and an ability to exercise sound judgment, as well as a commitment of service to our company and our board of directors.
As of April 24, 2023 |
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Total Number of Directors |
8 |
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Female |
Male |
Non- Binary |
Did Not Disclose |
Part I: Gender Identity |
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Directors |
3 |
4 |
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1 |
Part II: Demographic Background |
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African American or Black |
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Alaskan Native or Native American |
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Asian |
2 |
1 |
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Hispanic or Latinx |
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Native Hawaiian or Pacific Islander |
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White |
1 |
3 |
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Two or More Races or Ethnicities |
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LGBTQ+ |
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Did Not Disclose Demographic Background |
1 |
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Nominees for Election as Class I Directors
The following table identifies our nominees for class I directors, and sets forth their principal occupation and business experience during the last five years and their ages as of April 24, 2023.
Name |
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Positions and Offices Held with Akero |
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Director Since |
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Age |
Andrew Cheng, M.D., Ph.D. |
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Director, President and |
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2019 |
|
56 |
Jane Henderson |
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Director |
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2019 |
|
57 |
Mark T. Iwicki |
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Director |
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2019 |
|
56 |
Andrew Cheng, M.D., Ph.D.
Dr. Cheng has served as our President and Chief Executive Officer since September 2018. Before joining the Company, Dr. Cheng was formerly at Gilead Sciences, Inc., a biopharmaceutical company, as the Chief Medical Officer and Executive Vice President from March 2018 through September 2018. During his nearly 20-year tenure, he was responsible for the clinical development for the HIV program resulting in 11 FDA/EMA approved products. Currently, Dr. Cheng serves on the board of directors of MorphoSys AG (Nasdaq: MOR) and Vera Therapeutics, Inc. (Nasdaq: VERA). Dr. Cheng has served on the board of directors of Arbutus Biopharma Corporation (Nasdaq: ABUS) & Syntimmune, Inc., a private biotechnology company, which was acquired by Alexion Pharmaceuticals, Inc. Dr. Cheng holds a B.A. in biology from the Johns Hopkins University and a M.D. and Ph.D. in cellular and molecular biology from Columbia University College of Physicians and Surgeons. He completed his internal medicine residency at UCLA and was board certified in internal medicine. We believe Dr. Cheng is qualified to serve as a member of our board of directors due to his extensive experience in clinical development across multiple therapeutic areas.
Jane Henderson
Ms. Henderson has served as a member of our board of directors since April 2019. Ms. Henderson currently serves as the Chief Financial Officer of Apogee Therapeutics, a biotechnology company focused in the inflammation and immunology area, a position she has held since January 2023. Prior to joining Apogee, Ms. Henderson served as the Chief Financial Officer and Chief Business Officer of Adagio Therapeutics, Inc., a biotechnology company developing best-in-class antibody therapeutics for coronaviruses, a position she held from December 2020 to November 2022. Prior to joining Adagio Therapeutics, Ms. Henderson served as Chief Financial Officer of Turnstone Biologics Corp., a viral immuno-oncology company, from June 2018 to December 2020. Ms. Henderson also served as Chief Financial Officer and Senior Vice President of Corporate Development of Voyager Therapeutics, Inc., a gene therapy company, from January 2017 to June 2018, and as the Senior Vice President, Chief Financial and Business Officer of Kolltan Pharmaceuticals, Inc., an oncology biopharmaceutical company, from February 2013 until November 2016, when Kolltan Pharmaceuticals was acquired by Celldex Therapeutics, Inc. Prior to Kolltan Pharmaceuticals, Ms. Henderson served in various financial and business development executive roles at biopharmaceutical companies after spending almost 20 years in health care investment banking. During the past five years, Ms. Henderson has served on the board of directors of Sesen Bio Inc. (Nasdaq: SESN), a biopharmaceutical company, IVERIC bio, Inc. (Nasdaq: ISEE), a biopharmaceutical company and Ventus Therapeutics, Inc. a private biopharmaceutical company. Ms. Henderson received a B.S. in psychology from Duke University. We
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believe that Ms. Henderson is qualified to serve on our board of directors due to her extensive financial leadership in the life sciences industry and in health care investment banking.
Mark T. Iwicki
Mr. Iwicki has served as a member of our board of directors since November 2018 and as the chairperson of our board of directors since April 2019. Mr. Iwicki currently serves as the Chairman and Chief Executive Officer of Kala Pharmaceuticals, Inc., a pharmaceutical company, where he has been employed since April 2015. From February 2014 to November 2014 Mr. Iwicki served as President and Chief Executive Officer of Civitas Therapeutics, Inc. From December 2012 to January 2014, Mr. Iwicki served as President and Chief Executive Officer and Director at Blend Therapeutics, Inc., now known as Tarveda Therapeutics, Inc., a biotechnology company. From 2007 to June 2012, Mr. Iwicki served in several roles, including Chief Commercial Officer, President and Chief Operating Officer and Director and Chief Executive Officer at Sunovion Pharmaceuticals, Inc., formerly Sepracor, Inc., a pharmaceutical company. From 1998 to 2007, Mr. Iwicki held executive positions, including Vice President and Business Unit Head, at Novartis Pharmaceuticals Corporation, a pharmaceutical company. Currently, Mr. Iwicki serves on the board of directors for Third Harmonic Bio, Inc. (Nasdaq: THRD), Merus N.V. (Nasdaq: MRUS), a biopharmaceutical company, Kala Pharmaceuticals, Inc. (Nasdaq: KALA) a biopharmaceutical company and Aerovate Therapeutics, Inc. (Nasdaq: AVTE) a biopharmaceutical company. Mr. Iwicki previously served on the board of directors of Aimmune Therapeutics, Inc. (Nasdaq: AIMT), a biopharmaceutical company, from 2015 to 2020 and Pulmatrix, Inc. (Nasdaq: PULM), a biopharmaceutical company, from 2015 to 2021. Mr. Iwicki received a B.A. in business administration from Ball State University and an M.B.A. from Loyola University. We believe that Mr. Iwicki is qualified to serve on our Board due to his executive management and operational experience in the life science industry.
The proxies will be voted in favor of the above nominees unless a contrary specification is made in the proxy. The nominees have consented to serve as our directors if elected. However, if the nominees are unable to serve or for good cause will not serve as a director, the proxies will be voted for the election of such substitute nominee as our board of directors may designate.
Voting Required and Board of Directors' Recommendation
To be elected, the directors nominated via Proposal 1 must receive a plurality of the votes properly cast on the election of directors, meaning that the director nominees receiving the most votes will be elected. Shares voting “withheld” and broker non-votes have no effect on the election of directors.
The board of directors recommends voting “FOR” the election of Andrew Cheng, Jane Henderson and Mark Iwicki as the class I directors, to serve for a three-year term ending at the annual meeting of stockholders to be held in 2026.
Directors Continuing in Office
The following table identifies our class II and class III directors, and sets forth their principal occupation and business experience during the last five years and their ages as of April 24, 2023.
Name |
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Positions and Offices Held with Akero |
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Director Since |
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Class and Year |
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Age |
Seth L. Harrison, M.D. |
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Director |
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2019 |
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Class II – 2024 |
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62 |
Graham Walmsley, M.D., Ph.D. |
|
Director |
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2018 |
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Class II – 2024 |
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36 |
Yuan Xu, Ph.D. |
|
Director |
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2021 |
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Class II – 2024 |
|
55 |
Judy Chou, Ph.D. |
|
Director |
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2021 |
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Class III - 2025 |
|
57 |
Tomas Heyman |
|
Director |
|
2020 |
|
Class III - 2025 |
|
67 |
Class II Directors (Term Expires at 2024 Annual Meeting)
Seth L. Harrison, M.D.
Dr. Harrison has served as a member of our board of directors since April 2019 and previously from January 2017 to June 2018. Dr. Harrison has served as the managing partner of Apple Tree Partners, a series of venture capital funds investing in early-stage life sciences companies, including Akero, since 1999. During the past five years, Dr. Harrison served as a member of the board of directors of Stoke Therapeutics, Inc. (Nasdaq: STOK) and numerous private companies. Dr. Harrison also serves on the board of directors of the Harrison Atelier Foundation and Tortoise Foundation. Dr. Harrison received an A.B. from Princeton University, an M.D. and M.B.A. both from Columbia University, and completed a surgery internship at the Presbyterian Hospital in the City of New
9
York. We believe that Dr. Harrison’s extensive experience as a senior executive and service on the board of directors of other life science companies qualifies him to serve as a member of our board of directors.
Graham Walmsley, M.D., Ph.D.
Dr. Walmsley has served as a member of our board of directors since June 2018. Since August 2019, Dr. Walmsley has been a Co-Founder and Managing Member of Logos Capital, a fundamental biotechnology- focused hedge fund. He previously served as a Principal at Versant Ventures from July 2016 to August 2019 where he invested in biotechnology companies across funds totaling $1.5 billion in assets under management. In addition, Dr. Walmsley served as Head of Business Development at Jecure Therapeutics, Inc., a preclinical stage biotechnology company, from June 2017 through its acquisition by Roche/Genentech in November 2018. Dr. Walmsley currently serves as a board director for Olema Pharmaceuticals, Inc. (Nasdaq: OLMA), a clinical-stage biotechnology company, ALX Oncology Holdings Inc. (Nasdaq: ALXO ) and Science 37 Holdings, Inc. (Nasdaq: SNCE). Dr. Walmsley received a B.A., summa cum laude in molecular and cell biology from the University of California, Berkeley and an M.D. and Ph.D. from Stanford University School of Medicine. We believe that Dr. Walmsley is qualified to serve on our board of directors due to his significant experience in the healthcare and biotechnology industry.
Yuan Xu, Ph.D.
Dr. Xu has served as a member of our board of directors since April 2021. Dr. Xu previously served as a board member and chief executive officer of Legend Biotech Co. (Nasdaq: LEGN) from March 2018 to August 2020. Before joining Legend, Dr. Xu was Senior Vice President at Merck & Co., Inc. from August 2015 to August 2017, where she led teams in biologics and vaccines discovery, development and commercialization. Prior to Merck, Dr. Xu served as a Vice President of Biologics and Site Head at Gilead Sciences, Inc. from March 2014 to August 2015, and previously held positions at Novartis AG, Amgen Inc, Chiron, Inc., GlaxoSmithKline PLC and Genentech Inc. Dr. Xu currently serves on the Board of Directors of Fate Therapeutics, Inc. (Nasdaq: FATE) and Xilio Therapeutics, Inc. (Nasdaq: XLO), and the Scientific Advisory Board and Manufacturing Advisory Board of National Resilience, Inc. Dr. Xu received a B.S. in biochemistry from Nanjing University and a Ph.D. in biochemistry from the University of Maryland. Dr. Xu also completed her post-doctoral training in virology and gene therapy at the University of California, San Diego. We believe that Dr. Xu is qualified to serve on our board of directors due to her extensive experience leading biotech companies, as well as her experience as a director of other companies.
Class III Directors (Term Expires at 2025 Annual Meeting)
Judy Chou, Ph.D.
Dr. Chou has served as a member of our board of directors since July 2021. Dr. Chou is a biotech industry leader with a track record of over two decades of driving drug development and biomanufacturing successes in established and emerging growth biopharmaceutical companies. Dr. Chou is currently President & CEO and a member of the board of directors of AltruBio, Inc., a company focused on developing novel therapeutics for immunological diseases. Prior to AltruBio, she was senior vice president and global head of Biotech at Bayer AG where she oversaw a more than $3 billion biotechnology product portfolio and led drug development and launch activities for the companies’ biologics pipeline. Earlier in her career, Dr. Chou held senior pharmaceutical operations and manufacturing roles at Pfizer, Inc., formerly Medivation, and Tanvex Biopharma, Inc. Before joining the industry, Dr. Chou was a research faculty member at Harvard University Medical School, focused on cell biology and neuroscience research. She received her Ph.D. from Yale University and completed her post-doctoral training at Max-Planck Institute in Germany. We believe that Dr. Chou is qualified to serve on our board of directors due to her extensive experience leading biotech companies and knowledge of the life sciences industry.
Tomas Heyman
Mr. Heyman has served as a member of our board of directors since June 2020. Mr. Heyman most recently was the President of Johnson & Johnson Development Corporation, the corporate venture capital group of Johnson & Johnson, from April 2015 until September 2019. He also served as the Global Head of Business Development, Pharmaceuticals Group of Janssen Global Services, LLC from March 1992 to March 2015, and served as the CEO of Janssen Pharmaceutica NV in Belgium from November 2008 to November 2016. He currently serves on the board of directors of OptiNose, Inc. (Nasdaq: OPTN), a pharmaceutical company, Invivyd, Inc. (formerly Adagio Therapeutics, Inc.) (Nasdaq: IVVD), Xilio Therapeutics, Inc. (Nasdaq: XLO), Legend Biotech Corp. (Nasdaq: LEGN) and IMEC VZW, a non-profit research organization in Belgium. Mr. Heyman received his Master of Law degree from Katholieke Universiteit Leuven in Belgium. He continued with post-graduate studies in International Law in Geneva, Switzerland, and post-graduate studies in Business Management at the University of Antwerp in Belgium. We believe that Mr. Heyman is qualified to serve on our Board due to his leadership experience and knowledge of the industry.
There are no family relationships between or among any of our directors or executive officers. The principal occupation and employment during the past five years of each of our directors was carried on, in each case except as specifically identified above,
10
with a corporation or organization that is not a parent, subsidiary or other affiliate of us. There is no arrangement or understanding between any of our directors and any other person or persons pursuant to which he or she is to be selected as a director.
