UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN
PROXY STATEMENT
SCHEDULE 14A INFORMATION.
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant ☒
Filed by a Party other than the Registrant ☐
Check the appropriate box:
| ☐ | Preliminary Proxy Statement |
| ☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| ☒ | Definitive Proxy Statement |
| ☐ | Definitive Additional Materials |
| ☐ | Soliciting Material Pursuant to §240.14a-12 |
NOVAVAX, INC.
(Name of registrant as specified in its charter)
(Name of person(s) filing proxy statement, if other than the registrant)
Payment of Filing Fee (Check all boxes that apply):
| ☒ | No fee required. |
| ☐ | Fee paid previously with preliminary materials. |
| ☐ | Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. |
| NOVAVAX FYE 2021 AT A GLANCE | ||
| $1.1B | Total revenue | |
| $2.5B | Invested in R&D | |
| 550+ | U.S. and foreign patents and pending patent applications | |
| 1,541 | Employees as of February 21, 2022, of which 71% are engaged in research, development, and manufacturing activities | |
| CORE DEVELOPMENT PIPELINE | |
Coronavirus
● NVX-CoV2373 ● Omicron Variant Strain |
|
| Seasonal Influenza | |
● NanoFlu (Older Adults) |
|
| Combination Vaccines | |
● COVID / Influenza |
|
● Influenza / RSV |
|
● Influenza / COVID / RSV |
|
Novavax, Inc. (Nasdaq: NVAX) is a biotechnology company that promotes improved health globally through the discovery, development, and commercialization of innovative vaccines to prevent serious infectious diseases.
Our proprietary recombinant technology platform harnesses the power and speed of genetic engineering to efficiently produce highly immunogenic nanoparticles designed to address urgent global health needs.
NVX-CoV2373, our COVID-19 vaccine, has received provisional approval, conditional marketing authorization, and emergency use authorization from multiple regulatory authorities globally, including the European Commission and the World Health Organization. The vaccine is also under review by multiple regulatory agencies worldwide.
In addition to our COVID-19 vaccine, we are also currently evaluating a COVID-seasonal influenza combination vaccine in a Phase 1/2 clinical trial, which combines NVX-CoV2373 and NanoFlu, our quadrivalent influenza investigational vaccine candidate. These vaccine candidates incorporate our proprietary saponin-based Matrix-MTM adjuvant to enhance the immune response and stimulate higher levels of neutralizing antibodies. |
| LETTER FROM OUR CEO |
 |
DEAR NOVAVAX STOCKHOLDER:
You are cordially invited to our Annual Meeting of Stockholders (the “Annual Meeting”) on Thursday, June 16, 2022, beginning at 8:30 a.m. Eastern Time. In an effort to support the health and well-being of our stockholders in light of the coronavirus pandemic (“COVID-19”) and to encourage greater stockholder participation at our Annual Meeting, this year’s Annual Meeting will be held in a virtual meeting format only. You can virtually attend the live webcast of the Annual Meeting at www.virtualshareholdermeeting.com/NVAX2022. We are pleased to also provide a copy of our 2021 Annual Report to Stockholders with this Proxy Statement.
Your vote is important, and we hope you will be able to attend the Annual Meeting. You may vote over the Internet, by telephone, or, if you requested printed proxy materials, by mailing a proxy card or voting instruction form. Please review the instructions for each of your voting options described in this Proxy Statement. Also, please let us know if you plan to attend the live virtual webcast of our Annual Meeting by marking the appropriate box on the proxy card, if you requested printed proxy materials, or, if you vote by telephone or over the Internet, by indicating your plans when prompted.
We look forward to seeing you at our Annual Meeting.
|
As
COVID-19 continued to ravage the world and threaten the health and well-being of countless
individuals, we remained steadfast in our commitment to bring our COVID-19 vaccine to market.
Today, I am happy to report that we are accomplishing our mission to deliver our vaccine around
the world.
|
|
Yours truly,
STANLEY C. ERCK President and Chief Executive Officer
May 2, 2022
|
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON THURSDAY, JUNE 16, 2022 |
TO THE STOCKHOLDERS OF NOVAVAX, INC.:
NOTICE IS HEREBY GIVEN that the 2022 Annual Meeting of Stockholders (the “Annual Meeting”) of Novavax, Inc., a Delaware corporation (the “Company,” “Novavax,” “we,” or “us”), will be held:
 |
WHEN |  |
VIRTUAL WEBCAST |  |
RECORD DATE | ||
Thursday, June 16, 2022 8:30 a.m. Eastern Time |
www.virtualshareholdermeeting.com/NVAX2022 | Stockholders of record at the close of business on April 19, 2022 are entitled to notice of and to vote |
Matters to Be Voted on at the Annual Meeting
| Proposal | |
| 1 | Election of two directors as Class III directors to serve on the board of directors, each for a three-year term expiring at the 2025 Annual Meeting of Stockholders |
| 2 | Advisory vote to approve the compensation of our Named Executive Officers |
| 3 | Amendment and restatement of the Second Amended and Restated Certificate of Incorporation of Novavax, Inc., as amended (the “Certificate of Incorporation”) to eliminate the supermajority voting provisions |
| 4 | Amendment and restatement of the Amended and Restated By-laws of Novavax, Inc. (the “By-laws”) to eliminate the supermajority voting provisions |
| 5 | Amendment and restatement of the By-laws to permit stockholder access to the Company’s proxy statement with respect to the nomination of directors |
| 6 | Amendment and restatement of the Novavax, Inc. Amended and Restated 2015 Stock Incentive Plan, as amended (the “2015 Stock Plan”) to increase the number of shares of the Company’s common stock, par value $0.01 (“Common Stock”), available for issuance thereunder by 2,400,000 shares, and to limit the annual non-employee director compensation to $1.5 million and $1 million for the chairman of the Board and Board members, respectively |
| 7 | Amendment and restatement of the Novavax, Inc. 2013 Employee Stock Purchase Plan (the “ESPP”), as amended, to increase the number of shares of Common Stock available for issuance under the ESPP by 550,000 shares, such that the number of shares available for issuance is the lesser of (a) 1,100,000 shares of Common Stock increased each year by 5% and (b) 1,650,000 shares of Common Stock |
| 8 | Ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2022 |
| 9 | Transaction of such other business as may properly come before the Annual Meeting or any adjournments or postponements thereof |
The board of directors has fixed the close of business on April 19, 2022 (the “Record Date”) as the record date for determining stockholders of the Company entitled to notice of and to vote at the Annual Meeting and any adjournments or postponements thereof.
The following Proxy Statement is included with the Company’s Annual Report to Stockholders for the fiscal year ended December 31, 2021, which contains financial statements and other information of interest to stockholders, and is being mailed or made available to our Record Date stockholders on or about May 5, 2022.
 |
By Order of the Board of Directors,
JOHN A. HERRMANN III, J.D. Executive
Vice President, Chief Legal |
Gaithersburg, Maryland
May 2, 2022
| Whether or not you plan to attend the virtual webcast of the annual meeting, please promptly vote over the Internet or by telephone as per the instructions on the enclosed proxy or complete, sign and date the enclosed proxy and mail it promptly in the accompanying envelope. Postage is not needed if mailed in the United States. | IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDERS ANNUAL MEETING TO BE HELD ON JUNE 16, 2022 Our Notice of Annual Meeting, Proxy Statement, and Annual Report are available free of charge at www.virtualshareholdermeeting.com/NVAX2022 |
| PROXY STATEMENT |
Table of Contents
| PROXY SUMMARY |
This summary represents only selected information. You should review the entire proxy statement before voting.
Novavax, Inc. 2022 Annual Meeting of Stockholders
|
WHEN | |
VIRTUAL WEBCAST | |
RECORD DATE | ||
Thursday, June 16, 2022 8:30 a.m. Eastern Time |
www.virtualshareholdermeeting.com/NVAX2022 | Stockholders of record at the close of business on April 19, 2022 are entitled to notice of and to vote |
MATTERS TO BE VOTED ON AT THE ANNUAL MEETING
| Proposal | Board Recommendation | See Page | ||
| 1 | Election of two directors as Class III directors to serve on the board of directors, each for a three-year term expiring at the 2025 Annual Meeting of Stockholders |  |
FOR
all nominees |
7 |
| 2 | Advisory vote to approve the compensation of our Named Executive Officers | |
FOR | 29 |
| 3 | Amendment and restatement of the Certificate of Incorporation to eliminate supermajority voting provisions | |
FOR |
58 |
| 4 | Amendment and restatement of the By-laws to eliminate supermajority voting provisions | |
FOR | 60 |
| 5 | Amendment and restatement of the By-laws to permit stockholder access to the Company’s proxy statement with respect to the nomination of directors | |
FOR | 62 |
| 6 | Amendment and restatement of the 2015 Stock Plan to increase the number of shares of Common Stock available for issuance thereunder by 2,400,000 shares, and adopt director compensation limits | |
FOR | 63 |
| 7 | Amendment and restatement of the ESPP to increase the number of shares of Common Stock available for issuance under the ESPP by 550,000 shares, such that the number of shares available for issuance is the lesser of (a) 1,100,000 shares of Common Stock increased each year by 5% and (b) 1,650,000 shares of Common Stock | |
FOR | 74 |
| 8 | Ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2022 | |
FOR | 79 |
| 9 | Transaction of such other business as may properly come before the Annual Meeting or any adjournments or postponements thereof | |||
NOVAVAX, INC. 2022 PROXY STATEMENT | 1
Proxy Summary
HOW TO VOTE
Have your Notice of Internet Availability, proxy card, or voting instruction form in hand, with your 16-digit control number available. Even if you plan to attend the virtual meeting, please vote as soon as possible to ensure your shares are represented.
Board of Directors
| Name and Principal Occupation | Age(1) |
Director
|
Other
Current Public Company Boards |
Independent | Committee Membership | ||||
| Audit | Compensation | Nominating
& Corporate Governance |
Research & Development | ||||||
| CLASS I DIRECTORS, FOR TERMS EXPIRING AT THE 2023 ANNUAL MEETING | |||||||||
 |
Stanley C. Erck President
and Chief |
73 | 2009 | 1 | — | — | — | — | — |
 |
Gregg H. Alton, J.D. Former
Interim Chief |
56 | 2020 | 3 |  |
  |
— | — | — |
| CLASS II DIRECTORS, FOR TERMS EXPIRING AT THE 2024 ANNUAL MEETING | |||||||||
 |
Richard H. Douglas, Ph.D. Former
Senior Vice |
69 | 2010 | 2 | |
 |
|
— | |
 |
Margaret G. McGlynn, R. Ph. Former President,
|
62 | 2020 | 2 | |
— | |
|
— |
 |
David M. Mott Private
Investor, |
56 | 2020 | 5 | |
— | |
— | |
2 | ir.novavax.com
Proxy Summary
| Name and Principal Occupation | Age(1) |
Director
|
Other
Current Public Company Boards |
Independent | Committee Membership | ||||
| Audit | Compensation | Nominating
& Corporate Governance |
Research & Development | ||||||
| CLASS III DIRECTORS, FOR TERMS EXPIRING AT THE 2022 ANNUAL MEETING | |||||||||
 |
Rachel K. King Founder
and former |
62 | 2018 | 1 | |
— | |
|
— |
 |
Michael A. McManus, Jr., J.D. Former
President and |
79 | 1998 | 1 | |
|
|
— | — |
 |
James F. Young, Ph.D. Former
Chairman of the |
69 | 2010;
since 2011 |
— | |
— | — | |
|
| Number of meetings in 2021 | Board—19 | 6 | 11 | 4 | 1 | ||||
(1) As of April 19, 2022
| |
Committee Chair | |
Committee Member |  |
Chairman of the Board | |
Audit Committee Financial Expert |
BOARD ATTRIBUTES
NOVAVAX, INC. 2022 PROXY STATEMENT | 3
Proxy Summary
BOARD DIVERSITY
| Board Diversity Matrix (As of April 19, 2022) | ||||
| Total Number of Directors | 8 | |||
| Female | Male | Non-Binary | Did
Not Disclose Gender | |
| Part 1: Gender Identity | ||||
| Directors | 2 | 6 | — | — |
| Part II: Demographic Background | ||||
| African American or Black | — | — | — | — |
| Alaskan Native or Native American | — | — | — | — |
| Asian | — | — | — | — |
| Hispanic or Latin | — | — | — | — |
| Native Hawaiian or Pacific Islander | — | — | — | — |
| White | 2 | 5 | — | — |
| Two or More Races or Ethnicities | — | 1 | — | — |
| LGBTQ+ | — | |||
| Did Not Disclose Demographic Background | — | |||
4 | ir.novavax.com
Proxy Summary
ISG Stewardship Principles
Our Board and executive leaders are stewards of our stockholders’ interests, believing that strong and effective corporate governance is essential to our success. As a cornerstone of our corporate governance program, we provide transparent disclosure to our stockholders on a consistent basis. Our approach integrates all components of effective governance, including a strong ethical culture, an ongoing stockholder engagement program, and sound financial, regulatory, and legal compliance functions. Novavax supports and follows the Investor Stewardship Group’s (“ISG”) Corporate Governance Framework for U.S. Listed Companies. Below is an illustration how certain of our governance practices directly support each of the six ISG principles.
