☐
|
| |
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
|
Arena Pharmaceuticals, Inc.
|
(Name of Registrant as Specified In Its Charter)
|
|
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
|
Notice of Annual Meeting
of Stockholders
|
|||
Date:
|
| |
June 11, 2021
|
Place:
|
| |
www.virtualshareholdermeeting.com/ARNA2021
|
April 27, 2021
|
| |
By Telephone
By Internet
By Mail
By Scanning
|
|||
To the Stockholders of Arena Pharmaceuticals, Inc.:
|
| |||||
The 2021 Annual Meeting of Stockholders of Arena Pharmaceuticals, Inc., a Delaware corporation, will be held on Friday, June 11, 2021, at 9:00 a.m. (Pacific Time), virtually via a live interactive audio webcast at www.virtualshareholdermeeting.com/ARNA2021, for the following purposes, which are more fully described in the proxy statement accompanying this notice:
|
| |||||
1.
|
| |
To elect the nine nominees for director named herein to our Board of Directors to serve until the next annual meeting of stockholders and until their respective successors are elected and qualified or until their earlier resignation or removal (Proposal 1);
|
| ||
2.
|
| |
To approve, on an advisory basis, the compensation of our named executive officers, as disclosed in the proxy statement accompanying this notice (Proposal 2);
|
| ||
3.
|
| |
To approve the Arena Pharmaceuticals, Inc. 2021 Long-Term Incentive Plan (Proposal 3);
|
| ||
4.
|
| |
To ratify the appointment of KPMG LLP, an independent registered public accounting firm, as our independent auditors for the fiscal year ending December 31, 2021 (Proposal 4); and
|
| ||
5.
|
| |
To transact such other business as may properly come before the meeting or any adjournment or postponement thereof.
|
| ||
The record date for the 2021 Annual Meeting is April 15, 2021. Only stockholders of record at the close of business on April 15, 2021, are entitled to notice of and to vote at the 2021 Annual Meeting and at any adjournment or postponement thereof.
|
|
|
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of
Stockholders to Be Held on June 11, 2021, at 9:00 a.m. (Pacific Time) virtually via a live interactive audio webcast at www.virtualshareholdermeeting.com/ARNA2021.
The proxy statement and annual report to stockholders
are available on our investor relations home page of our website at http://invest.arenapharm.com/.
|
|
2021 PROXY STATEMENT
|
| |
|
| |
i
|
ii
|
| |
|
| |
2021 PROXY STATEMENT
|
| |
|
Proposals
|
| |
Required
Approval
|
| |
Board
Recommendation
|
| |
Page
Reference
|
|||
1.
|
| |
Election of Directors
|
| |
Majority of votes cast
|
| |
For each nominee
|
| |
Page 2
|
2.
|
| |
Advisory Approval of Executive Compensation
|
| |
Majority of votes cast
|
| |
For
|
| |
Page 17
|
3.
|
| |
Approval of the 2021 Long-Term Incentive Plan
|
| |
Majority of votes cast
|
| |
For
|
| |
Page 47
|
4.
|
| |
Ratification of Independent Auditors
|
| |
Majority of votes cast
|
| |
For
|
| |
Page 62
|
2021 PROXY STATEMENT
|
| |
|
| |
1
|
|
Name
|
| |
Positions and
Offices Held
|
| |
Year First
Elected or
Appointed Director
|
| |
Age
|
|
|
Garry A. Neil, M.D.
|
| |
Director, Chair of the Board
|
| |
2017
|
| |
67
|
|
|
Jayson Dallas, M.D.
|
| |
Director
|
| |
2017
|
| |
53
|
|
|
Oliver Fetzer, Ph.D.
|
| |
Director
|
| |
2017
|
| |
56
|
|
|
Kieran T. Gallahue
|
| |
Director
|
| |
2018
|
| |
57
|
|
|
Jennifer Jarrett
|
| |
Director
|
| |
2017
|
| |
50
|
|
|
Katharine Knobil, M.D.
|
| |
Director
|
| |
2020
|
| |
57
|
|
|
Amit D. Munshi
|
| |
Director, President and Chief Executive Officer
|
| |
2016
|
| |
53
|
|
|
Tina S. Nova, Ph.D.
|
| |
Director
|
| |
2004
|
| |
67
|
|
|
Nawal Ouzren
|
| |
Director
|
| |
2021
|
| |
42
|
|
2
|
| |
|
| |
2021 PROXY STATEMENT
|
| |
|
Garry Neil, M.D.