There are no material legal proceedings to which any of our directors is a party adverse to us or any of our subsidiaries or in which any such person has a material interest adverse to us or our subsidiary.
Executive Officers Who Are Not Directors
The following table identifies our executive officers, and sets forth their current positions at Akero and their ages as of April 24, 2023. Biographical information for Dr. Cheng, our President and Chief Executive Officer, is set forth under the heading “Directors Continuing in Office” above.
Name |
|
Position Held with Akero |
|
Officer Since |
|
Age |
William White, J.D. |
|
Chief Financial Officer and Head of |
|
2019 |
|
50 |
Jonathan Young, J.D., Ph.D. |
|
Chief Operating Officer and Secretary |
|
2017 |
|
53 |
Timothy Rolph, DPhil |
|
Chief Scientific Officer |
|
2017 |
|
69 |
Catriona Yale |
|
Chief Development Officer |
|
2018 |
|
51 |
Patrick Lamy |
|
Senior Vice President, Commercial Strategy |
|
2023 |
|
50 |
William White, J.D.
Mr. White has served as our Executive Vice President, Chief Financial Officer and Head of Corporate Development and Treasurer since April 2019. Before joining our company, Mr. White served as a Managing Director and Head of US Life Sciences Investment Banking at Deutsche Bank Aktiengesellschaft from September 2017 until March 2019. Prior to that position, Mr. White was a Managing Director in Healthcare Investment Banking at Citigroup Inc from May 2006 until September 2017. Previously, he served as an associate and later as a Vice President in Healthcare Investment Banking at Goldman, Sachs & Co., from November 2000 to March 2006. Mr. White currently serves on the board of directors of Ventyx Biosciences, Inc. (Nasdaq: VTYX) and Disc Medicine, Inc., (Nasdaq: IRON). Mr. White received an A.B. from Princeton University, an M.P.P. from Harvard University and a J.D. from Columbia University.
Jonathan Young, J.D., Ph.D.
Dr. Young served as our co-founder, President and Chief Executive Officer from April 2017 to September 2018, and since September 2018 as our co-founder, Executive Vice President, Chief Operating Officer and Secretary. Before joining the Company, Dr. Young served as a Venture Partner at Apple Tree Partners, a venture capital firm, from October 2016 to September 2018. From August 2014 to October 2016, he served as Vice President of Policy/Advocacy and General Counsel at Braeburn Pharmaceuticals, Inc. From October 2006 through August 2014, Dr. Young served in positions of increasing responsibility at FoxKiser LLP, a legal services firm, ultimately as Partner and General Counsel. He currently serves on the board of the MedStar Health Research Institute, the research division of the MedStar Health system. Dr. Young holds a B.A. in history from Messiah College, an M.A. and Ph.D. in American history from the University of North Carolina at Chapel Hill and a J.D. from Yale Law School.
Timothy Rolph, DPhil.
Dr. Rolph has served as our co-founder and Chief Scientific Officer since April 2017. Before joining our company, Dr. Rolph served as a Venture Partner at Apple Tree Partners, a venture capital firm, from October 2016 to September 2018. From March 1994 to October 2016, Dr. Rolph served in various roles at Pfizer Inc., a pharmaceutical company, most recently as Senior Vice President, Program Value Enhancement from July 2014 to October 2016 and as Chief Scientific Officer, Cardiovascular and Metabolic and Endocrine Disease from January 2009 to June 2014. During his tenure at Pfizer Inc., Dr. Rolph also oversaw the Company’s FGF21 program. Dr. Rolph holds a B.Sc. in biochemistry from the University of London and a DPhil in muscle development from University of Oxford.
Catriona Yale
Ms. Yale has served as our Chief Development Officer since October 2018. Before joining the Company, Ms. Yale served in various roles at Gilead Sciences, Inc., a biotechnology company, from October 2001 to October 2018, where she held senior clinical research and operations roles and led global clinical operations and management of the Company’s oncology, HIV, inflammation and liver disease trials. Most recently, Ms. Yale served as Vice President of Clinical Operations at Gilead Sciences, Inc. from July 2016 to October 2018. Ms. Yale holds a B.Sc. in applied biology from Glasgow Caledonian University.
Patrick Lamy
11
Mr. Lamy has served as our Senior Vice President of Commercial Strategy since January 2023. Before joining the Company, Mr. Lamy provided commercial strategy consulting services for a variety of small biotech companies and advertising agencies from September 2021 to December 2022. Prior to this, Mr. Lamy served as Vice President of Commercial at Iovance Therapeutics, Inc. (Nasdaq: IOVA) a biotechnology company, from October 2018 to February 2021. Prior to joining Iovance, Mr. Lamy served in various roles at Gilead Sciences, Inc., a biotechnology company, from April 2008 to September 2018, where he held roles in commercial strategy and marketing. Prior to this, Mr. Lamy held roles of increasing responsibility at Clinical Care Options, Novacea, and Gilead Sciences. Mr. Lamy holds an M.B.A. from the University of California, Berkeley and a B.Sc. in biochemistry and cellular biology from University of California, San Diego.
The principal occupation and employment during the past five years of each of our executive officers was carried on, in each case except as specifically identified above, with a corporation or organization that is not a parent, subsidiary or other affiliate of us. There is no arrangement or understanding between any of our executive officers and any other person or persons pursuant to which he or she was or is to be selected as an executive officer.
There are no material legal proceedings to which any of our executive officers is a party adverse to us or our subsidiary or in which any such person has a material interest adverse to us or our subsidiary.
12
PROPOSAL 2 — RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS AKERO’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2023
Akero’s stockholders are being asked to ratify the appointment by the audit committee of the board of directors of Deloitte & Touche LLP as Akero’s independent registered public accounting firm for the fiscal year ending December 31, 2023. Deloitte & Touche LLP has served as Akero’s independent registered public accounting firm since 2018.
The audit committee is solely responsible for selecting Akero’s independent registered public accounting firm for the fiscal year ending December 31, 2023. Stockholder approval is not required to appoint Deloitte& Touche LLP as Akero’s independent registered public accounting firm. However, the board of directors believes that submitting the appointment of Deloitte & Touche LLP to the stockholders for ratification is good corporate governance. If the stockholders do not ratify this appointment, the audit committee will reconsider whether to retain Deloitte & Touche LLP. If the selection of Deloitte &Touche LLP is ratified, the audit committee, at its discretion, may direct the appointment of a different independent registered public accounting firm at any time it decides that such a change would be in the best interest of Akero and its stockholders.
A representative of Deloitte & Touche LLP is expected to be present at the Annual Meeting and will have an opportunity to make a statement if he or she desires to do so and to respond to appropriate questions from our stockholders.
Akero incurred the following fees from Deloitte & Touche LLP, and its respective affiliates (the “Deloitte Entities”) for the audit of the consolidated financial statements of the Company, and for fees billed for other services provided by the Deloitte Entities, during the years ended December 31, 2022 and 2021. Akero's Audit Committee approved 100% of the services provided by the Deloitte Entities.
|
|
2022 |
|
|
2021 |
|
||
Audit fees (1) |
|
$ |
868,940 |
|
|
$ |
872,753 |
|
Audit-related fees |
|
— |
|
|
— |
|
||
Tax fees |
|
— |
|
|
— |
|
||
All other fees (2) |
|
|
1,895 |
|
|
|
1,895 |
|
Total fees |
|
$ |
870,835 |
|
|
$ |
874,648 |
|
Audit Committee Pre-approval Policy 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 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 or the engagement is entered into pursuant to the pre-approval procedure described below.
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 12 months. Any such pre-approval details the particular service or type of services to be provided and is also generally subject to a maximum dollar amount.
During our 2022 and 2021 fiscal years, no services were provided to us by Deloitte & Touche LLP other than in accordance with the pre-approval policies and procedures described above.
Vote Required and Board of Directors' Recommendation
The approval of Proposal 2 requires that the votes properly cast FOR must exceed the votes properly cast AGAINST this proposal. Shares voting “abstain” and broker non-votes, if any, will have no effect on the outcome of Proposal 2.
13
The board of directors recommends voting “FOR” Proposal No. 2 to ratify the appointment of Deloitte & Touche LLP as Akero’s independent registered public accounting firm for the fiscal year ending December 31, 2023.
14
PROPOSAL 3 — NON-BINDING ADVISORY VOTE ON COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
Our Board is committed to excellence in governance. As part of that commitment, as required by Section 14A(a)(1) of the Securities Exchange Act, our Board is providing our stockholders with an opportunity to approve, on a non-binding advisory basis, the compensation of our named executive officers.
As described in the section entitled “Executive Compensation” and in the accompanying tables and narrative disclosure, our executive compensation programs are designed to attract, motivate and retain top- performing senior executives; establish compensation opportunities that are competitive and reward performance; and align the interests of our senior executives with the interests of our stockholders to drive the creation of sustainable long-term value. This vote is not intended to address any specific item of compensation or the compensation of any specific officer, but rather the overall compensation of our named executive officers and our compensation philosophy, policies and practices, as discussed in this proxy statement.
For the reasons discussed above, the Board unanimously recommends that our stockholders vote in favor of the following resolution:
“RESOLVED, that the stockholders of the Company approve, on an advisory basis, the compensation of the Company’s executive officers, as disclosed in this Proxy Statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, Summary Compensation Table and the other compensation related tables and disclosure.”
We urge you to read the Executive Compensation section of this Proxy Statement and the accompanying tables and narrative disclosure for additional details on the Company’s executive compensation, including our governance, framework, components, and the compensation decisions for the executive officers for the fiscal year ended December 31, 2022.
Vote Required and Board of Directors’ Recommendation
The resolution will be approved, on a non-binding advisory basis, if the votes properly cast FOR exceed the votes properly cast AGAINST the proposal. Abstentions and broker non-votes will have no effect on the outcome of this proposal. As this vote is advisory, it will not be binding upon the Board or the Compensation Committee and neither our Board nor the Compensation Committee will be required to take any action as a result of the outcome of this vote. However, our Board and the Compensation Committee value the opinions of our stockholders, and the Compensation Committee will carefully consider the outcome of this vote when considering future executive compensation policies.
The board of directors recommends voting “FOR” Proposal No. 3, on a non-binding advisory basis, of the compensation of the Company’s executive officers, as disclosed in this Proxy Statement, including the Compensation Discussion and Analysis, compensation tables and narrative discussion.
15
EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis (“CD&A”) describes the Company’s executive compensation program as it relates to the following “named executive officers” or “NEOs” for 2022:
The following discussion should be read together with the compensation tables and related disclosures set forth below.
Executive Summary
Business Overview and Fiscal Year 2022 Performance Highlights
We are a clinical-stage company dedicated to developing transformational treatments for patients with serious metabolic diseases marked by high unmet medical need, including non-alcoholic steatohepatitis ("NASH"), a disease without any approved therapies.
In 2022, we built on the strong results from our Phase 2a BALANCED study evaluating EFX in patients with biopsy- confirmed NASH by progressing two Phase 2b clinical trials, one in patients with pre-cirrhotic NASH and a second in patients with cirrhosis due to NASH. We made significant progress on our corporate goals for 2022, which were adopted in December 2021, including the following achievements that impacted executive compensation:
Fiscal Year 2022 Executive Compensation Program Highlights
The goal of our compensation programs is to ensure that the interests of our employees, including our named executive officers, are aligned with the interests of our stockholders and our business goals and that the total compensation paid to each of our named executive officers is fair, reasonable and competitive.
We provide our executive officers with a significant portion of their compensation through cash incentive compensation determined based upon the achievement of financial, operational and individual performance metrics as well as through equity compensation. These two elements of executive compensation are aligned with the interests of our stockholders because the amount of compensation ultimately received will vary with our financial and operational performance. Equity compensation derives its value
16
from the appreciation of shares of our common stock, which in the future is likely to fluctuate based on our financial and operational performance.
Highlights of our fiscal year 2022 executive compensation program include:
Consideration of Say-On-Pay Advisory Vote
The compensation committee considered the results of our first non-binding advisory vote on the compensation of our named executive officers conducted at our 2022 Annual Meeting of Stockholders, commonly known as a “Say-on-Pay” vote. At our 2022 annual meeting, our say-on-pay proposal received 81.6% of votes cast. We believe this vote is indicative of strong support for our pay programs and their general design. Accordingly, our compensation committee maintained the general structure of our pay programs for 2022.
Best Compensation Practices & Policies
In addition to our direct compensation elements, the following features of our compensation program are designed to align our executive team with stockholder interests and with market best practices:
Overview of Executive Compensation Program
What We Do |
|
What We Don't Do |
||
✓ |
Maintain an industry-specific peer group for |
|
× |
Allow hedging or pledging of equity |
✓ |
Target pay at levels consistent with similarly sized |
|
× |
Provide excessive perquisites |
✓ |
Deliver executive compensation primarily through |
|
× |
Provide supplemental executive retirement plans |
✓ |
Offer market-competitive benefits for executives that are |
|
× |
Provide tax gross-up payments for any |
✓ |
Consult with an independent compensation consultant |
|
|
|
Executive Compensation Philosophy and Objectives
Our executive compensation program is guided by our overarching philosophy of paying for demonstrable performance. Consistent with this philosophy, we have designed our executive compensation program to achieve the following primary goals:
Executive Compensation Program Design
Our executive compensation program is designed to be reasonable and competitive, and balance our goal of attracting, motivating, rewarding and retaining top-performing senior executives with our goal of aligning their interests with those of our stockholders. The compensation committee annually evaluates our executive compensation program to ensure that it is consistent with our short-term and long-term goals and the dynamic nature of our business.