| ISG Principle | Novavax’ Practice |
| Boards are accountable to stockholders |
|
| Stockholders should be entitled to voting rights in proportion to their economic interest |
|
| Boards should be responsive to stockholders and be proactive in order to understand their perspectives |
|
| Boards should have a strong, independent leadership structure |
|
| Boards should adopt structures and practices that enhance their effectiveness |
|
| Boards should develop management incentive structures that are aligned with the long-term strategy of the company |
|
NOVAVAX, INC. 2022 PROXY STATEMENT | 5
Proxy Summary
Executive Compensation Highlights
STOCKHOLDER ENGAGEMENT
Stockholder Engagement Highlights ● We continued our Stockholder Outreach program in 2021 ● Topics discussed in connection with our Stockholder Outreach program included matters relating to our business, corporate governance, and executive compensation ● We contacted our top stockholders representing approximately 9.1% of shares outstanding |
|||
 |
SAY-ON-PAY VOTE Stockholder
approval |
COMPENSATION PHILOSOPHY AND OBJECTIVES
Our compensation program is designed to attract, retain, and reward a high-performance workforce in an extremely competitive recruitment and retention market to achieve Novavax’ mission, vision, and goals.
 |
 |
 |
 | |||
| Attract and retain highly qualified executives | Reward executives for meeting the strategic goals and objectives of the Company | Reward strong individual performance | Align executives’ interests with those of our stockholders |
COMPENSATION PROGRAM BEST PRACTICES
 |
What We Do | |
 |
Link what we pay our Named Executive Officers (“NEOs”) to our short-and long-term performance | |
|
Base pay increases on merit | |
|
Engage an independent compensation consultant for competitive analysis, based on a combination of survey data and peer group data | |
|
Have a clawback policy | |
|
Have stock ownership guidelines applicable to our executive officers | |
|
Include maximum payout caps on our annual incentive program |
 |
What We Do NOT Do | |
 |
No incentivizing excessive risk-taking that would have a material adverse effect on our business and operations | |
|
No excise tax gross ups | |
|
No repricing of underwater stock options or stock appreciation rights without stockholder approval | |
|
No guaranteed salary increases or bonuses | |
|
No single-trigger change in control provisions | |
|
No hedging or pledging of our stock |
Auditors
Ernst & Young LLP has served as our independent auditors since 2014. We are asking our stockholders to ratify the selection of Ernst & Young LLP as our independent auditors for the fiscal year ending December 31, 2022. Representatives of Ernst & Young LLP are expected to be present at the Annual Meeting and will have an opportunity to address the Annual Meeting if they desire to do so. They will also be available to respond to appropriate questions from stockholders.
6 | ir.novavax.com
| BOARD OF DIRECTORS AND CORPORATE GOVERNANCE |
Proposal 1―Election of Directors
In accordance with the Company’s charter, the Board of Directors (the “Board”) may consist of no fewer than three directors, with the specific number to be authorized by the Board from time to time at its discretion. The Board is presently authorized to consist of nine members, and currently includes the following eight individuals.
* Mr. McManus will not be standing for election at the Annual Meeting.
Members of the Board are divided into three classes, designated as Class I, Class II, and Class III, each serving staggered three-year terms. The terms of the Class III directors expire at the 2022 Annual Meeting. The terms of the Class I and Class II directors will expire at the 2023 and 2024 Annual Meetings of Stockholders, respectively. A director of any class who is elected by the Board to fill a vacancy resulting from an increase in the number of directors holds office for the remaining term of the class to which he or she is elected. A director who is elected by the Board to fill a vacancy arising in any other manner holds office for the remaining term of his or her predecessor. Directors elected by the stockholders at an annual meeting to succeed those whose terms expire at the meeting are of the same class as the directors they succeed and are elected for a term to expire at the third Annual Meeting of Stockholders after their election and until their successors are duly elected and qualified.
In the event of any increase or decrease in the authorized number of directors, the newly created or eliminated directorships must be apportioned by the Board among the three classes to ensure that no one class has more than one director more than any other class, unless otherwise determined by a resolution of the Board. However, since existing directors cannot move across classes, the number of directors continuing in office following the Annual Meeting, as well as the nominees for election at the Annual Meeting, including their ages and positions as of April 19, 2022, are reflected below followed by biographical information for each such director and nominee.
 |
The Board recommends that stockholders vote FOR the election of the nominees. |
Nominees for Election as Class III Directors
After recommendation by the Nominating and Corporate Governance Committee, the Board has designated Rachel K. King and Dr. James F. Young as nominees for election as Class III directors of the Company at the Annual Meeting. If elected, each such nominee will serve until the expiration of his or her term at the 2025 Annual Meeting of Stockholders and until his or her successor is elected and qualified. Ms. King and Dr. Young have consented to being named in this Proxy Statement and to serve if elected. The Board has
no reason to believe that Ms. King and Dr. Young will be unable or unwilling to serve if elected. If any nominee becomes unavailable to serve as a director, the persons named in the proxy will vote the proxy for a substitute nominee or nominees as they, in their discretion, shall determine. Michael A. McManus, Jr., J.D. will not be standing for election at the Annual Meeting.
Information on the nominees follows.
NOVAVAX, INC. 2022 PROXY STATEMENT | 7
Board of Directors and Corporate Governance
AGE 62
INDEPENDENT DIRECTOR SINCE 2018
COMMITTEES ● Compensation ● Nominating and Corporate Governance |
RACHEL K. KING | |
CAREER HIGHLIGHTS GlycoMimetics, Inc. ● Founder and former Chief Executive Officer (2003 to 2021)
New Enterprise Associates ● Executive in Residence (2001 to 2003)
Novartis Corporation ● Senior Vice President (1999 to 2001)
Genetic Therapy, Inc. ● Manager of Laboratory Operations from 1989 to 1993 and Vice President for Product Planning from 1993 to 1996 including early-stage development, initial public offering and acquisition by Novartis; Chief Executive Officer of GTI, a wholly owned subsidiary of Novartis from 1996 to 1998.
Ms. King worked previously at ALZA Corporation and Bain and Company |
OTHER CURRENT PUBLIC COMPANY BOARDS ● GlycoMimetics (Nasdaq: GLYC)
OTHER CURRENT DIRECTORSHIPS ● Executive Committee of the Biotechnology Innovation Organization ● University of Maryland BioPark
EDUCATION ● M.B.A., Harvard Business School ● Bachelor of Arts, Dartmouth College
KEY SKILLS AND QUALIFICATIONS Ms. King is well-suited to serve on our Board due to her successful growth and development of businesses and products, her experience as a chief executive officer of a public company, and her significant experience in governance, legal, finance and risk management.
| |
AGE 69
INDEPENDENT DIRECTOR SINCE 2010
CHAIRMAN OF THE BOARD SINCE 2011
COMMITTEES ● Nominating and Corporate Governance ●
Research and Development |
JAMES F. YOUNG, PH.D. | |
CAREER HIGHLIGHTS Targeted Microwave Solutions, Inc. ● Former Chairman of the Board and Chief Executive Officer (2016 to 2018)
MedImmune, Inc. ● Former President, Research and Development (2000 to 2008) ● Executive Vice President, Research and Development (1999 to 2000) ● Senior Vice President (1995 to 1999) ● Senior Vice President, Research and Development (1989 to 1995)
OTHER CURRENT DIRECTORSHIPS ● Sagimet Biosciences, a privately-held biopharmaceutical company |
EDUCATION ● Ph.D. in Microbiology and Immunology, Baylor College of Medicine ● Bachelor of Science degrees in General Science and Biology, Villanova University
KEY SKILLS AND QUALIFICATIONS Dr. Young is well-suited to serve on our Board due to his years of experience in the fields of molecular genetics, microbiology, immunology, and pharmaceutical development. In addition, Dr. Young brings extensive scientific background and experiences, particularly in the areas of vaccine research and development. | |
8 | ir.novavax.com
Board of Directors and Corporate Governance
Directors Continuing as Class I Directors
AGE 56
INDEPENDENT DIRECTOR SINCE 2020
COMMITTEES ●
Audit |
GREGG H. ALTON, J.D. | |
CAREER HIGHLIGHTS Gilead Sciences ● Served in an array of leadership roles across a portfolio of responsibilities for more than 20 years from 1999 to 2019, including: ● Interim Chief Executive Officer ● Chief Patent Officer, responsible for Gilead’s government affairs, public affairs, patient outreach and engagement initiatives, as well as efforts to facilitate access to its medicines globally ● Oversight for commercial operations in Europe, Asia, Latin America, and Africa, as well as government affairs, public affairs and global medical affairs ● General Counsel and Chief Compliance Officer
Cooley Godward, LLP ● Attorney, specializing in corporate finance transactions for healthcare and information technology companies (1993 to 1996 and 1998 to 1999) |
OTHER PUBLIC COMPANY BOARDS ● Corcept Therapeutics (Nasdaq: CORT) ● Enochian Biosciences (Nasdaq: ENOB)
OTHER CURRENT DIRECTORSHIPS ● Several non-profit organizations, including Black Women’s Health Imperative, AIDSVu and the Boys and Girls Clubs of Oakland
EDUCATION ● J.D., Stanford University ● Bachelor of Science in Legal Studies, University of California, Berkeley
KEY SKILLS AND QUALIFICATIONS Mr. Alton is well-suited to serve on our Board. His extensive industry experience and broad global experience across multiple business areas and his deep insight in infectious disease will contribute to the Board’s understanding of our mission and corporate goals. | |
NOVAVAX, INC. 2022 PROXY STATEMENT | 9
Board of Directors and Corporate Governance
Directors Continuing as Class II Directors
AGE 69
INDEPENDENT DIRECTOR SINCE 2010 COMMITTEES ● Audit ● Compensation ● Research and Development |
RICHARD H. DOUGLAS, PH.D. | |
CAREER HIGHLIGHTS Genzyme Corporation ● Former Senior Vice President, Corporate Development (1989 to 2011) ● Dr. Douglas led Genzyme Corporation’s Corporate Development team, and was involved in numerous acquisitions, licenses, financings, joint ventures, and strategic alliances
Integrated Genetics ● Dr. Douglas served in science and corporate development capacities (1982 until its merger with Genzyme Corporation in 1989, now Sanofi Genzyme)
OTHER PUBLIC COMPANY BOARDS ● Alderya Therapeutics (Nasdaq: ALDX) ● MaxCyte, Inc. (Nasdaq: MXCT) |
OTHER CURRENT DIRECTORSHIPS ● University of Michigan Technology Transfer National Advisory Board
EDUCATION ● Postdoctoral fellow, Dr. Leroy Hood’s laboratory at the California Institute of Technology ● Ph.D. in Biochemistry, University of California, Berkeley ● Bachelor of Science in Chemistry, University of Michigan
KEY SKILLS AND QUALIFICATIONS Dr. Douglas is well-suited to serve on our Board due to his significant business experience and scientific background. | |
AGE 62
INDEPENDENT DIRECTOR SINCE 2020
COMMITTEES ● Compensation ● Nominating and Corporate Governance
|
MARGARET G. MCGLYNN, R. PH. | |
CAREER HIGHLIGHTS International AIDS Vaccine Initiative ● President and Chief Executive Officer, leading extensive partnership efforts to advance the development, global launch and access to a broadly effective HIV vaccine (2011 to 2015)
Merck ● Served in leadership roles of increasing responsibility for more than two decades (1983 to 2009) including: ● President, U.S. Hospital and Specialty Products Division ● President of Merck Vaccines and Infectious Diseases
OTHER PUBLIC COMPANY BOARDS ● Amicus Therapeutics (Nasdaq: FOLD) ● Vertex Pharmaceuticals (Nasdaq: VRTX)
OTHER CURRENT DIRECTORSHIPS ● HCU Network America, a patient advocacy organization; Ms. McGlynn founded HCU Network America in 2016 which is focused on the rare genetic disease homocystinuria (HCU) and related disorders |
EDUCATION ● Honorary Doctorate, the State University of New York at Buffalo ● Master’s in Business Administration and Marketing, The State University of New York at Buffalo ● Bachelor of Science in Pharmacy, The State University of New York at Buffalo
KEY SKILLS AND QUALIFICATIONS Ms. McGlynn is well-suited to serve on our Board due to her extensive experience in the pharmaceutical and vaccine industries. In addition, her experience in for-profit and non-profit vaccine organizations and deep experience in vaccine commercialization and understanding of global public health make Ms. McGlynn an ideal board member. | |
10 | ir.novavax.com
Board of Directors and Corporate Governance
Information Regarding the Board and Corporate Governance Matters
On March 3, 2022, the Board determined, upon the recommendation by the Nominating and Corporate Governance Committee, that all of the members of the Board are “independent” directors as defined in the Nasdaq listing standards, except Mr. Erck. Mr. Erck is currently the President and Chief Executive Officer of the Company.
During 2021, the Board met 19 times and acted by written consent in lieu of a meeting twice, and the non-employee directors met four times in executive session during the same period. As the severity of the COVID-19 global pandemic continued, the directors convened an additional 13 times during 2021 during which management provided operational updates. Each of our incumbent directors attended at least 75%
of the aggregate of the total number of meetings of the Board they were eligible to attend, as well as the total number of meetings held by all committees on which they served. Dr. Modi was unable to attend 6 of the 19 Board meetings as a result of unavoidable obligations. Dr. Modi resigned from the Board effective March 5, 2022.
