UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by
the Registrant x
Filed by
a Party other than the Registrant ¨
Check the appropriate box:
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Preliminary
Proxy Statement |
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Confidential, for
Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional
Materials |
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Soliciting Material
Pursuant to Section 240.14a-12 |
THERIVA BIOLOGICS, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement,
if Other Than the Registrant)
Payment of Filing Fee (check the appropriate box):
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No fee required. |
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Fee paid previously with preliminary materials. |
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Fee computed on table in exhibit required by Item 25(b) per
Exchange Act Rules 14a6(i)(1) and 0-11. |
9605 Medical Center Drive, Suite 270
Rockville, Maryland 20850
(301) 417-4364
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of Theriva Biologics, Inc.:
We hereby notify you that the 2024 Annual Meeting
of Stockholders (the “2024 Annual Meeting of Stockholders”) of Theriva Biologics, Inc., a Nevada corporation (the “Company”),
will be held on October 31, 2024 at 9:30 a.m. (Eastern Time), at the offices of the Company, located at 9605 Medical Center
Drive, Suite 270, Rockville, Maryland 20850, for the following purposes:
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(1) |
to elect the
four (4) nominees for director named in the accompanying proxy statement to the Company’s Board of Directors until such
director’s successor is duly elected and qualified; |
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(2) |
to ratify the appointment
of BDO USA, P.C. as the Company’s independent registered public accounting firm for the year ending December 31, 2024;
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(3) |
to approve amendments to
the Company’s 2020 Stock Incentive Plan to increase the number of shares of common stock that the Company will have authority
to grant under the plan from 280,000 shares to 2,500,000 shares and to amend the annual non-employee director grant limit to 250,000
shares of common stock (the “Stock Incentive Plan Amendment Proposal”); |
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to approve an amendment to the Company’s
Articles of Incorporation, as amended, to, at the discretion of the Board of Directors of the Company, effect an increase the number
of authorized shares of common stock from 14,000,000 shares to 350,000,000 shares (the “Authorized Common Stock Increase Proposal”),
such amendment to be effected after stockholder approval thereof only in the event the Board of Directors still deems it advisable; |
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(5) |
to approve an adjournment of the 2024 Annual Meeting of Stockholders to a later date or dates, if
necessary or appropriate, to permit further solicitation and vote of proxies in the event there are not sufficient votes in favor
of the Stock Incentive Plan Amendment Proposal and/or the Authorized Common Stock Increase Proposal; and |
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(6) |
to transact such other
business as may properly come before the 2024 Annual Meeting of Stockholders or any adjournments or postponements of the 2024 Annual
Meeting of Stockholders. |
The matters listed in this notice of meeting
are described in detail in the accompanying Proxy Statement. Our Board of Directors has fixed the close of business on September 27,
2024 as the record date for determining those stockholders who are entitled to notice of and to vote at the meeting or any adjournment
or postponement of our 2024 Annual Meeting of Stockholders. The list of the stockholders of record as of the close of business on September 27,
2024 will be made available for inspection at the meeting and during the ten days preceding the meeting at the Company’s offices
located at 9605 Medical Center Drive, Suite 270, Rockville, Maryland 20850.
IMPORTANT NOTICE REGARDING THE AVAILABILITY
OF PROXY MATERIALS FOR THE 2024 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON October 31,
2024:
THE NOTICE OF ANNUAL MEETING OF STOCKHOLDERS,
THE PROXY STATEMENT AND OUR ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2023 ARE AVAILABLE ELECTRONICALLY AT WWW.THERIVABIO.COM.
Along with the attached Proxy Statement, we are
sending to you our Annual Report on Form 10-K for the year ended December 31, 2023. Such annual report, which includes our
audited financial statements, is not to be regarded as proxy solicitation material.
YOUR VOTE IS IMPORTANT
Even if you plan to attend the meeting, please
submit a proxy to have your shares voted as promptly as possible by using the internet or kindly sign, date, and return the enclosed
proxy card in the envelope provided so that your vote will be counted if you later decide not to attend the meeting. No postage is required
if the proxy card is mailed in the United States.
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By Order of the Board of Directors, |
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/s/
Steven A. Shallcross |
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Chief Executive Officer, |
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Chief Financial Officer and Director |
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Rockville, Maryland |
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September 30, 2024 |
9605 Medical Center Drive, Suite 270
Rockville, Maryland 20850
PROXY STATEMENT
For the 2024 Annual Meeting of Stockholders
to be held on October 31, 2024
GENERAL INFORMATION
This Proxy Statement is being furnished to holders
of shares of common stock, $0.001 par value per share (the “Common Stock”) of Theriva Biologics, Inc., a Nevada corporation
(“we,” us,” “Theriva” or the “Company”), in connection with the solicitation of proxies on
behalf of our Board of Directors (the “Board of Directors”) for use at our 2024 Annual Meeting of Stockholders to be held
on October 31, 2024 at 9:30 a.m. (Eastern Time), at the offices of the Company, 9605 Medical Center Drive, Suite 270,
Rockville, Maryland 20850, and at any adjournment or postponement of our 2024 Annual Meeting of Stockholders (the “2024 Annual
Meeting of Stockholders”). The purpose of the 2024 Annual Meeting of Stockholders and the matters to be acted on are stated in
the accompanying Notice of 2024 Annual Meeting of Stockholders. The Board of Directors knows of no other business that will come before
the 2024 Annual Meeting of Stockholders.
The Notice of our 2024 Annual Meeting of Stockholders,
this Proxy Statement, and a proxy card, together with our Annual Report on Form 10-K for the year ended December 31, 2023,
are being mailed to our stockholders on or about September 30, 2024. Such annual report, which includes our audited financial
statements, is not to be regarded as proxy solicitation material. We will bear the cost of our solicitation of proxies. The original
solicitation of proxies by mail may be supplemented by personal interview, telephone, or facsimile by our directors, officers, or employees,
who will receive no additional compensation for such services. Arrangements will be made with brokerage houses and other custodians,
nominees, and fiduciaries for the forwarding of solicitation material to the beneficial owners of stock held by any such persons, and
we will reimburse those custodians, nominees, and fiduciaries for the reasonable out-of-pocket expenses incurred by them in doing so.
The
Board of Directors is soliciting votes (1) FOR each of the four (4) nominees for director named herein for election
to the Company’s Board of Directors (“Proposal 1”); (2) FOR the ratification of the appointment of BDO
USA, P.C. as the Company’s independent registered public accounting firm for the year ending December 31, 2024 (“Proposal
2”); (3) FOR the approval of amendments to the Company’s 2020 Stock Incentive Plan (the “Stock Incentive
Plan Amendment”) to increase the number of shares of Common Stock that the Company will have authority to grant under the
plan from 280,000 shares to 2,500,000 shares and to amend the annual non-employee director grant limit to 250,000 shares of common stock
(the “Stock Incentive Plan Amendment Proposal” or “Proposal 3”); (4) FOR the approval of an
amendment to the Articles of Incorporation, as amended (the “Articles of Incorporation”), to at the discretion of the Board
of Directors of the Company, effect an increase in the number of authorized shares of Common Stock from 14,000,000 shares to 350,000,000
shares (the “Authorized Common Stock Increase Proposal” or “Proposal 4”), such amendment to be effected after
stockholder approval thereof only in the event the Board of Directors still deems it advisable; and (5) FOR approval of an
adjournment of the 2024 Annual Meeting of Stockholders to a later date or dates, if necessary or appropriate, to permit further solicitation
and vote of proxies in the event there are not sufficient votes in favor of the Stock Incentive Plan Amendment Proposal and/or the
Authorized Common Stock Increase Proposal (the “Adjournment Proposal” or “Proposal 5”).
The Company effected a 1-for-25 reverse stock
split on August 26, 2024. All Common Stock and related equity information presented in this proxy statement have been retroactively
adjusted to reflect the reverse stock split effected August 26, 2024.
2024 ANNUAL MEETING ADMISSION
All stockholders who own shares of Common Stock
as of the record date are welcome to attend the 2024 Annual Meeting of Stockholders. If you attend, please note that you will be asked
to present government-issued identification (such as a driver’s license or passport) and evidence of your share ownership of our
Common Stock on the record date. This can be your proxy card if you are a stockholder of record. If your shares are held beneficially
in the name of a bank, broker or other holder of record and you plan to attend the 2024 Annual Meeting of Stockholders, you will be required
to present proof of your ownership of our Common Stock on the record date, such as a bank or brokerage account statement or voting instruction
card, to be admitted to the 2024 Annual Meeting of Stockholders.
No cameras, recording equipment or electronic devices will be permitted
in the 2024 Annual Meeting of Stockholders.
INFORMATION ABOUT VOTING
Q: Why am I receiving these materials?
A: Our Board of Directors is providing these
proxy materials to you in connection with our 2024 Annual Meeting of Stockholders, which is scheduled to take place on October 31,
2024.
Q: What information is contained in these
materials?
A: The information included in this Proxy Statement
relates to the proposals to be voted on at the 2024 Annual Meeting of Stockholders, the voting process, the compensation of our directors
and executive officers, and other required information.
Q: What items of business will be voted
on at the 2024 Annual Meeting of Stockholders?
A:
The five (5) items of business scheduled to be voted on at the 2024 Annual Meeting of Stockholders are: (1) the election of
the four (4) nominees for director named herein to the Company’s Board of Directors until such director’s successor
is duly elected and qualified; (2) the ratification of the appointment of BDO USA, P.C. as the Company’s independent registered
public accounting firm for the year ending December 31, 2024; (3) the approval of amendments to the Company’s
2020 Stock Incentive Plan (the “Stock Incentive Plan Amendment”) to increase the number of shares of Common Stock that
the Company will have authority to grant under the plan from 280,000 shares to 2,500,000 shares and to amend the annual non-employee
director grant limit to 250,000 shares of Common Stock; (4) the approval of an amendment to the Company’s Articles of Incorporation
to, at the discretion of the Board of Directors of the Company, effect an increase in the number of authorized shares of Common Stock
from 14,000,000 shares to 350,000,000 shares, such amendment to be effected after stockholder approval thereof only in the event the
Board of Directors still deems it advisable; and (5) the approval of the adjournment the 2024 Annual Meeting of Stockholders to
a later date or dates, if necessary or appropriate, to permit further solicitation and vote of proxies in the event that there are insufficient
votes for, or otherwise in connection with, the approval of Proposal 3 and/or Proposal 4.
Q: How does the Board of Directors recommend
that I vote?
A:
The Board of Directors recommends that you vote your shares: (1) FOR each of the four (4) nominees named herein for
election to the Company’s Board of Directors; (2) FOR the ratification of the appointment of BDO USA, P.C. as our independent
registered public accounting firm for the year ending December 31, 2024; (3) FOR the approval of amendments to
the Company’s 2020 Stock Incentive Plan (to increase the number of shares of Common Stock that the Company will have authority
to grant under the plan from 280,000 shares to 2,500,000 shares and to amend the annual non-employee director grant limit to 250,000
shares of common stock ; (4) FOR the approval of an amendment to the Company’s Articles of Incorporation, to, at the
discretion of the Board of Directors of the Company, effect an increase in the number of authorized shares of Common Stock from 14,000,000
shares to 350,000,000 shares, such amendment to be effected after stockholder approval thereof only in the event the Board of Directors
still deems it advisable; and (5) FOR approval of the adjournment the 2024 Annual Meeting of Stockholders to a later date
or dates, if necessary or appropriate, to permit further solicitation and vote of proxies in the event that there are insufficient votes
for, or otherwise in connection with, the approval of Proposal 3 and/or Proposal 4.
Q: Who is entitled to vote?
A: Only stockholders who own our Common Stock
as of the close of business on September 27, 2024 (the “Record Date”) will be entitled to vote at the 2024 Annual Meeting
of Stockholders.
Q: How many shares are outstanding and how
many votes is each share entitled?
A: On the Record Date, (i) 2,272,462 shares
of Common Stock were issued and outstanding. All share numbers of Common Stock have been adjusted to reflect the 1-for-25 reverse stock
split effected August 26, 2024.
Only holders of record of our Common Stock as of the close of business
on the Record Date will be entitled to notice of and to vote at the 2024 Annual Meeting of Stockholders and at any adjournments or postponements
thereof, with each share being entitled to one vote on each matter.
Q: What is the difference between holding shares as a stockholder
of record and as a beneficial owner?
A: Most of our stockholders hold their shares
through a broker or other nominee rather than directly in their own name. As summarized below, there are some distinctions between shares
held of record and those owned beneficially. If your shares are registered directly in your name with our transfer agent, Equiniti Group
plc (formerly Corporate Stock Transfer, Inc.), you are considered, with respect to those shares, the stockholder of record and these
proxy materials are being sent directly to you by us. As the stockholder of record, you have the right to grant your voting proxy directly
to Mr. Steven Shallcross, our Chief Executive Officer, Chief Financial Officer and a Director, or to vote in person at the meeting.
The Board of Directors has enclosed a proxy card for stockholders of record to use to grant a voting proxy.
If your shares are held in a brokerage account
or by another nominee, you are considered the beneficial owner of shares held in “street name,” and these proxy materials
are being forwarded to you by your broker or nominee together with a voting instruction card. As the beneficial owner, you have the right
to direct your broker or nominee how to vote. Since you are not the stockholder of record, however, you may not vote these shares in
person at the meeting unless you obtain from the broker or nominee that holds your shares a valid proxy giving you the right to vote
the shares. Your broker or nominee should have enclosed or provided voting instructions for you to use in directing the broker or nominee
how to vote your shares. If you hold your shares through a broker and you do not give instructions to the record holder on how to vote,
the record holder will be entitled to vote your shares in its discretion on certain matters considered routine, such as Proposals 2,
4 and 5. Proposals 1 and 3 are not considered a routine matter. If you hold your shares in street name and you do not instruct your broker
how to vote for Proposals 1 or 3, no votes will be cast on your behalf for these non-routine matters for which you have not provided
voting instructions. These “broker non-votes” will be treated as shares that are present and entitled to vote for purposes
of determining the presence of a quorum, but not as shares entitled to vote on these non-routine proposals.
Q: May I attend the 2024 Annual Meeting of Stockholders?
A: You are entitled to attend the 2024 Annual
Meeting of Stockholders only if you own Common Stock as of the close of business on the Record Date, September 27, 2024, or you
hold a valid proxy for the 2024 Annual Meeting of Stockholders. You should be prepared to present photo identification for admittance.
If you are not a record holder but hold shares beneficially through a broker or nominee (that is, in “street name”), you
should provide proof of beneficial ownership on the Record Date, such as your most recent account statement, a copy of the voting instruction
card provided by your broker or nominee, or other similar evidence of ownership. If you do not provide photo identification or comply
with the other procedures outlined above upon request, you may not be admitted to the 2024 Annual Meeting of Stockholders. The 2024 Annual
Meeting of Stockholders will begin promptly at 9:30 a.m. (Eastern Time). Check-in will begin at 9:00 a.m., and you should allow
ample time for the check-in procedures.
Q: How do I vote my shares?
If you are a registered holder, you may
vote:
| · | By internet. Via the Internet at www.proxyvote.com; |
| · | By telephone. If you are located within the United States and Canada, call 1-800-690-6903 (toll-free)
from a touch-tone telephone; |
| · | By mail. By returning a properly executed proxy card in the postage-paid envelope provided or return it
to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717; or |
| · | In person. You may vote in person at the Special Meeting. |
To vote online or via telephone, you will need
your unique control number. You can find the control number on your proxy card. Be sure to have your proxy card in hand and follow the
instructions. Internet and telephone voting facilities will close at 11:59 p.m. Eastern Time on October 30, 2024, for the voting of shares
held by stockholders of record as of the Record Date. Proxy cards with respect to shares held of record must be received no later than
October 30, 2024.
If you hold your shares in street name,
you may vote:
| · | By internet*. Via the Internet at www.proxyvote.com. To vote online, you will need your unique control
number; |
| · | By telephone*. If you are located within the United States and Canada, call 1-800-454-8683 (toll-free)
from a touch-tone telephone; |
| · | By mail. By returning a properly executed voting instruction form by mail, depending upon the method(s)
your broker, bank or other nominee makes available; or |
| · | In person. To do so, you must request a legal proxy from your broker, bank, or other nominee and present
it at the Special Meeting. |
*Not all street name holders may be able to
vote at the web address and phone number provided above.
If your shares are held in street name, please
check the voting instruction form provided to you by your broker, bank, or other nominee for internet or telephone voting availability.
If internet and/or telephone voting is available to a street name holder, such facilities will close at 11:59 p.m. Eastern Time on October
30, 2024. To vote online or via telephone, you will need your unique control number. You can find the control number on your voting instruction
form. Be sure to have your voting instruction form in hand and follow the instructions. Please follow the voting instructions in the voting
instruction card provided by your broker, bank or other nominee to ensure that your vote is counted.
We provide internet proxy voting to allow record holders to vote your shares online, with procedures designed to ensure authenticity and correctness of your proxy vote instructions. Please be aware, however, that you must bear any costs associated with your internet access, such as usage charges from internet access providers and telephone companies.
Q: Can I change or revoke my vote?
A: You may change or revoke your vote at any
time prior to the final vote at the 2024 Annual Meeting of Stockholders. For shares held directly in your name, you may accomplish this
by: (1) sending a written notice of revocation to our Corporate Secretary at Theriva Biologics, Inc., 9605 Medical Center Drive,
Suite 270, Rockville, Maryland 20850; (2) submitting a new proxy bearing a later date (which automatically revokes the earlier
proxy) subject to the voting deadlines that are described on the proxy card; (3) granting a subsequent proxy through the internet;
subject to the voting deadlines that are described on the proxy card; or (4) by attending the 2024 Annual Meeting of Stockholders
and voting in person. Attendance at the meeting will not cause your previously granted proxy to be revoked unless you specifically so
request. Even if you plan to attend the 2024 Annual Meeting of Stockholders, we recommend that you also submit your or vote through
the internet so that your vote will be counted if you later decide not to attend the 2024 Annual Meeting of Stockholders.
If your shares are held by your broker or bank as nominee or agent,
you should follow the instructions provided by your broker or bank.
Q: Who can help answer my questions?
A: If you have any questions about the 2024 Annual
Meeting of Stockholders or how to vote or revoke your proxy, or you need additional copies of this Proxy Statement or voting materials,
you should contact our Corporate Secretary at Theriva Biologics, Inc., 9605 Medical Center Drive, Suite 270, Rockville, Maryland
20850 or by phone at (301) 417-4364.
Q: What is the voting requirement to approve each of the proposals?
A:
| Proposal |
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Vote
Required |
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Voting
Options |
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Impact of
“Abstain”
Vote |
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Impact
of
Broker Non-
Votes |
Proposal 1:
Election of Directors |
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Plurality – the four (4) director
nominees who receive the most “FOR” votes will be elected to serve on the Board |
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“FOR” “WITHELD”
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No effect |
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No effect |
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Proposal 2:
Ratification of Appointment of Independent Registered Public Accounting
Firm |
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The affirmative vote of a majority of the shares present
in person or by proxy and entitled to vote on the matter is required. |
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“FOR” “AGAINST” “ABSTAIN” |
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Counts as a vote “AGAINST”
this proposal. |
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Not applicable |
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Proposal 3:
Stock Incentive Plan Amendment Proposal |
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The affirmative vote of a majority of the shares present
in person or by proxy and entitled to vote on the matter is required. |
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“FOR” “AGAINST” “ABSTAIN” |
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Counts as a vote “AGAINST”
this proposal. |
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No effect |
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Proposal 4:
Authorized Common Stock Increase Proposal |
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The affirmative vote of a majority of the Company’s
outstanding shares of Common Stock is required. |
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“FOR” “AGAINST” “ABSTAIN” |
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Counts as a vote “AGAINST”
this proposal. |
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Not applicable |
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Proposal 5:
Adjournment Proposal |
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The affirmative vote of a majority of the shares present
in person or by proxy and entitled to vote on the matter is required. |
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“FOR” “AGAINST” “ABSTAIN” |
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Counts as a vote “AGAINST”
this proposal. |
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Not applicable |
Your shares will be voted in accordance with
your instructions. If you are a stockholder of record and sign, date and return a proxy card but do not indicate how you wish to vote
your shares, the appointed proxies named on the proxy card will vote your shares “for” each of the nominees with respect
to Proposal 1, “for” Proposals 2, 3, 4 and 5, and in the discretion of the appointed proxy named on the proxy
card with respect to any other business properly brought before the 2024 Annual Meeting of Stockholders..