17
The compensation of our named executive officers in fiscal year 2022 consisted of the following elements:
Governance of Executive Compensation Program
Compensation |
|
Purpose |
|
Features |
Base Salary |
|
To provide a fair and competitive base level |
|
Fixed annual salary competitive with our peers |
Annual Short-Term |
|
To motivate and reward for achievements relative |
|
Annual cash bonus with payment of a targeted |
Equity |
|
To align executives’ interests with those of our |
|
Stock options and restricted stock units that vest |
Other Benefits |
|
To provide market-competitive benefits to enable |
|
Benefit plans such as medical, dental, and life and |
Role of our Compensation Committee and Board of Directors
The compensation committee discharges many of the responsibilities of our board of directors relating to the compensation of our executive officers, including our named executive officers. The compensation committee oversees and evaluates our compensation and benefits policies generally, and the compensation plans, policies and practices applicable to our chief executive officer and other executive officers. As described below, the compensation committee retains a compensation consultant to provide support in its review and assessment of our executive compensation program.
Prior to the beginning of each year, the compensation committee reviews and recommends to the board of directors for approval, in the case of our chief executive officer, or approves, in the case of each of our other named executive officers, the primary elements of compensation — base salary increases, annual cash bonuses, and annual equity awards. In addition, the compensation committee may deem it advisable to review and approve subsequent compensation opportunities for our executive officers, including our named executive officers.
Role of our Chief Executive Officer and Other Executive Officers
Our chief executive officer is responsible for making recommendations to the compensation committee for the base salary and all other elements of our compensation program for our other executive officers. The compensation committee advises on the compensation of our chief executive officer, but the ultimate determinations on his compensation are made solely by the Board, without the chief executive officer’s participation. While the compensation committee will consider the chief executive officer’s recommendations regarding the compensation of other executive officers, it independently evaluates his recommendations and makes all final compensation decisions relating to all executive officers other than the chief executive officer.
Role of the Compensation Consultant
The compensation committee has the authority to engage and retain an independent compensation consultant to provide independent counsel and advice. From time to time, the committee assesses the effectiveness of the independent compensation consultant in meeting the committee’s needs. For 2022, the compensation committee retained the services of Pearl Meyer & Partners, LLC (“Pearl Meyer”) as the independent compensation consultant for matters related to overall compensation program design, peer group development and updates, and benchmarking executive officer and board of director compensation programs.
The compensation committee has assessed the independence of Pearl Meyer consistent with Nasdaq listing standards and has concluded that the engagement does not raise any conflicts of interest.
Use of Competitive Market Data and Peer Groups
18
In evaluating the total compensation of our named executive officers, our compensation committee establishes a peer group of publicly traded companies in the pharmaceutical and biotechnology industries that is selected based on a balance of the following criteria:
Based on these criteria, our peer group for 2022, as approved by our compensation committee, was comprised of the following companies:
Acleris Therapeutics, Inc. |
Altimmune, Inc. |
Crinetics Pharmaceuticals, Inc. |
Gossamer Bio, Inc. |
ImmunoGen, Inc. |
IVERIC bio, Inc. |
Kura Oncology, Inc. |
Madrigal Pharmaceuticals, Inc. |
MannKind Corporation |
Mirum Pharmaceuticals, Inc. |
Morphic Holding, Inc. |
NGM Biopharmaceuticals, Inc. |
REGENXBIO Inc. |
Replimune Group, Inc. |
Syndax Pharmaceuticals, Inc. |
Vaxcyte, Inc. |
|
|
Due to the nature of our business, we compete for executive talent with many public companies that are larger and more established than we are or that possess greater resources than we do, and with smaller private companies that may be able to offer greater equity compensation potential. For 2022, our compensation committee did not target a specific pay percentile and instead sought to position cash and long-term incentive compensation generally within a competitive range of our peer group. Although the compensation committee and the board of directors target compensation per the above, they also consider other criteria, including market factors, the experience level of the executive and the executive’s performance against established company goals, in determining variations to this general target range. We believe that the compensation practices of our 2022 peer group provided us with appropriate compensation data for evaluating the competitiveness of the compensation of our named executive officers for 2022.
Compensation-Setting Factors
When reviewing and approving, or recommending to the board of directors as applicable, the amount of each compensation element and the target total compensation opportunity for our executive officers, the compensation committee considers the following factors:
These factors provide the framework for compensation decisions for each of our executive officers, including our named executive officers. The compensation committee and the board of directors, as applicable, do not assign relative weights or rankings to
19
these factors, and do not consider any single factor as determinative in the compensation of our executive officers. Rather, the compensation committee and the board of directors, as applicable, rely on their own knowledge and judgment in assessing these factors and making compensation decisions.
Primary Elements of Our Executive Compensation Program
Base Salary
We provide base salaries to our named executive officers to compensate them with a fair and competitive base level of compensation for services rendered during the year. Typically, prior to the beginning of each year, the compensation committee reviews base salaries for our executive officers, including our named executive officers, based on such factors to determine if an increase is appropriate. In addition, base salaries may be adjusted in the event of a promotion or significant change in responsibilities. Our compensation committee has historically determined our executives’ base salaries. Our compensation committee typically reviews and discusses management’s proposed compensation with the chief executive officer for all executives other than the chief executive officer.
2022 Base Salary
Base salary represents annual fixed compensation and is a standard element of compensation necessary to attract and retain talent. Base salary levels are reviewed annually. When making adjustments, the compensation committee considers the Company’s overall performance; the executive’s individual performance; the executive’s experience, career potential, and tenure with the Company; and competitive market practices. Decisions are generally made during December of the prior fiscal year and effective January 1.
Based on the annual review, the board of directors approved merit increases to our NEOs effective January 1, 2022 as follows:
Name |
|
2021 Base Salary ($) |
|
|
2022 Base Salary ($) |
|
|
% Change |
|
|||
Andrew Cheng |
|
$ |
569,525 |
|
|
$ |
624,000 |
|
|
|
9.56 |
% |
William White |
|
$ |
423,766 |
|
|
$ |
452,000 |
|
|
|
6.66 |
% |
Jonathan Young |
|
$ |
428,490 |
|
|
$ |
449,000 |
|
|
|
4.79 |
% |
Timothy Rolph |
|
$ |
428,490 |
|
|
$ |
482,000 |
|
|
|
12.49 |
% |
Catriona Yale |
|
$ |
401,709 |
|
|
$ |
444,000 |
|
|
|
10.53 |
% |
Our compensation committee approved increases in base salary that were higher than prior base salary increases, based on an evaluation of third-party market compensation data and recommendations from Pearl Meyer, and believed such increases were necessary to reward personal performance, provide retentive value, and remain competitive with our peer group. The base salary increases were designed to align base salaries with the market median, consistent with our compensation philosophy.
Annual Short-Term Incentive Plan
Our cash incentive bonus plan motivates and rewards our executives for achievements relative to our goals and expectations for each fiscal year. Each named executive officer has a target bonus opportunity, defined as a percentage of his or her annual base salary. Actual award payouts are based upon an assessment by the board of directors of the Company’s achievement against the performance objectives for the year.
2022 Target Annual Bonuses
In December 2021, the compensation committee reviewed the target annual bonuses of our executive officers, including our named executive officers. The compensation committee considered the factors described in “Governance of Executive Compensation Program — Compensation-Setting Factors” above, particularly the market data from the companies in the compensation peer group, and determined that no changes were necessary to the target bonus percentages. Accordingly, the compensation committee approved the 2022 target annual bonuses of our named executive officers as set forth below:
Name |
|
2021 Target Bonus (%) |
|
|
2022 Target Bonus (%) |
|
||
Andrew Cheng |
|
|
55 |
% |
|
|
55 |
% |
William White |
|
|
40 |
% |
|
|
40 |
% |
Jonathan Young |
|
|
40 |
% |
|
|
40 |
% |
Timothy Rolph |
|
|
40 |
% |
|
|
40 |
% |
Catriona Yale |
|
|
40 |
% |
|
|
40 |
% |
20
2022 Performance Goals and Results
In December 2021, the compensation committee adopted corporate goals for 2022 and, at the end of 2022, our compensation committee evaluated company performance based upon achievement against such corporate goals, including:
2022 Annual Cash Bonuses
In December 2022, the compensation committee determined that the Company had achieved 175% of its corporate goals for the fiscal year ended December 31, 2022. In light of such achievement, the board approved cash incentive bonuses for our named executive officers for fiscal year 2022 at 175% of target levels.
The cash incentive bonus targets as a percentage of base salary and the actual cash incentive bonus amounts and actual cash incentive bonus amounts as a percentage of base salary paid to our named executive officers with respect to performance in fiscal year 2022 are set forth in the table below.
Name |
|
2022 Target Cash |
|
|
2022 Target Cash |
|
|
2022 Cash Incentive |
|
|
2022 Actual Cash |
|
||||
Andrew Cheng |
|
|
55 |
% |
|
$ |
343,200 |
|
|
$ |
600,600 |
|
|
|
175 |
% |
William White |
|
|
40 |
% |
|
$ |
180,800 |
|
|
$ |
316,400 |
|
|
|
175 |
% |
Jonathan Young |
|
|
40 |
% |
|
$ |
179,600 |
|
|
$ |
314,300 |
|
|
|
175 |
% |
Timothy Rolph |
|
|
40 |
% |
|
$ |
192,800 |
|
|
$ |
337,400 |
|
|
|
175 |
% |
Catriona Yale |
|
|
40 |
% |
|
$ |
177,600 |
|
|
$ |
310,800 |
|
|
|
175 |
% |
Long-Term Incentives
Our long-term program is designed to:
The market for qualified and talented executives is highly competitive and we compete for talent with many companies that have greater resources than we do. Accordingly, we believe equity compensation is a crucial component of any competitive executive compensation package we offer.
Stock Options and Restricted Stock Units
Prior to 2022, we had historically granted our executives stock options. In 2022, our compensation committee determined it was appropriate to grant a mix of stock options and restricted stock units. We grant stock options and restricted stock units to our executives to align their interests with those of our stockholders and as an incentive to remain with us. With stock options, our executives can realize value only to the extent that the market price of our common stock increases during the period that the option is outstanding. With restricted stock units, our executives not only derive additional value from stock price appreciation, but also build actual stock ownership. Restricted stock units are also less dilutive to our stockholders because they require fewer shares than stock options to deliver the same value. The compensation committee reviews the equity awards for our executive officers, including our NEOs, and determines the size and relative weighting of the annual equity awards it deems reasonable and appropriate based on the
21
factors described in “Governance of Executive Compensation Program—Compensation-Setting Factors” above. The size and relative weighting is the same for each of our executive officers, including our NEOs, who are at the same level.
On December 9, 2022, our compensation committee approved the grant of time-based stock options and restricted stock units under our 2019 Stock Option and Incentive Plan (the “2019 Plan”) to each of our named executive officers in recognition of achievements and performance during 2022. The following table sets forth the 2022 annual equity awards for our NEOs:
Name |
|
Time-Based Option |
|
|
Restricted Stock Units |
|
||
Andrew Cheng |
|
|
235,580 |
|
|
|
52,351 |
|
William White |
|
|
86,379 |
|
|
|
19,195 |
|
Jonathan Young |
|
|
86,379 |
|
|
|
19,195 |
|
Timothy Rolph |
|
|
86,379 |
|
|
|
19,195 |
|
Catriona Yale |
|
|
86,379 |
|
|
|
19,195 |
|
Each of the time-based stock options granted to our named executive officers in 2022 vests in 48 equal monthly installments over the four-year period following the grant, provided that the executive officer remains in service through the applicable vesting date. Each of the restricted stock unit awards, granted to our named executive officers in 2022 vests in 16 equal quarterly installments over the four-year period following the grant, provided that the executive officer remains in service through the applicable vesting date.
Benefits and Other Compensation
Health and Welfare Benefits
Our executive officers, including our named executive officers, are eligible to participate in the same employee benefit plans that are generally available to all of our employees, subject to the satisfaction of certain eligibility requirements, such as medical, dental, and life and disability insurance plans. We pay, on behalf of our employees, all of the premiums for health, life and disability insurance.
401(k) Plan
We maintain a tax-qualified 401(k) retirement plan for eligible employees in the United States to save for retirement on a tax advantaged basis. Under our 401(k) plan, employees may elect to defer up to 90% of their eligible compensation subject to applicable annual limits set pursuant to the Internal Revenue Code of 1986, as amended (the “Code”).
Our 401(k) plan permits participants to make both pre-tax and certain after-tax (Roth) deferral contributions. The retirement plan is intended to qualify under Section 401(a) of the Internal Revenue Code. Employees are 100% vested in their contributions to the 401(k) plan.
2019 Employee Stock Purchase Plan
Our executive officers, including our NEOs, are eligible to participate in our 2019 Employee Stock Purchase Plan (the “ESPP”) on the same basis as our other full-time employees. The ESPP permits eligible employees to set aside a portion of their compensation during a six-month offering period and use such contributions to purchase shares of our common stock at a purchase price equal to 85% of the lower of the fair market value of the shares on the first business day of the offering period or the last business day of the purchase period.
Perquisites
Currently, we do not view perquisites or other personal benefits as a significant component of our executive compensation program. Accordingly, we do not provide perquisites to our named executive officers, except in situations where we believe it is appropriate to assist an individual in the performance of his or her duties, to make him more efficient and effective, and for recruitment and retention purposes. In the future, we may provide perquisites or other personal benefits in limited circumstances, such as where we believe it is appropriate to assist an individual named executive officer in the performance of his or her duties, to make him more efficient and effective, and for recruitment, motivation or retention purposes.