Recognizing that director attendance at the Company’s Annual Meeting of Stockholders provides stockholders with an opportunity to communicate with members of the Board, the Company strongly encourages (but does not require) members of the Board to attend such meetings. All of the then-current Board members attended the 2021 Annual Meeting of Stockholders.
NOVAVAX, INC. 2022 PROXY STATEMENT | 11
Board of Directors and Corporate Governance
Leadership Structure and Risk Oversight
One of the most critical roles of our Chief Executive Officer and Board members is managing risk. Today’s environment consists of ongoing disruption, innovation, and technological change. Increasing disruption leads to greater risks, which may become greater still because they are often interconnected. The Board separates the positions of Chairman of the Board and Chief Executive Officer thereby allowing our Chief Executive Officer to focus on our day-to-day business,
while allowing the Chairman of the Board to lead the Board in its fundamental role of providing advice to and independent oversight of management. The Board recognizes the commitment that our Chief Executive Officer is required to devote to his position, as well as the commitment required to serve as our Chairman of the Board, particularly as the Board’s oversight responsibilities continue to grow. Mr. Erck and Dr. Young each are responsible for:
| PRESIDENT AND CHIEF EXECUTIVE OFFICER | |
 |
Stanley C. Erck
● general charge and supervision of the business of the Company ● managing the risks the Company faces in the ordinary course of operating the business, including reputation risk, culture risk, cybersecurity risk, and extended enterprise risk
|
| CHAIRMAN OF THE BOARD | |
 |
James F. Young, Ph.D.
● presiding at all meetings of the Board ● advising Board committee chairs in fulfilling their roles ● serving as a liaison between the Board and senior management team ● mentoring and advising the senior scientific team ● providing an extensive network of contacts ● reporting regularly to the Board |
Our Chief Executive Officer and Chairman work closely together to execute our strategic plan. Our Chairman leads our Board, serves as a liaison between the Board and senior management team, mentors and advises the senior scientific team, provides an extensive network of contacts, and reports regularly to the Board. We believe the combination of Mr. Erck as the President and Chief Executive Officer and Dr. Young as the Chairman of the Board is an effective leadership structure. The additional avenues of communication between the Board and management associated with having Dr. Young serve as Chairman provide the basis for the proper functioning of the Board and its oversight of management.
Our Chief Executive Officer and senior management team are primarily responsible for managing the risks Novavax faces in the ordinary course of operating the business. The Board actively oversees potential risks and risk management activities by regularly receiving operational and strategic presentations from management, which include discussions of key risks to the business. In addition, the Board delegates risk oversight to each of its key committees within their areas of responsibility.
12 | ir.novavax.com
Board of Directors and Corporate Governance
For example:
Board committees are chaired by independent directors and at each Board meeting the committee chairs deliver reports to the full Board on the activities and decisions made by the committees at recent meetings. In addition, there is significant cross-over of members of the various committees allowing information to flow freely outside of a full board meeting.
NOVAVAX, INC. 2022 PROXY STATEMENT | 13
Board of Directors and Corporate Governance
Our Board currently maintains four standing committees: Audit Committee, Compensation Committee, Nominating and Corporate Governance Committee, and Research and Development Committee. In addition to the descriptions below, please refer to the “Compensation Committee Report” and the “Audit Committee Report” included in this Proxy Statement. The members of the committees are shown below.
| |
Committee Chair | |
Committee Member | |
Chairman of the Board | |
Audit Committee Financial Expert |
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Board of Directors and Corporate Governance
| Audit Committee | Meetings in 2021: 6 |
 |
MEMBERS ● Gregg
H. Alton, J.D. ● Michael A. McManus, Jr., J.D. |
● Richard H. Douglas, Ph.D.
|
| During 2021, the Audit Committee met six times and acted by written consent in lieu of a meeting once. | ||
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Board of Directors and Corporate Governance
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Board of Directors and Corporate Governance
| Nominating and Corporate Governance Committee | Meetings in 2021: 4 |
 |
MEMBERS ●
James F. Young, Ph.D. ● Rachel K. King |
● Margaret G. McGlynn, R. Ph.
|
| During 2021, the Nominating and Corporate Governance Committee met four times and did not act by written consent in lieu of a meeting. | ||
PRINCIPAL RESPONSIBILITIES The Nominating and Corporate Governance Committee is responsible for: ● reviewing and making recommendations to the Board regarding the Board’s size, structure, and composition ● establishing criteria for Board membership ● identifying and evaluating candidates qualified to become members of the Board, including candidates proposed by stockholders ● selecting, or recommending for selection, director nominees to be presented for approval at the Annual Meeting of Stockholders and to fill vacancies on the Board The Nominating and Corporate Governance Committee's authority and responsibilities include, but are not limited to: ● oversee the Company’s corporate governance guidelines ● oversee the Company’s policies and practices with respect to corporate social responsibility and environmental sustainability ● evaluate Company policies relating to the recruitment of Board members ● develop and recommend to the Board corporate governance policies and practices ● oversee management’s plans for succession to senior management positions
The Nominating and Corporate Governance Committee’s goal is to contribute to the effective |
representation of the Company’s stockholders and to play a leadership role in shaping the Company’s corporate governance.
In reviewing and evaluating director candidates, including candidates submitted by stockholders, the Nominating and Corporate Governance Committee does not differentiate between candidates based on the proposing constituency, but rather applies the same criteria to each candidate.
CHARTER ● The Nominating and Corporate Governance Committee acts pursuant to a written charter as adopted by the Board; a current copy of the charter is available on the Company’s website at www.novavax.com. ● The Nominating and Corporate Governance Committee reviews and evaluates its charter annually to ensure its adequacy and accuracy, and is charged with performing an annual self-evaluation with the goal of continuing improvement.
QUALIFICATIONS ● Each Nominating and Corporate Governance Committee member is an “independent director,” as defined by the listing standards of the Nasdaq.
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Board of Directors and Corporate Governance
| Research and Development Committee | Meetings in 2021: 1 |
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Board of Directors and Corporate Governance |
Stockholders who wish to nominate qualified candidates to serve as directors may do so in accordance with the procedures set forth in the Company’s By-laws, which procedures did not change during the last fiscal year. As stated in the By-laws, a stockholder must notify the Company in writing, by notice delivered to the attention of the Secretary of the Company at the address of the Company’s principal executive offices, of a proposed nominee.
In order to ensure meaningful consideration of such candidates, notice must be received not less than 60 days nor more than 90 days prior to the anniversary date of the applicable year’s Annual Meeting of Stockholders. However, in the event the date of the applicable year’s Annual Meeting of Stockholders is more than 30 days before or after the anniversary date of the prior year’s Annual Meeting of Stockholders, notice by the stockholder to be timely it must be received not later than the close of business on the 10th day following the day on which such notice of the date of the meeting was mailed or public disclosure of the date of such meeting was made, whichever occurs first.
The notice must include the following information for each proposed nominee:
| • | name, age, business and residence address; |
| • | his or her principal occupation or employment; |
| • | the class and number of shares of capital stock and other securities of the Company, if any, which are beneficially owned by such nominee and whether and the extent to which any hedging or other transaction or series of transactions has been entered into by or on behalf of, or any other agreement, arrangement or understanding has been made, the effect or intent of which is to increase or decrease the voting power or economic interest of, such person with respect to the Company’s securities; and |
| • | any other information concerning the nominee that must be disclosed as to nominees in proxy solicitations, or is otherwise required, in each case pursuant to applicable law. |
The notice must also include with respect to the stockholder giving the notice and each Stockholder Associated Person:
| • | the name and address, as they appear on the Company’s books, of such stockholder; |
| • | a description of all direct and indirect compensation and other material monetary arrangements, agreements or understandings during the past three years, and any other material relationship, if any, between or concerning such stockholder and each Stockholder Associated Person, on the one hand, and each proposed nominee, and his or her respective affiliates and associates, on the other hand; |
| • | the class and number of shares of capital stock and other securities of the Company that are owned by such person; and |
| • | any derivative positions held of record or beneficially by such person and whether and the extent to which any hedging or other transaction or series of transactions has been entered into by or on behalf of, or any other agreement, arrangement or understanding has been made, the effect or intent of which is to increase or decrease the voting power or economic interest of, such person, with respect to the Company’s securities. |
For purposes of this Proxy Statement, a “Stockholder Associated Person” of any stockholder means:
| (i) | any “affiliate” or “associate” (as those terms are defined in Rule 12b-2 under the Exchange Act) of the stockholder who owns beneficially or of record any capital stock or other securities of the Company or, through one or more derivative positions, has an economic interest (whether positive or negative) in the price of securities of the Company, and |
| (ii) | any person acting in concert with such stockholder or any affiliate or associate of such stockholder with respect to the capital stock or other securities of the Company. |
In addition, any nominee proposed by a stockholder shall complete a questionnaire, in a form provided by the Company. The completed questionnaire shall be submitted within ten days after the Company provides the questionnaire. The Company may require any proposed nominee to furnish other information as may reasonably be required to determine the eligibility of the nominee to serve as a director. Nominations received through this process will be forwarded to the Nominating and Corporate Governance Committee for review.
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Board of Directors and Corporate Governance |
If Proposal No. 5 is approved at the Annual Meeting, stockholders who wish to nominate directors at the Annual Meeting of Stockholders and who wish the nomination to be included in our proxy materials for such Annual Meeting of Stockholders should follow the procedures described in the Company’s By-Laws as amended and restated pursuant to Proposal No. 5. These procedures require that the Company receive notice of the nomination in writing at the Company’s principal executive offices not less than 120 days nor more than 150 days prior to the anniversary date of the applicable year’s Annual Meeting of Stockholders. However, in the event the date of the applicable year’s Annual Meeting of Stockholders is more than 30 days before or after the anniversary of the prior year’s Annual Meeting of Stockholders, notice by the stockholder to be timely must be received not later than the close of business on the 10th day following the day on which such notice of the date of the meeting was mailed or public disclosure of the date of such meeting was made, whichever comes first. The notice must be given in the manner and must include the information and representations required by our By-laws, as amended and restated, if Proposal No. 5 is approved at the Annual Meeting. |
The Nominating and Corporate Governance Committee strives to maintain a board of directors with a diverse set of skills and qualifications to ensure the board of directors is adequately serving the needs of the Company’s stockholders. Before evaluating director candidates, the Nominating and Corporate Governance Committee reviews the skills and qualifications of the directors currently serving on the Board and identifies any areas of weakness or skills of particular importance. On the basis of that review, the Nominating and Corporate Governance Committee will evaluate director candidates with those identified skills. While the Nominating and Corporate Governance Committee does not have a formal policy on Board diversity, the committee takes into account a broad range of diversity considerations when assessing director candidates, including individual backgrounds and skill sets, professional experiences, underrepresented classes, and other factors that contribute to the Board having an appropriate range of expertise, talents, diversity, experiences, and viewpoints. The Nominating and Corporate Governance Committee considers the following skills and experiences necessary to the Board: industry knowledge, clinical development expertise, commercialization expertise, manufacturing expertise, financial expertise and capital raising experience, and scientific or medical education and experience, particularly in vaccine-related fields.
While there are no set minimum requirements, a candidate should:
| • | be intelligent, thoughtful, and analytical |
| • | have excelled in both academic and professional settings |
| • | possess superior business-related knowledge, skills, and experience |
| • | demonstrate achievement in his or her chosen field |
| • | reflect the highest integrity, ethics, and character |
| • | be free of actual or potential conflicts of interest |
| • | have the ability to devote sufficient time to the business and affairs of the Company |
| • | demonstrate the capacity and desire to represent the best interests of our stockholders as a whole |
In addition to the above criteria (which may be modified from time to time), the Nominating and Corporate Governance Committee may consider such other factors as it deems in the best interests of the Company and its stockholders and that may enhance the effectiveness and responsiveness of the Board and its committees. Finally, the Nominating and Corporate Governance Committee must consider a candidate’s independence to make certain the Board includes at least a majority of “independent” directors to satisfy all applicable independence requirements, as well as a candidate’s financial sophistication and special competencies.
The Nominating and Corporate Governance Committee identifies potential candidates through referrals and recommendations, including by incumbent directors, management, and stockholders, as well as through business and other organizational networks. To date, the Nominating and Corporate Governance Committee has not retained or paid any third party to identify or evaluate, or assist in identifying or evaluating, potential director nominees, although it reserves the right to engage executive search firms and other third parties to assist in finding suitable candidates.
Current members of the Board with the requisite skills and experience are considered for re-nomination, balancing the value of the member’s continuity of service with that of obtaining a new perspective, and considering each individual’s contributions, performance and level of participation, the current composition of the Board, and the Company’s needs. The Nominating and Corporate Governance Committee also must consider the age and length of service of incumbent directors.
The Board adopted a policy in 2005 not to re-nominate a director for re-election if such director has served ten years as a director or has reached 75 years of age, unless circumstances exist which cause the Nominating and Corporate Governance Committee to believe that despite such factors, such a nomination was in the best interest of the Company and its stockholders.