Q: What is a quorum and why is it necessary?
A: Conducting business at the 2024 Annual Meeting
of Stockholders requires a quorum. The presence, either in person or by proxy, of the holders of shares of stock having one-third of
the voting power of the shares of stock entitled to vote on September 27, 2024 are necessary to constitute a quorum to conduct business
at the 2024 Annual Meeting of Stockholders. Your shares will be counted towards the quorum only if you submit a valid proxy (or, in the
case of a beneficial owner, one is submitted on your behalf by your broker, bank or other nominee) or if you vote in person at the 2024
Annual Meeting of Stockholders. Abstentions and broker non-votes (which result when your shares are held in “street name,”
your broker does not have discretion to vote such shares and you do not tell the nominee how to vote your shares, as described in detail
below) are treated as present for purposes of determining whether a quorum exists. Broker non-votes are relevant in determining whether
a quorum is present at the meeting. If there is no quorum, the holders of a majority of shares present at the meeting in person or represented
by proxy may adjourn the meeting to another date.
Q: What are broker non-votes?
A: Under the rules of the New York Stock
Exchange, member brokers who hold shares in street name for their customers that are the beneficial owners of those shares have the authority
to only vote on certain “routine” items in the event that they have not received instructions from beneficial owners. Under
New York Stock Exchange rules, when a proposal is not a “routine” matter and a member broker, bank or nominee has not received
voting instructions from the beneficial owner of the shares with respect to that proposal, the brokerage firm, bank or nominee may not
vote the shares on that proposal since it does not have discretionary authority to vote those shares on that matter. A “broker
non-vote” is submitted when a broker, bank or nominee returns a proxy card and indicates that, with respect to particular matters,
it is not voting a specified number of shares on that matter, as it has not received voting instructions with respect to those shares
from the beneficial owner and does not have discretionary authority to vote those shares on such matters. If you hold your shares in
street name and you do not instruct your broker how to vote on these matters not considered routine, no votes will be cast on your behalf
with respect to these non-routine matters. “Broker non-votes” are not entitled to vote at the 2024 Annual Meeting of Stockholders
with respect to the matters to which they apply; however, “broker non-votes” will be included for purposes of determining
whether a quorum is present at the 2024 Annual Meeting of Stockholders.
Proposals 1 and 3 are each considered a “non-routine”
matter. As a result, brokers, banks or nominees that do not receive instructions with respect to Proposal 1 or 3 from their customers
will not be entitled to vote on such proposal for which instructions were not received.
Proposals 2, 4 and 5 are considered “routine” matters.
As a result, brokers that do not receive instructions with respect to Proposals 2, 4 and 5 from their customers will be entitled to vote
on such proposals in their discretion.
Q: What should I do if I receive more than
one set of voting materials?
A: You may receive more than one set of voting
materials, including multiple copies of this Proxy Statement and multiple proxy cards or voting instruction cards. For example, if you
hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in
which you hold shares. If you are a stockholder of record and your shares are registered in more than one name, you will receive more
than one proxy card. Please complete, sign, date, and return each proxy card and voting instruction card that you receive.
Q: Where can I find the voting results
of the 2024 Annual Meeting of Stockholders?
A: We intend to announce the voting results at
the 2024 Annual Meeting of Stockholders and publish final results in a Current Report on Form 8-K that will be filed with the U.S.
Securities and Exchange Commission (the “SEC”) within four (4) business days after the meeting. If final voting results
are not available to us in time to file a Current Report on Form 8-K within four (4) business days after the meeting, we intend
to file a Current Report on Form 8-K to publish preliminary results and, within four (4) business days after the final results
are known to us, file an additional Current Report on Form 8-K to publish the final results.
Q: What happens if additional matters are
presented at the 2024 Annual Meeting of Stockholders?
A: Other than the five (5) items of business
described in this Proxy Statement, we are not aware of any other business to be acted upon at the 2024 Annual Meeting of Stockholders.
If you grant a proxy, the person named as proxy holder, Mr. Steven Shallcross, our Chief Executive Officer, Chief Financial Officer
and Director, will have the discretion to vote your shares on any additional matters properly presented for a vote at the meeting. If
for any unforeseen reason any of our nominees are not available as a candidate for director, the person named as proxy holder will vote
your proxy for any one or more other candidates nominated by the Board of Directors.
Q: Who will count the votes?
A: One or more inspectors of election will tabulate the votes.
Q: Is my vote confidential?
A: Proxy instructions, ballots, and voting tabulations
that identify individual stockholders are handled in a manner that protects your voting privacy. Your vote will not be disclosed, either
within our business or to anyone else, except: (1) as necessary to meet applicable legal requirements; (2) to allow for the
tabulation of votes and certification of the vote; or (3) to facilitate a successful proxy solicitation.
Q: Who will bear the cost of soliciting votes for the 2024 Annual
Meeting of Stockholders?
A: The Board of Directors is making this solicitation
on our behalf, and we will pay the entire cost of preparing, assembling, printing, mailing, and distributing these proxy materials. Certain
of our directors, officers, and employees, without any additional compensation, may also solicit your vote in person, by telephone, or
by electronic communication. In addition, we have retained D.F. King & Co., Inc. to aid in the solicitation of proxies for
the Annual Meeting. We will pay D. F. King & Co., Inc. fees of not more than $7,500 plus expense reimbursement for its services.
Please contact (800) 859-8509 with any questions you may have regarding our proposals. On request, we will reimburse brokerage houses
and other custodians, nominees, and fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy and solicitation materials
to stockholders. In addition to the use of the mail, proxies may be solicited by personal interview, telephone, telegram, facsimile and
advertisement in periodicals and postings, in each case by our directors, officers and employees without additional compensation.
Q: When are stockholder proposals and director nominations due
for next year’s (2025) Annual Meeting of Stockholders?
A: To be considered for inclusion in next year’s
proxy materials (the “2025 Annual Meeting of Stockholders”), your proposal must be submitted in writing by June 2, 2025,
to the attention of our Corporate Secretary at Theriva Biologics, Inc., 9605 Medical Center Drive, Suite 270, Rockville, Maryland
20850, and you must comply with all applicable requirements of Rule 14a-8 promulgated under the Securities Exchange Act of 1934,
as amended (the “Exchange Act”).
If you wish to nominate a director at the 2025
Annual Meeting of Stockholders, or to bring any other proposal before the 2025 Annual Meeting of Stockholders, that is not to be included
in next year’s proxy materials pursuant to Rule 14a-8, you must do so in accordance with our Second Amended and Restated Bylaws
(the “Second A&R Bylaws”), which requires notice of not less than 120 days prior to the anniversary of the preceding year’s
annual meeting to be timely, which in this case means July 3, 2025, provided, however, that in the event that the date
of the annual meeting is changed by more than 30 days from such anniversary date, notice by the stockholder to be timely must be so received
not later than the close of business on the tenth day following the earlier of the day on which notice of the date of the meeting was
mailed or public disclosure was made. The stockholder’s notice must set forth the information required by our Second A&R Bylaws
with respect to each stockholder making the proposal and each proposal and director nomination that such stockholder intends to present
at the 2025 Annual Meeting of Stockholders. In addition to satisfying the foregoing requirements, to comply with the universal proxy rules,
stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide notice
that sets forth the information required by Rule 14a-19 under the Exchange Act no later than September 1, 2025. If such meeting date
is changed by more than 30 days, then notice must be provided by the later of 60 calendar days prior to the date of the annual meeting
or the 10th calendar day following the day on which public announcement of the date of the annual meeting is first made.
PROPOSAL 1
ELECTION OF DIRECTORS
Our Board of Directors, based on the recommendation
of the Nominations Committee of the Board of Directors, has nominated for annual election as director each of the individuals identified
below, all of whom are incumbent directors.
THE NOMINEES
| Name | |
Age | |
Position | |
Director
Since | |
| Jeffrey
J. Kraws (1)(2)(3) | |
60 | |
Chairman | |
| 2006 | |
| John
Monahan (1)(2)(3) | |
77 | |
Director | |
| 2020 | |
| Steven A. Shallcross | |
63 | |
Chief Executive Officer, Chief Financial Officer and Director | |
| 2018 | |
| Jeffrey
Wolf, J.D. (1)(2)(3) | |
61 | |
Director | |
| 2006 | |
| |
(1) |
Member
of the Audit Committee |
| |
(2) |
Member of the Compensation
Committee |
| |
(3) |
Member of the Nominations
Committee |
OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU
VOTE YOUR SHARES “FOR” THE ELECTION OF EACH OF THESE NOMINEES.
Each director nominee currently serves as a director
of the Company. Proxies solicited by the Board will, unless otherwise directed, be voted to elect the four (4) nominees named above
to constitute the entire Board of Directors. All of the nominees have consented to being named in this Proxy Statement and to serve as
a director if elected. At the time of the 2024 Annual Meeting of Stockholders, if any of the nominees named above is not available to
serve as director (an event that the Board of Directors does not currently have any reason to anticipate), all proxies will be voted
for any one or more other persons that the Board of Directors designates. The Board of Directors believes that it is in the best interests
of the Company to elect the above-described nominees.
DIRECTOR INDEPENDENCE
No director or executive officer of the Company
is related by blood, marriage or adoption to any other director or executive officer. A majority of the members of our Board of Directors
are independent in compliance with the applicable listing standards of the NYSE American, LLC (“NYSE American”). The Board
of Directors has affirmatively determined that the independent directors and nominees are Jeffrey J. Kraws, John Monahan and Jeffrey
Wolf.
INFORMATION ABOUT THE NOMINEES
Below is certain information regarding our directors and executive
officers.
Steven
A. Shallcross. Mr. Shallcross has been a member of our Board of Directors since December 6, 2018 and currently
serves as our Chief Executive Officer, a position he was appointed to on December 6, 2018, and our Chief Financial Officer. Mr. Shallcross
was appointed as our Interim Chief Executive Officer on December 5, 2017 and has served as our Chief Financial Officer since joining
us in June 2015. Mr. Shallcross brings to our company operational, financial and international biotech industry experience,
as well as an established track record at leading the financial development and strategy for several publicly traded biotech companies.
From May 2013 through May 2015, Mr. Shallcross served as Executive Vice President and Chief Financial Officer of Nuo Therapeutics, Inc.
(formerly Cytomedix, Inc.). In January 2016, Nuo Therapeutics, Inc. filed a voluntary petition for relief under Chapter
11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware and on April 25, 2016, the Bankruptcy
Court entered an order granting approval of Nuo’s plan of reorganization. From July 2012 to May 2013, Mr. Shallcross
held the offices of Executive Vice President, Chief Financial Officer and Treasurer of Empire Petroleum Partners, LLC, a motor fuel distribution
company. From July 2011 to March 2012, Mr. Shallcross was Acting Chief Financial Officer of Senseonics, a privately-held
medical device company located in Germantown, MD. From January 2009 to March 2011, he served as Executive Vice President and
Chief Financial Officer of Innocoll AG (formerly privately held Innocoll Holdings, Inc.), a global, commercial-stage biopharmaceutical
company specializing in the development and commercialization of collagen-based products. He also served for four years as the Chief
Financial Officer and Treasurer of Vanda Pharmaceuticals, Inc., leading the company through its successful IPO and follow-on offering
and previously served as the Senior Vice President and Chief Financial Officer of Middlebrook Pharmaceuticals, Inc. (formerly Advancis
Pharmaceutical Corporation). In addition, Mr. Shallcross also served as the Chief Financial Officer of Bering Truck Corporation.
From June 2019 until March 2024, Mr. Shallcross served on the board of directors of Elys Game Technology, Corp. a
Nasdaq listed international, vertically integrated commercial-stage company engaged in various aspects of the leisure gaming industry
and from April 2021 until June 2022, he served on the board of directors of TwinVee Powercats, Co., a designer, manufacturer
and marketer of recreational and commercial power catamaran boats. He holds an MBA from the University of Chicago’s Booth School
of Business, a Bachelor of Science degree in Accounting from the University of Illinois, Chicago, and is a Certified Public Accountant
in the State of Illinois.
Mr. Shallcross brings to the Board of Directors
significant strategic, business and financial experience related to the business and financial issues facing biotechnology companies.
Mr. Shallcross has a broad understanding of the financial markets, financial statements as well as generally accepted accounting
principles. Through his services as our Chief Executive Officer and Chief Financial Officer, he has developed extensive knowledge of
our business.
Jeffrey
J. Kraws. Mr. Kraws has been a member of the Company’s Board of Directors since January of
2006, and was appointed independent, non-executive Chairman of the Board in May 2012. Since 2003, Mr. Kraws has served as
Chief Executive Officer and co-founder of Crystal Research Associates and CRA Advisors, and since February 2012, he has served
as partner and co-founder of TopHat Capital, LLC. Mr. Kraws served as the Chief Executive Officer of Innovation 1 Biotech Inc.,
formerly known as GridIron Bionutrients, Inc., from November 2021 through December 2022. From August 2016 through January 2021, Mr. Kraws served as the
Co-President of Ra Medical Systems Inc., a medical device company. Mr. Kraws is a partner at Grannus Securities Pty Ltd. (an
Australian based private equity fund) since November 2015. Mr. Kraws is a partner of PDK Healthcare Innovations LLC.
Mr. Kraws also serves as Chief Financial Officer of Syncromune, Inc. He also consults and assists in management of private
companies through his private practice. Mr. Kraws has received some of the most prestigious awards in the industry. Among other
awards, he was given a “5-Star Rating” in 2001 by Zacks and was ranked the number one analyst among all pharmaceutical
analysts for stock performance in 2001 by Starmine.com. Prior to founding Crystal Research Associates, Mr. Kraws served as
co-president of The Investor Relations Group (IRG), a firm representing primarily under-followed, small-capitalization companies.
Previously, Mr. Kraws served as a managing director of healthcare research for Ryan Beck & Co. and as director of
research/senior pharmaceutical analyst and managing director at Gruntal & Co., LLC (prior to its merger with Ryan
Beck & Company). Mr. Kraws served as managing director of the healthcare research group and senior pharmaceutical
analyst at First Union Securities (formerly EVEREN Securities); as senior U.S. pharmaceutical analyst for the Swedish-Swiss
conglomerate Asea Brown Boveri; and as managing director and president of the Brokerage/Investment Banking operation of ABB Aros
Securities, Inc. He also served as senior pharmaceutical analyst at Nationsbanc Montgomery Securities, BT Alex Brown &
Sons, and Buckingham Research. Mr. Kraws also has industry experience, having been responsible for competitive analysis within
the treasury group at Bristol-Myers-Squibb Company. During 2006 through February of 2007, Mr. Kraws served as our Vice
President of Business Development, on a part-time basis. Since December 2013 until April 2023, Mr. Kraws served on
the board of directors of Avivagen Inc. and from 2013 until 2020 served on the board of directors of Saleen Automotive, Inc..
He holds an M.B.A. from Cornell University and a B.S. degree from State University of New York — Buffalo.
Mr. Kraws brings a strong business background to us, having worked as a pharmaceutical analyst for over 35 years.
Mr. Kraws brings to the Board of Directors
significant strategic, business and financial experience related to the business and financial issues facing pharmaceutical companies.
Mr. Kraws has a broad understanding of the operational, financial and strategic issues facing pharmaceutical companies. His healthcare
experience, executive and leadership experience further qualify him as a member of the Board.
John
Monahan. Dr. Monahan has been a member of the Company's Board of Directors since November 11, 2020.
Dr. Monahan has served on the board of directors of Scorpius Holdings, Inc. (formerly known as NightHawk Biosciences, Inc.)
(“Scorpius”), a contract development and manufacturing organization since November 2009, and from August 2016 until
May 2021 also served on the board of directors of Anixa Biosciences, Inc. (formerly known as ITUS Corporation), a biotechnology
company focused on using the body's immune system to diagnose, treat and prevent cancer. He is also a board member of Cellix Ltd. (Ireland)
and has served on a number of other public and private boards over the years. Dr. Monahan co-founded Avigen Inc. in 1992, a company
which has become a leader in its sector for the development of novel pharmaceutical products for the treatment of serious human diseases.
Over a 12-year period as Chief Executive Officer of Avigen he raised over $235 million in several private and public financings including
its initial public offering. From 1989-1992, he was Vice President of Research & Development at Somatix Therapy Corp., Alameda,
CA and from 1985-1989 he was Director of Molecular & Cell Biology at Triton Biosciences Inc., Alameda, CA. Prior to that from
1982-1985, he was Research Group Chief, Department of Molecular Genetics, Hoffmann-LaRoche, Inc. Nutley, NJ, and from 1975 to 1977
he was an Instructor at Baylor College of Medicine, Houston TX. Dr. Monahan served as a scientific advisory consultant to the Company
from 2015 to November 10, 2020 and from 2010 through 2015 he was the Company's Senior Executive Vice President of Research &
Development. Dr. Monahan was also a Scientific Advisory Board member of Agilis Biotherapeutics (recently merged into PTC Therapeutics),
from 2014 to 2019. Dr. Monahan received his Ph.D. in Biochemistry from McMaster University, Canada and his B.Sc. from University
College Dublin, Ireland.
Dr. Monahan brings to our Board of Directors
significant knowledge of and experience in the pharmaceutical and medical industries. He has extensive business, managerial, executive
and leadership experience that further qualify him to serve as a member of the Board and a valuable understanding of biochemistry and
our product candidates.
Jeffrey
Wolf, J.D. Mr. Wolf, who has been a member of the Company’s Board of Directors since 2006, has
substantial experience in creating, financing, nurturing and biomedical ventures based upon breakthrough research and technology. In
August 2008, Mr. Wolf founded Scorpius Holdings, Inc. (formerly known as NightHawk Biosciences, Inc.) (“Scorpius”),
a publicly traded contract development and manufacturing organization company. Since April 2010, Mr. Wolf has served as the
Chief Executive Officer and Chairman of the Board of Scorpius. Prior to founding Scorpius, from June 1997 to March 2011, Mr. Wolf
served as managing director at Seed-One Ventures, LLC a venture firm focused on launching and growing exceptional healthcare companies
from the ground up. Mr. Wolf has also founded and run several biomedical companies. Mr. Wolf’s start-ups include Avigen,
a San Francisco-based gene therapy company where he was a co-founder and director; TyRx Pharma, a company focused on the development
of bio-compatible polymers where he was a co-founder and Chairman; and Elusys Therapeutics, a company focused on the development of ANTHIM,
an FDA approved antitoxin against anthrax, which is currently a subsidiary of Scorpius. Mr. Wolf received his MBA from Stanford
Business School, his J.D. from New York University School of Law and his B.A. from the University of Chicago, where he graduated with
honors in Economics.
Mr. Wolf has extensive knowledge of the
industry and in particular research and development. His legal and business background provide him with a broad understanding of the
legal, operational, financial and strategic issues facing our company. Having served as a board member on other public company boards,
Mr. Wolf has an extensive understanding of the operational, financial and strategic issues facing public companies.
INFORMATION REGARDING THE BOARD OF DIRECTORS
AND CORPORATE GOVERNANCE
Independence of the Board of Directors
Our Common Stock is listed on the NYSE American.
Under the NYSE American listing standards, independent directors must comprise a majority of a listed company’s board of directors
and all members of the Audit Committee, Compensation Committee and Nominations Committee must be independent. Audit Committee members
must also satisfy the independence criteria set forth in Rule 10A-3 under the Exchange Act and Compensation Committee members must
also satisfy the independence criteria set forth in Rule 10C-1 under the Exchange Act. Under the NYSE American listing standards,
a director will only qualify as an “independent director” if, in the opinion of that 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 to be 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: (i) accept, directly or indirectly, any consulting,
advisory or other compensatory fee from the listed company or any of its subsidiaries, or (ii) be an affiliated person of the listed
company or any of its subsidiaries.