Other Benefits
We do not offer any defined benefit pension plans or nonqualified deferred compensation arrangements for our employees.
22
Employment Agreements
In June 2019, we entered into amended and restated employment agreements with each of our named executive officers, which provide assurances of specified benefits to our named executive officers in the event of certain terminations. The terms of these agreements were developed with input from our compensation consultant at the time regarding severance practices at comparable companies, and is designed to attract, retain and reward senior level employees.
We believe that these protections serve our retention objectives by helping our named executive officers and other key employees maintain continued focus and dedication to their responsibilities to maximize stockholder value, including in the event of a transaction that could result in a change in control of the Company. For more information, see the section titled “Potential Payments Upon Termination or Change in Control”.
Other Compensation Practices and Policies
Policy Prohibiting Hedging and Pledging
Our Insider Trading Policy prohibits our executive officers, the non-employee members of our board of directors and certain designated employees, consultants and contractors who in the course of the performance of their duties have access to material, nonpublic information regarding the Company from engaging in the following transactions:
As of the date of this Proxy Statement, none of our NEOs had previously sought or obtained approval from the Compensation Committee to engage in any hedging or pledging transaction involving our securities.
Tax and Accounting Considerations
Deductibility of Executive Compensation
The compensation committee annually reviews and considers the deductibility of the compensation paid to our executive officers, which includes each of the NEOs. Under the Tax Cuts and Jobs Act of 2017, the exemption for qualifying performance- based compensation was repealed for taxable years beginning after December 31, 2017. As a result, compensation paid to our executive officers (on or after January 1, 2018) in excess of $1 million is generally not deductible unless it qualifies for certain transition relief. While the Company will monitor guidance and developments in this area, the compensation committee believes that its primary responsibility is to provide a compensation program that attracts, retains and rewards the executive talent necessary for our success. Consequently, the compensation committee may pay or provide compensation that is not tax deductible or is otherwise limited as to tax deductibility.
Taxation of “Parachute” Payments
Sections 280G and 4999 of the Code provide that executive officers and directors who hold significant equity interests and certain other service providers may be subject to significant additional taxes if they receive payments or benefits in connection with a change in control of the company that exceeds certain prescribed limits, and that the company (or a successor) may forfeit a deduction on the amounts subject to this additional tax. We have not agreed to provide any executive officer, including any named executive officers, with a “gross-up” or other reimbursement payment for any tax liability that the executive officer might owe as a result of the application of Sections 280G or 4999 of the Code.
Section 409A of the Internal Revenue Code
Section 409A of the Code imposes additional significant taxes in the event that an executive officer, director or service provider receives “deferred compensation” that does not satisfy the requirements of Section 409A of the Code. Although we do not maintain a nonqualified deferred compensation plan, Section 409A of the Code may apply to certain severance arrangements, bonus arrangements and equity awards. We structure all our severance arrangements, bonus arrangements and equity awards in a manner to
23
either avoid the application of Section 409A or, to the extent doing so is not possible, to comply with the applicable requirements of Section 409A of the Code.
Accounting for Stock-Based Compensation
We follow Financial Accounting Standards Board ("FASB") standard ASC Topic 718 for our stock-based compensation awards, which requires us to measure the compensation expense for all share-based payment awards made to our employees and non-employee members of our board of directors, including options to purchase shares of our common stock and other stock awards, based on the grant date “fair value” of these awards. This calculation is performed for accounting purposes and reported in the executive compensation tables required by the federal securities laws, even though the recipient of the awards may never realize any value from their awards.
Compensation Risk Assessment
We believe that our executive compensation program does not encourage excessive or unnecessary risk taking. As described more fully above, we structure our pay to consist of both fixed and variable compensation, particularly in connection with our pay-for-performance compensation philosophy. We believe this structure motivates our executives to produce superior short- and long-term results that are in the best interests of our Company and stockholders in order to attain our ultimate objective of increasing stockholder value, and we have established, and our compensation committee endorses, several controls to address and mitigate compensation related risk. As a result, we do not believe that our compensation programs are reasonably likely to have a material adverse effect on us.
EXECUTIVE COMPENSATION TABLES
Summary Compensation Table
The following table presents the compensation awarded to, earned by or paid to each of our NEOs for the years indicated.
Name |
|
Year |
|
|
Salary ($) |
|
|
Bonus |
|
|
Stock |
|
|
Option |
|
|
Non-Equity |
|
|
Total ($) |
|
|||||||
Andrew Cheng, M.D. Ph.D. |
|
2022 |
|
|
|
624,000 |
|
|
|
- |
|
|
|
2,248,475 |
|
|
|
6,973,168 |
|
|
|
600,600 |
|
|
|
10,446,243 |
|
|
President and Chief Executive Officer |
|
2021 |
|
|
|
569,525 |
|
|
|
- |
|
|
|
- |
|
|
|
3,571,922 |
|
|
|
313,239 |
|
|
|
4,454,686 |
|
|
|
|
2020 |
|
|
|
522,500 |
|
|
|
326,563 |
|
|
|
- |
|
|
|
4,312,887 |
|
|
|
- |
|
|
|
5,161,950 |
|
|
William White, J.D. |
|
|
2022 |
|
|
|
452,000 |
|
|
|
- |
|
|
|
824,425 |
|
|
|
2,556,818 |
|
|
|
316,400 |
|
|
|
4,149,643 |
|
Chief Financial Officer |
|
2021 |
|
|
|
423,766 |
|
|
|
- |
|
|
|
- |
|
|
|
1,190,645 |
|
|
|
169,507 |
|
|
|
1,783,918 |
|
|
|
|
2020 |
|
|
|
409,436 |
|
|
|
204,718 |
|
|
|
- |
|
|
|
1,379,768 |
|
|
|
- |
|
|
|
1,993,922 |
|
|
Jonathan Young, J.D., Ph.D. |
|
2022 |
|
|
|
449,000 |
|
|
|
- |
|
|
|
824,425 |
|
|
|
2,556,818 |
|
|
|
314,300 |
|
|
|
4,144,543 |
|
|
Chief Operating Officer |
|
2021 |
|
|
|
428,490 |
|
|
|
- |
|
|
|
- |
|
|
|
1,190,645 |
|
|
|
171,396 |
|
|
|
1,790,531 |
|
|
|
|
2020 |
|
|
|
414,000 |
|
|
|
207,000 |
|
|
|
- |
|
|
|
1,379,768 |
|
|
|
- |
|
|
|
2,000,768 |
|
|
Timothy Rolph, DPhil. |
|
2022 |
|
|
|
482,000 |
|
|
|
- |
|
|
|
824,425 |
|
|
|
2,556,818 |
|
|
|
337,400 |
|
|
|
4,200,643 |
|
|
Chief Scientific Officer |
|
2021 |
|
|
|
428,490 |
|
|
|
- |
|
|
|
- |
|
|
|
1,190,645 |
|
|
|
171,396 |
|
|
|
1,790,531 |
|
|
|
|
2020 |
|
|
|
414,000 |
|
|
|
207,000 |
|
|
|
- |
|
|
|
1,379,768 |
|
|
|
- |
|
|
|
2,000,768 |
|
|
Catriona Yale |
|
2022 |
|
|
|
444,000 |
|
|
|
- |
|
|
|
824,425 |
|
|
|
2,556,818 |
|
|
|
310,800 |
|
|
|
4,136,043 |
|
|
Chief Development Officer |
|
2021 |
|
|
|
401,709 |
|
|
|
- |
|
|
|
- |
|
|
|
1,190,645 |
|
|
|
160,684 |
|
|
|
1,753,038 |
|
|
24
A portion of the stock options granted to our NEOs in 2021 are based upon achievement of certain milestones. In accordance with SEC rules, the grant date fair value to be reported for performance-based stock options, or PBOs, in the Option Awards column is calculated based on the probable outcome of the performance conditions as of the grant date. Due to the binary nature and uncertainty in achieving each of the performance-based milestones, we determined that as of the date of the grant it was not probable, as defined under applicable accounting guidance, that any of the performance conditions would be achieved and assigned a grant date fair value of $0 in the Options Awards column based on this evaluation. For PBOs granted in 2021, we determined the grant date fair value of such awards based upon maximum achievement would be $3,411,000 for Dr. Cheng and $1,137,004 for each of Mr. White, Dr. Young, Dr. Rolph and Ms. Yale. These amounts do not reflect the actual economic value that may be realized by the NEOs upon the exercise of the stock options or the sale of the common stock underlying such stock options.
Grants of Plan-Based Awards for Fiscal Year 2022
The following table shows information regarding grants of plan-based awards during the fiscal year ended December 31, 2022 to the Company’s named executive officers.
|
|
|
|
|
|
Estimated Future |
|
|
All Other |
|
|
All Other |
|
|
Exercise |
|
|
Grant |
|
|||||
Name |
|
Award Type |
|
Grant |
|
Target |
|
|
Stock |
|
|
Options |
|
|
Awards |
|
|
Awards |
|
|||||
Andrew Cheng |
|
Annual cash |
|
— |
|
|
343,200 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
||||
|
|
Time-based |
|
12/09/22 |
|
— |
|
|
— |
|
|
|
235,580 |
|
|
|
42.95 |
|
|
|
6,973,168 |
|
||
|
|
Time-based RSUs |
|
12/09/22 |
|
— |
|
|
|
52,351 |
|
|
— |
|
|
— |
|
|
|
2,248,475 |
|
|||
William White |
|
Annual cash |
|
— |
|
|
180,800 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
||||
|
|
Time-based |
|
12/09/22 |
|
— |
|
|
— |
|
|
|
86,379 |
|
|
|
42.95 |
|
|
|
2,556,818 |
|
||
|
|
Time-based RSUs |
|
12/09/22 |
|
— |
|
|
|
19,195 |
|
|
— |
|
|
— |
|
|
|
824,425 |
|
|||
Jonathan Young |
|
Annual cash |
|
— |
|
|
179,600 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
||||
|
|
Time-based |
|
12/09/22 |
|
— |
|
|
— |
|
|
|
86,379 |
|
|
|
42.95 |
|
|
|
2,556,818 |
|
||
|
|
Time-based RSUs |
|
12/09/22 |
|
— |
|
|
|
19,195 |
|
|
— |
|
|
— |
|
|
|
824,425 |
|
|||
Timothy Rolph |
|
Annual cash |
|
— |
|
|
192,800 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
||||
|
|
Time-based |
|
12/09/22 |
|
— |
|
|
— |
|
|
|
86,379 |
|
|
|
42.95 |
|
|
|
2,556,818 |
|
||
|
|
Time-based RSUs |
|
12/09/22 |
|
— |
|
|
|
19,195 |
|
|
— |
|
|
— |
|
|
|
824,425 |
|
|||
Catriona Yale |
|
Annual cash |
|
— |
|
|
177,600 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
||||
|
|
Time-based |
|
12/09/22 |
|
— |
|
|
— |
|
|
|
86,379 |
|
|
|
42.95 |
|
|
|
2,556,818 |
|
||
|
|
Time-based RSUs |
|
12/09/22 |
|
— |
|
|
|
19,195 |
|
|
— |
|
|
— |
|
|
|
824,425 |
|
|||
25
Outstanding Equity Awards at 2022 Fiscal Year-End
The following table presents information regarding all outstanding equity awards held by each of our named executive officers on December 31, 2022.