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In accordance with this policy, although Dr. Young will have served on our Board for more than ten years, the Nominating and Corporate Governance Committee determined to nominate him for reelection to the Board at the Annual Meeting due to his extensive knowledge of our corporate history, operations and strategy, and the Company’s urgent objective in developing its NVX-CoV2373 vaccine. If any existing members does not wish to continue in service or if it is decided not to re-nominate a director, new candidates are identified
in accordance with those skills, experience, and characteristics deemed necessary for new nominees, and are evaluated based on the qualifications set forth above. In every case, the Nominating and Corporate Governance Committee meets (in person or telephonically) to discuss each candidate and may require personal interviews before final approval. Once a slate of nominees is selected, the Nominating and Corporate Governance Committee presents it to the full Board.
Corporate Governance Guidelines
The Board has adopted corporate governance guidelines that are available on the Company’s website at www.novavax.com.
Environmental, Social, and Governance (“ESG”) Matters
At Novavax, we are committed to improving health globally through the discovery, development, and commercialization of innovative vaccines to prevent serious infectious diseases. Our Board and management understand that delivering on our mission also includes an emphasis on corporate sustainability, including ESG considerations. Accordingly, in the second half of 2021, our Board assigned oversight of our ESG policies and practices to the Nominating and Corporate Governance Committee, as set forth in its charter. As part of this effort, we plan to engage both internal and external stakeholders in ESG-specific conversations and identify priority ESG-related objectives. We expect that these engagements will enhance our commitment to these important topics.
Vaccine Access
We believe our societal impact is significant, especially considering the critical role we are currently playing in the global response to the COVID-19 pandemic. For patients and society to benefit from the vaccines we develop, we believe they must be available to those who will benefit from them. We intend to continue to actively engage with stakeholders across the global healthcare community to address barriers to vaccine access. Program highlights include:
| • | Entered into an advance purchase agreement (“APA”) with Gavi, the Vaccine Alliance, to make available 1.1 billion doses of NVX-CoV2373 to countries participating in the COVAX facility, which was established to allocate and distribute vaccines equitably to participating countries and economies. |
| • | Entered into APAs with the European Commission and several countries the terms of which permit |
| donations of NVX-CoV2373 to other countries, governments, or charitable organizations. |
Corporate Responsibility and Ethical Standards
Every day, we work to create vaccines to address unmet medical needs and improve the lives of people all over the world. But equally important to what we do, is how we do it. We pride ourselves on being a company built on our core values of agility, collaboration, integrity, courage, innovation and resilience. We are committed to conducting our business responsibly and ethically. Our core compliance principles include integrity, excellence, commitment, respect, and responsibility. This is demonstrated through the range of policies, practices, and initiatives we have implemented, encompassing areas such as compliance, responsible sales and marketing, ethical clinical trials, responsible supply chain, and product quality and safety. Program highlights include:
| • | Hired a full-time, dedicated Chief Compliance Officer responsible for developing, administering, and monitoring Novavax’ compliance program. The core components of our compliance program include: a compliance training curriculum (both online and in-person) to ensure employee awareness and understanding of relevant protocols; policies and procedures that provide substantive direction and practical guidance to reduce non-compliance; third-party due diligence to effectively vet and monitor our relationships with suppliers, vendors, licensees and other partners; and messaging through a variety of channels to promote our compliance initiatives. The Chief Compliance Officer provides periodic updates on the Compliance Program to the Audit Committee and Board. |
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Board of Directors and Corporate Governance |
| • | In 2021, our Board revised and updated the Novavax Code of Conduct. All employees receive Novavax annual training on our Code of Conduct. |
| • | Maintain a global hotline for reporting of any compliance concerns. The hotline is available 24 hours a day, 365 days a year and is operated by a third-party compliance management provider, enabling automated and anonymous reporting. |
Environmental Sustainability
As our business continues to grow, we recognize the importance of understanding, mitigating, and reporting on our global environmental footprint. As we continue to gain a better understanding of our office, lab, manufacturing facilities, and other direct and indirect greenhouse gas emission sources, we will work to develop additional strategic reduction methods and lower energy-related costs. Our next steps will be to establish better tracking and measurement tools, refine strategies and determine targets to drive our environmental performance. Program highlights include:
| • | Our 700 Quince Orchard office space located in Gaithersburg, Maryland is on track to receive WELL Platinum certification. As one of 35 WELL certified buildings in North America, this building will meet rigorous standards for materials selection, indoor air quality, and acoustics. In addition, our operations and policies contribute to earning high marks in all the 10 WELL Concepts: Air, Water, Nourishment, Light, Movement, Thermal Comfort, Sound, Materials, Mind, and Community. |
| • | Installed filtered water fountains throughout our facilities to help eliminate can and bottle use, provided reusable mugs and cups to employees, and furthered our transition to a paperless environment. |
Diversity, Equity, and Inclusion (“DEI”)
Our culture of DEI enables us to create, develop, and fully leverage the strengths of our workforce to meet our growth objectives. As of December 31, 2021, approximately 52% of our employees in the United States are female. As of February 2022, approximately 55% of our research and development employees are female. We are focused on growing and maintaining our diverse workforce and we believe our DEI strategy will enable us to continuously improve and excel. Program highlights include:
| • | Completed an evidence-based analysis of our current DEI state, resulting in a multi-year road map and strategy to drive diversity and inclusion. |
| • | Held the first annual Novavax Women’s Leadership Forum. |
| • | Hired a full-time, dedicated DEI and Employee Engagement Manager focused on actions to build an inclusive workforce. |
Human Capital Management
We have undertaken significant hiring to facilitate manufacturing of our COVID-19 vaccine, in addition to building out our commercial and regulatory organizations, as well as other functions. We began 2021 with approximately 690 employees and ended the year with almost 1,432 employees globally. We seek to attract, retain, and reward a high-performance workforce in an extremely competitive recruitment and retention market to achieve Novavax’ mission, vision, and goals. To nurture, grow, and treat our employees fairly is imbued in our culture, and we have invested in creating an exceptional work culture. Program highlights include:
| • | Generous total rewards package includes competitive market pay and comprehensive benefits that are among the best in our industry, including insurance to protect and maintain health, income protection through our short- and long-term disability programs, adoption assistance and paid parental leave programs. |
| • | Services to assist in balancing work and personal life, such as backup child, adult, and elder care, and financial wellbeing programs, including monthly financial wellness seminars, one-on-one financial planning sessions, and debt and credit management support. We provide employees with a concierge service to assist employees with tasks including, but not limited to: finding and booking auto services; sourcing pet sitters and boarders; researching online and in-person tutors; suggesting community events; providing vacation ideas; finding and booking home cleaners, plumbers, HVAC, and landscaping services; finding and booking yoga, personal training sessions, and spin classes; suggesting nutritional meals and recipes; and researching day care center availability and ratings. |
| • | Several digital apps that allow our employees to connect to an online licensed therapist or to access activities that are designed to reduce stress and anxiety and increase mindfulness and emotional well-being. We have a robust employee assistance program for employees to access support for a variety of life events. |
| • | Tuition and continuing education reimbursement, and an array of training and professional development opportunities, including on-the-spot coaching with executive coaches and access to the LinkedIn Learning library of over 16,000 on-demand video tutorials that address skills, knowledge, and behaviors related to business, leadership, technology, and innovation. |
| • | We provide an Executive Development Program for employees identified as having high potential and for employees who have been identified as potential successors to leadership positions. Our Executive Development Program includes executive coaching engagements and leadership development programs designed to strengthen |
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| our leadership bench and accelerate and prepare our top talent for future growth. Professional development learning series are available to all |
| employees and focus on self-awareness, collaboration, hybrid working, and business acumen. |
Stock Ownership Guidelines
In June 2021, the Board adopted stock ownership guidelines (the “Stock Ownership Guidelines”) for our executive team and Board to promote ongoing alignment between our executive team, directors, and stockholders. The Stock Ownership Guidelines are described below under “Compensation Discussion and Analysis.”
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The Board has adopted a Code of Conduct (“Code of Conduct”) that applies to each employee, officer, and director, including but not limited to, the Chief Executive Officer and Chief Financial Officer. The Code of Conduct is reviewed at least annually by the Nominating and Corporate Governance Committee. A current copy of the Code of Conduct, is available on
the Company’s website at www.novavax.com. The Company intends to disclose on its website any future amendments to and waivers of the Code of Conduct that apply to its Chief Executive Officer, Principal Financial Officer and Principal Accounting Officer, and persons performing similar functions.
Stockholder Communications with the Board of Directors
The Board welcomes communications from stockholders and has adopted a procedure for receiving and addressing such communications. Stockholders may send written communications to the entire Board or individual directors, addressing them to:
 |
Novavax,
Inc. Attention: Corporate Secretary 21 Firstfield Road Gaithersburg, Maryland 20878 |
 |
ir@novavax.com Mark “Attention: Corporate Secretary” in the “Subject” field |
All such communication must identify the author as a stockholder and include the stockholder’s full name, address, and a telephone number. If the communication is intended for a specific Board member, the name of such Board member should be noted in the communication. The Corporate Secretary, or his designee, will forward any such correspondence to the intended recipient. However, the Corporate Secretary, or his designee, in his or her discretion, may not forward the communication that relates to ordinary business affairs, is clearly of a marketing nature, or is unduly hostile, threatening, illegal, or similarly inappropriate for the Board’s consideration.
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Delinquent Section 16(a) Reports
To the Company’s knowledge, based upon a review of the copies of such reports furnished to the Company and written representations that no other reports were required, the Company believes that during 2021, all filing requirements applicable to the Company’s officers, directors and greater than 10% beneficial owners pursuant to Section 16(a) of the Exchange Act were complied with, except for one inadvertent late Form 4 for Mr. Herrmann to report the vesting of restricted stock units to Mr. Herrmann’s spouse, who is engaged as a consultant for the Company.
Certain Relationships and Related Transactions
The Company’s Code of Conduct provides that the Audit Committee is responsible for approving all transactions or business relationships involving Novavax and any director or executive officer, including any transactions between Novavax and either the director or officer personally, members of their immediate families, or entities in which they have an interest. In evaluating related party transactions, the Audit Committee members apply the same standards of good faith and fiduciary duty they apply to their general responsibilities as a committee of the Board and as individual directors. The Audit Committee will
approve a related party transaction when, in its good faith judgment, the transaction is in the best interest of the Company.
There are no family relationships among any of the directors or executive officers (or any board member nominee) of Novavax. No director, executive officer, nominee, or any associate of any of the foregoing has any interest, direct or indirect, in any proposal to be considered and acted upon at the Annual Meeting (other than the election of directors).
Compensation Committee Interlocks and Insider Participation
During 2021, Dr. Douglas, Ms. King, Ms. McGlynn, Mr. McManus, and Mr. Mott served as members of the Compensation Committee. None of the members of the Compensation Committee was at any time during 2021 an employee or executive officer of Novavax.
No executive officer of the Company currently serves, or during 2021 served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving as a member of the Company’s Board or Compensation Committee.
Compensation paid to our non-employee directors is comprised of two components: (i) cash compensation and (ii) equity awards. Stanley C. Erck and Rajiv I. Modi did not receive compensation for service on the Board during the fiscal year ending December 31, 2021.
The Compensation Committee, working with its independent compensation consultant, conducts
analyses of our director compensation program and makes recommendations to the Board about the non-employee director compensation program. The Board then approves any changes to the program, as well as the approach to equity compensation for that year. Novavax’ annual non-employee director compensation is generally structured to deliver competitive compensation relative to the peer group used for executive compensation setting purposes.
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CASH COMPENSATION
On December 9, 2021, the Board and Compensation Committee approved increases to certain of our non-employee director cash retainers intended to bring the various retainers in line with approximate market median practice. Our non-employee director cash compensation arrangement for 2021 was as follows:
NON-EMPLOYEE DIRECTOR DEFERRED FEE POLICY
The Company’s Director Deferred Fee Policy for its non-employee directors permits an eligible director to defer receipt of all or part of the director’s cash retainer. To defer fees payable during any calendar year, a director must make an election by the end of the preceding calendar year. A director can elect to have 100% of deferred amounts credited to a “cash account” or a “Company common stock account,” or, alternatively, a director may elect to have deferred amounts credited 50% to each account. Cash accounts are credited with interest quarterly at the IRS Applicable Federal Rate for short-term debt instruments for the last month of such calendar quarter. Company Common Stock accounts are credited as if amounts were invested in notional stock units based upon the market price of Common Stock and are credited with additional notional units if dividends are paid on Common Stock. Payment of deferred amounts is to be made in cash upon the
occurrence of certain events, including the director’s separation from service, death of the director, or a change in control of the Company. The director may also elect to receive payment of the deferred amounts in a specified year that is not more than ten years from the year in which the director’s fees were earned. A director may elect to receive payment in either a lump sum or in up to ten annual installments.
Dr. Douglas has elected to defer fees earned in the fiscal year ending December 31, 2021. The following table shows how he currently has his deferred fees credited.
| Name | Annual Retainer | |
| Richard H. | Cash account | 0% |
| Douglas, Ph.D. | Company Common Stock account | 100% |
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EQUITY AWARDS
| Director Equity Compensation |
Historically, we have emphasized equity compensation as a component of our director compensation program in order to conserve cash.