The Board of Directors undertook a review of
the independence of the members of the Board of Directors and considered whether any director has a material relationship with our company
that could compromise his or her ability to exercise independent judgment in carrying out his or her responsibilities. Based upon information
requested from and provided by each director concerning their background, employment and affiliations, including family relationships,
the Board of Directors has determined that all of our current directors, except Mr. Shallcross, due to his current position as Chief
Executive Officer and Chief Financial Officer of our company, is “independent” as that term is defined under the rules of
the NYSE American. As a result, Mr. Kraws, Dr. Monahan and Mr. Wolf are deemed to be “independent” as that
term is defined under the rules of the NYSE American.
In making these determinations, the Board of
Directors considered the current and prior relationships that each non-employee director has with our company and all other facts and
circumstances the Board of Directors deemed relevant in determining their independence, including the beneficial ownership of capital
stock by each non-employee director, and the transactions involving them described in the section of this proxy statement entitled “Certain
Relationships and Related Party Transactions.”
Board Leadership Structure
The Board of Directors has an independent Chairman,
Mr. Kraws, who has authority, among other things, to call and preside over meetings of the Board of Directors, 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 of the Board has substantial ability to shape the work of the Board of Directors. We believe that separation of the positions
of Chairman of the Board and Chief Executive Officer reinforces the independence of the Board of Directors in its oversight of our business
and affairs. In addition, we believe that having an independent Chairman of the Board creates an environment that is more conducive to
objective evaluation and oversight of management’s performance, increasing management accountability and improving the ability
of the Board of Directors to monitor whether management’s actions are in our best interests and the best interests of our stockholders.
As a result, we believe that having an independent Chairman of the Board can enhance the effectiveness of the Board of Directors as a
whole.
Risk Oversight
One of the Board of Directors’ key functions
is informed oversight of our risk management process. The Board of Directors does not have a standing risk management committee, but
rather administers this oversight function directly through the Board of Directors as a whole, as well as through various standing committees
of the Board of Directors that address risks inherent in their respective areas of oversight. In particular, the Board of Directors is
responsible for monitoring and assessing strategic risk exposure, including a determination of the nature and level of risk appropriate
for us. Our Audit Committee has the responsibility to consider and discuss our major financial risk exposures and the steps our management
has taken to monitor and control these exposures, including guidelines and policies to govern the process by which risk assessment and
management is undertaken. The Audit Committee also monitors compliance with legal and regulatory requirements, in addition to oversight
of the performance of our internal audit function at the time of its establishment. Our Nominations Committee monitors the effectiveness
of our corporate governance guidelines, including whether they are successful in preventing illegal or improper liability-creating conduct.
Our Compensation Committee assesses and monitors whether any of our compensation policies and programs has the potential to encourage
excessive risk-taking.
Board and Committee Meetings and Attendance
During the year ended December 31, 2023,
the Board of Directors held six (6) meetings. During the year ended December 31, 2023, our Audit, Compensation and Nominations
Committees met seven (7) times, two (2) times, and one (1) time, respectively. Each director attended at least seventy
five percent (75%) of the aggregate of all meetings of the Board of Directors and all of the Committee meetings, for the Committees on
which he serves.
Board Attendance at Annual Stockholders’
Meeting
Our policy is to invite and encourage each member
of the Board of Directors to be present at our annual meetings of stockholders (assuming that we hold in-person annual meetings). Only
one director, Steven Shallcross, attended our 2023 Annual Meeting of Stockholders in person and our other three directors attended our
2023 Annual Meeting of Stockholders via telephone.
Review of Transactions with Related Persons
Pursuant to our charter, our Audit Committee
reviews on an on-going basis for potential conflicts of interest, and approves if appropriate, all our “Related Party Transactions.”
For purposes of the Audit Committee Charter, “Related Party Transactions” means those transactions required to be disclosed
pursuant to Item 404 of SEC Regulation S-K.
A discussion of our current related person transactions
appears in this Proxy Statement under “Certain Relationships and Related Party Transactions.”
Communication with Directors
Stockholders may direct any communications intended
for the Board of Directors to our Corporate Secretary by telephone at (301) 417-4364, by facsimile at (301) 417-4367, or by mail to Theriva
Biologics, Inc., 9605 Medical Center Drive, Suite 270, Rockville, Maryland 20850.
This centralized process assists the Board of
Directors in reviewing and responding to stockholder communications in an appropriate manner. If a stockholder wishes to direct any communication
to a specific member of the Board of Directors, the name of that member of the Board of Directors should be noted in the communication.
The Board of Directors has instructed the Corporate Secretary to forward stockholder correspondence only to the intended recipients,
and has also instructed the Corporate Secretary to review all stockholder correspondence and, in the Corporate Secretary’s discretion,
refrain from forwarding any items deemed to be of a commercial or frivolous nature or otherwise inappropriate for the Board of Directors’
consideration. Any such items may be forwarded elsewhere in the Company for review and possible response.
Code of Conduct
We have adopted a code of conduct that applies
to all officers, directors and employees. The Code of Conduct is intended to promote honest and ethical conduct, full, accurate and timely
disclosure, and compliance with all applicable laws and government regulations. The full text of the code of conduct is posted on our
website at www.therivabio.com and a copy will be made available to stockholders without charge, upon request, in writing to the
Corporate Secretary at 9605 Medical Center, Suite 270, Rockville, Maryland 20850. If we make any substantive amendments to the code
of conduct or grant any waiver from a provision of the code of conduct to any executive officer or director, we will promptly disclose
the nature of the amendment or waiver on our website or by filing with the SEC a Current Report on Form 8-K, in each case if such
disclosure is required by SEC or the NYSE American rules.
Code of Ethics for Financial Management
We adopted a Code of Ethics for Financial Management
that applies to all persons responsible for our financial management. The Code of Ethics for Financial Management is intended to promote
professional conduct in our financial management. A copy of our Code of Ethics for Financial Management is available on our website at
www.therivabio.com and a copy will be made available to stockholders without charge, upon request, in writing to the Corporate
Secretary at 9605 Medical Center, Suite 270, Rockville, Maryland 20850. Violations of the Code of Ethics for Financial Management
may result in disciplinary action. If we make any substantive amendments to the Code of Ethics for Financial Management or grant any
waiver from a provision of the Code of Ethics for Financial Management to any director or officer, we will promptly disclose the nature
of the amendment or waiver on our website.
Anti-Hedging/Anti-Pledging Policy
The Company has adopted an insider trading
policy that is reasonably designed to promote compliance with insider trading laws, rules and regulations, and the listing standards
of NYSE American, which incorporates anti-hedging and anti-pledging provisions. Consequently, no employee, executive officer or
director may enter into a hedge or pledge of the Company’s Common Stock, including short sales, derivatives, put options,
swaps and collars. A copy of our insider trading policy is attached as an exhibit to our Annual Report on Form 10-K for the fiscal
year ended December 31, 2023.
INFORMATION REGARDING COMMITTEES OF THE BOARD
OF DIRECTORS
The Board of Directors has the authority to appoint
committees to perform certain management and administration functions. As disclosed above, the Board of Directors has established an
Audit Committee, a Compensation Committee and a Nominations Committee. The Board of Directors may establish other committees to facilitate
the management of our company’s business. The composition and functions of each committee are described below. Members serve on
these committees until their resignation or until otherwise determined by the Board of Directors.
All of the committees comply with all applicable
requirements of the Sarbanes-Oxley Act of 2002, NYSE American, and SEC, rules and regulations as further described below. The charters
for each of these committees are available on our website at www.therivabio.com. Information contained on or accessible through
our website is not a part of this Proxy Statement and the inclusion of such website address in this proxy statement is an inactive textual
reference only.
Committees of the Board of Directors
The table set forth below shows the directors who are currently members
or Chairman of each of the Audit Committee, Compensation Committee and Nominations Committee. From time to time, the Board of Directors
may also establish ad hoc committees to address particular matters.
| Name |
|
Audit |
|
Compensation |
|
Nominations |
| Steven Shallcross* |
|
— |
|
— |
|
— |
| Jeffrey Kraws** |
|
Member |
|
Chairman |
|
Member |
| John Monahan |
|
Member |
|
Member |
|
Chairman |
| Jeffrey Wolf |
|
Chairman |
|
Member |
|
Member |
*Mr. Shallcross is not a member of any of the committees of the
Board of Directors.
**Mr. Kraws serves as the Chairman of the Board of Directors.
Below is a description of each committee of the Board of Directors.
Audit Committee
Mr. Wolf (Chairman), Mr. Kraws and
Dr. Monahan currently serve as members of the Audit Committee. The Board of Directors has determined that Mr. Kraws,
Dr. Monahan and Mr. Wolf are each “independent” in accordance with the NYSE American definition of
independence. The Board of Directors has determined that each of Messrs. Kraws, Monahan and Wolf has the related financial
management expertise within the meaning of the NYSE American rules, that Messrs. Kraws and Wolf are each an “audit
committee financial expert” as defined by SEC regulations and that each member of the Audit Committee is “financially
literate” under the applicable rules and regulations of the SEC and NYSE American.
The primary purpose of the Audit Committee is
to assist the Board of Directors in its oversight of the integrity of our financial statements, of our compliance with legal and regulatory
requirements, of the independence and qualifications of the registered public accounting firm or firms engaged as our independent outside
auditors and the performance of our internal audit function and independent auditors. Specific responsibilities of the Audit Committee
include:
·
overseeing the work and compensation of the independent auditor in connection with the preparation by the independent auditor
of the audit report;
·
reviewing and approving the internal corporate audit staff functions;
·
approving the retention or replacement of the independent auditors;
·
reviewing the scope of the independent auditor’s audit examination and approving the retention of the independent auditors
to perform any proposed permissible non-audit services;
·
overseeing the rotation of partners of the independent auditors on our audit engagement team as required by law;
·
reviewing and approving transactions between us and any related persons;
·
conferring with management and the independent auditors regarding the adequacy of internal controls over financial reporting;
establishing procedures, as required under applicable law, for the receipt, retention and treatment of complaints received by us regarding
accounting, internal accounting controls or auditing matters and the confidential and anonymous submission by employees of concerns regarding
questionable accounting or auditing matters;
·
oversee cybersecurity risk management strategy and infrastructure; and
·
reviewing and discussing our annual audited financial statements and quarterly financial statements with management and the independent
auditor.
The Audit Committee operates pursuant to a written
charter adopted by the Board of Directors, which is available on our website at www.therivabio.com. The charter describes in more
detail the nature and scope of responsibilities of the Audit Committee.
Compensation Committee
Mr. Kraws (Chairman), Dr. Monahan and
Mr. Wolf currently serve as members of the Compensation Committee, each of whom the Board of Directors has determined is independent
in accordance Rule 10C-1 under the Exchange Act and the NYSE American definition of independence and that each is a “non-employee
director” as defined in Rule 16b-3 promulgated under the Exchange Act.
The primary purpose of the Compensation Committee
is to assist the Board of Directors in fulfilling its oversight responsibilities relating to compensation of our Chief Executive Officer
and other senior executive officers, including evaluating and approving officer’s benefits, bonus, incentive compensation, severance,
equity based-compensation and other compensation. Specific responsibilities of the Compensation Committee include:
| · | establishing
on an annual basis the performance goals and objectives for purposes of determining the compensation
of our Chief Executive Officer and other senior executive officers, and evaluating performance
in light of such goals and objectives and based upon these evaluations setting the compensation
level for those officers; |
| · | recommending
to the Board of Directors the compensation of the directors; |
| · | overseeing
the administration of equity incentive plans, including making recommendations to the Board
of Directors regarding granting of options and other awards; |
| · | overseeing
the administration of our clawback policy, including determining which compensation should
be recouped or forfeited; |
| · | reviewing
and making recommendations to the Board of Directors for the Company’s Chief Executive
Officer and other senior executive officers regarding employment agreements, severance agreements
and, change in control agreements. |
The Compensation Committee operates pursuant
to a written charter adopted by the Board of Directors, which is available on our website at www.therivabio.com. The charter describes
in more detail the nature and scope of responsibilities of the Compensation Committee.
Nominations Committee
Dr. Monahan (Chairman), Mr. Kraws,
and Mr. Wolf currently serve as members of the Nominations Committee, each of whom the Board of Directors has determined is independent
in accordance with the NYSE American definition of independence. Specific responsibilities of the Nominations Committee include:
·
considering and recommending to the Board of Directors, candidates for appointment or election as directors, and making recommendations
regarding re-election of incumbent directors;
·
considering and recommending to the Board of Directors changes to the size of the Board of Directors or any Committee; and
·
recommending to the Board of Directors, candidates to vacancies on any committees of the Board of Directors.
The Nominations Committee believes that candidates
for director should have certain minimum qualifications, including the ability to read and understand basic financial statements, being
over 21 years of age and having the highest personal integrity and ethics. The Nominations Committee also intends to consider such factors
as possessing relevant expertise upon which to be able to offer advice and guidance to management, having sufficient time to devote to
our affairs, demonstrated excellence in his or her field, having the ability to exercise sound business judgment and having the commitment
to rigorously represent the long-term interests of our stockholders. However, the Nominations Committee retains the right to modify these
qualifications from time to time. The Nominations Committee does not have a set policy or process for considering diversity in identifying
nominees, but endeavors to establish a diversity of background and experience in a number of areas of core competency, including business
judgment, management, accounting, finance, knowledge of our industry, strategic vision, research and development and other areas relevant
to our business. Candidates for director nominees are reviewed in the context of the current composition of the Board of Directors, our
operating requirements and the long-term interests of its stockholders. In conducting this assessment, the Nominations Committee typically
considers diversity, age, skills and such other factors as it deems appropriate, given the current needs of the Company and the Board
of Directors, to maintain a balance of knowledge, experience and capability.
In the case of incumbent directors whose terms
of office are set to expire, the Nominations Committee reviews these directors’ overall service to us during their terms, including
the number of meetings attended, level of participation, quality of performance and any other relationships and transactions that might
impair the directors’ independence. The Nominations Committee also takes into account the results of the Board of Directors’
self-evaluation, conducted annually on a group and individual basis. In the case of new director candidates, the Nominations Committee
also determines whether the nominee is independent for NYSE American purposes, which determination is based upon applicable NYSE American
listing standards, applicable SEC rules and regulations and the advice of counsel, if necessary. The Nominations Committee then
uses its network of contacts to compile a list of potential candidates, but may also engage, if it deems appropriate, a professional
search firm. The Nominations Committee conducts any appropriate and necessary inquiries into the backgrounds and qualifications of possible
candidates after considering the function and needs of the Board of Directors. The Nominations Committee meets to discuss and consider
the candidates’ qualifications and then selects a nominee for recommendation to the Board of Directors by majority vote.
The Nominations Committee operates pursuant to
a written charter adopted by the Board of Directors, which is available on our website at www.therivabio.com. The charter describes
in more detail the nature and scope of responsibilities of the Nominations Committee.
The Nominations Committee will consider director
candidates recommended by stockholders. The Nominations Committee does not intend to alter the manner in which it evaluates candidates,
including the minimum criteria set forth above, based on whether or not the candidate was recommended by a stockholder. Under our current
governing documents, stockholders wishing to directly recommend candidates for election to the Board of Directors at our next annual
meeting to be included in our Proxy Statement must do so by giving written notice to: Chairman of the Nominations Committee, Theriva
Biologics, Inc., 9605 Medical Center Drive, Suite 270, Rockville, Maryland 20850. Any such notice must be delivered to the
Chairman not less than 120 days prior to the anniversary of the preceding year’s annual meeting. The notice must state: (1) the
name and address of the stockholder making the recommendations; (2) the name, age, business address, and residential address of
each person recommended; (3) the principal occupation or employment of each person recommended; (4) the class and number of
shares of the Company’s stock that are beneficially owned by each person recommended and by the recommending stockholder; (5) any
other information concerning the persons recommended that must be disclosed in nominee and proxy solicitations in accordance with Regulation
14A of the Exchange Act; and (6) a signed consent of each person recommended stating that he or she consents to serve as a director
of the Company if elected.
DIRECTOR COMPENSATION
The following table sets forth information for
the fiscal year ended December 31, 2023 regarding the compensation of our directors who at December 31, 2023 were not
also our Named Executive Officers.
| | |
Fees Earned or | | |
Option | | |
Other | | |
| |
| Name | |
Paid in Cash | | |
Awards(1)(2) | | |
Compensation | | |
Total | |
| Jeffrey J. Kraws | |
$ | 176,250 | | |
$ | 43,756 | | |
$ | — | | |
$ | 220,006 | |
| John Monahan | |
$ | 66,750 | | |
$ | 43,756 | | |
$ | — | | |
$ | 110,506 | |
| Jeffrey Wolf | |
$ | 73,750 | | |
$ | 43,756 | | |
$ | — | | |
$ | 117,506 | |
(1) The amounts in the “Option
Awards” column reflect the dollar amounts of the grant date fair value for the financial statement reporting purposes for stock
options for the fiscal year ended December 31, 2023 in accordance with ASC 718. The fair value of the options was determined using the
Black-Scholes model. For a discussion of the assumptions used in computing this valuation, see “Management’s Discussion and
Analysis of Financial Conditions and Results of Operations” and Note 5 of the Notes to Consolidated Financial Statements in our
Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
(2) As of December 31, 2023,
the following are the outstanding aggregate number of option awards held by each of our directors who were not also Named Executive Officers:
| | |
Option Awards | |
| Name | |
(#) | |
| Jeffrey J. Kraws | |
| 11,152 | |
| John Monahan | |
| 9,900 | |
| Jeffrey Wolf | |
| 11,152 | |
During 2023, our independent, non-executive Chairman of the Board
of Directors received an annual cash retainer of $150,000, each other non-employee member of the Board of Directors received an annual
cash retainer of $43,000, all non-employee directors receive an annual cash fee of $7,500, $5,000 and $3,750 for service as a member
of the Audit, Compensation and Nominations Committees, respectively, or an additional annual cash fee of $15,000, $10,000 and $7,500
for service as Chairman of the Audit, Compensation and Nominations Committees, respectively. In addition, each non-employee member of
the Board of Directors was issued an option exercisable for 4,400 shares of our Common Stock, for a term of seven years, vesting monthly
over one year of the date of grant. In setting 2023 compensation for directors, the Compensation Committee relied on a report from Meridian
Compensation Partners, LLC.
LIMITS ON LIABILITY AND INDEMNIFICATION
Our Articles of Incorporation and Second A&R
Bylaws provide that we will indemnify and hold harmless each person who serves at any time as a director or officer from and against
any and all claims, judgments and liabilities to which such person shall become subject by reason of the fact that he or she is or was
a director or officer of the Company, and shall reimburse such person for all legal and other expenses reasonably incurred by him or
her in connection with any such claim or liability. We believe that this indemnification covers at least negligence and gross negligence
on the part of the indemnified parties. Insofar as indemnification for liabilities under the Securities Act of 1933, as amended (the
“Securities Act”) may be permitted to directors, officers, and controlling persons of the Company under the foregoing provisions
or otherwise, we have been advised that in the opinion of the SEC that indemnification is against public policy as expressed in the Securities
Act, and is therefore unenforceable. We entered into an indemnification agreement with our directors and officers. The agreement confirms
our obligation to indemnify the directors and officers to the fullest extent authorized by our Articles of Incorporation and Second A&R
Bylaws and supplements the indemnification otherwise available to the covered person under our Articles of Incorporation and Second A&R
Bylaws. The form of indemnification agreement was described and filed as an exhibit to the Form 8-K we filed with the SEC on January 6,
2009.
COMPENSATION COMMITTEE INTERLOCKS
During the last fiscal year ended December 31, 2023, none of
our executive officers served on the Board of Directors or Compensation Committee of any other entity whose officers served either on
our Board of Directors or Compensation Committee.