DIRECTOR SINCE: 2017
AGE: 67
|
| |
BIOGRAPHICAL INFORMATION
Garry Neil, M.D., has served on our Board of Directors since February 2017 and as its Chair since February 2021. Dr. Neil serves as the Chief Scientific Officer of Cerecor, Inc., a publicly held biotechnology company focused on translating genetic discoveries into novel therapies to improve the lives of children and adults with pediatric onset life altering diseases, a position he has held since Cerecor’s February 2020 merger with Aevi Genomic Medicine, Inc., a biotechnology company with the same focus, where Dr. Neil had served as Chief Scientific Officer since September 2013. Prior to joining Aevi, Dr. Neil was a Partner at Apple Tree Partners, a life science private equity firm, from September 2012 to September 2013, and held a number of senior positions in the pharmaceutical industry, including most recently Corporate VP of Science & Technology at Johnson & Johnson from November 2007 to August 2012. Prior to these roles, Dr. Neil served as Group President at Johnson & Johnson Pharmaceutical Research and Development, VP of R&D at Merck KGaA/EMD Pharmaceuticals, and VP of Clinical Research at AstraZeneca and Astra Merck. Dr. Neil holds a B.S. from the University of Saskatchewan and an M.D. from the University of Saskatchewan College of Medicine. He completed postdoctoral clinical training in internal medicine and gastroenterology at the University of Toronto. Dr. Neil also completed a postdoctoral research fellowship at the Research Institute of Scripps Clinic. He has previously served on the board of GTx, Inc., a publicly traded biopharmaceutical company focused on cancer and other serious medical conditions. He is the Founding Chairman of TransCelerate Biopharma, Inc., a non-profit pharmaceuticals industry R&D consortium, and is a past member of the TransCelerate Board. He also serves on the board of Reagan Udall Foundation and previously served on the board of Foundation for the National Institutes of Health (NIH) and on the Science Management Review Board of the NIH. Dr. Neil is also the past Chairman of the Pharmaceutical Research and Manufacturers Association (PhRMA) Science and Regulatory Executive Committee and the PhRMA Foundation Board.
|
|
KEY QUALIFICATIONS AND EXPERIENCE
Dr. Neil’s years of biopharmaceutical experience with emphasis on unique insight into gastrointestinal, or GI, drug development with vast network of global key opinion leaders, or KOLs, his medical degree and specialty training, as well as his global executive positions in research and development, clinical, and regulatory affairs, gives him the qualifications, attributes and skills to serve as one of our directors.
|
Jayson Dallas, M.D.
DIRECTOR SINCE: 2017
AGE: 53
|
| |
BIOGRAPHICAL INFORMATION
Jayson Dallas, M.D., has served on our Board of Directors since February 2017. Dr. Dallas served as President and Chief Executive Officer of Aimmune Therapeutics, Inc., a biopharmaceutical company developing treatments for potentially life-threatening food allergies, from June 2018 until Aimmune’s acquisition by Nestlé S.A. in October 2020. Prior to joining Aimmune, he served as the first Chief Commercial Officer and Executive Vice President of Ultragenyx Pharmaceutical, Inc., a publicly held biopharmaceutical company focused on the development of novel products for rare and ultra-rare diseases, since August 2015. Prior to Ultragenyx, Dr. Dallas served as General Manager of F. Hoffmann-La Roche Ltd, a healthcare company, in the United Kingdom from January 2013 to July 2015. Before joining Roche, he held two different positions at Genentech, a pharmaceutical company, as Head of Global Oncology Launch Excellence and Biosimilar Strategy and Head of Global Product Strategy for Immunology and Ophthalmology, from May 2010 to December 2012 in South San Francisco. Earlier in his career, Dr. Dallas worked at Novartis International AG and Pfizer Inc. / Pharmacia Corporation in the United States and previously at Roche in Switzerland. Dr. Dallas holds an M.D. from the University of the Witwatersrand, Johannesburg, South Africa and an M.B.A. from Ashridge Business School in the United Kingdom. Dr. Dallas also serves on the Board of Galecto, Inc., a biotechnology company.