2021 non-employee director annual equity awards were determined in June 2021. On June 17, 2021, after reviewing peer group data provided by Radford, the Compensation Committee granted awards based on the market data provided.
2021 non-employee annual director equity awards generally targeted delivering value at the 75th percentile of the peer group used for executive compensation setting purposes, using data provided by Radford to the Compensation Committee. The Compensation Committee recommended using the 75th percentile in 2021 due to unique aspects of 2021, as the Company continued to transform itself to develop a vaccine to address the global COVID-19 pandemic. While this marks a decrease from the Compensation Committee’s recommendation of using the 90th percentile in 2020, the Compensation Committee’s recommendation nevertheless exceeded the 50th percentile because the level of Board commitment continued to be high in 2021. During 2021, directors devoted substantial time to Company matters. The Board held 19 meetings during 2021; the Board also held 13 operational updates and acted by written consent twice; and Board committees held an aggregate of 22 meetings and took action by written consent three times.
| Annual Equity Awards |
On June 17, 2021, the Compensation Committee granted options to purchase 1,300 shares of Common Stock to each of Dr. Douglas, Mses. King and McGlynn, and Messrs. Alton, McManus and Mott. In recognition of his service as our Chairman of the Board, Dr. Young was granted an option to purchase 2,600 shares of Common Stock. All of the aforementioned options have an exercise price per share equal to the closing price of a share of Common Stock on the grant date ($179.89) and will vest in full one year from the date of grant subject to continued service on the Company’s Board through the vesting date.
On June 17, 2021, the Compensation Committee granted time-vesting RSUs representing a right to receive 700 shares of Common Stock to each of Dr. Douglas, Mses. King and McGlynn, and Messrs. Alton, McManus, and Mott. In recognition of his service as our Chairman of the Board, Dr. Young received RSUs representing a right to receive 1,400 shares of Common Stock. All of the aforementioned RSUs will vest in full one year from the date of grant subject to continued service on the Company’s Board through the vesting date.
| Initial Equity Awards |
The Compensation Committee also reviewed our approach to initial equity grants provided to new board members. Any eligible non-employee director who is elected or appointed to the Board will receive an initial equity grant at 1.5x the value of the annual grant value for non-employee directors, which will be granted on the date of appointment and vest in one year from the date of grant, subject to continued service on the Company’s Board through the vesting date.
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DIRECTOR COMPENSATION TABLE
The Company does not pay employee directors additional compensation for service on the Board. The following table sets forth information concerning the compensation paid by the Company to each individual who served as a non-employee director at any time during fiscal year 2021:
Fees Earned or Paid in Cash(1) |
Option Awards(2) | Stock Awards | Total | |
| Name | ($) | ($) | ($)(3) | ($) |
| Gregg H. Alton, J.D. | 56,653 | 212,289 | 125,923 | 394,865 |
| Richard H. Douglas, Ph.D.(4) | 63,860 | 212,289 | 125,923 | 402,072 |
| Gary C. Evans(5) | 27,833 | 611,000 | 332,408 | 971,241 |
| Rachel K. King | 53,582 | 212,289 | 125,923 | 391,794 |
| Margaret G. McGlynn, R. Ph. | 53,582 | 212,289 | 125,923 | 391,794 |
| Michael A. McManus, Jr., J.D. | 63,372 | 212,289 | 125,923 | 401,584 |
| Rajiv I. Modi, Ph.D.(6) | — | — | — | — |
| David M. Mott | 61,391 | 212,289 | 125,923 | 399,603 |
| James F. Young, Ph.D. | 84,656 | 424,579 | 251,846 | 761,081 |
| (1) | Represents fees earned in 2021, pro-rated as applicable for a partial year of service. |
| (2) | Represents options granted in 2021 in respect of 2021 service on the Board. The grant date fair value was calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) Topic 718. Assumptions used in the calculation of this amount are included in Note 13 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on March 1, 2022. Amount shown for Mr. Evans reflects the incremental fair value attributable to the modification of his equity awards during 2021 to provide for vesting of his equity awards at the annual meeting of stockholders in 2021. As of December 31, 2021, the aggregate number of stock options held by each non-employee director is as follows: |
| Mr. Alton | 9,000 | Mr. McManus | 36,200 | |
| Dr. Douglas | 45,700 | Dr. Modi | — | |
| Mr. Evans | 10,400 | Mr. Mott | 13,700 | |
| Ms. King | 34,200 | Dr. Young | 45,280 | |
| Ms. McGlynn | 9,000 |
| (3) | Represents restricted stock units granted in 2021 in respect of 2021 service on the Board. The grant date fair value was calculated by multiplying the number of RSUs subject to the award by the closing price of a share of Common Stock on the date of grant (or, if no closing price was reported on that date, the closing price on the immediately preceding date on which a closing price was reported), in accordance with FASB ASC Topic 718. Assumptions used in the calculation of this amount are included in Note 13 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on March 1, 2022. Amount shown for Mr. Evans reflects the incremental fair value attributable to the modification of his equity awards during 2021 to provide for vesting of his equity awards at the annual meeting of stockholders in 2021. As of December 31, 2021, the aggregate number of restricted stock units held by each non-employee director is as follows: |
| Mr. Alton | 700 | Mr. McManus | 700 | |
| Dr. Douglas | 700 | Dr. Modi | — | |
| Mr. Evans | — | Mr. Mott | 700 | |
| Ms. King | 700 | Dr. Young | 1,400 | |
| Ms. McGlynn | 700 |
| (4) | Dr. Douglas’ fees in respect of 2021 were deferred in accordance with the Non-Employee Director Deferred Fee Policy, described above. |
| (5) | Mr. Evans' term expired at the Company's 2021 Annual Meeting of Stockholders and he did not stand for re-election. |
| (6) | Due to his relationship with Cadila and CPL Biologicals Private Limited, Dr. Modi did not receive compensation for his services as a director in 2021. Dr. Modi resigned from the Board effective March 5, 2022. |
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| EXECUTIVE OFFICERS AND COMPENSATION |
Proposal 2—Advisory Vote on Executive Compensation (Say-on-Pay)
We are asking stockholders to approve, on an advisory, non-binding basis, the compensation of our Named Executive Officers as disclosed in this Proxy Statement, as required pursuant to section 14A of the Exchange Act (15 U.S.C. 78n-1). The Company provides its stockholders with the opportunity to cast an annual advisory vote to approve the compensation of its Named Executive Officers and this Proposal 2, commonly referred to as a “say-on-pay” proposal, gives our stockholders the opportunity to express their views on our executive compensation programs.
As described in detail in the Compensation Discussion and Analysis section and the related tables and narrative disclosure in this Proxy Statement, our executive compensation programs are designed to:
| |
|
|
| |||
| Attract
and retain highly qualified executives |
Reward
executives for meeting the strategic goals and objectives of the Company |
Reward
strong individual performance |
Align
executives’ interests with those of our stockholders |
Please read the Compensation Discussion and Analysis section for additional details about our executive compensation objectives, philosophy, and programs, along with the compensation paid to our Named Executive Officers with respect to the fiscal year ended December 31, 2021 and the rationale for such compensation.
The Board is asking stockholders to cast a non-binding, advisory vote “FOR” the compensation paid to our Named Executive Officers in 2021, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, compensation tables, and related narrative discussion included in this Proxy Statement.
We recommend that you vote “FOR” the following resolution at the Annual Meeting:
RESOLVED, that the compensation of the Company’s Named Executive Officers as disclosed in the Company’s Proxy Statement for the 2022 Annual Meeting of Stockholders pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables, and narrative discussion, is hereby approved.
Although the say-on-pay vote we are asking you to cast is non-binding, the Board and the Compensation Committee, who are responsible for designing and administering our executive compensation programs, value the opinions of our stockholders on this Proposal 2 and will consider the outcome of the vote on Proposal 2 when making future compensation decisions for our Named Executive Officers. The Board has determined to provide stockholders with an annual opportunity to approve the compensation of the Named Executive Officers.
| |
The Board recommends that stockholders vote FOR the compensation paid to our Named Executive Officers in 2021. |
NOVAVAX, INC. 2022 PROXY STATEMENT | 29
| Executive Officers and Compensation |
Our executive officers hold office until the first meeting of the Board following the Annual Meeting of Stockholders and until their successors are duly chosen and qualified, or until they resign or are removed from office in accordance with our By-laws. The following information outlines our executive officers, their ages, and positions as of April 19, 2022, followed by biographical information for each executive officer.
 |
 |
 |
 |
 | ||||
| STANLEY C. ERCK | JAMES P. KELLY | GREGORY M. GLENN, M.D. | JOHN J.TRIZZINO | JOHN A. HERRMANN III, J.D. | ||||
| Age 73 | Age 56 | Age 68 | Age 62 | Age 56 | ||||
President
and |
Executive
Vice President, Chief Financial Officer and Treasurer |
President,
Research and
|
Executive
Vice |
Executive
Vice |
President
and Officer
and
|
Stanley C. Erck | |
CAREER HIGHLIGHTS Novavax, Inc. ● President and Chief Executive Officer (April 2011 to present) ● Interim Chief Financial Officer (November 2017 to March 2018) ● Executive Chairman (February 2010 to April 2011) Iomai Corporation ● President and Chief Executive Officer (2000 to 2008, when it was acquired by Intercell AG) Mr. Erck previously held leadership positions at Procept, a publicly traded immunology company, Integrated Genetics, now Sanofi Genzyme, and Baxter International.
|
EDUCATION ● M.B.A., University of Chicago ● Bachelor of Science in Economics, University of Illinois | |
30 | ir.novavax.com
| Executive Officers and Compensation |
President, Research and Development |
Gregory M. Glenn, M.D. | |
CAREER HIGHLIGHTS Novavax, Inc. ● President, Research and Development (March 2016 to present) ● Senior Vice President, Research and Development (January 2014 to March 2016) ● Senior Vice President, Chief Medical Officer (January 2011 to January 2014) ● Senior Vice President and Chief Scientific Officer (June 2010 to January 2011)
Iomai Corporation, which was acquired by Intercell AG in 2008 ● Chief Scientific Officer and Founder
|
Johns Hopkins University’s School of Public Health ● Associate in International Health
Walter Reed Army Institute of Research ● Clinical and Basic Research Scientist
EDUCATION ● Graduate of the Medical Research Fellowship, Walter Reed Army Institute of Research ● M.D., Oral Roberts University School of Medicine ● Bachelor of Arts in Biology and Chemistry, Whitman College | |
NOVAVAX, INC. 2022 PROXY STATEMENT | 31
Executive Officers and Compensation
Executive Vice President, Chief Commercial
|
John J. Trizzino | |
CAREER HIGHLIGHTS Novavax, Inc. ● Executive Vice President, Chief Commercial Officer and Chief Business Officer (August 2021 to present) ● Executive Vice President, Chief Commercial Officer, Chief Business Officer, and Interim Chief Financial Officer (April 2021 to August 2021) ● Executive Vice President, Chief Commercial Officer and Chief Business Officer (November 2020 to April 2021) ● Executive Vice President, Chief Business Officer and Chief Financial Officer (June 2020 to November 2020) ● Senior Vice President, Chief Business Officer and Chief Financial Officer and Treasurer (March 2018 to June 2020) ● Senior Vice President, Commercial Operations (March 2014 to March 2018) ● Senior Vice President, Business Development (August 2010 to September 2011) ● Senior Vice President, International and Government Alliances (July 2009 to September 2011) Medimmune, LLC ● Vice President, Vaccine Franchise
ID Biomedical ● Senior Vice President, Business Development
Henry Schein, Inc. ● Vice President, Business Development in the Medical Group ● Vice President, General Manager, GIV Division |
CURRENT DIRECTORSHIPS ImmunoVaccine, Inc. ● Chief Executive Officer (September 2011 to September 2013) ● The Maryland Tech Council
EDUCATION ● M.B.A., New York University ● Bachelor of Science, Long Island University, CW Post | |
Executive
Vice |
John A. Herrmann III, J.D. | |
CAREER HIGHLIGHTS Novavax, Inc. ● Executive Vice President, Chief Legal Officer and Corporate Secretary (June 2020 to present) ● Senior Vice President, General Counsel and Corporate Secretary (June 2014 to June 2020) ● Vice President, General Counsel and Corporate Secretary (March 2012 to June 2014) ● Executive Director, Legal Affairs and Corporate Secretary (April 2010 to March 2012)
Ore Pharmaceuticals ● General Counsel |
Gene Logic ● Deputy General Counsel (prior to Gene Logic becoming Ore Pharmaceuticals) Celera Genomics ● Senior Counsel Baxter Healthcare ● Senior Corporate Counsel, Renal Division EDUCATION ● J.D., University of Illinois ● Bachelor of Arts. in Political Science and History, Brown University | |
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Executive Officers and Compensation
Compensation Discussion and Analysis
CD&A CONTENTS
The Compensation Discussion and Analysis (the “CD&A”) discusses the compensation of our six executive officers for 2021 (each a “Named Executive Officer” or an “NEO”):
| NEO | Title |
| Stanley C. Erck | President and Chief Executive Officer |
| James P. Kelly(1) | Executive Vice President, Chief Financial Officer and Treasurer |
| John J. Trizzino(2) | Executive Vice President, Chief Commercial Officer and Chief Business Officer and Former Interim Chief Financial Officer and Treasurer |
| Gregory F. Covino(3) | Former Executive Vice President, Chief Financial Officer and Treasurer |
| Gregory M. Glenn, M.D. | President, Research and Development |
| John A. Herrmann III, J.D. | Executive Vice President, Chief Legal Officer and Corporate Secretary |
| (1) | Effective April 16, 2021, Mr. Kelly was appointed as our Executive Vice President, Chief Financial Officer and Treasurer. |
| (2) | Effective April 12, 2021, Mr. Trizzino was appointed interim Chief Financial Officer and Treasurer of the Company and served in that role until Mr. Kelly was appointed Chief Financial Officer and Treasurer on August 16, 2021. |
| (3) | Effective April 12, 2021, Mr. Covino resigned from his position as our Executive Vice President, Chief Financial Officer and Treasurer. Mr. Covino remained with the Company as an executive advisor until August 2021 and is currently party to a consulting agreement pursuant to which, at the request of the Company, he will provide consulting services to the Company until August 9, 2022. |
The CD&A reviews:
● the Company’s executive compensation philosophy ● the objectives and operation of the executive compensation program ● how compensation was set for 2021 ● the various elements of compensation paid to the executive officers for services during 2021
|
NOVAVAX, INC. 2022 PROXY STATEMENT | 33
Executive Officers and Compensation
EXECUTIVE COMPENSATION PROGRAM
Our executive compensation program is designed to attract, retain, and reward highly qualified executives in an extremely competitive recruitment and retention market to achieve the Company’s mission, vision, and goals. We maintain a compensation philosophy that rewards Company performance as it relates to key performance goals.