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has selected BDO USA, P.C.,
an independent registered accounting firm, to audit the books and financial records of the Company for the year ending December 31,
2024. Theriva is asking its stockholders to ratify the appointment of BDO USA, P.C. as Theriva’s independent registered public
accounting firm for fiscal 2023.
A representative of BDO USA, P.C. is expected
to be present either in person or via teleconference at the 2024 Annual Meeting of Stockholders and available to respond to appropriate
questions, and will have the opportunity to make a statement if he or she desires to do so.
Vote Required
The affirmative vote of the holders of a majority
of the shares present in person or represented by proxy and entitled to vote on this matter at the 2024 Annual Meeting of Stockholders
will be required to approve the ratification of the appointment of Theriva’s independent registered public accounting firm. Abstentions
will be counted and will have the same effect as a vote against the proposal. Ratification of the appointment of BDO USA, P.C. by our
stockholders is not required by law, our Second A&R Bylaws or other governing documents. As a matter of policy, however, the appointment
is being submitted to our stockholders for ratification at the 2024 Annual Meeting of Stockholders. If our stockholders fail to ratify
the appointment, the Audit Committee will reconsider whether or not to retain that firm. Even if the appointment is ratified, the Audit
Committee, in its discretion, may direct the appointment of different independent auditors at any time during the year if they determine
that such a change would be in our best interest and the best interests of our stockholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE “FOR” RATIFICATION OF THE SELECTION OF BDO USA, P.C. AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR
OUR FISCAL YEAR ENDING ON DECEMBER 31, 2024.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD
OF DIRECTORS
The Audit Committee reviews our financial reporting
process on behalf of the Board of Directors. In January 2007, the Board of Directors adopted a written charter for the Audit Committee,
which it re-evaluates annually. In fulfilling its responsibilities, the Audit Committee has reviewed and discussed the audited financial
statements contained in the Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Annual Report on Form
10-K”) with our management and our independent registered public accounting firm for such year, BDO USA, P.C. Our management is
responsible for the financial statements and the reporting process, including the system of internal controls. The independent registered
public accounting firm is responsible for expressing an opinion on the conformity of those audited financial statements with accounting
principles generally accepted in the United States.
The Audit Committee (1) discussed with BDO
USA, P.C. the matters required by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”)
and the SEC; (2) received the written disclosures and the letter from BDO USA, P.C. required by the applicable requirements of the
PCAOB regarding the independent accountant’s communications with the audit committee concerning independence; and (3) discussed
with BDO USA, P.C. its independence. The Audit Committee also considered whether, and determined that, the independent registered public
accounting firm’s provision of other non-audit services to us was compatible with maintaining BDO USA, P.C.’s independence.
During 2023, management evaluated our system
of internal control over financial reporting in accordance with the requirements set forth in Section 404 of the Sarbanes-Oxley
Act of 2002 and related regulations. The Audit Committee was kept apprised of the progress of the evaluation and provided oversight and
advice to management during the process. In connection with this oversight, the Audit Committee received periodic updates provided by
management and the independent registered public accounting firm at each regularly scheduled Audit Committee meeting. At the conclusion
of the process, management provided the Audit Committee with a report on the effectiveness of our internal control over financial reporting.
The Audit Committee also reviewed the report of management contained in our 2023 Annual Report on Form 10-K, as well as the Report
of Independent Registered Public Accounting Firm and the Consolidated Financial Statements (included in the 2023 Annual Report on Form 10-K).
These reports related to its audit of the consolidated financial statements. The Audit Committee continues to oversee our efforts related
to our internal control over financial reporting and management’s preparations for the evaluations in 2024.
It should be noted that the members of our Audit
Committee are not our employees and are not performing the functions of auditors or accountants. Accordingly, it is not the duty or responsibility
of the Audit Committee or its members to conduct “field work” or other types of auditing or accounting reviews or procedures
or to set auditor independence standards. Members of the Audit Committee necessarily rely on the information provided to them by management
and the independent auditors. Accordingly, the Audit Committee’s considerations and discussions referred to above do not constitute
assurance that the audit of our financial statements has been carried out in accordance with generally accepted auditing standards or
that our auditors are in fact independent.
Based on the review and discussions referred
to above, the Audit Committee recommended to the Board of Directors (and the Board of Directors approved) that the audited financial
statements be included in our Annual Report on Form 10-K for the year ended December 31, 2023, for filing with the SEC.
Members of the Audit Committee:
Jeffrey Wolf (Chairman)
Jeffrey J. Kraws
John Monahan
The material in this report is not “soliciting material,”
is not deemed “filed” with the SEC and is not incorporated by reference in any filing of the Company under the Securities
Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation
language in any such filing.
AUDIT FEES AND ALL OTHER FEES
Independent Registered Public Accounting Firm
Fees and Services
The following table sets forth the aggregate
fees including expenses billed to us for the years ended December 31, 2023 and 2022 by BDO USA, P.C.
| | |
December 31, | |
| | |
2023 | | |
2022 | |
| Audit Fees | |
$ | 472,500 | | |
$ | 598,500 | |
| Tax Fees | |
| — | | |
| 19,500 | |
| Total Fees (1) | |
$ | 472,500 | | |
$ | 618,000 | |
| |
(1) |
Audit fees and expenses
were for professional services rendered for the audit and reviews of the consolidated financial statements of the Company, professional
services rendered for issuance of consents and assistance with review of documents filed with the SEC. |
Audit Committee Pre-Approval Policy
The Audit Committee has adopted procedures for
pre-approving all audit and non-audit services provided by the independent registered public accounting firm, including the fees and
terms of such services. These procedures include reviewing detailed back-up documentation for audit and permitted non-audit services.
The documentation includes a description of, and a budgeted amount for, particular categories of non-audit services that are recurring
in nature and therefore anticipated at the time that the budget is submitted. Audit Committee approval is required to exceed the pre-approved
amount for a particular category of non-audit services and to engage the independent registered public accounting firm for any non-audit
services not included in those pre-approved amounts. For both types of pre-approval, the Audit Committee considers whether such services
are consistent with the rules on auditor independence promulgated by the SEC and the PCAOB. The Audit Committee may form and delegate
pre-approval authority to subcommittees consisting of one or more members of the Audit Committee, and such subcommittees must report
any pre-approval decisions to the Audit Committee at its next scheduled meeting. All of the services provided by the independent registered
public accounting firm were pre-approved by the Audit Committee.
EXECUTIVE COMPENSATION
We are a “smaller reporting company”
and the following compensation disclosure is intended to comply with the requirements applicable to smaller reporting companies. Although
the rules allow us to provide less detail about our executive compensation program, the Compensation Committee is committed to providing
the information necessary to help stockholders understand its executive compensation-related decisions. Accordingly, this section includes
supplemental narratives that describe the 2023 executive compensation program for our Named Executive Officers.
The following table summarizes all compensation
awarded to, earned by or paid to our Named Executive Officers, Steven A. Shallcross and Frank Tufaro, during the fiscal years presented
below.
Summary Compensation Table for Fiscal 2023
| Name and Principal | |
| | |
| | |
| | |
Options | | |
Compensation | | |
| |
| Position | |
Year | | |
Salary ($)(1) | | |
Bonus ($)(2) | | |
Awards ($)(3) | | |
($)(4) | | |
Total ($) | |
| Steven Shallcross | |
| 2023 | | |
$ | 614,250 | | |
$ | 350,000 | | |
$ | 278,450 | | |
$ | 29,213 | | |
$ | 1,271,913 | (5) |
| Chief Executive Officer and Chief Financial Officer | |
| 2022 | | |
$ | 585,000 | | |
$ | 385,000 | | |
$ | 192,989 | | |
$ | 27,674 | | |
$ | 1,190,663 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Frank Tufaro | |
| 2023 | | |
$ | 143,182 | | |
$ | — | | |
$ | — | | |
$ | 236,249 | | |
$ | 379,431 | |
| Former Chief Operating Officer(6) | |
| 2022 | | |
$ | 291,667 | | |
$ | 85,000 | | |
$ | 40,629 | | |
$ | 23,963 | | |
$ | 441,259 | |
| |
(1) |
Mr. Shallcross' annual
salary was $585,000 commencing January 1, 2022 and $614,250 commencing January 1, 2023. Dr. Tufaro was appointed our
Chief Operating Officer on March 22, 2022 and separated from the Company on May 10, 2023. Dr. Tufaro’s annual
salary was $375,000 commencing March 22, 2022. |
| |
(2) |
Amounts represent annual
cash bonuses earned for the applicable fiscal year. The annual cash bonuses are paid in the first quarter of the calendar year following
the year to which the cash bonus relates. |
| |
(3) |
Amount reflects the grant date fair value
of the Named Executive Officer’s stock options, calculated in accordance with FASB ASC Topic 718. For a discussion of the assumptions
used in calculating these values, see Note 5 to our consolidated financial statements included in our Annual Report on Form 10-K for
the fiscal year ended December 31, 2023. In December 2022 and December 2023, Mr. Shallcross was issued options
to purchase 19,000 and 28,000 shares of Common Stock, respectively, Dr. Tufaro was issued 4,000 options in December 2022,
and each of these awards vest monthly over 36 months. |
| |
|
|
| |
(4) |
The all other compensation
column is comprised of vacation accrual paid, and the portion of medical, dental and vision premiums paid by us on behalf of our
Named Executive Officers. These benefits are offered to all Theriva Biologics’ employees who work at least 17.5 hours per week.
All other compensation for Mr. Tufaro includes pursuant to his separation agreement the payment of a total of $196,875 for a
period of six months, and reimbursement of COBRA coverage for himself, his spouse and other eligible dependents for six months. |
| |
(5) |
Amount excludes compensation
paid to the wife of Mr. Shallcross disclosed under "“Certain Relationships and Related Party Transactions.” |
| |
(6) |
Dr. Tufaro was appointed
as our Chief Operating officer on March 22, 2022 and separated from the Company on May 10, 2023. |
Narrative Disclosure to Summary Compensation Table
Overview of Our Compensation Program
A. Philosophy and Objectives
The Compensation Committee seeks to attract and
retain superior executive talent by offering competitive base salaries, bonuses and long-term incentives. The Compensation Committee’s
philosophy is to deliver higher rewards for superior performance and consequences for underperformance. It is also the Compensation Committee’s
practice to provide a balanced mix of cash and equity-based compensation that aligns both the short and long-term interests of our executives
with that of our stockholders. Our executive compensation program is based on the following philosophies and objectives:
| |
● |
Compensation Should
Align with Stockholders’ Interests — The Compensation Committee believes that
executives’ interests should be aligned with those of stockholders. Executives are granted stock options so that their total
compensation is tied directly to value realized by our stockholders. Executive bonuses are tied directly to the achievement of performance
goals that the Compensation Committee believes will ultimately drive stockholder value creation. |
| |
● |
Compensation is Competitive
— The Compensation Committee seeks to provide a total compensation package that attracts,
motivates and retains the executive talent that we need in order to maximize our return to stockholders. To accomplish this objective,
executive compensation is reviewed annually to ensure that compensation levels are competitive and reasonable relative to our level
of performance and to the compensation opportunities provided by comparable companies with which we compete for talent. |
| |
● |
Compensation
Motivates and Rewards the Achievement of Goals — Our executive compensation program
is designed to appropriately reward both individual and collective performance that meets and exceeds our annual, long-term and strategic
goals. To accomplish this objective, a substantial percentage of total compensation is variable and “at risk”, both through
annual incentive compensation in the form of cash bonuses and the granting of long-term incentive awards. |
B. Oversight of Executive Compensation
Role of the Compensation Committee
Pursuant to the terms of its charter, the Compensation
Committee is responsible for the review of all aspects of our executive compensation program and makes decisions regarding the compensation
of our Named Executive Officers. Our Named Executive Officers for the year ended December 31, 2023 were Steven Shallcross, our Chief
Executive Officer who also serves as our Chief Financial Officer, and Frank Tufaro, who served as our Chief Operating Officer until his
separation on May 10, 2023.
The Compensation Committee’s responsibilities
include but are not limited to the following:
| |
● |
Establishing on an annual basis the performance
goals and objectives for purposes of determining the compensation of our Chief Executive Officer and other senior executive officers.
|
| |
● |
Evaluating the Chief Executive Officer’s
and other senior executive officers’ performance at least annually in light of those goals and objectives, and based upon these
evaluations setting the compensation level for those officers.
|
| |
● |
Reviewing the competitive position of, and
making recommendations to, the Board of Directors with respect to the cash-based and equity-based compensation plans and our programs
relating to compensation and benefits.
|
| |
● |
Overseeing administration of our stock option
plan and incentive compensation plans, making recommendations to the Board of Directors regarding the granting of options and incentives
and otherwise assisting the Board of Directors in administering awards under these plans.
|
| |
● |
Reviewing the financial
performance and operations of our major benefit plans. |
Additional information regarding the Compensation
Committee’s responsibilities is set forth in its charter, which is posted on our website at www.therivabio.com.
Role of the Chief Executive Officer
Our Chief Executive Officer makes recommendations
to the Compensation Committee regarding the compensation of our other Named Executive Officers. The Chief Executive Officer does not
participate in any discussions or processes concerning his own compensation and participates in a non-voting capacity in discussions
or processes concerning the compensation of our other members of management. In addition to our Chief Executive Officer, other members
of our management and consultants also attend Compensation Committee meetings from time to time and may take part in discussions of executive
compensation.
C. Program Design
The Compensation Committee uses a simple and
straightforward approach in compensating our Named Executive Officers in which base salary, annual incentives and stock options are the
principal components. In addition, executive officers generally participate in the same benefit programs as other full-time employees.
Our executive compensation program is designed
to provide executives with a reasonable level of fixed compensation through base salary and benefits, and an opportunity to earn incentive
compensation through the annual and long-term incentive programs based on a mix of individual and corporate performance, individual performance
and the value of our stock. We do not currently have formal policies for allocating compensation among base salary, performance-based
bonus and equity awards. Instead our Compensation Committee uses its judgment to establish a total direct compensation opportunity for
each Named Executive Officer that is a mix of current, short-term and long-term incentive compensation and cash and non-cash compensation
that it believes appropriate to achieve the goals of our executive compensation program and corporate objectives. Our target pay mix
places a significant emphasis on performance based variable compensation. The incentive plans are designed to pay well when performance
meets or exceeds expectations and pay little or no incentive if performance is below expectations.
In designing and implementing our executive compensation
program, our Compensation Committee considers our company’s operating and financial objectives, including our risk profile, and
the effect that its executive compensation decisions will have on encouraging our executive officers to take an appropriate level of
business risk consistent with our overall goal of enhancing long-term stockholder value. In particular, the Compensation Committee considers
how our executive compensation program serves to achieve our operating and financial objectives while at the same time mitigating any
incentives for our executive officers to engage in excessive risk-taking to achieve short-term results that may not be sustainable in
the long-term.
Target compensation comprises base salary and
performance based variable compensation, including targeted cash bonus amounts and equity-based compensation. As an executive’s
level of responsibility increases, the Compensation Committee generally targets a greater portion of the executive’s compensation
to be contingent upon performance in the form of variable compensation. For example, historically our Named Executive Officers have a
higher percentage of compensation at risk (and thus greater upside and downside potential) relative to our other employees. The
Compensation Committee believes this is appropriate because our Named Executive Officers have the greatest influence on our performance.
During 2023, the salary for our Chief Executive
Officer who also serves as our Chief Financial Officer was 51% of his target compensation package and performance based variable compensation
comprised 49% of his target compensation. Of the performance based variable compensation 52% was equity-based compensation and 49% was
his target cash bonus. During 2023, our Chief Operating Officer Officer’s salary was 71% of his target annual compensation package
and performance based variable compensation comprised 29% of his target annual compensation. Because he served only until May 10,
2023, our Chief Operating Officer received only a pro-rated amount of his base salary, was not paid a cash bonus and did not receive
equity-based compensation in 2023.
D. Compensation Review Process
The Compensation Committee annually reviews compensation
for our Named Executive Officers. The Compensation Committee considers the executive’s role and responsibilities, corporate and
individual performance, and industry-wide compensation practices and trends for other companies of similar size. This approach is used
to set base salaries, bonuses, stock option award levels and the mix of compensation elements.
We strive to attract and retain the most highly
qualified executive officers in an extremely competitive market. Our Compensation Committee believes that it is important when making
its compensation decisions to be informed as to the competitive market for executive talent, including the current practices of comparable
public companies with which we compete for such talent. Consequently, our Compensation Committee reviewed an executive compensation benchmarking
report prepared by Meridian Compensation Partners, LLC (“Meridian”) at the Compensation Committee’s request. With respect
to its analysis of the compensation of the Chief Executive Officer, the Compensation Committee took into account that our Chief Executive
Officer also serves as our Chief Financial Officer, which is not typical for most companies.
While the Compensation Committee does take into
consideration the data it reviewed, the Committee does not attempt to benchmark our executive compensation against any specific level,
range, or percentile of compensation paid at any other companies, does not apply any specific measures of internal or external pay
equity in reaching its conclusions, and does not employ tally sheets, wealth accumulation, or similar tools in its analysis. Rather,
the Compensation Committee reviews compensation data from the report mentioned above as reference points in making executive compensation
decisions especially in light of the fact that our Chief Executive Officer is also performing the role of Chief Financial Officer. The
Compensation Committee’s general aim is for our compensation to remain competitive with the market, falling above or below the
median of the market data as appropriate based on corporate and individual executive performance, and other factors deemed to be appropriate.
Competitive market positioning is only one of several factors, as described below, that the Compensation Committee considers in making
compensation decisions, and therefore individual Named Executive Officer compensation may fall at varying levels as compared to the market
data.
Our Compensation Committee values the opinion
of our stockholders. At our 2022 Annual Meeting of Stockholders approximately 97% of the shares voted (excluding broker non-votes) were
cast in support of our fiscal 2022 executive compensation and related disclosures. At that time, our Compensation Committee viewed those
voting results as broad stockholder support for our executive compensation program and consequently made no material changes to the program
or to our compensation policies. Our Compensation Committee will continue to consider input from stockholders, including through advisory
votes on executive compensation, in making compensation decisions and reviewing executive compensation programs and policies.
We currently hold our advisory vote to approve
the compensation of our named executive officers (“Say-on-Pay vote”) every three years. Stockholders have an opportunity
to cast an advisory vote on the frequency of the Say-on-Pay vote at least every six years, and the next advisory vote on the frequency
of the Say-on-Pay vote will be at our 2025 Annual Meeting of Stockholders.
E. Components of Compensation
We provide four compensation components to Named
Executive Officers:
| |
● |
bonuses based
on the achievement of specified goals and objectives; |
| |
● |
long-term incentives;
and |
| |
|
|
| |
● |
benefits |
1. Base Salaries
We provide our Named Executive Officers a base
salary commensurate with their position, responsibilities and experience. In setting the base salary, the Compensation Committee considers
the scope and accountability associated with each Named Executive Officer’s position and such factors as performance and experience
of each Named Executive Officer. We design base pay to provide the essential reward for an employee’s work that is required to
be competitive in attracting talent. Once base pay levels are initially determined, increases in base pay may be provided to recognize
an employee’s specific performance achievements or expansion of responsibilities. The base salaries are targeted to be competitive
with other similar biotechnology companies. Base salaries for the Named Executive Officers are set by their respective employment contracts
and are reviewed annually by the Compensation Committee referencing an executive compensation benchmarking report provided by Meridian.
Mr. Shallcross’ base salary was $585,000 for the year ended December 31, 2022. Mr. Shallcross received a 5%
merit increase to $614,250 for the year ended December 31, 2023, and on December 14, 2023 received a 5% merit increase to $644,963.
executive compensation benchmarking report executive
compensation benchmarking report Our former Chief Operating Officer, Dr. Tufaro, received a base salary of $375,000 for the year
ended December 31, 2022. Dr. Tufaro received a 5% merit increase to $393,750 for the year ended December 31, 2023.