26
|
|
Option Awards |
|
Stock Awards |
|
|||||||||||
Name |
|
Number of |
|
Number of |
|
Option |
|
|
Option |
|
Number of |
|
Market |
|
||
Andrew Cheng |
|
197,212 (2) |
|
— |
|
|
0.62 |
|
|
09/08/28 |
|
— |
|
— |
|
|
|
|
210,868 (3) |
|
— |
|
|
0.62 |
|
|
10/18/28 |
|
— |
|
— |
|
|
|
|
140,678 (4) |
|
2,992 (4) |
|
|
6.36 |
|
|
01/16/29 |
|
— |
|
— |
|
|
|
|
59,266 (5) |
|
8,467 (5) |
|
|
16.00 |
|
|
06/19/29 |
|
— |
|
— |
|
|
|
|
175,500 (6) |
|
58,500 (6) |
|
|
21.09 |
|
|
12/13/29 |
|
— |
|
— |
|
|
|
|
126,302 (7) |
|
116,198 (7) |
|
|
28.35 |
|
|
12/08/30 |
|
— |
|
— |
|
|
|
|
65,415 (8) |
|
196,247 (8) |
|
|
21.10 |
|
|
12/08/31 |
|
— |
|
— |
|
|
|
|
261,662 (9) |
|
— |
|
|
21.10 |
|
|
12/08/31 |
|
— |
|
— |
|
|
|
|
— |
|
235,580 (16) |
|
|
42.95 |
|
|
12/09/32 |
|
— |
|
— |
|
|
|
|
— |
|
— |
|
— |
|
|
— |
|
52,351 (18) |
|
|
2,868,835 |
|
|
William White |
|
207,326 (10) |
|
34,503 (10) |
|
|
7.01 |
|
|
04/05/29 |
|
— |
|
— |
|
|
|
|
63,750 (6) |
|
21,250 (6) |
|
|
21.09 |
|
|
12/13/29 |
|
— |
|
— |
|
|
|
|
40,406 (7) |
|
37,174 (7) |
|
|
28.35 |
|
|
12/08/30 |
|
— |
|
— |
|
|
|
|
21,805 (8) |
|
65,416 (8) |
|
|
21.10 |
|
|
12/08/31 |
|
— |
|
— |
|
|
|
|
87,221 (9) |
|
— |
|
|
21.10 |
|
|
12/08/31 |
|
— |
|
— |
|
|
|
|
— |
|
86,379 (16) |
|
|
42.95 |
|
|
12/09/32 |
|
— |
|
— |
|
|
|
|
— |
|
— |
|
— |
|
|
— |
|
19,195 (18) |
|
|
1,051,886 |
|
|
Jonathan Young |
|
92,098 (12) |
|
— |
|
|
0.62 |
|
|
10/18/28 |
|
— |
|
— |
|
|
|
|
46,962 (13) |
|
1,516 (13) |
|
|
6.36 |
|
|
01/16/29 |
|
— |
|
— |
|
|
|
|
63,750 (6) |
|
21,250 (6) |
|
|
21.09 |
|
|
12/13/29 |
|
— |
|
— |
|
|
|
|
40,406 (7) |
|
37,174 (7) |
|
|
28.35 |
|
|
12/08/30 |
|
— |
|
— |
|
|
|
|
21,805 (8) |
|
65,416 (8) |
|
|
21.10 |
|
|
12/08/31 |
|
— |
|
— |
|
|
|
|
87,221 (9) |
|
— |
|
|
21.10 |
|
|
12/08/31 |
|
— |
|
— |
|
|
|
|
— |
|
86,379 (16) |
|
|
42.95 |
|
|
12/09/32 |
|
— |
|
— |
|
|
|
|
— |
|
— |
|
— |
|
|
— |
|
19,195 (18) |
|
|
1,051,886 |
|
|
Timothy Rolph |
|
42,796 (11) |
|
— |
|
|
0.62 |
|
|
07/30/28 |
|
— |
|
— |
|
|
|
|
94,268 (12) |
|
— |
|
|
0.62 |
|
|
10/18/28 |
|
— |
|
— |
|
|
|
|
46,709 (13) |
|
1,516 (13) |
|
|
6.36 |
|
|
01/16/29 |
|
— |
|
— |
|
|
|
|
40,078 (6) |
|
21,250 (6) |
|
|
21.09 |
|
|
12/13/29 |
|
— |
|
— |
|
|
|
|
29,093 (7) |
|
37,174 (7) |
|
|
28.35 |
|
|
12/08/30 |
|
— |
|
— |
|
|
|
|
21,805 (8) |
|
65,416 (8) |
|
|
21.10 |
|
|
12/08/31 |
|
— |
|
— |
|
|
|
|
87,221 (9) |
|
— |
|
|
21.10 |
|
|
12/08/31 |
|
— |
|
— |
|
|
|
|
— |
|
86,379 (16) |
|
|
42.95 |
|
|
12/09/32 |
|
— |
|
— |
|
|
|
|
— |
|
— |
|
— |
|
|
— |
|
19,195 (18) |
|
|
1,051,886 |
|
|
Catriona Yale |
|
33,715 (14) |
|
— |
|
|
0.62 |
|
|
09/26/28 |
|
— |
|
— |
|
|
|
|
41,852 (15) |
|
— |
|
|
0.62 |
|
|
10/18/28 |
|
— |
|
— |
|
|
|
|
35,917 (4) |
|
— |
|
|
6.36 |
|
|
01/16/29 |
|
— |
|
— |
|
|
|
|
63,750 (6) |
|
21,250 (6) |
|
|
21.09 |
|
|
12/13/29 |
|
— |
|
— |
|
|
|
|
40,406 (7) |
|
37,174 (7) |
|
|
28.35 |
|
|
12/08/30 |
|
— |
|
— |
|
|
|
|
21,805 (8) |
|
65,416 (8) |
|
|
21.10 |
|
|
12/08/31 |
|
— |
|
— |
|
|
|
|
87,221 (9) |
|
— |
|
|
21.10 |
|
|
12/08/31 |
|
— |
|
— |
|
|
|
|
— |
|
86,379 (16) |
|
|
42.95 |
|
|
12/09/32 |
|
— |
|
— |
|
|
|
|
— |
|
— |
|
— |
|
|
— |
|
19,195 (18) |
|
|
1,051,886 |
|
|
27
Option Exercises and Stock Vested in Fiscal Year 2022
The following table sets forth, for each of the named executive officers, information with respect to the exercise of stock options and the vesting of restricted stock unit awards during the year ended December 31, 2022.
28
|
|
Option Awards |
|
|
Stock Awards |
|||||||
Name |
|
Number of |
|
|
Value Realized |
|
|
Number of |
|
Value Realized |
||
Andrew Cheng |
|
|
181,500 |
|
|
|
4,857,093 |
|
|
— |
|
— |
William White |
|
|
82,200 |
|
|
|
2,307,651 |
|
|
— |
|
— |
Jonathan Young |
|
|
52,744 |
|
|
|
1,559,766 |
|
|
— |
|
— |
Timothy Rolph |
|
|
59,516 |
|
|
|
1,297,874 |
|
|
— |
|
— |
Catriona Yale |
|
— |
|
|
— |
|
|
— |
|
— |
||
Potential Payments Upon Termination or Change in Control
Employment, Severance and Change in Control Arrangements
In May 2019, we entered into amended and restated employment agreements with each of our named executive officers serving at that time. Each of our named executive officers is employed at will. These employment agreements contain provisions that provide for certain payments and benefits in the event of an involuntary termination of employment. In addition, the named executive officers may be entitled to accelerated vesting of their outstanding and unvested awards in certain circumstances. The information below describes certain compensation that may become due as a result of certain events. These payments and benefits are in addition to benefits available generally to salaried employees, including an ability to participate in our Section 401(k) plan, and our ESPP, accrued benefits under our health and welfare plans and arrangements and vacation pay or other accrued benefits under our medical and dental insurance plans, that are not generally described.
Andrew Cheng, M.D., Ph.D.
Dr. Cheng entered into a new employment agreement with us, effective upon the consummation of our IPO, in May 2019. Under Dr. Cheng’s new employment agreement, in the event that Dr. Cheng’s employment is terminated by us without cause or Dr. Cheng resigns with good reason, each outside of the “change in control period” (as defined in the employment agreement), subject to the execution and effectiveness of a separation agreement, including a general release of claims in our favor, he will be entitled to receive:
In the event that Dr. Cheng’s employment is terminated by us without cause or Dr. Cheng resigns with good reason, in either case within 12 months following a “change in control” (as defined in the employment agreement), subject to the execution and effectiveness of a separation agreement, including a general release of claims in our favor, then in lieu of the foregoing payments and benefits, he will be entitled to receive:
In addition to the above, in the event of Dr. Cheng’s death, the termination of his employment due to “disability” (as defined in the employment agreement), or his resignation with “good reason” (as defined in the employment agreement), 100% of any unvested shares under his “initial equity awards” (as defined in the employment agreement) shall immediately vest. In addition, upon the earlier of (x) six (6) months after the consummation of a “sale event”(as defined in the employment agreement) and (y) termination of Dr. Cheng’s employment upon or following the consummation of a sale event for any reason other than for “cause” (as defined in the employment agreement), 100% of any unvested shares of the initial equity awards shall vest effective as the date of the event set forth in (x) or (y), as applicable. If Dr. Cheng’s employment is terminated by us without cause or Dr. Cheng resigns with good reason, then Dr. Cheng shall have until the earlier of (i) the original 10-year expiration date for such vested stock options, or (ii)
29
12 months following his date of termination (as defined in the employment agreement) to exercise any stock options that have vested as of the date of termination.
Other NEOs
Each of our other NEOs entered into a new employment agreement with us, effective upon the consummation of our IPO, in May 2019. Pursuant to the new employment agreements, if such executive officer’s employment is terminated by us without “cause” or such executive officer resigns for “good reason” (as each such term is defined in the applicable employment agreement), subject to the execution and effectiveness of a separation agreement, including a general release of claims in our favor, such executive officer will be entitled to receive:
In addition, in the event that such executive officer’s employment is terminated by us without cause or such executive officer resigns for good reason, in either case within 12 months following a “change in control” (as defined in the applicable employment agreement), subject to the execution and effectiveness of a separation agreement, including a general release of claims in our favor, such executive officer will be entitled to receive:
In addition, each executive officer’s employment agreement provides that, upon the earlier of (x) six (6) months after the consummation of a “sale event” (as defined in the employment agreement) and (y) termination of such executive officer’s employment following the consummation of a sale event, other than termination for “cause” (as defined in the employment agreement), 100% of any unvested shares held by such executive officer as of the effective date of the new employment agreement, together with any other unvested shares of common stock purchased by such executive officer prior to the effective date of the new employment agreement, shall vest effective as of the date of the event set forth in (x) or (y), as applicable.
Estimated Payment and Benefits Upon Termination or Change of Control
The amount of compensation and benefits payable to each named executive officer under our current employment agreements in various termination and change in control situations has been estimated in the table below. The value of the equity vesting acceleration was calculated based on the assumption that the change in control and the named executive officer’s employment termination occurred on December 31, 2022. The per share closing price of the Company’s stock on the Nasdaq Global Select Market as of December 31, 2022 was $54.80, which was used as the value of the Company’s stock in the change in control. The value of the option vesting acceleration was calculated by multiplying the number of unvested option shares subject to vesting acceleration as of December 31, 2022, by the difference between the per share closing price of the Company’s stock as of December 31, 2022, and the per share exercise price for such unvested option shares.
30
|
|
Termination |
|
|
Resignation for |
|
|
Termination |
|
|
Termination |
|
|
Six-Month |
|
|
|||||
Andrew Cheng |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash Severance |
|
|
660,000 |
|
(1) |
|
660,000 |
|
(1) |
— |
|
|
|
990,000 |
|
(4) |
— |
|
|
||
Cash Incentive Bonus |
|
— |
|
|
— |
|
|
— |
|
|
|
544,500 |
|
(5) |
— |
|
|
||||
COBRA Premiums |
|
|
37,268 |
|
(2) |
|
37,268 |
|
(2) |
— |
|
|
|
55,903 |
|
(6) |
— |
|
|
||
Acceleration of Equity Awards |
|
— |
|
|
|
144,921 |
|
(3) |
|
144,921 |
|
(3) |
|
17,792,894 |
|
(7) |
|
144,921 |
|
(8) |
|
Total |
|
|
697,268 |
|
|
|
842,189 |
|
|
|
144,921 |
|
|
|
19,383,297 |
|
|
|
144,921 |
|
|
William White |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash Severance |
|
|
356,250 |
|
(9) |
|
356,250 |
|
(9) |
— |
|
|
|
475,000 |
|
(12) |
— |
|
|
||
Cash Incentive Bonus |
|
— |
|
|
— |
|
|
— |
|
|
|
190,000 |
|
(13) |
— |
|
|
||||
COBRA Premiums |
|
|
27,951 |
|
(10) |
|
27,951 |
|
(10) |
— |
|
|
|
37,268 |
|
(2) |
— |
|
|
||
Acceleration of Equity Awards |
|
— |
|
|
|
1,648,933 |
|
(11) |
— |
|
|
|
7,628,519 |
|
(7) |
|
1,648,933 |
|
(8) |
||
Total |
|
|
384,201 |
|
|
|
2,033,134 |
|
|
— |
|
|
|
8,330,787 |
|
|
|
1,648,933 |
|
|
|
Jonathan Young |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash Severance |
|
|
353,250 |
|
(9) |
|
353,250 |
|
(9) |
— |
|
|
|
471,000 |
|
(12) |
— |
|
|
||
Cash Incentive Bonus |
|
— |
|
|
— |
|
|
— |
|
|
|
188,400 |
|
(13) |
— |
|
|
||||
COBRA Premiums |
|
|
27,951 |
|
(10) |
|
27,951 |
|
(10) |
— |
|
|
|
37,268 |
|
(2) |
— |
|
|
||
Acceleration of Equity Awards |
|
— |
|
|
— |
|
|
— |
|
|
|
6,053,015 |
|
(7) |
|
73,429 |
|
(8) |
|||
Total |
|
|
381,201 |
|
|
|
381,201 |
|
|
— |
|
|
|
6,749,683 |
|
|
|
73,429 |
|
|
|
Timothy Rolph |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash Severance |
|
|
379,500 |
|
(9) |
|
379,500 |
|
(9) |
— |
|
|
|
506,000 |
|
(12) |
— |
|
|
||
Cash Incentive Bonus |
|
— |
|
|
— |
|
|
— |
|
|
|
202,400 |
|
(13) |
— |
|
|
||||
COBRA Premiums |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|||||
Acceleration of Equity Awards |
|
— |
|
|
— |
|
|
— |
|
|
|
6,053,015 |
|
(7) |
|
73,429 |
|
(8) |
|||
Total |
|
|
379,500 |
|
|
|
379,500 |
|
|
— |
|
|
|
6,761,415 |
|
|
|
73,429 |
|
|
|
Catriona Yale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash Severance |
|
|
356,250 |
|
(9) |
|
356,250 |
|
(9) |
— |
|
|
|
475,000 |
|
(12) |
— |
|
|
||
Cash Incentive Bonus |
|
— |
|
|
— |
|
|
— |
|
|
|
190,000 |
|
(13) |
— |
|
|
||||
COBRA Premiums |
|
|
27,951 |
|
(10) |
|
27,951 |
|
(10) |
— |
|
|
|
37,268 |
|
(2) |
— |
|
|
||
Acceleration of Equity Awards |
|
— |
|
|
— |
|
|
— |
|
|
|
5,979,586 |
|
(7) |
— |
|
|
||||
Total |
|
|
384,201 |
|
|
|
384,201 |
|
|
— |
|
|
|
6,681,854 |
|
|
— |
|
|
||
31
Equity Compensation Plan Information
The following table provides information as of December 31, 2022 with respect to the shares of our common stock that may be issued under our existing equity compensation plans, consisting of the Akero Therapeutics, Inc. 2018 Stock Option and Grant Plan, or the 2018 Plan, the 2019 Plan, and the ESPP.