The Compensation Committee believes the components of our executive compensation program provide the tools needed to deliver performance-vesting compensation to retain and reward high-performing executives, align with general industry practices, and benefit our stockholders.
2021 Performance Highlights
2021 was a transformative year for Novavax. As the world faced new challenges amid the evolving COVID-19 pandemic, we remained focused on our mission to deliver our COVID-19 vaccine across the globe. By the end of 2021, we successfully achieved provisional approval, conditional marketing authorization, or emergency use authorization around the world and successfully initiated the global rollout of our COVID-19 vaccine. Throughout this pivotal year, the Board sought to retain the team necessary to advance these efforts. The Compensation Committee believes that the 2021 compensation of our Named Executive Officers is appropriate due to the achievement of critical milestones for Novavax. Importantly, it also serves to continue to encourage their extraordinary contributions towards the achievement of our strategic priorities and anticipated milestones in 2022 and beyond, supporting continued value creation for our stockholders. These remarkable efforts contributed to our outstanding operational results in 2021, reflected in the following highlights:
| We expanded all areas of our business to support our transition into a global, commercial organization, nearly doubling our global workforce over the course of 2021 to include almost 1,500 employees spanning the U.S., Czech Republic, and Sweden. |
| In 2021 and into early 2022, we gained regulatory authorizations spanning over 38 countries and Emergency Use Listing from the World Health Organization, representing the potential to reach over 170 countries that encompass over 6 billion total lives. |
| By the end of 2021, we initiated shipments of our COVID-19 vaccine that continued into 2022, with doses of our vaccine administered across Europe, North America, Asia, Australia, and Oceania. |
| We expanded our strategic partnerships to support our manufacturing and supply capabilities and solidify our global reach, including with Serum Institute of India Pvt. Ltd., SK bioscience Co., Ltd., and Takeda Pharmaceutical Company Limited. |
| We built a robust manufacturing and supply network to support over 2 billion annual doses of capacity. |
| We entered into multiple supply agreements for our COVID-19 vaccine, including with Gavi, the Vaccine Alliance; the European Commission; and various countries globally. |
| We advanced NVX-CoV2373 through our PREVENT-19 Phase 3 U.S. and Mexico, Phase 3 UK and Phase 2b South Africa trials. Our pivotal Phase 3 clinical trials demonstrated high efficacy against both the original COVID-19 strain and commonly circulating COVID-19 variants of concern, while maintaining a favorable safety profile. |
| We evaluated NVX-CoV2373 as a homologous booster through multiple studies. We announced positive results from 6-month booster doses in our Phase 2 U.S. and Australia trial and initiated our PREVENT-19 Phase 3 trial booster study. |
| We initiated our PREVENT-19 pediatric expansion in the U.S. to evaluate NVX-CoV2373 in adolescents ages 12 to 17. |
| We proactively evaluated NVX-CoV2373’s ability to protect against variant strains in our booster and adolescent studies. In our Phase 2 U.S. and Australia trial, data demonstrated broad cross-reactivity against Omicron and other variants following a 2-dose primary series, with increased immune responses after a 6-month booster dose. In our PREVENT-19 Phase 3 pediatric expansion, data showed robust immune responses in adolescents 2-to-4-fold higher than adults against evaluated variants, including Omicron, following a primary 2-dose regimen. |
| We advanced our pipeline, including developing and initiating Good Manufacturing Practice of our Omicron-specific variant strain vaccine, as well as initiating clinical evaluation of our COVID-influenza combination vaccine through a Phase 1/2 trial in Australia. |
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Executive Officers and Compensation
2021 Pay Decisions
During 2021, we maintained an executive compensation program designed to provide incentives that were necessary to retain key employees to avoid disruption to the Company’s important work around COVID-19.
We conducted our most recent advisory vote on executive compensation at our 2021 Annual Meeting of Stockholders. Our Board and our Compensation Committee value the opinions of our stockholders. Close attention was given to the outcome of this vote even though it is non-binding. Approximately 79% of the votes cast on the advisory vote on executive compensation were in favor of our Named Executive Officer compensation as disclosed in our 2021 proxy statement.
We continued our stockholder outreach in late 2021 and the information we obtain from these engagements is highly valued.
Active stockholder outreach and interaction is paramount to Novavax’ investor relations strategy. Consistent with that, Novavax attended eight investor conferences in 2021, the majority of which included presentations, fireside chats, and opportunities to meet with institutional investors in virtual settings. Novavax holds an annual stockholder day in the second quarter. In total, Novavax conducted over 200 meetings and conversations with buy-side investors as part of investor conferences and other opportunities to connect with our shareholders and had over 70 interactions with sell-side analysts in 2021. The Company believes these interactions are central to communicating Novavax’ investment opportunity, corporate strategy, milestones and goals, and to obtaining feedback directly from the investment community.
In 2022, in response to the stockholder community, the Board decided to make certain changes to its governance practices, including to recommend eliminating supermajority voting provisions in its charter and bylaws and permitting stockholder access to the Company’s proxy statement with respect to the nomination of directors, each as described further in Proposals 3, 4 and 5 included elsewhere in this proxy statement. Further, the Board approved an amendment to the 2015 Stock Plan to provide for overall limits on non-employee director compensation. If the Amended 2015 Stock Plan described in Proposal 6 included elsewhere in this proxy statement is approved by stockholders, then under the terms of the Amended 2015 Stock Plan, the aggregate value of all compensation paid to granted to a non-employee director for services to the Board in any year, including equity awards under the Amended 2015 Stock Plan and cash fees or other compensation paid outside the Amended 2015 Stock Plan in respect of such individual’s service on the Board, may not exceed $1,500,000 in the case of the chairman of the Board and $1,000,000 in the case of any other non-employee director (or $1,500,000 with respect to the year in which a nonemployee director commences service on the Board). |
STOCKHOLDER OUTREACH FORUMS | |
● Eight investor conferences, with presentations, fireside chats or meetings with institutional investors ● Six events hosted by sell-side analysts, including panels, forums, and group calls ● Our Annual Stockholder Day | ||
| IN TOTAL, IN 2021, WE CONDUCTED: | ||
● Over 200 meetings and conversations with buy-side investors as part of investor conferences and other opportunities to connect with our shareholders ● Over 70 interactions with sell-side analysts |
OBJECTIVES OF THE EXECUTIVE COMPENSATION PROGRAM
The Compensation Committee believes the compensation for our executive officers should be designed to attract, engage, and retain highly qualified executive officers responsible for the success of Novavax and should be determined within a framework that rewards performance and aligns the interests of the executive officers with the interests of the Company’s stockholders.
Within this overall philosophy, the Compensation Committee’s objectives are to:
| |
|
|
| |||
| Attract and retain highly qualified executives | Reward executives for meeting strategic goals and objectives of the Company | Reward strong individual performance | Align executives’ interests with those of our stockholders |
NOVAVAX, INC. 2022 PROXY STATEMENT | 35
Executive Officers and Compensation
Attract and Retain Highly Qualified Executives
Our executive compensation program is designed to attract, motivate, and retain, from a limited pool of available talent, individuals who are highly experienced with proven records of success, and to provide total compensation that is competitive with Company peers within the biotechnology and pharmaceutical industries.
Reward Executives for Meeting Strategic Goals and Objectives of the Company
The Compensation Committee believes a significant portion of an executive officer’s total compensation should reflect overall Company performance. The executive compensation program rewards the Company’s executive officers for achieving specified corporate performance goals, as well as goals that fall within their individual functional areas. Incentives are based on meeting criteria in each of these categories and reflect the executive officer’s overall contribution to the Company. In 2021, the primary focus of the Company’s employees continued to be the development and receipt of regulatory approval of NVX-CoV2373, the Company’s vaccine candidate against SARS-CoV2, on a global scale. As a result, the majority of the strategic goals for purposes of our executive compensation plans centered around this Company objective.
Align Executives’ Interests with Those of Our Stockholders
The Compensation Committee believes that Novavax’ long-term success depends upon aligning executives’ and stockholders’ interests. To support this objective, Novavax provides executive officers with the opportunity to receive equity grants in various forms. We consider grants of stock options to align the interests of our executives with our stockholders’ interests because value is created in such grants only when the value of Common Stock appreciates after the grant. We also view RSUs granted to our executive officers as important incentives, designed to encourage retention and stock ownership.
In June 2021, the Compensation Committee determined to move the timing of annual equity grants from December of each year to the first quarter of each year. As a result, no equity awards were granted to our Named Executive Officers in 2021, other than the equity awards granted to Mr. Kelly in connection with the commencement of his employment with the Company and to Mr. Trizzino in recognition of his service as Interim Chief Financial Officer and Treasurer.
For a discussion of equity grants made to our NEOs, see “Equity Awards” below.
OVERSIGHT AND OPERATION OF THE EXECUTIVE COMPENSATION PROGRAM
The Compensation Committee is appointed by the Board to assist in the development, review, and approval of the compensation of the Company’s directors and executive officers, as well as the development of the Company’s compensation plans. For details on the Compensation Committee’s oversight of the executive compensation program, see the section titled “Information Regarding the Board and Corporate Governance Matters — Compensation Committee” beginning on page 16 of this Proxy Statement.
The Chief Executive Officer (the “CEO”) evaluates and provides to the Compensation Committee performance assessments and compensation recommendations for each executive officer other than himself. The Board evaluates the CEO’s performance and makes compensation recommendations for the CEO to the Compensation Committee. The Compensation Committee considers the CEO’s and the Board’s recommendations, information provided by the Human Resources team, and advice provided by its compensation consultant in its deliberations regarding executive compensation and determines the compensation of the executive officers based on such deliberations. In 2021, the CEO and the Executive Vice President, Chief Human Resources Officer generally attended Compensation Committee meetings, but were not present for executive sessions or any discussion of their own compensation.
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Executive Officers and Compensation
Independent Compensation Consultant
The Compensation Committee retains an independent compensation consulting firm to assist and advise on executive and Board compensation. As required by rules adopted by the SEC under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the Compensation Committee engaged Aon for 2021 after assessing its independence. In September 2016, the Compensation Committee retained Radford, a part of the Total Rewards practice at Aon plc (“Radford”), to conduct annual analyses of each executive’s compensation and provide ongoing compensation support. In September 2021, the Compensation Committee determined to change compensation consultants and engaged Pearl Meyer & Partners, LLC (“Pearl Meyer”) as an independent compensation consultant after assessing Pearl Meyer’s independence. Based upon these assessments, it was determined the engagement of Radford and Pearl Meyer did not raise any conflicts of interest or similar concerns. The Compensation Committee will assess Pearl Meyer’s independence and potential conflicts of interest on a regular basis, no less than annually.
Our outside compensation consultant is independent, reports directly to the Compensation Committee, and advises on compensation levels and practices. The role of the Compensation Committee’s independent compensation advisor includes:
| ● | Reviewing executive compensation marketplace trends and best practices; |
| ● | Informing the Compensation Committee of regulatory developments relating to executive compensation practices; |
| ● | Advising the Compensation Committee on peer companies for compensation plan designs and competitive pay levels; and |
| ● | Providing compensation risk assessments |
Radford was and Pearl Meyer is authorized by the Compensation Committee to work with certain executive officers of the Company, as well as other employees in the Company’s Human Resources, Legal, and Finance departments in connection with their work on behalf of the Compensation Committee.