The below shows the 2023 annualized base salary
levels for our Named Executive Officers, including a comparison with 2022.
| |
2022 | | |
2023 | |
| Named Executive Officer | |
Base Salary | | |
Base Salary | |
| Steven A. Shallcross, Chief Executive Officer and Chief Financial Officer | |
$ | 585,000 | | |
$ | 614,250 | |
| Frank Tufaro, Chief Operating Officer | |
$ | 375,000 | | |
$ | 393,750 | |
2. Bonuses
The Compensation Committee believes that the granting
of a bonus is appropriate to motivate the Named Executive Officers. The bonuses are to be rewarded in the discretion of the Compensation
Committee and the Board of Directors, based on a review of achievements for the year. The Compensation Committee focuses on individual
performance, which enables the Compensation Committee to differentiate among executives and emphasize the link between personal performance
and compensation. The Compensation Committee also uses executive benchmarking information provided by Meridian in determining bonus amounts.
Although the Compensation Committee does not use any fixed formula in determining bonuses, it does bonuses to objectives the Compensation
Committee deems important such as for 2023, effective M&A strategy and implementation, financings, and achievement of clinical milestones.
| |
· |
Mr. Shallcross’ employment agreement provides that he was eligible for a target bonus of up to fifty percent (50%) of his base salary in cash. After considering Mr. Shallcross’ achievement relative to performance goals in 2023, the Compensation Committee approved a $350,000 cash bonus, or 114% of target. |
| |
· |
Dr. Tufaro’s employment agreement provided that he was eligible for a target bonus of up to forty percent (40%) of his base salary in cash. Because he served only until May 10, 2023, Dr. Tufaro did not receive a cash bonus for 2023. |
3. Long-Term Incentives
The Compensation Committee believes that a substantial
portion of the Named Executive Officer’s compensation should be awarded in equity-based compensation since equity-based compensation
is directly linked to the interests of stockholders. The Compensation Committee has elected to grant stock options to the Named Executive
Officers and other key employees as the primary long-term incentive vehicle. In making this determination, the Compensation Committee
considered a number of factors including: the accounting impact, potential value of stock option grants versus other equity instruments
and cash incentives, and the alignment of equity participants with stockholders. The Compensation Committee determined to grant stock
options to:
| |
· |
enhance the link between the creation of stockholder value and executive compensation; |
| |
|
|
| |
· |
provide an opportunity for equity ownership; |
| |
· |
act as a retention tool; and |
| |
· |
provide competitive levels of total compensation. |
In 2023, the Compensation Committee approved grants
of options exercisable for 28,000 shares to Mr. Shallcross. The options had a grant date of December 14, 2023, an exercise price
of $14.75, vest pro rata on a monthly basis over 36 months and expire seven years from date of grant. Because he served only until
May 10, 2023, Dr. Tufaro did not receive any equity-based compensation in 2023.
The Compensation Committee reviews the performance,
potential burn rates and dilution levels to create an option pool that may be awarded to employee participants. Grants to the Named Executive
Officers are determined by the Compensation Committee after reviewing market data, including the reports and analysis discussed above
and after considering each executive’s performance, role and responsibilities.
The Compensation Committee does not seek to time
equity grants to take advantage of information, either positive or negative, about our company that has not been publicly disclosed. Option
grants are effective on the date the award determination is made by the Compensation Committee and the exercise price of options is the
closing market price of our common stock on the business day of the grant or, if the grant is made on a weekend or holiday, on the prior
business day.
4. Benefits
Named Executive Officers are eligible to participate
in our standard medical, dental, vision, disability insurance, life insurance plans and other health and welfare plans provided to other
full-time employees.
Each of our Named Executive Officers is entitled
to participate in our 401(k) contributory defined contribution plan.
Pension Benefits
We do not currently provide pension arrangements
or post-retirement health coverage for our employees, although we may consider such benefits in the future.
5. Retirement Benefits
Each of our Named Executive Officers is eligible
to participate in our 401(k) contributory defined contribution plan. Pursuant to our 401(k) plan, all eligible employees, including
our Named Executive Officers, are provided with a means of saving for their retirement. We currently match all participating employee
contributions up to maximum of 4 percent of compensation which vest immediately.
6. Nonqualified Deferred Compensation
We do not provide any nonqualified deferred compensation
plans to our employees, although we may consider such benefits in the future.
Conclusion
Attracting and retaining talented and motivated
management and key employees is essential to creating long-term stockholder value. Offering a competitive, performance-based compensation
program with a substantial equity component helps to achieve this objective by aligning the interests of the executive officers and other
key employees with those of stockholders. We believe that our compensation program met these objectives and that our 2023 compensation
program was appropriate in light of the challenges we and our employees face.
Risk Analysis of Our Compensation Program
Our Compensation Committee has reviewed our compensation
policies as generally applicable to our employees and believes that our policies do not encourage excessive or inappropriate risk taking
and that the level of risk that they do encourage is not reasonably likely to have a material adverse effect on us. As part of its assessment,
the Compensation Committee considered, among other factors, the allocation of compensation among base salary and short- and long-term
compensation, and our approach to establishing company-wide and individual financial, operational and other performance goals.
Outstanding Equity Awards at December 31, 2023
The table below reflects all outstanding equity
awards made to each of the Named Executive Officers that were outstanding at December 31, 2023. We currently grant stock-based awards
pursuant to our 2020 Stock Incentive Plan (the “2020 Stock Plan”) and have outstanding awards to Mr. Shallcross under
our 2010 Stock Incentive Plan (the “2010 Stock Plan”). Dr. Tufaro resigned from the Company effective May 10, 2023.
All of Dr. Tufaro’s option awards expired prior to December 31, 2023.
| | |
| |
Number of | | |
Number of | | |
| | |
|
| | |
| |
Securities | | |
Securities | | |
| | |
|
| | |
| |
Underlying | | |
Underlying | | |
| | |
|
| | |
| |
Unexercised | | |
Unexercised | | |
Option | | |
|
| | |
| |
Options | | |
Options | | |
Exercise | | |
Option |
| Name | |
Grant Date(1) | |
Exercisable | | |
Unexercisable | | |
Price ($) | | |
Expiration Date |
| Steven Shallcross | |
12/14/23 | |
| — | | |
| 28,000 | | |
$ | 14.75 | | |
12/15/30 |
| | |
12/15/22 | |
| 6,334 | | |
| 12,667 | | |
$ | 14.75 | | |
12/15/29 |
| | |
12/23/21 | |
| 1,734 | | |
| 867 | | |
$ | 82.75 | | |
12/23/28 |
| | |
12/30/20 | |
| 1,800 | | |
| — | | |
$ | 104.25 | | |
12/30/27 |
| | |
12/04/19 | |
| 1,800 | | |
| — | | |
$ | 104.25 | | |
12/04/26 |
| | |
12/06/18 | |
| 800 | | |
| — | | |
$ | 172.25 | | |
12/06/25 |
| | |
12/20/17 | |
| 63 | | |
| — | | |
$ | 4,550.00 | | |
12/20/24 |
| | |
06/01/15 | |
| 103 | | |
| — | | |
$ | 18,900 | | |
06/01/25 |
| (1) |
Options will vest pro rata, on a monthly basis, over 36 months. |
Employment Agreements
Steven A. Shallcross, Chief Executive Officer, Chief Financial Officer
On January 3, 2022, we entered into a three-year
employment agreement with Mr. Shallcross (the “2022 Shallcross Employment Agreement”), to serve as our Chief Executive
Officer and to continue to serve as our Chief Financial Officer. The 2022 Employment Agreement replaced the prior employment agreement
with us that Mr. Shallcross entered into on December 6, 2018, as amended December 5, 2019 (the “Amended Employment
Agreement”). Mr. Shallcross has served as our Chief Financial Officer since June 1, 2015, initially pursuant to the terms
of a two year employment agreement that we entered with him on April 28, 2015 (the “Initial Shallcross Employment Agreement”)
and then pursuant to an employment agreement we entered into with him on December 6, 2018, which replaced the Initial Shallcross
Agreement (the “Amended Shallcross Employment Agreement”). Mr. Shallcross does not receive additional compensation for
service as our director. The material terms of the 2022 Shallcross Employment Agreement are set forth below.
Pursuant to the 2022 Employment Agreement, Mr. Shallcross
was initially entitled to an annual base salary of $585,000 which was increased to $614,250 for the year ended December 31, 2023
and increased on December 14, 2023 to $644,963 to reflect a 5% merit increase. Mr. Shallcross is also eligible to receive an
annual cash performance bonus targeted at fifty percent (50%) of his annual base salary as well as discretionary annual equity awards
pursuant to the Company’s incentive plans. The annual bonus will be based upon the assessment of the Board of Mr. Shallcross’s
performance. The 2022 Employment Agreement also includes confidentiality obligations and inventions assignments by Mr. Shallcross
and non-solicitation and non-competition provisions.
The 2022 Employment Agreement has a stated term
of three years but may be terminated earlier pursuant to its terms. If Mr. Shallcross’s employment is terminated for any reason,
he or his estate as the case may be, will be entitled to receive the unpaid base salary through the date of termination and accrued vacation,
any unpaid annual bonus earned with respect to any calendar year ending on or preceding the date of termination, expense reimbursement
and any other entitlements accrued by him to the extent not previously paid (the “Accrued Obligations”); provided, however,
that if his employment is terminated (i) by the us without Cause or by Mr. Shallcross for Good Reason (as each is defined in
the Employment Agreement) then, subject to him executing a general release in form acceptable to the us that becomes effective, in addition
to paying the Accrued Obligations, (a) we will continue to pay his then current base salary and if the Executive timely elects continued
coverage under COBRA, the Company will continue to provide benefits at least equal to those that were provided at the time of termination
for a period of twelve (12) months and (b) all unvested equity awards will vest and he shall have the right to exercise any such
vested equity awards until the earlier of eighteen (18) months after termination or the remaining term of the awards; or (ii) by
reason of his death or Disability (as defined in the Employment Agreement), then in addition to paying the Accrued Obligations, Mr. Shallcross
or his estate would have the right to exercise any vested options until the earlier of six (6) months after termination or the remaining
term of the awards. In such event, if Mr. Shallcross commenced employment with another employer and becomes eligible to receive medical
or other welfare benefits under another employer-provided plan, the medical and other welfare benefits to be provided by the Company as
described herein would terminate.
The 2022 Employment Agreement provides that upon
the closing of a “Change in Control” (as defined in the 2022 Employment Agreement), all unvested options shall immediately
vest and the time period that Mr. Shallcross will have to exercise all vested stock options and other awards that Mr. Shallcross
may have will be equal to the shorter of: (i) eighteen (18) months after termination, or (ii) the remaining term of the award(s).
If within one (1) year after the occurrence of a Change in Control, Mr. Shallcross terminates his employment for “Good
Reason” or the Company terminates Mr. Shallcross’s employment for any reason other than death, disability or Cause, Mr. Shallcross
will be entitled to receive: (i) the portion of his base salary for periods prior to the effective date of termination accrued but
unpaid (if any); (ii) all unreimbursed expenses (if any); (iii) an aggregate amount (the “Change in Control Severance
Amount”) equal to two (2) times the sum of his base salary plus an amount equal to the bonus that would be payable if the “target”
level performance were achieved under the Company’s annual bonus plan (if any) in respect of the fiscal year during which the termination
occurs (or the prior fiscal year if bonus levels have not yet been established for the year of termination) subject to him executing a
general release in form acceptable to the Company that becomes effective. If within two (2) years after the occurrence of a Change
in Control, Mr. Shallcross terminates his employment for “Good Reason” or the Company terminates Mr. Shallcross’s
employment for any reason other than death, disability or Cause, Mr. Shallcross will be entitled to also receive for the period of
two (2) consecutive years commencing on the date of such termination of his employment, medical, dental, life and disability insurance
coverage for him and the members of his family that are not less favorable to him than the group medical, dental, life and disability
insurance coverage carried by the Company for him subject to him executing a general release in form acceptable to the Company that becomes
effective. The Change in Control Severance Amount is to be paid in a lump sum if the Change in Control event constitutes a “change
in the ownership” or a “change in the effective control” of the Company or a “change in the ownership of a substantial
portion of a corporation’s assets” (each within the meaning of Section 409A of the Internal Revenue Code (“Rule 409A”)),
or in 48 substantially equal payments, if the Change in Control event does not so comply with Section 409A.
Frank Tufaro, Former Chief Operating Officer
On March 22, 2022, we entered into an employment
agreement with Dr. Tufaro, as amended on December 15, 2022 (the “Employment Agreement”) to serve as the Chief Operating
Officer of the Company, which agreement terminated on May 10, 2023. The material terms of the Employment Agreement are set forth
below.
Pursuant to the Employment Agreement, as amended
Dr. Tufaro was to receive an annual base salary of $393,750 and was eligible to earn an annual performance bonus targeted at forty
percent (40%) of his annual base salary. The annual bonus was to be based upon the assessment of the Company’s Board of Dr. Tufaro’s
performance and the Company’s attainment of targeted goals set by the Board. In addition, Dr. Tufaro was eligible to receive
annual equity awards pursuant to the Company’s incentive equity plans: such awards (including the number and type of awards), if
any, were at the sole discretion of the Board. The Employment Agreement also included confidentiality obligations and inventions assignments
by Dr. Tufaro and non-solicitation and non-competition provisions.
The Employment Agreement had a stated term of
three (3) years but could be terminated earlier pursuant to its terms. If Dr. Tufaro’s employment was terminated for any
reason, he or his estate as the case may be, would be entitled to receive the accrued base salary, any unpaid annual bonus earned with
respect to any calendar year ending on or preceding the date of termination, vacation pay, expense reimbursement and any other entitlements
accrued by him to the extent not previously paid (the “Accrued Obligations”); provided, however, that if his employment was
terminated (i) by the Company without Cause or by Dr. Tufaro for Good Reason (as each was defined in the Employment Agreement)
then in addition to paying the Accrued Obligations, (a) the Company would continue to pay his then current base salary and continue
to provide benefits at least equal to those that were provided at the time of termination for a period of six (6) months and (b) all
unvested stock options and other equity awards would immediately vest and he would be entitled to exercise any vested equity awards until
the earlier of six (6) months after termination or the remaining term of the awards; or (ii) by reason of his death or Disability
(as defined in the Employment Agreement), then in addition to paying the Accrued Obligations, Dr. Tufaro, or his estate as the case
may be, would have the right to exercise any vested options until the earlier of six (6) months after termination or the remaining
term of the awards. If Dr. Tufaro commenced employment with another employer and became eligible to receive medical or other welfare
benefits under another employer-provided plan, the medical and other welfare benefits to be provided by the Company as described herein
would terminate.
Effective May 10, 2023, the Company entered
into a Separation Agreement and Release (the “Separation Agreement”) and a consulting agreement (the “Consulting Agreement”)
with Dr. Tufaro. Dr. Tufaro had entered into the Employment Agreement with the Company on March 22, 2022 to serve as our
Chief Operating Officer.
In accordance with the terms of the Employment
Agreement, the Separation Agreement provides for (i) the payment to Mr. Tufaro of a total of $196,875, paid in bi-monthly installments,
less applicable withholding, for a period of six months, (ii) reimbursement of COBRA coverage for himself, his spouse and other eligible
dependents for the lesser of: six months or until he commences new employment or substantial self-employment, (iii) acceleration
of the vesting of his outstanding stock options (the “Option Awards”) and (iv) the extension of the period of time for
which Mr. Tufaro has the right to exercise any vested shares subject to options until the earlier of (a) the expiration date
of the Option Awards, or (b) six (6) months from the separation date. The Separation Agreement contains mutual general releases
of claims and non-disparagement provisions.
The Consulting Agreement has a term of six months
unless sooner terminated. Either party may terminate the Consulting Agreement without cause at any time upon thirty days’ prior
written notice or with cause immediately. Mr. Tufaro will be compensated a set daily rate for each full day that he provides consulting
services, pro-rated for any days services are provided less than eight hours.
Clawback Policy
The Board has adopted a clawback policy which
allows us to recover performance-based compensation, whether cash or equity, from a current or former executive officer in the event of
an Accounting Restatement. The clawback policy defines an Accounting Restatement as an accounting restatement of our financial statements
due to our material noncompliance with any financial reporting requirement under the securities laws. Under such policy, we may recoup
incentive-based compensation previously received by an executive officer that exceeds the amount of incentive-based compensation that
otherwise would have been received had it been determined based on the restated amounts in the Accounting Restatement.
The Board has the sole discretion to determine
the form and timing of the recovery, which may include repayment, forfeiture and/or an adjustment to future performance-based compensation
payouts or awards. The remedies under the clawback policy are in addition to, and not in lieu of, any legal and equitable claims available
to the Company.
PAY VERSUS PERFORMANCE
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. For the most recently completed fiscal year, the Company did not use any “financial performance measures” as defined
in Item 402(v) of Regulation S-K to link compensation paid to our Named Executive Officers, or NEOs, to the Company’s performance.
We are also permitted to report as a “smaller reporting company” as defined under the U.S. federal securities laws. Accordingly,
we have not included a tabular list of financial performance measures, and the table below does not include a column for a “Company-Selected
Measure” as defined in Item 402(v) of Regulation S-K. For further information regarding our compensation philosophy and how
we seek to align executive compensation with the Company’s performance, refer to “Executive Compensation”.