|
|
| |
KEY QUALIFICATIONS AND EXPERIENCE
Dr. Dallas’s years of global experience at the intersection of drug development, medical and commercial planning, and business operations for leading biopharmaceutical and healthcare companies give him the qualifications, attributes and skills to serve as one of our directors.
|
2021 PROXY STATEMENT
|
| |
|
| |
3
|
Oliver Fetzer, Ph.D.
DIRECTOR SINCE: 2017
AGE: 56
|
| |
BIOGRAPHICAL INFORMATION
Oliver Fetzer, Ph.D., has served on our Board of Directors since February 2017. Dr. Fetzer has served as the Chief Executive Officer of Synthetic Genomics, Inc., a private synthetic biology company commercializing genomic technologies, since November 2014. Prior to Synthetic Genomics, Dr. Fetzer was President and Chief Executive Officer of Cerulean Pharma Inc., a pharmaceutical company that developed nanoparticle drug conjugate oncology therapeutics, from April 2009 to October 2014. Prior to Cerulean Pharma, Dr. Fetzer served in a variety of positions at Cubist Pharmaceuticals, Inc., including Senior Vice President, Corporate Development and Research & Development, Senior Vice President, Corporate Development and Chief Business Officer, and Senior Vice President, Business Development. Dr. Fetzer began his career in 1993 in various positions of increasing responsibility at the Boston Consulting Group, Inc. (BCG), a global leading management consulting firm, including Consultant, Project Leader, Principal, Partner and Managing Director. Dr. Fetzer served on the boards of Auxilium Pharmaceuticals, Inc. from 2005 to 2015 and of Cerulean Pharma, Inc. from 2009 to 2014, and has served on the board of Tecan Group AG, a publicly traded provider of laboratory instruments and solutions in biopharmaceuticals, forensics and clinical diagnostics, since 2011. Dr. Fetzer received a B.S. in Biochemistry from the College of Charleston, a Ph.D. in Pharmaceutical Sciences from the Medical University of South Carolina, and an M.B.A. from Carnegie Mellon University.
|
|
KEY QUALIFICATIONS AND EXPERIENCE
Dr. Fetzer’s experience with transactions, operations and leadership from pre-clinical to late-stage development in the biopharmaceutical industry, in addition to his management consulting and prior publicly held company board service, give him the qualifications, attributes and skills to serve as one of our directors.
|
Kieran T. Gallahue
DIRECTOR SINCE: 2018
AGE: 57
|
| |
BIOGRAPHICAL INFORMATION
Kieran T. Gallahue has served as a member of our Board of Directors since July 2018. Mr. Gallahue served as Chairman and Chief Executive Officer of CareFusion Corporation, a medical products company, from 2011 until its acquisition by Becton, Dickinson and Company in 2015 for over $12 billion. He previously served as President, CEO and a director of ResMed Inc., a medical device firm serving the sleep disordered breathing and respiratory markets, and also held a variety of senior-level positions at Nanogen, Inc., Instrumentation Laboratory, Procter & Gamble Co., and General Electric Co. Mr. Gallahue is currently a member of the board of directors of three medical device companies, Edwards Lifesciences Corporation, Intersect ENT, Inc. and Envista Holdings Corporation. He previously served on the board of directors of Volcano Corporation, a developer of products for interventional cardiology and image guided therapy, from 2007 until its acquisition by Royal Philips in 2015. Mr. Gallahue also served on the Executive Committee of the Advanced Medical Technology Association, a trade association representing 80% of medical technology firms in the United States. He holds a B.A. in economics from Rutgers University and an M.B.A. from Harvard Business School.