PROCESS FOR SETTING EXECUTIVE COMPENSATION
Generally, compensation packages for each executive officer are analyzed and discussed separately at the first Compensation Committee meeting each year. Prior to that meeting, the Committee’s independent compensation consultant performs a comprehensive competitive analysis on the compensation package for each executive officer. In the fourth quarter of 2021, Pearl Meyer completed a thorough competitive analysis for 2022 executive compensation, and this analysis was used by the Compensation Committee to inform decisions made regarding base salaries, target incentive cash bonus opportunities, and equity awards granted to our executive officers.
When determining overall compensation for 2021, the Compensation Committee reviewed an analysis, provided by Pearl Meyer, based on relevant market data from a combination of life sciences industry compensation survey data and compensation information from an individual set of comparable publicly-traded companies (the “Peer Group”), collectively referred to as “Comparative Market Data.”
The Compensation Committee selected the companies in the Peer Group with the assistance of Radford based on factors including, but not limited to, the following:
| ● | industry sector |
| ● | stage of development |
| ● | market capitalization |
| ● | business focus |
| ● | employee headcount |
NOVAVAX, INC. 2022 PROXY STATEMENT | 37
Executive Officers and Compensation
The Peer Group utilized in 2021 consists of the following 18 companies:
| ● Acceleron Pharma | ● Exelixis | ● Neurocrine Biosciences | ||||
| ● Alnylam Pharmaceuticals | ● Dynavax Technologies | ● Sarepta Therapeutics | ||||
| ● Biohaven Pharmaceutical | ● InCyte | ● Seagen | ||||
| ● BioMarin Pharmaceutical | ● Inovio Pharmaceuticals | ● Ultragenyx Pharmaceutical | ||||
| ● Blueprint Medicines | ● Ionis Pharmaceuticals | ● United Therapeutics | ||||
| ● Emergent Bio Solutions | ● Nektar Therapeutics | ● Vir Biotechnology | ||||
In addition to the Peer Group, Radford provided compensation survey data through the Radford Global Life Sciences Survey (the “Survey”). The Survey provides data on total compensation and compensation practices for more than 900 life sciences companies and more than 600,000 individuals. Global market data is available for 50 countries and positions at the executive, management, professional, sales, and support levels, as well as overall compensation practices. Target industries include biotechnology, pharmaceutical, diagnostic and clinical research organizations. In 2021, Radford used an equal blend of survey data and public proxy data for the Peer Group, where possible.
For 2021, Radford benchmarked each executive officer’s current compensation against the 50th percentile of the Comparative Market Data. The Compensation Committee determined that this benchmarking was appropriate because market median is a common reference point among biotechnology companies similar in size to Novavax.
In addition to Comparative Market Data, the Compensation Committee considers various internal factors when evaluating compensation decisions. These factors include, but are not limited to, internal equity, an executive’s experience both broadly and in his or her current role, the scope of role, individual performance, and contributions, and how critical the role is to the Company’s business objectives and long-term business strategy. These factors help ensure the Company is fair in its compensation practices across roles similar in scope and level of responsibility.
WHAT THE COMPENSATION PROGRAM IS DESIGNED TO REWARD
The executive compensation program is designed to reward both individual and Company performance. Because of the key roles the executive officers play in the success of the Company, a significant portion of the achievement of corporate goals is reflective of the executive officers’ individual performance. Accordingly, a significant portion of an executive officer’s total compensation package is based on the Company’s performance and the achievement of certain corporate goals. In 2021, the Company set three corporate objectives (“2021 Objectives”). These 2021 Objectives are described below under “2021 Performance and Outcomes.”
Typically, the CEO recommends individual performance goals and objectives for executive officers other than himself at the beginning of the year, and, in the first quarter of the following year, reviews each executive officer’s achievement of specific performance goals and objectives. Because of his key role in the overall success of the Company, the CEO’s performance goals and objectives typically are the same as the Company’s performance goals. With the exception of the CEO, whose incentive compensation is based entirely on achievement of the 2021 Objectives and the discretion of the Board, each NEO had additional individual goals to support the 2021 Objectives or to further the Company’s strategic plan. Each NEO achieved his individual objectives.
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Executive Officers and Compensation
During the first quarter of 2022, the Compensation Committee reviewed the Company’s performance related to the 2021 Objectives. The following table summarizes its conclusions regarding these objectives:
| 2021 Objectives | Weight | Achievement | Percent | Explanation | ||
| Development of NVX- CoV2373 Measured Against Specific Milestones |
80% |  |
Partially met objective |
60%(1) | |
Received emergency regulatory approval of NVX-CoV2373 from the U.K. MHRA, European Medicines Agency and WHO, but later than expected. US FDA approval remains in progress. |
| |
Met Manufacturing run rate of > 1B/Year by September 2021, and | |||||
| |
2B/year by end of 2021 | |||||
 |
Failed to achieve material revenue in 2021 due to delays related to regulatory approval | |||||
 |
Development of a COVID Beta variant vaccine ceased because of the demonstrated efficacy of NVX-CoV2373 | |||||
| Development of Flu Vaccine |
10%
|
|
Met
|
10%
|
|
Met Flu + COVID vaccine ("Combo") clinical protocol and strategy |
| |
Phase 1 Combo Trial initiated | |||||
| |
Identified and validated PPQ manufacturing facility for Flu Vaccine | |||||
| Corporate Objectives Related to Compliance and Employee Turnover | 10% |  |
Met objective |
10% | |
Implemented dedicated Compliance function |
| |
700 Quince Orchard office space in use | |||||
| |
Favorable employee turnover ratio compared to peer group | |||||
| |
Officer succession plans implemented | |||||
| Total | 100% | 80% | ||||
| (1) | The Compensation Committee determined that the 2021 Objectives related to NVX-CoV2373 were met as to 30% of this objective and used its discretionary authority to assess material accomplishments related to NVX-CoV2373 that were not specifically reflected in the 2021 Objectives. The Committee determined such accomplishments merited an additional 30% achievement. |
The Compensation Committee believes the most effective executive compensation program is one that:
| ● | provides a competitive base salary |
| ● | rewards the achievement of established annual and long-term goals and objectives |
| ● | provides an incentive for retention |
For this reason, the executive compensation program is comprised of three primary elements:
| (i) | base salary (fixed) — the base salary provides recognition of an individual’s role, responsibility, and experience |
| (ii) | an incentive cash bonus program — variable pay designed to reward achievement of strategic objectives |
| (iii) | equity awards — variable compensation which promotes a culture of ownership and aligns the interests of the executive with that of the shareholders |
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Executive Officers and Compensation
The Compensation Committee believes these three elements are the most effective combination to motivate and retain executive officers.
The Compensation Committee has not adopted any formal guidelines for allocating total compensation between equity compensation and cash compensation, but generally seeks to provide an overall executive compensation package designed to attract, motivate, and retain highly qualified executive officers, to reward them for performance over time, and to align the interests of the executive officers with the interests of our stockholders.
The Compensation Committee’s philosophy is to maintain base salaries at a competitive level sufficient to recruit and retain individuals possessing the skills and capabilities necessary to achieve the Company’s goals over the long term. The Compensation Committee considers Comparative Market Data, and the internal factors described above, as well as retention and succession considerations.
The base salaries for the NEOs as of December 31, 2021 were:
| Executive | Base
Salary ($) | Percentage
Increase in Base Salary from December 31, 2020 | ||||||
| Stanley C. Erck | 725,000 | 9.5 | %(1) | |||||
| James P. Kelly(2) | 490,000 | — | ||||||
| John J. Trizzino | 465,000 | 8.1 | %(3) | |||||
| Gregory F. Covino(4) | 262,500 | — | ||||||
| Gregory M. Glenn, M.D. | 575,000 | 18.1 | %(5) | |||||
| John A. Herrmann III, J.D. | 490,000 | 18.1 | %(6) | |||||
| (1) | Mr. Erck’s continuing leadership, along with the continued growth of the size of the Company and the complexity of its operations, his individual performance, and a review of the Comparative Market Data, were factors used by the Compensation Committee in its decision to increase his base salary on April 1, 2021. |
| (2) | Mr. Kelly was hired as the Company’s Executive Vice President, Chief Financial Officer and Treasurer in August 2021. Mr. Kelly’s base salary was determined based on his expertise, his expected level of responsibilities and a review of the Comparative Market Data. |
| (3) | In November 2020, Mr. Trizzino transitioned from his role as Chief Financial Officer to the newly created role of Chief Commercial Officer. Mr. Trizzino’s additional responsibilities in his new role, along with the continued growth of the Company and the related increase in the complexity of the interim Chief Financial Officer and Chief Business Officer position from April to August 2021, his individual performance, and a review of the Comparative Market Data, were factors used by the Compensation Committee in its decision to increase his base salary on April 1, 2021. |
| (4) | Mr. Covino resigned as the Company’s Executive Vice President, Chief Financial Officer and Treasurer in April 2021, at which point his base salary was reduced from $440,000 to $262,500. Mr. Covino’s employment terminated on August 6, 2021. |
| (5) | Dr. Glenn’s individual contributions to the Company, along with the growth of the Company and a review of the Comparative Market Data, were factors used by the Compensation Committee in its decision to increase his base salary on April 1, 2021. |
| (6) | Mr. Herrmann’s individual contributions to the Company, along with the growth of the Company and a review of the Comparative Market Data, were factors used by the Compensation Committee in its decision to increase his base salary on April 1, 2021. |
The 2021 incentive cash bonus program was designed to motivate and reward executive officers for the achievement of specific corporate objectives. The purpose of the incentive cash bonus program is to align company, departmental, and individual goals throughout the Company and to provide an incentive that further ties compensation to individual contribution and teamwork.
As described above, for 2021, the Board set three corporate objectives — the Development of NVX-CoV2373 Measured Against Specific Milestones (80%), the Development of a Flu Vaccine (10%), and Corporate Objectives Related to Compliance and Employee Turnover (10%). In reviewing the Company’s achievement against the 2021 Objectives during the first quarter of 2022, the Compensation Committee determined that the
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Executive Officers and Compensation
2021 Objectives were achieved at a level of 80% of target, based on the achievements described above under “2021 Performance and Outcomes.”
A target bonus for each named executive officer is set as a percentage of the executive officer’s base salary, with such percentages being based on market data, although the ultimate amount of any bonus payout is at the discretion of the Compensation Committee and based on the level of achievement of applicable bonus plan objectives.
The 2021 NEO bonus targets and actual incentive cash bonus awards received, based on the achievement of the 2021 Objectives, as described above, were as follows:
| Executive | Bonus
Target as Percentage of Base Salary | Incentive
Cash Bonus Award Received ($) | ||||||
| Stanley C. Erck | 70.0% | 397,180 | ||||||
| James P. Kelly(1) | 45.0% | 68,217 | ||||||
| John J. Trizzino | 45.0% | 169,383 | ||||||
| Gregory F. Covino(2) | 40.0% | — | ||||||
| Gregory M. Glenn, M.D. | 50.0% | 226,730 | ||||||
| John A. Herrmann III, J.D | 45.0% | 174,952 | ||||||
| (1) | Mr. Kelly was hired as the Company’s Executive Vice President, Chief Financial Officer and Treasurer in August 2021. For 2021, Mr. Kelly’s annual bonus was pro-rated for the portion of the year he was employed by the Company. |
| (2) | Mr. Covino resigned as the Company’s Executive Vice President, Chief Financial Officer and Treasurer in April 2021, terminated employment on August 6, 2021 and did not receive an annual bonus for 2021. |
Equity awards are a fundamental incentive element in the Company’s executive compensation program because they emphasize long-term performance, as measured by creation of stockholder value, and foster a commonality of interest between stockholders and key executives. In addition, they are crucial to a competitive compensation program for executive officers because they act as a powerful retention tool. With the Company’s ongoing global rollout of NVX-CoV2373, its vaccine candidate for the SARS-CoV-2 virus responsible for the COVID-19 pandemic, as well as the ongoing efforts to attain licensure for its influenza vaccine, the Compensation Committee believes that equity awards create appropriate incentives for rewarding our executives for increases in stock performance as a result of our efforts towards improved global health and align the executives’ interests with those of our stockholders.
In the case of stock options, the executive officers are further motivated by the potential appreciation in stock price above the exercise price of the stock options. To encourage continued employment, equity grants to executive officers, other than retention- and performance-vesting grants, typically require the executive to remain an employee of the Company for three or four years before the award is fully vested. In addition, the Compensation Committee may grant equity awards that vest as the Company achieves certain performance milestones. The Compensation Committee believes it is important to tie the long-term benefit potentially realizable by the executive to a long-term commitment with Novavax.
Annual equity grants are awarded to executive officers at the discretion of the Board upon a recommendation by the Compensation Committee or at the discretion of the Compensation Committee pursuant to the authority delegated by the Board. In making its recommendations or determinations, the Compensation Committee considers Company performance, competitive data, and the individual’s scope of responsibility and continuing performance. In connection with the shift in grant timing from year-end annual equity award grants to first quarter annual equity award grants, no annual equity awards were granted to the NEOs in 2021. After reviewing guidance from Pearl Meyer based on its analysis of competitive data, annual equity awards were awarded to all eligible employees, including the NEOs, in March 2022.