| Year | |
SCT Total
Compensation
For
PEO(1) | | |
Compensation
Actually Paid to
PEO(2) | | |
Average SCT
Total
Compensation
for
Other Non-
PEOs(3 | | |
Average
Compensation
Actually Paid to
Other Non-
PEOs(4) | | |
Value of
Initial
Fixed
$100
Investment
Based on
Cumulative
TSR(5) | | |
Net Loss | |
| 2023 | |
$ | 1,271,913 | | |
$ | 851,435 | | |
$ | 379,431 | | |
$ | 356,134 | | |
$ | 8.48 | | |
$ | (18,349,000 | ) |
| 2022 | |
$ | 1,190,663 | | |
$ | (904,217 | ) | |
$ | 441,259 | | |
$ | 430,432 | | |
$ | 8.97 | | |
$ | (20,025,000 | ) |
| 2021 | |
$ | 1,121,124 | | |
$ | 349,848 | | |
| N/A | | |
| N/A | | |
$ | 53.70 | | |
$ | (23,189,000 | ) |
| (1) |
The dollar amounts reported are the amounts of total compensation reported for Steven A. Shallcross (our Chief Exeutive Officer and principal executive officer, or PEO) for each corresponding year in the “Total” column of the Summary Compensation Table. Refer to “Executive Compensation—Summary Compensation Table.” |
| (2) |
The dollar amounts reported in column (c) represent the amount of “compensation actually paid” to Mr. Shallcross, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to Mr. Shallcross during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the adjustments below were made to Mr. Shallcross' total compensation for each year to determine the compensation actually paid. |
| |
|
| (3) |
The dollar amounts reported represent the average of the amounts reported for the non-PEOs as a group (excluding our PEO) in the “Total” column of the Summary Compensation Table in each applicable year. Frank Tufaro was our only non-PEO (excluding our PEO) included for purposes of calculating the average amounts in 2022. For the years 2021 and 2020, we did not have any named executive officers other than our PEO. |
| |
|
| (4) |
The dollar amounts reported represent the average amount of “compensation actually paid” to the NEOs as a group (excluding our PEO), as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual average amount of compensation earned by or paid to the NEOs as a group (excluding our PEO) during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the adjustments below were made to average total compensation for the NEOs as a group (excluding our PEO) for each year to determine the compensation actually paid, using the same methodology described above in Note (2). |
| |
|
| (5) |
Cumulative TSR is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between the Company’s share price at the end and the beginning of the measurement period by the Company’s share price at the beginning of the measurement period. |
The amounts deducted or added in calculating the equity award adjustments
with regard to our PEO are as follows:
| | |
| |
2023 | |
| | |
Total Compensation as reported SCT | |
$ | 1,271,913 | |
| Subtract | |
Pension values reported in SCT for covered fiscal year | |
$ | --- | |
| Subtract | |
Fair value of equity awards granted during covered fiscal year | |
$ | (278,450 | ) |
| Add | |
Pension value attributable to covered fiscal year’s service and any change in pension value attributable to plan amendments made in the covered year | |
$ | --- | |
| Add | |
Fair value of equity awards granted in covered fiscal year and that are unvested at end of such covered fiscal year – valued at year-end | |
$ | 194,139 | |
| Add | |
Fair value of equity awards granted in covered fiscal year that vested during such covered fiscal year - valued on date of vesting | |
$ | --- | |
| Add | |
Dividends or other earnings paid on stock or option awards in the covered fiscal year prior to the vesting date that are not otherwise included in the total compensation for the covered fiscal year | |
$ | --- | |
| Add/(Subtract) | |
Change in fair value from end of prior fiscal year to end of covered fiscal year for awards made in prior fiscal years that were unvested at end of current fiscal year | |
$ | (363,645 | ) |
| Add/Subtract | |
Change in fair value from end of prior fiscal year to vesting date for awards made in prior fiscal years that vested during covered fiscal year | |
$ | 27,479 | |
| Subtract | |
Fair value of awards forfeited in current fiscal year determined at end of prior fiscal year | |
$ | --- | |
| Equals | |
Compensation Actually Paid to CEO | |
$ | 851,435 | |
The amounts deducted or added in calculating the equity award adjustments
with regard to our non-PEO are as follows:
| | |
| |
2023 | |
| | |
Total Compensation as reported SCT | |
$ | 379.431 | |
| Subtract | |
Pension values reported in SCT for covered fiscal year | |
$ | --- | |
| Subtract | |
Fair value of equity awards granted during covered fiscal year | |
$ | --- | |
| Add | |
Pension value attributable to covered fiscal year’s service and any change in pension value attributable to plan amendments made in the covered year | |
$ | --- | |
| Add | |
Fair value of equity awards granted in covered fiscal year and that are unvested at end of such covered fiscal year – valued at year-end | |
$ | --- | |
| Add | |
Fair value of equity awards granted in covered fiscal year that vested during such covered fiscal year - valued on date of vesting | |
$ | --- | |
| Add | |
Dividends or other earnings paid on stock or option awards in the covered fiscal year prior to the vesting date that are not otherwise included in the total compensation for the covered fiscal year | |
$ | --- | |
| Add/(Subtract) | |
Change in fair value from end of prior fiscal year to end of covered fiscal year for awards made in prior fiscal years that were unvested at end of current fiscal year | |
$ | --- | |
| Add/Subtract | |
Change in fair value from end of prior fiscal year to vesting date for awards made in prior fiscal years that vested during covered fiscal year | |
$ | 3,389 | |
| Subtract | |
Fair value of awards forfeited in current fiscal year determined at end of prior fiscal year | |
$ | (26,686 | ) |
| Equals | |
Compensation Actually Paid to CEO | |
$ | 356,134 | |
Analysis of the Information Presented in the Pay Versus Performance
Table
As described in more detail above in “Executive Compensation–Narrative
Disclosure to Summary Compensation Table,” the Company’s executive compensation program reflects a performance-driven compensation
philosophy. While the Company utilizes several performance measures to align executive compensation with Company performance, those Company
measures are not financial performance measures and are therefore 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 computed in accordance with Item 402(v) of Regulation S-K) for a particular year.
In accordance with Item 402(v) of Regulation S-K, we are providing the following descriptions of the relationships between information
presented in the Pay Versus Performance table above.
Compensation Actually Paid and Cumulative TSR
The chart below shows the relationship between the compensation actually
paid to our PEO and the average compensation actually paid to our non-PEO NEOs, on the one hand, to the Company’s cumulative TSR
over the three years presented in the table, on the other.
Compensation Actually Paid and Net Income
The chart below shows the relationship between the compensation actually
paid to our PEO and the average compensation actually paid to our non-PEO NEOs, on the one hand, to the Company’s net income, on
the other hand.
All information provided above under the heading “Pay Versus
Performance” will not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933,
as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general
incorporation language in any such filing, except to the extent the Company specifically incorporates such information by reference.
PROPOSAL 3
APPROVAL OF AMENDMENTS TO THE COMPANY’S
2020 STOCK INCENTIVE PLAN
On July 30, 2020, the Board of Directors
adopted, and on September 17, 2020 our stockholders approved, the Synthetic Biologics, Inc. 2020 Stock Incentive Plan (the “2020
Plan”). The 2020 Plan, as adopted, initially reserved an aggregate of 16,000 shares of Common Stock (which number has been
adjusted to reflect prior reverse stock splits, including the 1-for-25 reverse stock split effected on August 26, 2024). The Board
of Directors adopted, and the stockholders approved, an amendment to the 2020 Plan in 2022 to increase the shares available for issuance
under the 2020 Plan to 280,000 shares (which number has been adjusted to reflect the 1-for-25 reverse stock split effected on August 26,
2024). As of September 27, 2024, there were (i) 112,640 shares of Common Stock available for grant under the 2020 Plan and (ii) 175,191
shares of Common Stock subject to awards were outstanding under the 2020 Plan, which numbers have been adjusted for the 1-for-25 reverse
stock split effected on August 26, 2024.
In an effort to preserve cash and to attract,
retain and motivate persons who make important contributions to our business, we would like to issue securities to our officers, directors
and consultants. Management believes that the number of shares of Common Stock currently available for issuance under the 2020 Plan is
insufficient to ensure it can meet its needs to provide for awards to the 2020 Plan participants for the next 12 months and that
it may be insufficient in order to allow us the ability to compete successfully for talented employees and consultants.
The Board of Directors has approved, subject to
stockholder approval, the amendment to the 2020 Plan (the “2020 Plan Amendment”) to increase by 2,220,000 the number of shares
that may be granted under the 2020 Plan. The amendment to our 2020 Plan will (i) increase the number of shares of Common Stock
with respect to which awards may be granted under the 2020 Plan from 280,000 shares of Common Stock (which number has been adjusted to
reflect the reverse stock split effected on August 26, 2024) to 2,500,000 shares of Common Stock, and (ii) amend the number
of shares of Common Stock with respect to which awards may be granted under the 2020 Plan to any non-employee director during any calendar
year from 40,000 shares of Common Stock (which number has been adjusted to reflect the reverse stock split effected on August 26,
2024) to 250,000 shares of Common Stock.
Purpose of the 2020 Stock Incentive Plan
The Board of Directors believes that the proposed
amendment to the 2020 Plan is necessary for us to attract, retain and motivate our employees, directors and consultants through the grant
of stock options, stock appreciation rights, restricted stock, restricted stock units and other equity-based or equity-related awards.
The Company believes the 2020 Plan is best designed to provide the proper incentives for our employees, directors and consultants, ensures
our ability to make performance-based awards, and meets the requirements of applicable law. Additional individuals may be awarded awards
under the 2020 Plan as consultants.
We manage our long-term stockholder dilution by
limiting the number of equity incentive awards granted annually. The Board of Directors monitors our annual stock award Burn Rate, Dilution
and Overhang (each as defined below), among other factors, in its efforts to maximize stockholders’ value by granting what, in the
Board of Directors’ judgment, are the appropriate number of equity incentive awards necessary to attract, reward, and retain employees,
consultants and directors. The table below illustrates our Burn Rate, Dilution, and Overhang for 2023, 2022, and 2021 with details of
each calculation are noted below the table.
| | |
2023 | | |
2022 | | |
2021 | |
| Burn Rate(1) | |
| 13.63 | % | |
| 11.27 | % | |
| 1.85 | % |
| Dilution(2) | |
| 29.57 | % | |
| 31.25 | % | |
| 3.08 | % |
| Overhang(3) | |
| 17.97 | % | |
| 9.96 | % | |
| 2.93 | % |
| (1) | Burn Rate is (number of shares subject to equity awards granted during a fiscal year)/(weighted average shares outstanding for that
fiscal year). |
| (2) | Dilution is (number of shares subject to equity awards + the number of shares available for future awards at the end of a fiscal year)/(number
of shares outstanding at the end of the fiscal year + number of share subject to equity awards + number of shares available for future
awards). |
| (3) | Overhang is (number of shares subject to equity awards at the end of a fiscal year)/(number of shares outstanding at the end of the
fiscal year + number of shares subject to equity awards + number of shares available for future awards). |
Limitation on Awards and Shares Available
The aggregate number of shares of Common Stock
that we have authority to issue pursuant to stock awards under the 2020 Stock Incentive Plan is 280,000 shares. To date, we have issued
options to purchase an aggregate of 167,360 shares of Common Stock under the 2020 Plan. As of September 27, 2024, there are 112,640
shares of Common Stock available for grants that may be made under the 2020 Plan. The 2020 Plan Amendment would increase the number of
shares we have authority to issue pursuant to stock awards under the 2020 Stock Incentive Plan by 2,220,000 shares to 2,500,000 shares.
Summary of the 2020 Stock Incentive Plan
The following is a summary of the principal features
of the 2020 Plan. This summary does not purport to be a complete description of all of the provisions of the 2020 Plan and it is qualified
in its entirety by reference to the full text of the 2020 Plan, a copy of which has been filed as an exhibit to our Annual Report on Form 10-K
for the year ended December 31, 2023 and the proposed amendment to the 2020 Plan is attached hereto as Appendix A.
Available
Shares. Currently, an aggregate of 280,000 shares of the Company’s Common Stock may be issued under
the 2020 Plan, subject to equitable adjustment in the event of stock splits and other capital changes, all of which may be issued in respect
of Incentive Stock Options (or ISOs) that meet the requirements of Section 424(a) of the Code.
In applying the aggregate share limitation under
the 2020 Plan, shares of Common Stock (i) subject to awards that are forfeited, cancelled, returned to or repurchased by the Company
for failure to satisfy vesting requirements or otherwise forfeited, or terminated without payment being made thereunder and (ii) that
are surrendered in payment or partial payment of the exercise price of an option or taxes required to be withheld with respect to the
exercise of stock options or in payment with respect to any other form of award, are not counted and, therefore, may be made subject to
new awards under the 2020 Plan.
Non-Employee Director Compensation Limit
Under the 2020 Plan, no more than 40,000 shares
of Common Stock (which number has been adjusted to reflect the reverse stock split effected on August 26, 2024) may be subject to
stock awards granted under the 2020 Plan during any one calendar year to any non-employee director. The 2020 Plan Amendment would adjust
the number of shares of Common Stock with respect to which awards may be granted under the 2020 Plan to any non-employee director during
any calendar year from 40,000 shares of Common Stock to 250,000 shares of Common Stock.
Administration. The
2020 Plan is administered by the Compensation Committee of our Board of Directors (the “Compensation Committee”). The Compensation
Committee has discretion to determine the individuals to whom awards may be granted under the 2020 Plan, the number of shares of Common
Stock, units or other rights subject to each award, the type of award, the manner in which such awards will vest, and the other conditions
applicable to awards. The Compensation Committee is authorized to interpret the 2020 Plan, to prescribe, amend and rescind any rules and
regulations relating to the 2020 Plan and to make any other determinations necessary or desirable for the administration of the 2020 Plan.
All interpretations, determinations and actions by the Compensation Committee are final, conclusive and binding on all parties.
Eligibility. Any
employee, officer, director, consultant, advisor or other individual service provider of the Company or any of its subsidiaries, or any
person who is determined by our Compensation Committee to be a prospective employee, officer, director, consultant, advisor or other individual
service provider of the Company or any of its subsidiaries is eligible to participate in the 2020 Plan. As of September 27, 2024, the
Company had approximately 23 full-time employees, including 1 executive officer, 3 non-employee directors, and 4 consultants, advisors
and/or other individual service providers. As of September 27, 2024, no person is eligible to participate as a result of a determination
by the Compensation Committee that that person is a prospective employee, director or consultant of our Company or any of our subsidiaries.
As awards under the 2020 Plan are within the discretion of the Compensation Committee, we cannot determine how many individuals in each
of the categories described above will receive awards.
Types
of Awards. Under the 2020 Plan, the Compensation Committee may grant nonqualified stock options (or NSOs),
incentive stock options (or ISOs), stock appreciation rights (or SARs), restricted stock, stock units, performance shares, performance units,
other cash-based awards and other stock- based awards. The terms of each award will be set forth in a written agreement with the recipient.
Stock
Options. The Compensation Committee will determine the exercise price and other terms for each option and
whether the options will be NSOs or ISOs. The exercise price per share of each option will not be less than 100% of the fair market value
of the Company’s Common Stock on the date of grant or, if there are no trades on such date, then the closing price of a share of
our Common Stock on the most recent date preceding the date of grant on which shares of Common Stock were publicly traded (or 110% of
the fair market value per share in the case of ISOs granted to a ten-percent or more shareholder). However, if permissible under law
and the rules of the exchange on which the Company is listed, options to participants who are not residents of the U.S. may be granted
at a price below fair market value on the date of grant. On September 27, 2024, the closing sale price of a share of our Common
Stock on the NYSE American was $1.49.
ISOs may be granted only to employees and are
subject to certain other restrictions. To the extent an option intended to be an ISO does not qualify as an ISO, it will be treated as
a nonqualified option.
A participant may exercise an option by written
notice and payment of the exercise price in cash, or, as determined by the Compensation Committee, through delivery of previously owned
shares, the withholding of shares deliverable upon exercise, a cashless exercise program implemented by the Compensation Committee in
connection with the 2020 Plan, and/or such other method as approved by the Compensation Committee and set forth in an award agreement.
The maximum term of any option granted under the 2020 Plan is ten years from the date of grant (five years in the case of an
ISO granted to a ten-percent or more shareholder). The Compensation Committee may, in its discretion, permit a holder of an NSO to exercise
the option before it has otherwise become exercisable, in which case the shares of the Company’s Common Stock issued to the recipient
will be restricted stock having analogous vesting restrictions to the unvested NSO before exercise.
No option may be exercisable for more than ten years
(five years in the case of an ISO granted to a ten-percent or more shareholder) from the date of grant. Options granted under the
2020 Plan will be exercisable at such time or times as the Compensation Committee prescribes at the time of grant. No employee may receive
ISOs that first become exercisable in any calendar year in an amount exceeding $100,000.
Unless an award agreement provides otherwise,
if a participant’s Service (as defined in the 2020 Plan) terminates (i) by reason of his or her death or Disability (as defined
in the 2020 Plan), any option held by such participant may be exercised, to the extent otherwise exercisable, by the participant or his
or her estate or personal representative, as applicable, at any time in accordance with its terms for up to one year after the date of
such participant’s death or termination of Service, as applicable, (ii) for Cause (as defined in the 2020 Plan), any option
held by such participant will be forfeited and cancelled as of the date of termination of Service and (iii) for any reason other
than death, Disability or Cause, any option held by such participant may be exercised, to the extent otherwise exercisable, up until ninety
(90) days following termination of Service.
Stock
Appreciation Rights. The Compensation Committee may grant SARs on a basis that allows for the exercise of the right
by the Participant or that provides for the automatic payment of the right upon a specified date or event. The Compensation Committee
will determine the other terms applicable to SARs. The base price per share of each SAR will not be less than 100% of the closing price
of a share of the Company’s Common Stock on the date of grant or, if there are no trades on such date, then the closing price of
a share of the Company’s Common Stock on the most recent date preceding the date of grant on which shares of Common Stock were publicly
traded. The maximum term of any SAR granted under the 2020 Plan will be ten years from the date of grant. Generally, each SAR will
entitle a participant upon exercise to an amount equal to the excess of the fair market value on the exercise date of one share of our
Common Stock over the base price, multiplied by the number of shares of Common Stock as to which the SAR is exercised. Payment may be
made in shares of Company Common Stock, in cash, or partly in shares of Company Common Stock and partly in cash, all as determined by
the Compensation Committee.
Restricted
Stock and Stock Units. The Compensation Committee may award restricted common stock and/or stock units under
the 2020 Plan. Restricted stock awards consist of shares of stock that are transferred to a participant subject to restrictions that may
result in forfeiture if specified conditions are not satisfied. Stock units confer the right to receive shares of the Company’s
Common Stock, cash, or a combination of shares and cash, at a future date upon or following the attainment of certain conditions specified
by the Compensation Committee, subject to applicable tax withholding requirements. The Compensation Committee will determine the restrictions
and conditions applicable to each award of restricted stock or stock units, which may include performance-based conditions. Unless
the Compensation Committee determines otherwise at the time of grant, holders of restricted stock will have the right to vote the shares
and receive all dividends and other distributions.
Performance
Shares and Performance Units. The Compensation Committee may award performance shares and/or performance units under the
2020 Plan. Performance shares and performance units are awards, payable in shares of the Company’s Common Stock, cash or a
combination thereof, which are earned during a specified time period subject to the attainment of performance goals, as established by
the Compensation Committee. The Compensation Committee will determine the restrictions and conditions applicable to each award of performance
shares and performance units.
Incentive
Bonus Awards. The Compensation Committee may award incentive bonus awards payable in cash or shares of common stock,
as set forth in an award agreement. Incentive bonus awards may be based upon the attainment of specified levels of Company or subsidiary
performance. The amount of an incentive bonus award to be paid upon the attainment of each targeted level of performance will equal a percentage
of a participant’s base salary for the fiscal year, a fixed dollar amount or such other formula, as determined by the Compensation
Committee. The Compensation Committee will determine the terms and conditions applicable to each incentive bonus award.
Other
Stock-Based and Cash-Based Awards. The Compensation Committee may award other types of stock-based or cash-based
awards under the 2020 Plan, including the grant or offer for sale of unrestricted shares of the Company’s Common Stock, in such
amounts and subject to such terms and conditions as the Compensation Committee determines.
Transferability. Awards
granted under the 2020 Plan will not be transferable other than by will or by the laws of descent and distribution, except that the Compensation
Committee may permit NSOs, share-settled SARs, restricted stock, performance share or share-settled other stock-based awards to be transferred
to immediate family members and/or for estate planning or charitable purposes.
Change
in Control. The Compensation Committee may, at the time of the grant of an award, provide for the effect of
a Change in Control (as defined in the 2020 Plan) on any award, including (i) accelerating or extending the time periods for exercising,
vesting in, or realizing gain from any award, (ii) eliminating or modifying the performance or other conditions of an award, (iii) providing
for the cash settlement of an award for an equivalent cash value, as determined by the Compensation Committee, or (iv) such other
modification or adjustment to an award as the Compensation Committee deems appropriate to maintain and protect the rights and interests
of participants upon or following a Change in Control. Unless otherwise provided by an award agreement, the Compensation Committee may,
in its discretion and without the need for the consent of any recipient of an award, also take one or more of the following actions contingent
upon the occurrence or in anticipation of a Change in Control: (a) cause any or all outstanding options and SARs to become immediately
exercisable, in whole or in part; (b) cause any other awards to become non-forfeitable, in whole or in part; (c) cancel any
option or SAR in exchange for a substitute option and/or SAR; (d) cancel any award of restricted stock, stock units, performance
shares or performance units in exchange for a similar award of the capital stock of any successor corporation; (e) redeem any
restricted stock for cash and/or other substitute consideration with a value equal to the fair market value of an unrestricted share of
the Company’s Common Stock on the date of the Change in Control; or (f) terminate any award in exchange for an amount of cash
and/or property equal to the amount, if any, that would have been attained upon the exercise of such award or realization of the participant’s
rights as of the date of the occurrence of the Change in Control (the “Change in Control Consideration”); provided, however
that if the Change in Control Consideration with respect to any option or SAR does not exceed the exercise price of such option or SAR,
the Compensation Committee may cancel the option or SAR without payment of any consideration therefor. Any such Change in Control Consideration
may be subject to any escrow, indemnification and similar obligations, contingencies and encumbrances applicable in connection with the
Change in Control to holders of the Company’s Common Stock. Without limitation of the foregoing, if as of the date of the occurrence
of the Change in Control the Compensation Committee determines that no amount would have been attained upon the realization of the participant’s
rights, then such award may be terminated by the Company without payment. The Compensation Committee may cause the Change in Control Consideration
to be subject to vesting conditions (whether or not the same as the vesting conditions applicable to the award prior to the Change in
Control) and/or make such other modifications, adjustments or amendments to outstanding Awards or the 2020 Plan as the Compensation Committee
deems necessary or appropriate.