|
|
KEY QUALIFICATIONS AND EXPERIENCE
Mr. Gallahue’s extensive leadership and business expertise, including his background serving as the President and Chief Executive Officer of companies in the healthcare industry and his service on other boards, give him the qualifications, attributes and skills to serve as one of our directors.
|
4
|
| |
|
| |
2021 PROXY STATEMENT
|
| |
|
Jennifer Jarrett
DIRECTOR SINCE: 2017
AGE: 50
|
| |
BIOGRAPHICAL INFORMATION
Jennifer Jarrett has served as a member of our Board of Directors since June 2017. Ms. Jarrett has served as Chief Operating Officer of Arcus Biosciences, Inc., a biotechnology company developing next generation cancer immunotherapies, since October 2020. Ms. Jarrett previously served as Vice President of Corporate Development and Capital Markets of Uber Technologies, Inc., a transportation and technology company, from February 2019 through September 2020. Prior to joining Uber, Ms. Jarrett was Chief Operating Officer and Chief Financial Officer of Arcus from June 2018 to January 2019 and Chief Business Officer and Chief Financial Officer of Arcus from March 2017 to June 2018. Prior to Arcus, Ms. Jarrett was Chief Financial Officer of Medivation, Inc., which was acquired by Pfizer Inc. in 2016. Before Medivation, Ms. Jarrett spent 20 years in investment banking, most recently at Citigroup Inc., where she ran the firm’s west coast life sciences investment banking practice, and prior to that at Credit Suisse AG and Donaldson, Lufkin & Jenrette Inc. In 2014, she was named one of the Most Influential Women in Bay Area Business by the San Francisco Business Times. Ms. Jarrett currently serves on the boards of Arcus, Syndax Pharmaceuticals, Inc. and Consonance-HFW Acquisition Corp (a SPAC) and previously served on the board of Audentes Therapeutics, Inc. until its acquisition by Astellas Pharma Inc. in January 2020. Ms. Jarrett received a B.A. in economics from Dartmouth College and an M.B.A. from Stanford Graduate School of Business.
|
|
KEY QUALIFICATIONS AND EXPERIENCE
Ms. Jarrett’s extensive experience and leadership, including in investment banking and in serving as a chief financial officer and chief business officer in the biopharmaceutical industry, give her the qualifications, attributes and skills to serve as one of our directors.
|
Katharine Knobil, M.D.
DIRECTOR SINCE: 2020
AGE: 57
|
| |
BIOGRAPHICAL INFORMATION
Katharine Knobil, M.D., has served as a member of our Board of Directors since June 2020. Dr. Knobil currently serves as Chief Medical Officer of Agilent Technologies Inc., a position she has held since April 2021. Dr. Knobil previously served as Chief Medical Officer and Head of Research & Development at Kaleido Biosciences, Inc., a clinical-stage healthcare company targeting the microbiome to treat disease and improve health, from December 2018 to January 2021. Dr. Knobil spent more than 20 years in roles of increasing responsibility at GlaxoSmithKline plc (GSK), a pharmaceutical company, most recently serving as the corporate Chief Medical Officer from December 2017 to December 2018, overseeing medical affairs, health outcomes, global clinical safety and medical governance across the pharmaceutical, vaccines, and consumer businesses. Previously she was Chief Medical Officer for Pharmaceuticals at GSK from November 2015 to December 2017, and prior to that was senior vice president, value evidence and outcomes. Dr. Knobil first joined GSK in 1997 as a research physician in respiratory clinical development, and subsequently held a number of roles, including leading the European respiratory clinical team, and building the late-stage clinical development for all therapeutic areas in China. Dr. Knobil was recently named one of 2018’s Fiercest Women in Life Sciences by FiercePharma. She has served on the Board of Directors of the National Health Council and has been active with the National Academies of Sciences, Engineering, and Medicine, and the Patient Centered Outcomes Research Institute. Dr. Knobil received her B.A. from Cornell University, her M.D. from University of Texas Southwestern Medical School, and completed a Fellowship in Pulmonary and Critical Care Medicine at the Johns Hopkins Medical School.