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Executive Officers and Compensation
The following table contains information about the grant, vesting, and forfeiture of outstanding performance-vesting awards as of December 31, 2021:
| Number of Shares | ||||
| Non-vested at December 31, 2017 | 48,750 | |||
| Granted | — | |||
| Vested | — | |||
| Forfeited | — | |||
| Non-vested at December 31, 2018 | 48,750 | |||
| Granted | 38,758 | |||
| Vested | — | |||
| Forfeited | (31,009 | ) | ||
| Non-vested at December 31, 2019 | 56,499 | |||
| Granted | 830,000 | |||
| Vested | (40,243 | ) | ||
| Forfeited | (16,256 | ) | ||
| Non-vested at December 31, 2020 | 830,000 | |||
| Granted | — | |||
| Vested | (415,000 | ) | ||
| Forfeited | — | |||
| Non-vested at December 31, 2021 | 415,000 | |||
In August 2021, the Compensation Committee granted an option to purchase 14,200 shares of Common Stock to Mr. Kelly effective as of his first day of employment pursuant to his appointment as the Company’s Executive Vice President, Chief Financial Officer, and Treasurer. The stock option will vest as to 25% of the shares underlying the option on the first anniversary of the grant date and as to the remaining 75% in equal monthly installments over a three-year period, subject to Mr. Kelly’s continued service with the Company through the applicable vesting date.
Going forward, annual equity awards will be made in the first quarter of each year. In March 2022, the Compensation Committee awarded to each Named Executive Officer, other than Mr. Covino who resigned as Executive Vice President, Chief Financial Officer and Treasurer of the Company in April 2021, an option to purchase shares of Common Stock. Each stock option vests as to 25% of the shares underlying the option on the first anniversary of the grant date and as to the remaining 75% in equal monthly installments over a three-year period, subject to continued service with the Company through the applicable vesting date. The following table sets forth the number of shares underlying the time-vesting stock option granted to each NEO:
| Executive | Time-Vesting Stock Options | |||
| Stanley C. Erck | 62,211 | |||
| James P. Kelly | 20,737 | |||
| John J. Trizzino | 20,737 | |||
| Gregory F. Covino(1) | — | |||
| Gregory M. Glenn, M.D. | 28,341 | |||
| John A. Herrmann III, J.D. | 20,737 | |||
| (1) | Mr. Covino resigned as the Company’s Executive Vice President, Chief Financial Officer and Treasurer in April 2021, and was therefore not eligible for an annual equity grant. |
In August 2021, the Compensation Committee awarded Mr. Kelly 7,100 time-vesting RSUs effective as of his first day of employment pursuant to his appointment as the Company’s Executive Vice President, Chief Financial Officer and Treasurer. The RSUs vest in three equal annual installments on the first three anniversaries of the date of grant, in each case subject to Mr. Kelly’s continued service with the Company through the applicable vesting date.
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In August 2021, the Compensation Committee awarded Mr. Trizzino 1,965 time-vested RSUs in recognition of his services as Interim Chief Financial Officer and Treasurer. The RSUs vest in three equal annual installments on the first three anniversaries of the date of grant, in each case subject to Mr. Trizzino’s continued service with the Company through the applicable vesting date.
In March 2022, the Board awarded each NEO, other than Mr. Covino, time-vesting RSUs that vest in three equal annual installments on the first three anniversaries of the date of grant, in each case subject to continued service with the Company through the applicable vesting date. The following table sets forth the RSUs granted to each NEO:
| Executive | Time-Vesting RSUs | |||
| Stanley C. Erck | 41,474 | |||
| James P. Kelly | 13,825 | |||
| John J. Trizzino | 13,825 | |||
| Gregory F. Covino(1) | — | |||
| Gregory M. Glenn, M.D. | 18,894 | |||
| John A. Herrmann III, J.D. | 13,825 | |||
| (1) | Mr. Covino resigned as the Company’s Executive Vice President, Chief Financial Officer and Treasurer in April 2021, and was therefore not eligible for an annual equity grant. |
In 2017, the Board adopted a policy providing that, if the Company is required to prepare an accounting restatement due to material non-compliance with financial reporting requirements under applicable securities laws, with respect to any cash bonus or other cash compensation paid or awarded, or equity-based bonus or other equity-based incentive compensation that was exercised, vested or settled, within six months preceding such restatement, and that was granted or earned or became vested based wholly or in part upon the attainment of any financial reporting measure, if the recipient of such cash or equity-based bonus or other cash or equity-based incentive compensation engaged in fraud, intentional misconduct, or gross negligence that caused or partially caused the need for the restatement, the Board generally may seek reimbursement of any amount paid under an award in excess of what would have been paid had such material noncompliance not occurred.
In June 2021, the Board adopted the Stock Ownership Guidelines for our executive team and Board. The Stock Ownership Guidelines require that by the fifth anniversary of the guideline’s effective date (i.e., June 17, 2021) or the fifth anniversary of an individual becoming subject to the policy (whichever is later), that individual is required to hold a number of shares of Common Stock equivalent in value to a multiple of the individual’s salary or, in the case of directors, their annual cash retainer, as follows:
The Stock Ownership Guidelines provide that the following shares or share equivalents count towards satisfaction of the guidelines:
| ● | shares owned outright by the executive or director or a member of his or her immediate family residing in the same household, |
| ● | shares held in trust for the benefit of the executive or director or a member of his or her immediate family residing in the same household, |
| ● | shares or share equivalents held in any Company employee stock purchase plan, 401(k) plan or deferred compensation retirement plan, and |
| ● | unvested restricted stock units. |
Other unvested equity awards, vested stock options and unearned performance-based equity awards do not count toward satisfaction of the guidelines.
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Executive Officers and Compensation
Until the required ownership level is reached, covered executives and non-employee directors are required to retain at least 50% of the shares, net of applicable tax withholding and the payment of any exercise or purchase price (if applicable), received upon the vesting or settlement of equity awards or the exercise of stock options or stock appreciation rights. Once the requisite level has been achieved, ownership of the guideline amount must be maintained for as long as the individual is subject to the Stock Ownership Guidelines.
As of December 31, 2021, all of the covered individuals satisfied the ownership guidelines set forth in the Stock Ownership Guidelines, as shown in the following table:
Named Executive Officers
| Name | Base Salary ($) | Stock Ownership Guideline | Minimum Value to be Owned ($) | Minimum Shares to be Owned(1) | Total
Shares Beneficially Owned(2) | Difference | ||||||||||||||||
| Stanley C. Erck | 725,000 | 3x Base Salary | 2,175,000 | 11,078 | 840,577 | +829,499 | ||||||||||||||||
| James P. Kelly | 490,000 | 1x Base Salary | 490,000 | 2,496 | 7,100 | +4,604 | ||||||||||||||||
| John J. Trizzino | 465,000 | 1x Base Salary | 465,000 | 2,368 | 238,120 | +235,752 | ||||||||||||||||
| Gregory M. Glenn, M.D. | 575,000 | 1x Base Salary | 575,000 | 2,929 | 332,799 | +329,870 | ||||||||||||||||
| John A. Herrmann III, J.D. | 490,000 | 1x Base Salary | 490,000 | 2,496 | 229,443 | +226,947 | ||||||||||||||||
Board of Directors
| Name | Cash Retainer ($) | Stock Ownership Guideline | Minimum Value to be Owned ($) | Minimum Shares to be Owned | Total
Shares Beneficially Owned | Difference | ||||||||||||||||
| Gregg H. Alton, J.D. | 55,000 | 3x Cash Retainer | 165,000 | 840 | 8,400 | +7,560 | ||||||||||||||||
| Richard H. Douglas, Ph.D. | 55,000 | 3x Cash Retainer | 165,000 | 840 | 81,050 | +80,210 | ||||||||||||||||
| Rachel K. King | 55,000 | 3x Cash Retainer | 165,000 | 840 | 42,050 | +41,210 | ||||||||||||||||
| Margaret G. McGlynn, R. Ph. | 55,000 | 3x Cash Retainer | 165,000 | 840 | 8,400 | +7,560 | ||||||||||||||||
| Michael A. McManus Jr., J.D. | 55,000 | 3x Cash Retainer | 165,000 | 840 | 60,001 | +59,161 | ||||||||||||||||
| David M. Mott | 55,000 | 3x Cash Retainer | 165,000 | 840 | 53,100 | +52,260 | ||||||||||||||||
| James F. Young, Ph.D. | 55,000 | 3x Cash Retainer | 165,000 | 840 | 192,920 | +192,080 | ||||||||||||||||
| (1) | Determined based on a Common Stock value of $196.34, the average month-end closing price over the 12 months preceding the end of the fiscal year 2021. |
| (2) | Does not include vested, unexercised stock options held by the individual. |
PERQUISITES AND OTHER PERSONAL BENEFITS
The Company does not have any executive perquisite programs. From time to time, on a limited or exception basis, it may decide to provide other benefits that are related to a business purpose or are customary among peer public companies that may otherwise be considered perquisites. All of the NEOs are eligible to participate in the Company’s benefit plans offered to all employees, including health, dental and vision insurance, a prescription drug plan, flexible spending accounts, short- and long-term disability, life insurance, and a 401(k) plan. The NEOs are also eligible to participate in the Company’s Amended and Restated 2013 Employee Stock Purchase Plan (the “ESPP”).
EMPLOYMENT AGREEMENTS AND SEVERANCE BENEFITS
As of December 31, 2021, the Company had employment agreements in place with all of the NEOs. The employment agreements provide for certain payments if the NEO is terminated by the Company without cause or leaves for good reason. The terms of these agreements are described in greater detail in the section titled “Overview of Employment and Change in Control Agreements.” All of the NEOs are “at will” employees.
The Company has established a Change in Control Severance Benefit Plan, which provides for severance payments to participating employees if the participant’s employment is terminated in connection with a change in control. This plan is described in greater detail in the section titled “Overview of Employment and Change in Control Agreements.” The Compensation Committee believes it is important to provide such employees with an incentive to remain with the Company amid the uncertainty that often accompanies efforts to consummate a corporate sale or similar transaction that may enhance stockholder value. All of the NEOs participate in the Change in Control Severance Benefit Plan.
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Executive Officers and Compensation
TAX AND ACCOUNTING IMPLICATIONS
Section 162(m) limits to $1 million the amount a company may deduct for compensation paid to certain current and former executive officers, subject to certain limited exceptions. The Compensation Committee believes its primary responsibility is to provide a compensation program that attracts, retains, and rewards the executives necessary for our success. Accordingly, the Compensation Committee has authorized, and will continue to authorize, compensation arrangements that are not deductible in whole or in part. The Compensation Committee may consider the accounting implications of significant equity-related compensation decisions.
PROHIBITION ON HEDGING AND PLEDGING OUR COMMON STOCK
Our insider trading policy prohibits all directors, officers and other employees from engaging in hedging of Common Stock or similar transactions that transfer to another, in whole or in part, any of the economic consequences of ownership of Common Stock, such as put and call options and short and long sales, convertible debentures or preferred stock and debt securities (debentures, bonds and notes). Further, our insider trading policy provides that no director, executive officer, or vice president may engage in any transaction involving pledging of Common Stock.
The Compensation Committee regularly reviews the Company’s compensation and benefits programs, policies and practices, including its executive compensation program and its incentive-based compensation programs for its executive officers, to determine whether such programs, policies and practices create risks that are reasonably likely to have a material adverse effect on the Company. Our compensation and governance-related policies are enhanced by our clawback policy, described in the section titled “Elements of Compensation — Clawback Policy” on page 42 of this Proxy Statement, as well as a policy prohibiting hedging and pledging of our securities by our directors and officers, including our NEOs, and employees, as described above. Based on its assessment, the Compensation Committee does not believe that our compensation programs, policies and practices, in conjunction with our existing processes and controls, create risks that are reasonably likely to have a material adverse effect on our business and operations.
NOVAVAX, INC. 2022 PROXY STATEMENT | 45
Executive Officers and Compensation
|
The Compensation Committee of the Company has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and based on such review and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.
| |
| COMPENSATION COMMITTEE | |
| David
M. Mott, Chair Richard H. Douglas, Ph.D. Rachel K. King Margaret G. McGlynn, R. Ph. Michael A. McManus, Jr., J.D. | |
| This Compensation Committee Report shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933 or under the Securities Exchange Act of 1934 except to the extent that Novavax specifically incorporates this information by reference and shall not otherwise be deemed filed under the Securities Act of 1933 and the Securities Exchange Act of 1934 and shall not be deemed soliciting material. | |
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The following table sets forth information concerning the compensation of our NEOs for the fiscal years ended December 31, 2021, 2020, and 2019.
| Name
and Principal Position | Year | Salary(1) ($) | Bonus(2) ($) | Stock Awards(3) ($) | Option Awards(4) ($) | Non-Equity Incentive Plan Compensation(5) ($) | All
Other Compensation(6) ($) | Total ($) | ||||||||||||||||||||||||
| Stanley C. Erck | 2021 | 709,250 | — | — | — | 397,180 | 11,600 | 1,118,030 | ||||||||||||||||||||||||
| President and CEO | 2020 | 657,181 | — | 2,710,730 | 44,115,244 | 591,463 | 11,400 | 48,086,018 | ||||||||||||||||||||||||
| 2019 | 642,720 | — | 431,631 | 986,660 | 366,351 | 11,200 | 2,438,562 | |||||||||||||||||||||||||
James P. Kelly(7) EVP,
Chief Financial | ||||||||||||||||||||||||||||||||