Term;
Amendment and Termination. No award may be granted under the 2020 Plan on or after July 30, 2030.
The Board of Directors may suspend or terminate the 2020 Plan (or any portion thereof) at any time and may amend the 2020 Plan at any
time and from time to time in such respects as the Board of Directors may deem advisable or in the best interests of the Company or any
subsidiary, provided, however, that (i) no amendment, suspension or termination may materially impair the rights of a participant
under any awards previously granted, without his or her consent, (ii) the Company shall obtain stockholder approval of any 2020 Plan
amendment as required to comply with any applicable law, regulation or stock exchange rule and (iii) stockholder approval is
required for any amendment to the 2020 Plan that (x) increases the number of shares of common stock available for issuance thereunder
or (y) changes the persons or class of persons eligible to receive awards.
New Plan Benefits
The grant of options and other awards under the
2020 Plan is discretionary, and we cannot determine now the number or type of options or other awards to be granted in the future to any
particular person or group.
Since it is not possible to determine the exact
number of awards that will be granted under the 2020 Plan, the awards granted during 2023 under the 2020 Plan are set forth in the following
table.
| Name and position | |
Number of
Stock Options | |
| Steven A. Shallcross, Chief Executive Officer, Chief Financial Officer and Director | |
| 28,000 | |
| Frank Tufaro, Chief Operating Officer | |
| 0 | |
| All Current Executive Officers as a Group (two (2) persons) | |
| 28,000 | |
| All Current Non-Executive Directors as a Group (three (3) persons) | |
| 13,200 | |
| All Employees, including our current officers who are not Executive Officers, as a group | |
| 46,600 | |
U.S. Federal Income Tax Consequences
The following is a brief summary of the general
U.S. federal income tax consequences relating to the 2020 Plan. This summary is based on U.S. federal tax laws and regulations in effect
on the date of this Proxy Statement and does not purport to be a complete description of the U.S. federal income tax laws.
Incentive
Stock Options. Incentive stock options are intended to qualify for special treatment available under Section 422
of the Internal Revenue Code. A participant who is granted an incentive stock option will not recognize ordinary income at the time of
grant. A participant will not recognize ordinary income upon the exercise of an incentive stock option provided that the participant was,
without a break in service, an employee of the Company or a subsidiary during the period beginning on the grant date of the option and
ending on the date three months prior to the date of exercise (one year prior to the date of exercise if the participant’s employment
is terminated due to permanent and total disability).
If the participant does not sell or otherwise
dispose of the shares of Common Stock acquired upon the exercise of an incentive stock option within two years from the grant date of
the incentive stock option or within one year after he or she receives the shares of Common Stock, then, upon disposition of such shares
of Common Stock, any amount recognized in excess of the exercise price will be taxed to the participant as a capital gain. The participant
will generally recognize a capital loss to the extent that the amount recognized is less than the exercise price.
If the foregoing holding period requirements are
not met, the participant will generally recognize ordinary income at the time of the disposition of the shares of Common Stock in an amount
equal to the lesser of (i) the excess of the fair market value of the shares of Common Stock on the date of exercise over the exercise
price or (ii) the excess, if any, of the amount recognized upon disposition of the shares of Common Stock over the exercise price.
Any amount recognized in excess of the value of the shares of Common Stock on the date of exercise will be capital gain. If the amount
recognized is less than the exercise price, the participant generally will recognize a capital loss equal to the excess of the exercise
price over the amount recognized upon the disposition of the shares of Common Stock.
The rules described above that generally
apply to incentive stock options do not apply when calculating any alternative minimum tax liability. The rules affecting the application
of the alternative minimum tax are complex, and their effect depends on individual circumstances, including whether a participant has
items of adjustment other than those derived from incentive stock options.
Nonqualified
Stock Options. A participant will not recognize ordinary income when a nonqualified stock option is granted. When a nonqualified
stock option is exercised, a participant will recognize ordinary income in an amount equal to the excess, if any, of the fair market value
of the shares of Common Stock that the participant purchased over the exercise price he or she paid.
Stock
Appreciation Rights. A participant will not recognize ordinary income when a SAR is granted. When a SAR is exercised,
the participant will recognize ordinary income equal to the cash and/or the fair market value of shares of Common Stock the participant
receives.
Restricted
Shares. A participant who has been granted restricted shares will not recognize ordinary income at the time of grant,
assuming that the underlying shares of Common Stock are not transferable and that the restrictions create a “substantial risk of
forfeiture” for federal income tax purposes and that the participant does not make an election under Section 83(b) of
the Internal Revenue Code. Generally, upon the vesting of restricted shares, the participant will recognize ordinary income in an amount
equal to the then fair market value of the shares of Common Stock, less any consideration paid for such shares of Common Stock. Any gains
or losses recognized by the participant upon disposition of the shares of Common Stock will be treated as capital gains or losses. However,
a participant may elect, pursuant to Section 83(b) of the Internal Revenue Code, to have income recognized at the date of grant
of a restricted share award equal to the fair market value of the shares of Common Stock on the grant date (less any amount paid for the
restricted shares) and to have the applicable capital gain holding period commence as of that date.
Restricted
Share Units. A participant generally will not recognize ordinary income when restricted share units are granted. Instead,
a participant will recognize ordinary income when the restricted share units are settled in an amount equal to the fair market value of
the shares of Common Stock or the cash he or she receives, less any consideration paid.
Sale
of Shares. When a participant sells shares of Common Stock that he or she has received under an award, the participant
will generally recognize long-term capital gain or loss if, at the time of the sale, the participant has held the shares of Common Stock
for more than one year (or, in the case of a restricted share award, more than one year from the date the restricted shares vested unless
the participant made an election pursuant to Section 83(b) of the Internal Revenue Code, described above). If the participant
has held the shares of Common Stock for one year or less, the gain or loss will be a short-term capital gain or loss.
Section 409A
of the Tax Code. In 2004, the Internal Revenue Code was amended to add Section 409A, which created new rules for
amounts deferred under nonqualified deferred compensation plans. Section 409A includes a broad definition of nonqualified deferred
compensation plans which may extend to various types of awards granted under the 2020 Plan. If an award is subject to, but fails to comply
with, Section 409A, the participant would generally be subject to accelerated income taxation, plus a penalty tax and an interest
charge. The Company intends that awards granted under the 2020 Plan will either be exempt from, or will comply with, Section 409A.
Tax
Deductibility of Compensation Provided Under the 2020 Plan. When a participant recognizes ordinary compensation income
as a result of an award granted under the 2020 Plan, the Company may be permitted to claim a federal income tax deduction for such compensation,
subject to various limitations that may apply under applicable law.
Further, to the extent that compensation provided
under the 2020 Plan may be deemed to be contingent upon a change in control of the Company, a portion of such compensation may be non-deductible
by the Company under Section 280G of the Internal Revenue Code and may be subject to a 20% excise tax imposed on the recipient of
the compensation.
Equity Compensation Plan Information
The following table sets forth information about
the securities authorized for issuance under our equity compensation plans for the fiscal year ended December 31, 2023.
| | |
| | |
| | |
Number of | |
| | |
| | |
| | |
Securities | |
| | |
Number of | | |
| | |
Remaining | |
| | |
Securities | | |
| | |
Available for | |
| | |
to be Issued Upon | | |
Weighted-Average | | |
Future Issuance | |
| | |
Exercise of | | |
Exercise Price of | | |
Under Equity | |
| | |
Outstanding | | |
Outstanding | | |
Compensation | |
| Plan Category(1) | |
Options | | |
Options | | |
Plans | |
| Equity compensation plans approved by stockholders: | |
| | | |
| | | |
| | |
| 2001 Stock Incentive Plan | |
| — | | |
$ | — | | |
| — | |
| 2007 Stock Incentive Plan | |
| 4 | | |
$ | 7,600 | | |
| — | |
| 2010 Stock Incentive Plan | |
| 7,942 | | |
$ | 537,25 | | |
| — | |
| 2020 Stock Incentive Plan | |
| 167,087 | | |
| 21.25 | | |
| 112,914 | |
| Equity compensation plans not approved by stockholders | |
| N/A | | |
| N/A | | |
| N/A | |
| Total | |
| 175,033 | | |
$ | 45 | | |
| 112,914 | |
(1) This table does not include the additional
shares proposed to be authorized under the 2020 Plan pursuant to the 2020 Plan Amendment which is subject to stockholder approval as provided
in Proposal 3.
Interests of Directors and Executive Officers
Our directors and executive officers have substantial
interests in the matters set forth in this proposal regarding the proposed 2020 Plan Amendment since equity awards may be granted to them
under the 2020 Plan.
Vote Required
Approval of the 2020 Plan Amendment included as
Appendix A requires the affirmative vote of a majority of the shares of Common Stock present in person or represented by proxy
and entitled to vote on this matter at the 2024 Annual Meeting of Stockholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE “FOR” THE AMENDMENT TO THE COMPANY’S 2020 PLAN TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK AVAILABLE
THAT WE WILL HAVE AUTHORITY TO GRANT.
PROPOSAL 4
APPROVAL
OF AN AMENDMENT TO THE COMPANY’S ARTICLES OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
Our Board of Directors has unanimously approved
an amendment to our Articles of Incorporation to increase the number of shares of authorized Common Stock from 14,000,000 shares to 350,000,000
shares, as further described below. The number of authorized shares was decreased in connection with the reverse stock split effected
August 26, 2024. If approved, the Authorized Common Stock Increase would be effected by amending Article 3 of our Articles of
Incorporation to reflect the Authorized Common Stock Increase which would restore the authorized number of shares of Common Stock to the
pre-August 26, 2024 reverse stock split authorized number. The full text of the proposed certificate of change to amend Article 3
of our Articles of Incorporation is attached to this Proxy Statement as Appendix B.
The Board of Directors proposes and recommends
increasing the number of shares of authorized Common Stock from the 14,000,000 shares that are authorized for issuance pursuant to our
Articles of Incorporation to a total of 350,000,000 shares of Common Stock. The chart below illustrates the number of shares of Common
Stock that will be available for issuance if the Authorized Common Stock Increase is effected. The number of shares disclosed in the column
“Estimated Number of Shares of Common Stock after the Increase” gives further effect to the Authorized Common Stock Increase
in the number of authorized shares of Common Stock from 14,000,000 to 350,000,000.
| | |
ESTIMATED NUMBER
OF SHARES OF
COMMON STOCK
BEFORE INCREASE | | |
ESTIMATED NUMBER
OF SHARES OF
COMMON STOCK
AFTER THE INCREASE(3) | |
| Authorized | |
| 14,000,000 | | |
| 350,000,000 | |
| Outstanding | |
| 2,272,462 | | |
| 2,272,462 | |
| Issuable upon exercise of outstanding warrants and options | |
| 2,113,791 | | |
| 2,113,791 | |
| Reserved for issuance(1) | |
| 112,640 | | |
| 2,332,640 | |
| Authorized but unissued(2) | |
| 9,501,107 | | |
| 343,281,107 | |
| (1) | Shares reserved for future issuance under our existing equity incentive plans, excluding shares issuable under outstanding stock options, and outstanding warrants. |
| (2) | Shares authorized but unissued represent Common Stock available for future issuance beyond shares currently outstanding, shares issuable
under outstanding warrants and stock options, and shares reserved for issuance under
equity incentive plans. |
| (3) | Assumes the 2020 Plan Amendment is approved by stockholders. |
The Board of Directors believes that the Authorized Common Stock Increase
is advisable and in our stockholders’ best interests. The Authorized Common Stock Increase will provide us with flexibility in completing
financing and capital raising transactions, which may be necessary for us to execute our future business plans.
We anticipate that we may issue additional shares of Common Stock in
the future in connection with one or more of the following:
• financing transactions, such as public or private
offerings of Common Stock or convertible securities;
• partnerships, collaborations
and other similar transactions;
• our equity incentive plans;
• strategic investments; and
• other corporate purposes that have not yet been identified.
The availability of additional shares of Common Stock for issuance
is, in management’s view, prudent and will afford us flexibility in acting upon financing transactions to strengthen our financial
position and/or commercial partnership opportunities that may arise and aid in meeting the NYSE American stockholders’ equity requirements.
Other possible business and financial uses for the additional shares of Common Stock include, without limitation, potential strategic
transactions, including, among other things, acquisitions, strategic partnerships, joint ventures, restructurings, business combinations
and investment. As of the Record Date, we have approximately 112,640 authorized shares of Common Stock available for future issuance.
We do not believe that this is sufficient to meet our future equity financing requirements. We currently have no agreements with any third
parties for the sale of our securities. Although at this time, we do not have any plans, commitments, proposals, arrangements, understandings
or agreements regarding the issuance of Common Stock other than issuances upon exercise or conversion of currently outstanding securities;
we anticipate seeking future equity financing opportunities and will evaluate opportunities that are presented to us. We believe that
the Authorized Common Stock Increase will help ensure that we have sufficient authorized shares available for issuance to allow us to
pursue equity financings if the Board of Directors determines that it would be in our best interests based on our working capital needs
and prevailing market conditions.
We believe that the additional authorized shares
would enable us to act quickly in response to opportunities that may arise for these types of transactions, in most cases without the
necessity of obtaining further stockholder approval and holding a special stockholders’ meeting before such issuance(s) could
proceed, except as provided under Nevada law or under applicable NYSE American rules.
Possible Effects of the Authorized Common Stock
Increase
The newly authorized shares of Common Stock will
have all the powers, preferences, and rights of the shares of Common Stock presently authorized. Therefore, approval of the Authorized
Common Stock Increase and any subsequent issuance of additional shares of Common Stock would not affect a current common stockholder’s
rights as a stockholder, except for any dilutive effects of a potential increase in the number of outstanding shares of Common Stock to,
among other things, earnings per share, book value per share, and the voting power of current holders of our Common Stock. The Authorized
Common Stock Increase would not have any immediate dilutive effect on the proportionate voting power or other rights of existing stockholders
until additional shares are issued.
As is true for shares presently authorized but
unissued, the future issuance of Common Stock authorized by the Authorized Common Stock Increase may, among other things, decrease existing
stockholders’ percentage equity ownership and, depending on the price at which they are issued, could be dilutive to the voting
rights of existing stockholders and have a negative effect on the market price of the Common Stock.
Potential Anti-takeover Effects of the Authorized
Common Stock Increase
Release No. 34-15230 of the staff of the
SEC requires disclosure and discussion of the effects of any action, including the proposals discussed herein, that may be used as an
anti-takeover mechanism. Since the Authorized Common Stock Increase will provide that the number of authorized shares of Common Stock
will be 350,000,000, the Authorized Common Stock Increase, if effected, will result in a relative increase in the number of authorized
but unissued shares of our Common Stock vis-à-vis the outstanding shares of our Common Stock and, could, under certain circumstances,
have an anti-takeover effect, although this is not the purpose or intent of our Board of Directors. A relative increase in the number
of authorized shares of Common Stock could have other effects on our stockholders, depending upon the exact nature and circumstances of
any actual issuances of authorized but unissued shares. A relative increase in our authorized shares could potentially deter takeovers,
including takeovers that our Board of Directors has determined are not in the best interest of our stockholders, in that additional shares
could be issued (within the limits imposed by applicable law and the NYSE American) in one or more transactions that could make a change
in control or takeover more difficult. For example, we could issue additional shares without further stockholder approval so as to dilute
the stock ownership or voting rights of persons seeking to obtain control without our agreement. Similarly, the issuance of additional
shares to certain persons allied with our management could have the effect of making it more difficult to remove our current management
by diluting the stock ownership or voting rights of persons seeking to cause such removal. The Authorized Common Stock Increase therefore
may have the effect of discouraging unsolicited takeover attempts. By potentially discouraging initiation of any such unsolicited takeover
attempts, the Authorized Common Stock Increase may limit the opportunity for our stockholders to dispose of their shares at the higher
price generally available in takeover attempts or that may be available under a merger proposal.
We have not proposed the increase in the number
of authorized shares of Common Stock with the intention of using the additional authorized shares for anti-takeover purposes, but we would
be able to use the additional shares to oppose a hostile takeover attempt or delay or prevent changes in our control or our management.
Although the Authorized Common Stock Increase has been prompted by business and financial considerations and not by the threat of any
known or threatened hostile takeover attempt, stockholders should be aware that the effect of the Authorized Common Stock Increase could
facilitate future attempts by us to oppose changes in our control and perpetuate our management, including transactions in which the stockholders
might otherwise receive a premium for their shares over then current market prices. We cannot provide assurances that any such transactions
will be consummated on favorable terms or at all, that they will enhance stockholder value, or that they will not adversely affect our
business or the trading price of the Common Stock.
Consequences if Stockholder Approval for Proposal
Is Not Obtained
If stockholder approval for this Proposal 4 is
not obtained, we will not be able to file a certificate of change to amend our Articles of Incorporation to effect the Authorized Common
Stock Increase, and our limited number of authorized shares of the Common Stock that are neither outstanding nor reserved for issuance
could adversely affect our ability to raise capital through equity financings or engage in acquisitions or other transactions.
Interests of Directors and Executive Officers
Our directors and executive officers have no substantial
interests, directly or indirectly, in the matters set forth herein regarding the proposed Authorized Common Stock Increase except to the
extent of their ownership of shares of our Common Stock and any additional shares of Common Stock that will be available for grant under
the 2020 Plan.
Vote Required to Approve the Authorized Common
Stock Increase
Approval of the certificate of change to our Articles
of Incorporation included as Appendix B, and to authorize our Board of Directors to effect the Authorized Common Stock Increase,
requires an affirmative vote of a majority of the voting power of the Common Stock.
Recommendation
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE “FOR” APPROVAL OF THE AMENDMENT TO THE COMPANY’S ARTICLES OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED
SHARES OF COMMON STOCK.
PROPOSAL 5
ADJOURNMENT OF THE ANNUAL MEETING
Background of and Rationale for the Adjournment
Proposal
Our stockholders are being asked to consider and
vote upon an adjournment of the 2024 Annual Meeting of Stockholders, if necessary, to solicit additional proxies if there are not sufficient
votes in favor Proposal 3 and/or Proposal 4.
In the Adjournment Proposal, we are asking stockholders
to authorize the holder of any proxy solicited by the Board to vote in favor of adjourning or postponing the 2024 Annual Meeting of Stockholders
or any adjournment or postponement thereof. If our stockholders approve this proposal, we could adjourn or postpone the 2024 Annual Meeting
of Stockholders, and any adjourned session of the 2024 Annual Meeting of Stockholders, to use the additional time to solicit additional
proxies in favor of Proposal 3 and/or Proposal 4.
Additionally, approval of the Adjournment Proposal could mean that,
in the event we receive proxies indicating that holders of a majority of the number of shares present in person or represented by proxy
at the 2024 Annual Meeting of Stockholders will vote against Proposal 3 and/or Proposal 4, we could adjourn or postpone the 2024 Annual
Meeting of Stockholders without a vote on Proposal 3 and/or Proposal 4 and use the additional time to solicit the holders of those shares
to change their vote in favor of Proposal 3 and/or Proposal 4.