Plan Category |
|
Number of |
|
|
Weighted |
|
|
Number of |
|
|
|||
Equity compensation plans approved by security holders (1) |
|
|
5,780,004 |
|
|
18.88 |
|
|
|
3,225,650 |
|
(2) |
|
Equity compensation plans not approved by security holders |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Total |
|
|
5,780,004 |
|
|
18.88 |
|
|
|
3,225,650 |
|
|
|
CEO Pay Ratio
Our compensation and benefits philosophy and the overall structure of our compensation and benefit programs are designed to encourage and reward all employees who contribute to our success. We strive to ensure the pay of each of our employees reflects the level of their job impact and responsibilities and is competitive within our peer group. Compensation rates are generally set to be market-competitive. Our ongoing commitment to pay equity is critical to our success in supporting a diverse workforce with opportunities for all employees to grow, develop and contribute.
Under applicable SEC rules, we are required to calculate and disclose the total compensation paid to our median paid employee, as well as the ratio of the total compensation paid to the median employee as compared to the total compensation paid to our chief executive officer, or the CEO Pay Ratio. The paragraphs that follow describe our methodology and the resulting CEO Pay Ratio.
32
We determined our median compensated employee by using base salary and bonuses as our consistently applied compensation measure. We applied this measure to our employee population as of December 31, 2022, the last day of our 2022 fiscal year, and annualized base salaries for permanent full-time and part-time employees that did not work the full year.
We calculated the median compensated employee’s 2022 annual total compensation using the same methodology that is used to calculate our chief executive officer’s annual total compensation in the table entitled “Summary Compensation Table.” The 2022 annual total compensation of our chief executive officer was $10,446,243, the 2022 annual total compensation of our median compensated employee was $515,516, and the ratio of these amounts is 20 to 1. Thus, this pay ratio reflects a reasonable estimate consistent with SEC rules based on the methodology we described above. Because SEC rules for identifying a median compensated employee allow companies to apply certain exclusions, include estimates, and adopt different methodologies that reflect their employee population and compensation practices, the ratio above may not be comparable to the CEO pay ratio reported by other companies.
PAY VERSUS PERFORMANCE
In accordance with the Pay versus Performance disclosure requirements in Item 402(v) of Regulation S-K, this section presents information that describes the relationship between Compensation Actually Paid (“CAP”), as that term is defined under the rules prescribed by Item 402(v), to the Company’s other NEOs and certain financial performance measures of the Company.
As required by Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid and certain financial performance of the Company. “Compensation Actually Paid” is calculated in accordance with SEC rules and does not reflect the actual amount of compensation earned or paid during the applicable year. As described in greater detail in the CD&A, the Company’s executive compensation program reflects a variable pay-for-performance philosophy. While the Company utilizes several performance measures to align executive compensation with Company performance, all of those Company measures are not presented in the Pay versus Performance table. Moreover, the Company generally seeks to incentivize long-term performance, and therefore does not specifically align the Company’s performance measures with “compensation actually paid” (as defined by the SEC) for a particular year. For further information concerning the Company’s pay-for-performance philosophy and how the Company aligns executive compensation with the Company’s performance, refer to Executive Compensation – Compensation Disclosure & Analysis.
Pay Versus Performance Table
The following table sets forth information for each applicable year regarding the CAP of our CEO, Andrew Cheng, and of our other NEOs as a group, as well as certain Company financial performance measures, including our total shareholder return (“TSR”) and our net income (loss).
Compensation Actually Paid
Year (1) |
|
Summary |
|
|
Compensation |
|
|
Average |
|
|
Average |
|
|
Value of Initial |
|
|
Net Income |
|
||||||
2022 |
|
|
10,446,243 |
|
|
|
21,573,799 |
|
|
|
4,157,718 |
|
|
|
7,943,008 |
|
|
|
212.40 |
|
|
|
(112,033,000 |
) |
2021 |
|
|
4,454,686 |
|
|
|
5,446,171 |
|
|
|
1,779,505 |
|
|
|
2,001,761 |
|
|
|
81.98 |
|
|
|
(100,777,000 |
) |
33
Compensation Actually Paid Adjustments
|
|
|
|
|
|
2022 |
|
|
2021 |
|
||||||||||
|
|
PEO (7) |
|
|
Average |
|
|
PEO (7) |
|
|
Average |
|
||||||||
Total Compensation from Summary Compensation Table (1) ($) |
|
|
10,446,243 |
|
|
|
4,157,718 |
|
|
|
4,454,686 |
|
|
|
1,779,505 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Adjustments for Equity Awards (8) |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Less Grant Date Fair Value of Stock Option and Stock Awards |
|
|
(9,221,643 |
) |
|
|
(3,381,243 |
) |
|
|
(3,571,922 |
) |
|
|
(1,190,645 |
) |
||||
Plus Value at Year-End of Outstanding and Unvested Equity |
|
|
8,743,756 |
|
|
|
3,206,033 |
|
|
|
6,680,778 |
|
|
|
2,226,935 |
|
||||
Plus Vesting-Date Fair Value of Equity Awards Granted |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
||||
Plus (Minus) the Change in Fair Value of Outstanding and |
|
|
10,144,719 |
|
|
|
3,578,162 |
|
|
|
(1,870,545 |
) |
|
|
(791,166 |
) |
||||
Plus (Minus) the Change in Fair Value as of the Vesting Date |
|
|
1,460,724 |
|
|
|
382,338 |
|
|
|
(246,826 |
) |
|
|
(22,868 |
) |
||||
Total Adjustments for Equity Awards ($) |
|
|
11,127,556 |
|
|
|
3,785,290 |
|
|
|
991,485 |
|
|
|
222,256 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Compensation Actually Paid (as calculated) ($) |
|
|
21,573,799 |
|
|
|
7,943,008 |
|
|
|
5,446,171 |
|
|
|
2,001,761 |
|
||||
Relationship between Pay and Performance
34
We believe the “compensation actually paid” or “CAP” in each of the years reported above are reflective of the Compensation Committee’s emphasis on “pay-for-performance" as the “compensation actually paid” fluctuated year-over-year, primarily due to the result of our stock performance and our varying levels of achievement against pre-established performance goals under our annual incentive program. As noted in the CD&A, the principal incentive elements in the Company’s executive compensation program were delivered in the form of annual cash bonuses and equity awards in the form of options, performance-based options and restricted stock units. As is the case with many companies in the biotechnology industry, our annual incentive objectives are generally tied to the Company’s strategic and operational goals rather than financial goals. In addition, while we include performance-based options as a component in our equity incentive program, those options are scheduled to vest based on operational goals rather than financial goals.
As noted above, as is the case with many companies in the biotechnology industry, the Company’s incentive objectives are generally tied to our strategic and operational goals rather than financial goals. The fluctuations in our “compensation actually paid” were driven by the fluctuations in our stock price over the two-year period, particularly in light of the leverage of our executive compensation program towards equity awards. The following graphics illustrate the relationship between the “compensation actually paid” to the named executive officers and the Company’s total shareholder return (“TSR”) as well as the relationship between the Company’s TSR and our net income (loss).
Pay Versus Performance Graphical Description
The illustrations below provide a graphical description of CAP (as calculated in accordance with the SEC rules) compared to (1) our cumulative TSR and (2) our net income (loss).
Since a significant portion of compensation for our CEO and other NEOs consists of equity awards, the change in value of Compensation Actually Paid is directionally aligned with changes in our TSR. Note, however, that while we are required by SEC rules to disclose the relationship between our TSR and net income (loss) and “compensation actually paid” to our NEOs, none of these are metrics our compensation committee currently uses in evaluating our NEOs’ compensation.
35
Director Compensation
The table below shows all compensation paid to our non-employee directors during 2022.
Name |
|
Fees Paid |
|
|
Option |
|
|
Total |
|
|||
Judy Chou, Ph.D. (2) |
|
|
49,375 |
|
|
|
78,743 |
|
|
|
128,118 |
|
Seth Harrison, M.D. (3) |
|
|
58,750 |
|
|
|
78,743 |
|
|
|
137,493 |
|
Jane Henderson (4) |
|
|
79,500 |
|
|
|
78,743 |
|
|
|
158,243 |
|
Tomas Heyman (5) |
|
|
58,875 |
|
|
|
78,743 |
|
|
|
137,618 |
|
Mark Iwicki (6) |
|
|
85,000 |
|
|
|
78,743 |
|
|
|
163,743 |
|
Graham Walmsley, M.D., Ph.D. (7) |
|
|
56,250 |
|
|
|
78,743 |
|
|
|
134,993 |
|
Yuan Xu, Ph.D. (8) |
|
|
50,375 |
|
|
|
78,743 |
|
|
|
129,118 |
|
Non-Employee Director Compensation Policy
Under our non-employee director compensation policy, most recently amended in December 2021, we pay our non-employee directors a cash retainer for service on the board of directors and for service on each committee on which the director is a member. The chairman of each committee receives a higher retainer for such service. These fees are payable in arrears in four equal quarterly installments on the last day of each quarter, provided that the amount of such payment is prorated for any portion of such quarter that
36
the director is not serving on our board of directors. The fees paid to non-employee directors for service on the board of directors and for service on each committee of the board of directors on which the director is a member are as follows:
|
|
Annual Retainer ($) |
|
|
Board of Directors |
|
|
|
|
Chair |
|
|
70,000 |
|
Member |
|
|
40,000 |
|
Audit Committee |
|
|
|
|
Chair |
|
|
20,000 |
|
Member |
|
|
10,000 |
|
Compensation Committee |
|
|
|
|
Chair |
|
|
15,000 |
|
Member |
|
|
7,500 |
|
Nominating and Corporate Governance Committee |
|
|
|
|
Chair |
|
|
10,000 |
|
Member |
|
|
5,000 |
|
We also reimburse our non-employee directors for reasonable travel and out-of-pocket expenses incurred in connection with attending our board of director and committee meetings.
In addition, each new non-employee director elected to our board of directors will be granted an initial, one-time equity award of 31,000 shares in the form of stock options, which shall vest monthly over a three-year period, subject to continued service as a director through such vesting date. On the date of each annual meeting of stockholders of our company, each non- employee director will receive an annual equity award of 15,000 shares in the form of stock options, which shall vest in full upon the earlier to occur of the first anniversary of the date of grant or the date of the next annual meeting, subject to continued service as a director through such vesting date.
This program is intended to provide a total compensation package that enables us to attract and retain qualified and experienced individuals to serve as directors and to align our directors’ interests with those of our stockholders.
37
REPORT OF THE COMPENSATION COMMITTEE
The information contained in this report shall not be deemed to be (1) “soliciting material,” (2) “filed” with the SEC, (3) subject to Regulations 14A or 14C of the Exchange Act, or (4) subject to the liabilities of Section 18 of the Exchange Act. This report shall not be deemed incorporated by reference into any of our other filings under the Exchange Act or the Securities Act, except to the extent that we specifically incorporate it by reference into such filing.
The compensation committee has reviewed and discussed the Compensation Discussion and Analysis section of this proxy statement required by Item 402(b) of Regulation S-K with our management. Based on the review and discussions, the compensation committee recommended to the board of directors that the Compensation Discussion and Analysis section be included in this proxy statement, which is incorporated by reference in our annual report on Form 10-K for the fiscal year ended December 31, 2022.
By the Compensation Committee of the Board of Directors of Akero Therapeutics, Inc.
Mark Iwicki, Chairperson
Seth Harrison
Graham Walmsley
Yuan Xu
38
CORPORATE GOVERNANCE
Director Nomination Process
Our nominating and corporate governance committee is responsible for identifying individuals qualified to serve as directors, consistent with criteria approved by our board of directors, and recommending such 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 corporate 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 management, recruiters, members of the committee and our board of directors. The qualifications, qualities and skills that our nominating and corporate governance committee believes must be met by a committee-recommended nominee for a position on our board of directors are as follows:
The nominating and corporate governance committee may also consider factors such as judgment, diversity, independence, skills, education, expertise, business acumen, business experience, length of service, understanding of the Company’s business and industry, conflicts of interest, and other commitments and the like. The nominating and corporate governance committee evaluates these factors, among others, and does not assign any particular weight or priority to any of these factors.
Stockholders may recommend individuals to the nominating and corporate governance committee for consideration as potential director candidates. Any such proposals should be submitted to our corporate secretary at our principal executive offices no later than the close of business on the 90th day nor earlier than the close of business on the 120th day prior to the one-year anniversary of the date of the preceding year’s annual meeting and should include appropriate biographical and background material to allow the nominating and corporate governance committee to properly evaluate the potential director candidate and the number of shares of our stock beneficially owned by the stockholder proposing the candidate. Stockholder proposals should be addressed to Akero Therapeutics, Inc., 601 Gateway Boulevard, Suite 350, South San Francisco, California 94080, Attention: Corporate Secretary. Assuming that biographical and background material has been provided on a timely basis in accordance with our bylaws, any recommendations received from stockholders will be evaluated in the same manner as potential nominees proposed by the nominating and corporate governance committee. If our board of directors determines to nominate a stockholder- recommended candidate and recommends his or her election, then his or her name will be included on our proxy card for the next annual meeting of stockholders. See “Stockholder Proposals” for a discussion of submitting stockholder proposals.