Vote Required
Approval of
the adjournment of the 2024 Annual Meeting of Stockholders requires an affirmative vote of holders of a majority of the shares
of Common Stock present in person or represented by proxy and entitled to vote on this matter at the 2024 Annual Meeting of Stockholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE “FOR”
APPROVAL OF THE ADJOURNMENT PROPOSAL.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth information, as
of September 27, 2024, or as otherwise set forth below, with respect to the beneficial ownership of our common stock (i) all
persons known to us to be the beneficial owners of more than 5% of the outstanding shares of our common stock; (ii) each of our directors
and our named executive officers named in the Summary Compensation Table; and (iii) all of our directors and our current executive
officer as a group. All share numbers set forth below reflect the 1-for-25 reverse stock split effected on August 26, 2024.
| | |
Shares Owned (1) | |
| | |
Number of | | |
| |
| | |
Shares | | |
Percentages | |
| Name and Address of Beneficial Ownership (2) | |
Owned | | |
of Shares (3) | |
| Named Executive Officers and Directors | |
| | | |
| | |
| Jeffrey J. Kraws (4) | |
| 10,800 | | |
| * | |
| Steven Shallcross (5) | |
| 40,086 | | |
| 1.7 | % |
| Jeffrey Wolf (6) | |
| 10,774 | | |
| * | |
| John Monahan (7) | |
| 9,534 | | |
| * | |
| All current officers and directors as a group (4 persons) | |
| 71,194 | | |
| 3.05 | % |
| Frank Tufaro (8) | |
| 3,225 | | |
| * | |
| | |
| | | |
| | |
| 5% Stockholders | |
| | | |
| | |
| Armistice Capital Master Fund Ltd. (9) | |
| 225,000 | | |
| 9.9 | % |
| CVI Investments, Inc. (10) | |
| 229,915 | | |
| 9.9 | % |
| Anson Investments Master Fund LP (11) | |
| 225,000 | | |
| 9.9 | % |
| Intracoastal Capital LLC(12) | |
| 140,000 | | |
| 6.2 | % |
| |
* |
represents less than 1% of our common stock |
| (1) |
The address for each officer and directors is 9605 Medical Center, Suite 270, Rockville, Maryland 20850. |
| (2) |
Beneficial ownership is determined in accordance with SEC rules and generally includes voting or investment power with respect to securities. Except as indicated in the footnotes to the table, to the knowledge of the Company, the persons named in the table have sole voting and investment power with respect to all shares of common stock, preferred stock, options and/or warrants shown as beneficially owned by them, subject to community property laws, where applicable. Pursuant to the rules of the SEC, the number of shares of our common stock deemed outstanding includes shares issuable pursuant to options held by the respective person or group that are currently exercisable or may be exercised within 60 days of September 27, 2024. |
| (3) |
As of September 27, 2024, the Company had 2,272,462 shares of common stock outstanding. |
| (4) |
Includes 10,774 shares issuable upon exercise of options held by Mr. Kraws that are exercisable within the 60-day period following September 27, 2024. Does not include an additional 367 shares issuable upon exercise of options held by Mr. Kraws that are not exercisable within the 60-day period following September 27, 2024. |
| (5) |
Includes 27,788 shares issuable upon exercise of options held by Mr. Shallcross and 2,298 shares of Common Stock issuable upon exercise of options held by Mrs. Shallcross (Mr. Shallcross’s wife) that are exercisable within the 60-day period following September 27, 2024. Does not include an additional 26,378 shares issuable upon exercise of options held by Mr. Shallcross and 2,822 issuable upon exercise of options held by Mrs. Shallcross that are not exercisable within the 60-day period following September 27, 2024. |
| |
|
| (6) |
Includes 10,774 shares issuable upon exercise of options held by Mr. Wolf that are exercisable within the 60-day period following September 27, 2024. Does not include an additional 367 shares issuable upon exercise of options held by Mr. Wolf that are not exercisable within the 60-day period following September 27, 2024. |
| (7) |
Includes 9,534 shares issuable upon exercise of options held by Dr. Monahan that are exercisable within the 60-day period following September 27, 2024. Does not include an additional 367 shares issuable upon exercise of options held by Dr. Monahan that are not exercisable within the 60-day period following September 27, 2024. |
| (8) |
Includes 3,225 shares of Common Stock owned by Dr. Tufaro. Dr. Tufaro was appointed as our Chief Operating Officer on March 22, 2022 and resigned from the Company effective May 10, 2023. |
| (9) |
Includes 225,000 shares of Common Stock. Does not include 345,000 shares of Common Stock issuable upon exercise of Pre-Funded Warrants and 570,000 shares of Common Stock issuable upon exercise of Common Warrants, which warrants are subject to a beneficial ownership limit of 9.99% and 4.99%, respectively and, therefore, are not exercisable since the exercise thereof would cause Armistice Capital Master Fund Ltd. to beneficially own a number of shares of Common Stock in excess of such beneficial ownership limitations. All of the foregoing securities are directly held by Armistice Capital Master Fund Ltd., a Cayman Islands exempted company, and may be deemed to be indirectly beneficially owned by (i) Armistice Capital LLC (“Armistice”), as the investment manager of Armistice Capital Master Fund Ltd.; and (ii) Steven Boyd, as the Managing Member of Armistice. Armistice and Steven Boyd disclaim beneficial ownership of the reported securities except to the extent of their respective pecuniary interest therein. The address for Armistice Capital Master Fund Ltd. is c/o Armistice, 510 Madison Avenue, New York, New York 10022. |
| |
|
| (10) |
Includes 180,000 shares of Common Stock and 49,915 shares of Common Stock issuable upon exercise of Pre-Funded Warrants. Does not include 55,085 shares of Common Stock issuable upon exercise of Pre-Funded Warrants and 285,000 shares of Common Stock issuable upon exercise of Common Warrants, which warrants are subject to a beneficial ownership limit of 9.99% and 4.99%, respectively and, therefore, are not exercisable since the exercise thereof would cause CVI Investments, Inc. to beneficially own a number of shares of Common Stock in excess of such beneficial ownership limitations. Heights Capital Management, Inc., the authorized agent of CVI Investments, Inc. (“CVI”), has discretionary authority to vote and dispose of the shares held by CVI and may be deemed to be the beneficial owner of these shares. Martin Kobinger, in his capacity as Investment Manager of Heights Capital Management, Inc., may also be deemed to have investment discretion and voting power over the shares held by CVI. Mr. Kobinger disclaims any such beneficial ownership of the shares. The address of CVI is c/o Heights Capital Management, Inc., 101 California Street, Suite 3250, San Francisco, California 94111. |
| |
|
| (11) |
Includes 225,000 shares of Common Stock. Does not include 60,000 shares of Common Stock issuable upon exercise of Pre-Funded Warrants and 285,000 shares of Common Stock issuable upon exercise of Common Warrants, which warrants are subject to a beneficial ownership limit of 9.99% and 4.99%, respectively and, therefore, are not exercisable since the exercise thereof would cause Anson Investments Master Fund LP to beneficially own a number of shares of Common Stock in excess of such beneficial ownership limitations. Anson Advisors Inc. and Anson Funds Management LP (collectively, “Anson”) are the Co-Investment Advisers of Anson Investments Master Fund LP, and hold voting and dispositive power over the shares of Common Stock issuable to such Anson entities. Tony Moore is the managing member of Anson Management GP LLC, which is the general partner of Anson Funds Management LP. Moez Kassam and Amin Nathoo are directors of Anson Advisors Inc. Each of the parties in this footnote disclaims any beneficial ownership of the reported shares other than to the extent of any pecuniary interest the party may have therein. The address of Anson Investments Master Fund LP is 181 Bay Street, Suite 4200, Toronto, Ontario, Canada M5J 2T3. |
| |
|
| (12) |
Includes 140,000 shares of Common Stock. Does not include include 140,000
shares of Common Stock issuable upon exercise of of Common Warrants, which warrants are subject to a beneficial ownership limit of 4.99%
and, therefore, are not exercisable since the exercise thereof would cause Intracoastal Capital LLC to beneficially own a number of shares
of Common Stock in excess of such beneficial ownership limitation. The shares of Common Stock are
directly held by Intracoastal Capital LLC (“Intracoastal”), a Delaware limited liability company, and may be deemed to be
beneficially owned by: (i) Mitchell P. Kopin and (ii) Daniel B. Asher each of whom are managers of Intracoastal, and have shared
voting and shared dispositive control of the shares reported herein. The address of Intracoastal Capital LLC is 2211A Lakeside
Drive, Bannockburn, Illinois 60015. |
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Pursuant to our charter, our Audit Committee shall
review on an on-going basis for potential conflicts of interest, and approve if appropriate, all our “Related Party Transactions”
as required by Section 120 of the NYSE American Company Guide. For purposes of the Audit Committee Charter, “Related Party
Transactions” shall mean those transactions required to be disclosed pursuant to SEC Regulation S-K, Item 404.
Except as disclosed under “Executive Compensation,”
and below there were no related party transactions during the two years ended December 31, 2023 or the current year.
On December 15, 2022, we approved the retention
of MaryAnn Shallcross, the wife of Steven Shallcross, as director of Clinical Operations, for compensation of $145,000 and the grant of
an option to purchase 2,000 shares of common stock having a value of $20,000. Ms. Shallcross received (i) a salary of $77,000
and an equity award of an option to purchase 2,000 shares of common stock having a value of $20,000 in 2022 and (ii) a salary of
$145,000, earned a bonus of $70,000 and an equity award valued of an option to purchase 3,000 shares of common stock having a value of
$30,000 in 2023. On December 14, 2023, Ms. Shallcross’ salary was increased to $152,000.
ANNUAL REPORT/FORM 10-K
Theriva’s Annual Report on Form 10-K for
the fiscal year ended December 31, 2023 is being mailed to stockholders concurrently with this Proxy Statement. Copies of the Annual
Report on Form 10-K for the fiscal year ended December 31, 2023 and any amendments thereto, as filed with the SEC, may be obtained
without charge by writing to Theriva Biologics, Inc., 9605 Medical Center Drive, Suite 270, Rockville, Maryland 20850, Attention:
Corporate Secretary. A complimentary copy may also be obtained at the internet website maintained by the SEC at www.sec.gov, and
by visiting our internet website at www.therivabio.com.
NOTICE REGARDING DELIVERY OF STOCKHOLDER DOCUMENTS
(“HOUSEHOLDING” INFORMATION)
The SEC has adopted rules that permit companies
and intermediaries (e.g., brokers) to satisfy the delivery requirements for proxy statements and annual reports by delivering a single
copy of these materials to an address shared by two or more Theriva stockholders. This process, which is commonly referred to as “householding,”
potentially means extra convenience for stockholders and cost savings for companies and intermediaries. A number of brokers and other
intermediaries with account holders who are our stockholders may be householding our proxy materials, including this Proxy Statement.
In that event, a single proxy statement, as the case may be, will be delivered to multiple stockholders sharing an address unless contrary
instructions have been received from the affected stockholders. Once you have received notice from your broker or other intermediary that
it will be householding communications to your address, householding will continue until you are notified otherwise or until you revoke
your consent, which is deemed to be given unless you inform the broker or other intermediary otherwise when you receive or received the
original notice of householding. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate
proxy statement, please notify your broker or other intermediary to discontinue householding and direct your written request to receive
a separate proxy statement and other annual meeting materials to Broadridge Householding Department, 51 Mercedes Way, Edgewood, NY 11717 or by calling Broadridge at 1-866-540-7095. Stockholders who currently receive
multiple copies of the proxy statement at their address and would like to request householding of their communications should contact
their broker or other intermediary.
STOCKHOLDER PROPOSALS FOR THE 2025 ANNUAL MEETING
Stockholders who intend to present proposals
for inclusion in next year’s proxy materials at the 2025 Annual Meeting of Stockholders under SEC Rule 14a-8 must ensure that
such proposals are received by the Corporate Secretary of the Company not later than June 2, 2025. Such proposals must meet the requirements
of the SEC to be eligible for inclusion in our 2025 proxy materials.
If you wish to nominate a director at the 2025
Annual Meeting of Stockholders, or to bring any other proposal before the 2025 Annual Meeting of Stockholders, that is not to be included
in next year’s proxy materials pursuant to Rule 14a-8, you must do so in accordance with our Second A&R Bylaws, which requires
notice of not less than 120 days prior to the anniversary of the preceding year’s annual meeting to be timely, which in this case
means July 3, 2025, provided, however, that in the event that the date of the annual meeting is changed by more than
30 days from such anniversary date, notice by the stockholder to be timely must be so received not later than the close of business on
the tenth day following the earlier of the day on which notice of the date of the meeting was mailed or public disclosure was made. The
stockholder’s notice must set forth the information required by our Second A&R Bylaws with respect to each stockholder making
the proposal and each proposal and director nomination that such stockholder intends to present at the 2025 Annual Meeting of Stockholders.
All stockholder director nominations must be given in writing to the Chairman of the Nominations Committee, Theriva Biologics, Inc.,
9605 Medical Center Drive, Suite 270, Rockville, Maryland 20850, All other stockholder proposals must be given in writing to the
Corporate Secretary, Theriva Biologics, Inc., 9605 Medical Center Drive, Suite 270, Rockville, Maryland 20850. In addition to
satisfying the foregoing requirements, to comply with the universal proxy rules, stockholders who intend to solicit proxies in support
of director nominees other than the Company’s nominees must provide notice that sets forth the information required by Rule 14a-19
under the Exchange Act no later than September 1, 2025. If such meeting date is more than 30 days before or after October 31, 2025, then notice must be provided
by the later of 60 calendar days prior to the date of the annual meeting or the 10th calendar day following the day on which public announcement
of the date of the annual meeting is first made.
AVAILABLE INFORMATION ON CORPORATE GOVERNANCE
AND SEC FILINGS
Through our website (www.therivabio.com),
we make available, free of charge, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K,
all amendments to those reports, and other filings with the SEC, as soon as reasonably practicable after they are electronically filed
with, or furnished to, the SEC. We also make the following documents available on our website: the Audit Committee Charter; the Compensation
Committee Charter; the Nominations Committee Charter; our Code of Conduct; and our Code of Ethics for Financial Management. You may also
obtain a copy of any of the foregoing documents, free of charge, if you submit a written request to the Corporate Secretary, Theriva Biologics, Inc.,
9605 Medical Center Drive, Suite 270, Rockville, Maryland 20850.
OTHER MATTERS
The Board of Directors knows of no other business
to be presented at the 2024 Annual Meeting of Stockholders. If, however, other matters properly do come before the 2024 Annual Meeting
of Stockholders, it is intended that the proxies in the accompanying form will be voted thereon in accordance with the judgment of the
person or persons holding such proxies.
YOU ARE URGED TO CAST YOUR VOTE AS INDICATED
IN THE PROXY MATERIALS.
PROMPT RESPONSE WILL GREATLY FACILITATE ARRANGEMENTS FOR THE 2024 ANNUAL
MEETING OF STOCKHOLDERS, AND YOUR COOPERATION WILL BE APPRECIATED.
| |
By order of the Board of Directors, |
| |
|
| |
/s/ Steven A. Shallcross |
| |
Steven A. Shallcross
Chief Executive Officer, Chief Financial Officer and Director |
Rockville, Maryland
September 30, 2024
APPENDIX A
AMENDMENT NO. 2
TO THE THERIVA BIOLOGICS, INC. 2020 STOCK INCENTIVE
PLAN
Dated: October 31, 2024
WHEREAS, the Board
of Directors (the “Board”) of Synthetic Biologics, Inc. (the “Company”) heretofore established the Synthetic Biologics,
Inc. 2020 Stock Incentive Plan (the “Plan”); and
WHEREAS, the Board
desires to amend the Plan to increase the maximum number of shares of common stock of the Company available for grants of Awards thereunder
(as of the date of this amendment, previously adopted the Plan) by an additional 2,220,000 shares of common stock to 2,500,000 shares
of common stock; and
WHEREAS, the Board
desires to further amend the Plan to amend Section 4.2 of the Plan to increase the non-employee director grant limit from 40,000 shares
of common stock to 250,000 shares of common stock; and
WHEREAS, pursuant to
Section 17.2 of the Plan, the Board has the right to amend the Plan with respect to certain matters; and
WHEREAS, the Board
has approved and authorized this Amendment No. 2 to the Plan and has recommended that the stockholders of the Company approve this Amendment
No. 2;
NOW, THEREFORE, BE IT RESOLVED,
that the Plan is hereby amended, subject to and effective as of the date of stockholder approval hereof, in the following particulars:
| 1. | Subject to approval of the Company’s stockholders, Section 4(a) of the Plan is hereby amended by
increasing the share references in such section by an additional 2,220,000 shares of common stock to 2,500,000 shares of common stock,
so that Section 4(a) reads in its entirety as follows: |
(a) Subject to adjustment pursuant to Section
4.3 hereof, the maximum aggregate number of shares of Common Stock which may be issued under all Awards granted to Participants under
the Plan shall be 2,500,000 shares (the “Initial Limit”), all of which may, but need not, be issued in respect of Incentive
Stock Options.
| 2. | Subject to approval of the Company’s stockholders, Section 4.2 of the Plan is hereby amended by
increasing the share references in such section from 40,000 shares of common stock to 250,000 shares of common stock, so that Section
4.2 reads in its entirety as follows: |
(a) Subject to adjustment pursuant to Section
4.3 hereof, the number of shares of Common Stock with respect to which Awards may be granted during any calendar year to any one Eligible
Person who is a non-employee director of the Board shall not exceed 250,000.
| 3. | Except as specifically set forth herein, the terms of the Plan shall be and remain unchanged, and the
Plan as amended shall remain in full force and effect. |
[Signature Page Follows]
IN WITNESS WHEREOF, the undersigned has
executed this Amendment No. 2 as evidence of its adoption by the Board on the date set forth above.
|
THERIVA BIOLOGICS, INC. |
| |
|
|
| |
By: |
/s/ Steven A. Shallcross |
| |
Name: |
Steven A. Shallcross |
| |
Title: |
Chief Executive Officer and Chief Financial Officer |
| |
|
|
| Dated: |
|
|
APPENDIX B
THERIVA BIOLOGICS, INC
9605 MEDICAL CENTER DRIVE, SUITE 270 ROCKVILLE, MARYLAND 20850 TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: SCAN TO ?
VIEW MATERIALS & VOTE VOTE BY INTERNET - 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 the day before the meeting date. 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. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials,
you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To
sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you
agree to receive or access proxy materials electronically in future years. 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 the day before the meeting date. 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. V57990-P19707 KEEP THIS PORTION
FOR YOUR RECORDSTHIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLYTHERIVA BIOLOGICS, INC The Board
of Directors recommends you vote FOR the election of each of the following: 1. Election of Directors Nominees: 01) Jeffrey J. Kraws 02)
Steven A. Shallcross 03) John Monahan 04) Jeffrey Wolf, J.D. The Board of Directors recommends you vote FOR proposals 2-5: 2. To ratify
the appointment of BDO USA, P.C. as our independent registered public accounting firm for our fiscal year ending on December 31, 2024.
3. To approve amendments to the Company’s 2020 Stock Incentive Plan to increase the number of shares of common stock that we will
have authority to grant under the plan from 280,000 to 2,500,000 and to amend the annual non-employee director grant limit to 250,000
shares of common stock. For Withhold For All To withhold authority to vote for any individual All All Except nominee(s), mark "For All
Except" and write the number(s) of the nominee(s) on the line below. 4. To approve an amendment to the Company’s Articles of Incorporation,
to effect an increase to the number of authorized shares of common stock from 14,000,000 to 350,000,000, such amendment to be effected
after stockholder For Against Abstain approval thereof only in the event the Board of Directors still deems it advisable.5. To approve
the adjournment of the Annual Meeting to a later date, if necessary or appropriate, to permit further solicitation and vote of proxies
in the event that there are insufficient votes for, ! ! ! or otherwise in connection with, the approval ofProposal 3 and/or 4. Note:
To transact such other business as may properly come before the meeting or any adjournments or postponements of the meeting. For Against
AbstainPlease 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. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
Important Notice Regarding
the Availability of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement and our Annual Report on Form 10-K for the
year ended December 31, 2023 are available at www.proxyvote.com. V57991-P19707 THERIVA BIOLOGICS, INC ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 31, 2024 AT 9:30 A.M. (Eastern Time) THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned stockholder
hereby appoints Steven A. Shallcross as proxy, with the power to appoint his substitute, and hereby authorizes him to represent and to
vote, as designated on the reverse side of this ballot, all of the shares of common stock of THERIVA BIOLOGICS, INC. that the undersigned
is entitled to vote at the Annual Meeting of Stockholders to be held at 9:30 A.M., Eastern Time, on October 31, 2024 at the offices of
the Company located at 9605 Medical Center Drive, Suite 270, Rockville, Maryland 20850, or 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
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