Director Independence
Applicable Nasdaq Stock Market LLC, or Nasdaq, rules require a majority of a listed company’s board of directors to be comprised of independent directors within one year of listing. In addition, the Nasdaq rules require that, subject to specified exceptions, each member of a listed company’s audit, compensation and nominating and corporate governance committees be independent and that audit committee members also satisfy independence criteria set forth in Rule 10A-3 under the Exchange Act and that compensation committee members satisfy independence criteria set forth in Rule10C-1 under the Exchange Act. Under applicable Nasdaq rules, a director will only qualify as an “independent director” if, in the opinion of the listed company’s 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, accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries or otherwise 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 must consider all factors specifically relevant to determining whether a director has a relationship
39
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: the source of compensation to the director, including any consulting, advisory or other compensatory fee paid by such company to the director, and whether the director is affiliated with the company or any of its subsidiaries or affiliates.
Our board of directors has determined that all members of the board of directors, except Dr. Cheng, are independent directors, including for purposes of the rules of Nasdaq and the SEC. In making such independence determination, our board of directors considered the relationships that each non-employee director has with us and all other facts and circumstances that our board of directors deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each non-employee director. In considering the independence of the directors listed above, our board of directors considered the association of our directors with the holders of more than 5% of our common stock. There are no family relationships among any of our directors or executive officers. Dr. Cheng is not an independent director under these rules because he is an executive officer of the Company.
Board Committees
Our board of directors has established an audit committee, a compensation committee, and a nominating and corporate governance committee. Each of the audit committee, compensation committee, and nominating and corporate governance committee operates under a charter that satisfies the applicable standards of the SEC and Nasdaq. Each such committee reviews its respective charter at least annually. A current copy of the charter for each of the audit committee, compensation committee, and nominating and corporate governance committee is posted on the corporate governance section of our website, https://ir.akerotx.com/corporate-governance/documents-charters.
Audit Committee
Jane Henderson, Tomas Heyman, Judy Chou, Ph.D., and Graham Walmsley, M.D., Ph.D. serve on the audit committee, which is chaired by Jane Henderson. Our board of directors has determined that each member of the audit committee is “independent” for audit committee purposes as that term is defined in the rules of the SEC and the applicable Nasdaq rules, and each has sufficient knowledge in financial and auditing matters to serve on the audit committee. Our board of directors has designated Jane Henderson as an “audit committee financial expert,” as defined under the applicable rules of the SEC. During the fiscal year ended December 31, 2022, the audit committee met five times. The report of the audit committee is included in this proxy statement under “Report of the Audit Committee.” The audit committee’s responsibilities include:
All audit and non-audit services, other than de minimis non-audit services, to be provided to us by our independent registered public accounting firm must be approved in advance by our audit committee.
40
Compensation Committee
Yuan Xu, Seth Harrison, M.D., Graham Walmsley and Mark Iwicki serve on the compensation committee, which is chaired by Mark Iwicki. Our board of directors has determined that each member of the compensation committee is “independent” as defined in the applicable Nasdaq rules and is a “non-employee director” as defined in Rule 16b-3 promulgated under the Exchange Act. During the fiscal year ended December 31, 2022, the compensation committee met six times. The compensation committee’s responsibilities include:
Nominating and Corporate Governance Committee
Jane Henderson, Tomas Heyman and Yuan Xu serve on the nominating and corporate governance committee, which is chaired by Tomas Heyman. Our board of directors has determined that each member of the nominating and corporate governance committee is “independent” as defined in the applicable Nasdaq rules. During the fiscal year ended December 31, 2022, the nominating and corporate governance committee met one time. The nominating and corporate governance committee’s responsibilities include:
The nominating and corporate governance committee considers candidates for our board of directors suggested by its members and the chief executive officer. Additionally, in selecting nominees for directors, the nominating and corporate governance committee will review candidates recommended by stockholders in the same manner and using the same general criteria as candidates recruited by the committee and/or recommended by our board of directors. Any stockholder who wishes to recommend a candidate for
41
consideration by the committee as a nominee for director should follow the procedures described later in this proxy statement under the heading “Stockholder Proposals.” The nominating and corporate governance committee will also consider whether to nominate any person proposed by a stockholder in accordance with the provisions of our bylaws relating to stockholder nominations as described later in this proxy statement under the heading “Stockholder Proposals.”
Identifying and Evaluating Director Nominees.
Our board of directors is responsible for filling vacancies on our board of directors and for nominating candidates for election by our stockholders each year in the class of directors whose term expires at the relevant annual meeting. The board of directors delegates the selection and nomination process to the nominating and corporate governance committee, with the expectation that other members of the board of directors, and of management, will be requested to take part in the process as appropriate.
The nominating and corporate governance committee establishes a process for identifying and evaluating nominees for the board of directors, including nominees recommended by stockholders. The nominating and corporate governance committee may solicit recommendations from non-management directors, the chief executive officer, other executive officers, third-party search firms, or any other source it deems appropriate. Once candidates have been identified, the nominating and corporate governance committee confirms that the candidates meet all of the minimum qualifications for director nominees established by the nominating and corporate governance committee. The nominating and corporate governance committee may gather information about the candidates through interviews, detailed questionnaires, comprehensive background checks or any other means that the nominating and corporate governance committee deems to be appropriate in the evaluation process. The nominating and corporate governance committee then meets as a group to discuss and evaluate the qualities and skills of each candidate, both on an individual basis and taking into account the overall composition and needs of our board of directors. Based on the results of the evaluation process, the nominating and corporate governance committee recommends candidates for the board of directors’ approval to fill a vacancy or as director nominees for election to the board of directors by our stockholders each year in the class of directors whose term expires at the relevant annual meeting.
We have no formal policy regarding board diversity. Our priority in selection of board members is identification of members who will further the interests of our stockholders through their established record of professional accomplishment, their ability to contribute positively to the collaborative culture among board members, and their knowledge of our business and understanding of the competitive landscape.
Board and Committee Meetings Attendance
The full board of directors met nine times during 2022. During 2022, each member of the board of directors, with the exception of Seth Harrison, attended in person or participated in 75% or more of the aggregate of (i) the total number of meetings of the board of directors (held during the period for which such person has been a director) and (ii) the total number of meetings held by all committees of the board of directors on which such person served (during the periods that such person served).
Director Attendance at Annual Meeting of Stockholders
Directors are responsible for attending the annual meeting of stockholders to the extent practicable. All members of the board of directors then in office attended the annual meeting of stockholders on June 2, 2022.
Code of Business Conduct and Ethics
We have adopted a written code of business conduct and ethics that applies to our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A current copy of the code is posted on the corporate governance section of our website, which is located at https://ir.akerotx.com/corporate-governance/documents-charters. If we make any substantive amendments to, or grant any waivers from, the code of business conduct and ethics for any officer or director, we will disclose the nature of such amendment or waiver on our website or in a current report on Form 8-K.
Compensation Committee Interlocks and Insider Participation
None of the members of our Compensation Committee have at any time been one of our officers or employees. None of our executive officers currently serves, or in the past fiscal year has served, as a member of the board of directors or on a compensation committee of any entity that has one or more executive officers serving on our Board or Compensation Committee. For a description of transactions between us and members of our Compensation Committee and affiliates of such members, please see “Certain Relationships and Related Party Transactions.”
Board Leadership Structure and Board’s Role in Risk Oversight
42
The board of directors of the Company has an independent chair, Mr. Iwicki, who has authority, among other things, to call and preside over board meetings, including meetings of the independent directors, to set meeting agendas and to determine materials to be distributed to the board of directors. Accordingly, the chairman has substantial ability to shape the work of the board of directors. Currently, the role of chairman of the board is separated from the role of chief executive officer. We believe that separating these positions allows our chief executive officer to focus on our day-to-day business, while allowing the chairman of the board to lead the board of directors in its fundamental role of providing advice to, and independent oversight, of management. Our board of directors recognizes the time, effort, and energy that the chief executive officer is required to devote to his position in the current business environment, as well as the commitment required to serve as our chairman, particularly as the board of directors’ oversight responsibilities continue to grow. While our bylaws and our corporate governance guidelines do not require that our chairman and chief executive officer positions be separate, our board of directors believes that having separate positions is the appropriate leadership structure for us at this time and demonstrates our commitment to good corporate governance.
Risk is inherent to every business, and how well a business manages risk can ultimately determine its success. We face a number of risks, including risks relating to our financial condition, development and commercialization activities, operations, strategic direction, and intellectual property. Management is responsible for the day-to-day management of risks we face, while our board of directors, as a whole and through its committees, has responsibility for the oversight of risk management. In its risk oversight role, our board of directors has the responsibility to satisfy itself that the risk management processes designed and implemented by management are adequate and functioning as designed.
The role of the board of directors in overseeing the management of our risks is conducted primarily through committees of the board of directors, as disclosed in the descriptions of each of the committees above and in the charters of each of the committees. The full board of directors (or the appropriate board committee in the case of risks that are under the purview of a particular committee) discusses with management our major risk exposures, their potential impact on us, and the steps we take to manage them. When a board committee is responsible for evaluating and overseeing the management of a particular risk or risks, the chairman of the relevant committee reports on the discussion to the full board of directors during the committee reports portion of the next board meeting. This enables the board of directors and its committees to coordinate the risk oversight role, particularly with respect to risk interrelationships.
Communication with the Directors of Akero Therapeutics, Inc.
Any interested party with concerns about our company may report such concerns to the board of directors or the chairman of our board of directors and nominating and corporate governance committee, by submitting a written communication to the attention of such director at the following address:
c/o Akero Therapeutics, Inc.
601 Gateway Boulevard, Suite 350
South San Francisco, California 94080
United States
You may submit your concern anonymously or confidentially by postal mail. You may also indicate whether you are a stockholder, customer, supplier, or other interested party.
A copy of any such written communication may also be forwarded to Akero’s legal counsel and a copy of such communication may be retained for a reasonable period of time. The director may discuss the matter with Akero’s legal counsel, with independent advisors, with non-management directors, or with Akero’s management, or may take other action or no action as the director determines in good faith, using reasonable judgment, and applying his or her own discretion.
Communications may be forwarded to other directors if they relate to important substantive matters and include suggestions or comments that may be important for other directors to know. In general, communications relating to corporate governance and long- term corporate strategy are more likely to be forwarded than communications relating to ordinary business affairs, personal grievances, and matters as to which we tend to receive repetitive or duplicative communications.
The audit committee oversees the procedures for the receipt, retention, and treatment of complaints received by Akero regarding accounting, internal accounting controls, or audit matters, and the confidential, anonymous submission by employees of concerns regarding questionable accounting, internal accounting controls or auditing matters. Akero has also established a toll-free telephone number for the reporting of such activity, which is 855-697-1771.
43
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Certain Relationships and Transactions
Other than the compensation agreements and other arrangements described under “Executive compensation” and “Director compensation” in this proxy statement and the transactions described below, since January 1, 2021, there has not been and there is not currently proposed, any transaction or series of similar transactions to which we were, or will be, a party in which the amount involved exceeded, or will exceed, $120,000 (or, if less, 1% of the average of our total assets amounts at December 31, 2021 and 2022) and in which any director, executive officer, holder of five percent or more of any class of our capital stock or any member of the immediate family of, or entities affiliated with, any of the foregoing persons, had, or will have, a direct or indirect material interest.
2022 Follow-On Offering
In September 2022, we completed a registered public offering pursuant to which we issued and sold an aggregate of 7,692,308 shares of our common stock (including 1,153,846 shares sold pursuant to the underwriters’ full exercise of their option to purchase additional shares) at a public offering price of $26.00 per share for aggregate net proceeds to us of approximately $215.8 million. The following table sets forth the number of shares of common stock purchased in our registered public offering by a related party:
Name |
|
Shares of |
|
|
Total |
|
||
Logos Global Master Fund LP (1) |
|
|
400,000 |
|
|
$ |
10,400,000 |
|
|
|
|
|
|
|
|
||
(1) Graham Walmsley, a member of our board of directors, is a General Partner of |
|
|||||||
2022 Registered Direct Offering
In June 2022, we entered into a Securities Purchase Agreement with Pfizer, Inc., (“Pfizer”), pursuant to which we issued and sold an aggregate of 2,525,252 shares of our common stock to Pfizer in a registered direct public offering, at a purchase price of $9.90 per share for gross proceeds to us of approximately $25.0 million. The following table sets forth the number of shares of common stock purchased in our registered public offering by a related party:
Name |
|
Shares of |
|
|
Total |
|
||
Pfizer, Inc. (1) |
|
|
2,525,252 |
|
|
$ |
24,999,995 |
|
|
|
|
|
|
|
|
||
(1) Upon the completion of this transaction, Pfizer, Inc. became a holder of 5% or more of our common stock. |
|
|||||||
Limitation of Liability and Indemnification of Officers and Directors
Our third amended and restated certificate of incorporation contains provisions that limit the liability of our directors for monetary damages to the fullest extent permitted by Delaware law. Consequently, our directors will not be personally liable to us or our stockholders for monetary damages for any breach of fiduciary duties as directors, except liability for the following:
Any amendment to, or repeal of, these provisions will not eliminate or reduce the effect of these provisions in respect of any act, omission or claim that occurred or arose prior to that amendment or repeal. If the Delaware General Corporation Law is amended
44
to provide for further limitations on the personal liability of directors of corporations, then the personal liability of our directors will be further limited to the greatest extent permitted by the Delaware General Corporation Law.
In addition, we adopted bylaws which provide that we will indemnify, to the fullest extent permitted by law, any person who is or was a party or is threatened to be made a party to any action, suit or proceeding by reason of the fact that he or she is or was one of our directors or officers or is or was serving at our request as a director or officer of another corporation, partnership, joint venture, trust, or other enterprise. Our bylaws provide that we may indemnify to the fullest extent permitted by law any person who is or was a party or is threatened to be made a party to any action, suit, or proceeding by reason of the fact that he or she is or was one of our employees or agents or is or was serving at our request as an employee or agent of another corporation, partnership, joint venture, trust or other enterprise. Our bylaws also provide that we must advance expenses incurred by or on behalf of a director or officer in advance of the final disposition of any action or proceeding, subject to very limited exceptions.
We have entered into and in the future plan to enter into agreements to indemnify our directors and executive officers. These agreements, among other things, require us to indemnify these individuals for certain expenses (including attorneys’ fees), judgments, fines and settlement amounts reasonably incurred by such person in any action or proceeding, including any action by or in our right, on account of any services undertaken by such person on behalf of our company or that person’s status as a member of our board of directors to the maximum extent allowed under Delaware law.
Related Person Transaction Policy
Our board of directors adopted a written related person transactions policy providing that transactions with our directors, officers and holders of five percent or more of our voting securities and their affiliates, each a related person, must be approved by our audit committee. This policy became effective on June 20, 2019, the date our registration statement for our IPO became effective. Pursuant to this policy, the audit committee has the primary responsibility for reviewing and approving or disapproving “related person transactions,” which are transactions between us and related persons in which the aggregate amount involved exceeds or may be expected to exceed $120,000 and in which a related person has or will have a direct or indirect material interest. For purposes of this policy, a related person is defined as a director, executive officer, nominee for director, or greater than 5% beneficial owner of our common stock, in each case since the beginning of the most recently completed year, and their immediate family members.
As appropriate for the circumstances, the audit committee will review and consider:
45
PRINCIPAL STOCKHOLDERS
The following table sets forth information, to the extent known by us or ascertainable from public filings, with respect to the beneficial ownership of our common stock as of April 6, 2023 by:
The column entitled “Shares Beneficially Owned” is based on a total of 47,275,628 shares of our common stock outstanding as of April 6, 2023.
Beneficial ownership is determined in accordance with the rules and regulations of the SEC and includes voting or investment power with respect to our common stock. Shares of our common stock subject to options that are currently exercisable or exercisable within 60 days of April 6, 2023 are considered outstanding and beneficially owned by the person holding the options for the purpose of calculating the percentage ownership of that person but not for the purpose of calculating the percentage ownership of any other person. Except as otherwise noted, the persons and entities in this table have sole voting and investing power with respect to all of the shares of our common stock beneficially owned by them, subject to community property laws, where applicable.
|
|
Shares Beneficially Owned |
|
|||||
Name and address of beneficial owner (1) |
|
Number |
|
|
Percentage |
|
||
Greater-than-5% Stockholders: |
|
|
|
|
|
|
||
Entities affiliated with Avidity Partners Management (2) |
|
|
3,825,000 |
|
|
|
8.09 |
% |
Entities affiliated with Janus Henderson (3) |
|
|
3,340,174 |
|
|
|
7.07 |
% |
Entities affiliated with Skorpios Trust (4) |
|
|
3,271,829 |
|
|
|
6.92 |
% |
Alkeon Capital Management, LLC (5) |
|
|
3,243,915 |
|
|
|
6.86 |
% |
BlackRock, Inc. (6) |
|
|
2,758,529 |
|
|
|
5.83 |
% |
Redmile Group, LLC (7) |
|
|
2,632,912 |
|
|
|
5.57 |
% |
Pfizer, Inc. (8) |
|
|
2,525,252 |
|
|
|
5.34 |
% |
Entities affiliated with State Street (9) |
|
|
2,500,969 |
|
|
|
5.29 |
% |
Entities affiliated with T. Rowe Price (10) |
|
|
2,401,037 |
|
|
|
5.08 |
% |
Entities affiliated with Baker Brothers (11) |
|
|
2,368,378 |
|
|
|
5.01 |
% |
Named Executive Officers and Directors: |
|
|
|
|
|
|
||
Andrew Cheng, M.D., Ph.D. (12) |
|
|
1,568,593 |
|
|
|
3.23 |
% |
William White (13) |
|
|
495,015 |
|
|
|
1.04 |
% |
Jonathan Young, J.D., Ph.D. (14) |
|
|
606,279 |
|
|
|
1.27 |
% |
Timothy Rolph, DPhil (15) |
|
|
570,436 |
|
|
|
1.20 |
% |
Catriona Yale (16) |
|
|
422,254 |
|
|
* |
|
|
Judy Chou, Ph.D. (17) |
|
|
30,888 |
|
|
* |
|
|
Seth Harrison, M.D. (18) |
|
|
351,364 |
|
|
* |
|
|
Jane Henderson (19) |
|
|
95,797 |
|
|
* |
|
|
Tomas Heyman (20) |
|
|
53,277 |
|
|
* |
|
|
Mark Iwicki (21) |
|
|
199,307 |
|
|
* |
|
|
Graham Walmsley, M.D., Ph.D. (22) |
|
|
467,000 |
|
|
* |
|
|
Yuan Xu, Ph.D. (23) |
|
|
46,055 |
|
|
* |
|
|
All executive officers and directors as a group (12 persons) (24) |
|
|
4,914,598 |
|
|
|
9.69 |
% |
* Represents beneficial ownership of less than one percent.
46
47
48
REPORT OF THE AUDIT COMMITTEE
The audit committee is appointed by the board of directors to assist the board of directors in fulfilling its oversight responsibilities with respect to (1) the integrity of Akero’s financial statements and financial reporting process and systems of internal controls regarding finance, accounting, and compliance with legal and regulatory requirements, (2) the qualifications, independence, and performance of Akero’s independent registered public accounting firm, (3) the performance of Akero’s internal audit function, if any, and (4) other matters as set forth in the charter of the audit committee approved by the board of directors.
Management is responsible for the preparation of Akero’s financial statements and the financial reporting process, including its system of internal control over financial reporting and its disclosure controls and procedures. The independent registered public accounting firm is responsible for performing an audit of Akero’s financial statements in accordance with the standards of the Public Company Accounting Oversight Board (PCAOB) and issuing a report thereon. The audit committee’s responsibility is to monitor and oversee these processes.
In connection with these responsibilities, the audit committee reviewed and discussed with management and the independent registered public accounting firm the audited consolidated financial statements of Akero for the fiscal year ended December 31, 2022. The audit committee also discussed with the independent registered public accounting firm the matters required to be discussed by the applicable requirements of the PCAOB and the SEC. In addition, the audit committee received written disclosures and the letter from the independent registered public accounting firm as required by the applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communication with the audit committee concerning independence and has discussed with the independent registered public accounting firm their independence.
Based on the reviews and discussions referred to above, the audit committee recommended to the board of directors that the audited consolidated financial statements of Akero be included in Akero’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, that was filed with the SEC. The information contained in this report shall not be deemed to be (1) “soliciting material,” (2) “filed” with the SEC, (3) subject to Regulations 14A or 14C of the Exchange Act, or (4) subject to the liabilities of Section 18 of the Exchange Act. This report shall not be deemed incorporated by reference into any of our other filings under the Exchange Act or the Securities Act, except to the extent that we specifically incorporate it by reference into such filing.
By the Audit Committee of the Board of Directors of Akero Therapeutics, Inc.
Jane Henderson, Chairperson
Judy Chou
Tomas Heyman
Graham Walmsley
April 28, 2023
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HOUSEHOLDING
Some banks, brokers and other nominee record holders may be participating in the practice of “householding” proxy statements and annual reports. This means that only one copy of our documents, including the annual report to stockholders and proxy statement, may have been sent to multiple stockholders in your household. We will promptly deliver a separate copy of either document to you upon written or oral request to Akero Therapeutics, Inc., 601 Gateway Boulevard, Suite 350, South San Francisco, California 94080, Attention: Corporate Secretary, telephone: (650) 487-6488. If you want to receive separate copies of the proxy statement or annual report to stockholders 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, broker or other nominee record holder, or you may contact us at the above address and phone number.
STOCKHOLDER PROPOSALS
A stockholder who would like to have a proposal considered for inclusion in our 2024 proxy statement must submit the proposal in accordance with the procedures outlined in Rule14a-8 of the Exchange Act so that it is received by us no later than December 30, 2023. However, if the date of the 2023 Annual Meeting of Stockholders is changed by more than 30 days from the date of the previous year’s meeting, then the deadline is a reasonable time before we begin to print and send our proxy statement for the 2024 Annual Meeting of Stockholders. SEC rules set standards for eligibility and specify the types of stockholder proposals that may be excluded from a proxy statement. Stockholder proposals should be addressed to Akero Therapeutics, Inc., 601 Gateway Boulevard, Suite 350, South San Francisco, California 94080, Attention: Corporate Secretary. We also encourage you to submit any such proposals via email to ir@akerotx.com.
If a stockholder wishes to propose a nomination of persons for election to our board of directors or present a proposal at an annual meeting but does not wish to have the proposal considered for inclusion in our proxy statement and proxy card, our bylaws establish an advance notice procedure for such nominations and proposals. Stockholders at an annual meeting may only consider proposals or nominations specified in the notice of meeting or brought before the meeting by or at the direction of the board of directors or by a stockholder of record on the record date for the meeting, who is entitled to vote at the meeting and who has delivered timely notice in proper form to our corporate secretary of the stockholder’s intention to bring such business before the meeting.
The required notice must be in writing and received by our corporate secretary at our principal executive offices not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting. However, in the event that the date of the annual meeting is advanced by more than 30 days, or delayed by more than 60 days, from the first anniversary of the preceding year’s annual meeting, a stockholder’s notice must be so received no earlier than the 120th day prior to such annual meeting and not later than the close of business on the later of (A) the 90th day prior to such annual meeting and (B) the tenth day following the day on which notice of the date of such annual meeting was mailed or public disclosure of the date of such annual meeting was made, whichever first occurs. For stockholder proposals to be brought before the 2024 Annual Meeting of Stockholders, the required notice must be received by our corporate secretary at our principal executive offices no earlier than February 24, 2024 and no later than March 25, 2024. In addition, to comply with the universal proxy rules, stockholders who intend to solicit proxies for the Company’s 2024 annual meeting of stockholders in support of director nominees other than the Company’s nominees must provide notice by the same deadline noted herein to submit a notice of nomination at an annual meeting of stockholders. Such notice must comply with the additional requirements of Rule 14a-19(b). Stockholder proposals and the required notice should be addressed to Akero Therapeutics, Inc., 601 Gateway Boulevard, Suite 350, South San Francisco, California 94080, Attention: Corporate Secretary.
Any stockholder recommendation for a director nominee must be submitted to the Company not less than 120 calendar days prior to the date on which the Company’s proxy statement was released to stockholders in connection with the previous year’s annual meeting.
OTHER MATTERS
Our board of directors does not know of any other matters to be brought before the Annual Meeting. If any other matters not mentioned in this proxy statement are properly brought before the meeting, the individuals named in the enclosed proxy intend to use their discretionary voting authority under the proxy to vote the proxy in accordance with their best judgment on those matters.
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You may attend and vote via the Internet during the Annual Meeting. Have the information that is printed in the box marked with the arrow on your proxy card available and follow the instructions. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE STOCKHOLDER OF RECORD. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" PROPOSALS 1, 2 AND 3. w SCAN TO VIEW MATERIALS & VOTE VOTE BY INTERNET Before The Meeting - Go to www.proxyvote.com or scan the QR Barcode above Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time on June 22, 2023. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. During The Meeting - Go to www.virtualshareholdermeeting.com/AKRO2023 You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time on June 22, 2023. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. Proxy cards submitted by mail must be received no later than June 22, 2023 to be voted at the annual meeting. AKERO THERAPEUTICS, INC. 601 GATEWAY BOULEVARD, SUITE 350 SOUTH SAN FRANCISCO, CA 94080 V14775-P92329 For All Withhold All For All Except AKERO THERAPEUTICS, INC. To withhold authority to vote for any individual nominee(s), mark "For All Except" and write the number(s) of the nominee(s) on the line below. The Board of Directors recommends you vote FOR the following nominees: ! ! ! 1. Election of Class I Directors to serve until the 2026 annual meeting of stockholders and until his or her successor has been duly elected and qualified Company Nominees: 01) Andrew Cheng M.D., Ph.D. 02) Jane Henderson 03) Mark T. Iwicki The Board of Directors recommends you vote FOR the following proposals: For Against Abstain ! ! ! 2. To ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023. ! ! ! 3. To consider and act upon a non-binding, advisory vote to approve the compensation of our named executive officers. Note: The Board of Directors will consider and act upon any other business properly brought before the Annual Meeting or any adjournment or postponement of the Annual Meeting. Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com. V14776-P92329 AKERO THERAPEUTICS, INC. Annual Meeting of Stockholders June 23, 2023 9:00 AM ET This proxy is solicited by the Board of Directors The stockholder(s) hereby appoint(s) Andrew Cheng, William White and Jonathan Young, or any of them, as proxies, each with the power to appoint his substitute, and hereby authorize(s) them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of Common Stock of AKERO THERAPEUTICS, INC. that the stockholder(s) is/are entitled to vote at the Annual Meeting of Stockholders to be held at 9:00 AM, ET on June 23, 2023, via a live webcast at www.virtualshareholdermeeting.com/AKRO2023, and any adjournment or postponement thereof. This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors' recommendations. Continued and to be signed on reverse side