|
|
KEY QUALIFICATIONS AND EXPERIENCE
Dr. Knobil’s years of leadership experience in the pharmaceutical and healthcare industry, including as Chief Medical Officer and Head of Research and Development, and her medical degree and specialty training give her the qualifications, attributes and skills to serve as one of our directors.
|
2021 PROXY STATEMENT
|
| |
|
| |
5
|
Amit D. Munshi
DIRECTOR SINCE: 2016
AGE: 53
|
| |
BIOGRAPHICAL INFORMATION
Amit D. Munshi has served as a member of our Board of Directors since June 2016, and as our President and Chief Executive Officer since May 2016. Previously, Mr. Munshi served as President and Chief Executive Officer and as a director of Epirus Biopharmaceuticals, Inc., a biopharmaceutical company focused on biosimilars, and Percivia LLC, a biotechnology company (sold to Johnson & Johnson). Prior to Epirus and Percivia, Mr. Munshi was a co-founder and served as Chief Business Officer of Kythera Biopharmaceuticals, Inc., from 2005 to 2010, (sold $2.1B to Allergan Inc.) and held multiple leadership positions at Amgen Inc. from 1997 to 2005, including General Manager, Nephrology Europe. In July 2016, Epirus filed a voluntary Chapter 7 petition in the United States Bankruptcy Court for the District of Massachusetts. Mr. Munshi holds a B.S. in Economics and a B.A. in History from the University of California, Riverside, and an M.B.A. from the Peter F. Drucker School of Management at Claremont Graduate University. Mr. Munshi has more than 29 years of global biopharmaceutical industry experience in executive management, business development, product development and portfolio management. Mr. Munshi currently serves on the boards of Galecto, Inc. (Nasdaq: GLTO), a biotechnology company, and Enterprise Therapeutics Ltd, a biopharmaceutical company.
|
|
KEY QUALIFICATIONS AND EXPERIENCE
The Board believes that it is important to have the Company’s Chief Executive Officer serve on the Board as he is closest to our company’s day-to-day operations. Mr. Munshi’s vast executive management and business experience in the global biopharmaceutical industry and in-depth knowledge of product development gives him the qualifications, attributes and skills to serve as one of our directors.
|
Tina S. Nova, Ph.D.
DIRECTOR SINCE: 2004
AGE: 67
|
| |
BIOGRAPHICAL INFORMATION
Tina S. Nova, Ph.D.has served as a member of our Board of Directors since September 2004 and as its Chair from June 2016 to February 2021. Dr. Nova previously served as the Board’s lead independent director from June 2015 to June 2016. Dr. Nova has served as President and Chief Executive Officer of Decipher Biosciences, Inc., a molecular diagnostics company focused on prostate cancer, since August 2018. Dr. Nova served as President and Chief Executive Officer of Molecular Stethoscope, Inc, a molecular diagnostics company, from September 2015 to August 2018. Dr. Nova served as Senior Vice President and General Manager of Illumina Inc.’s oncology business unit from July 2014 to August 2015. Dr. Nova was a co-founder of Genoptix, Inc., a medical laboratory diagnostics company, and served as its President from 2000 to April 2014. Dr. Nova also served as the Chief Executive Officer of Genoptix and as a member of its board of directors from 2000 until Novartis AG acquired Genoptix in March 2011. Dr. Nova was a co-founder of Nanogen, Inc., a provider of molecular diagnostic tests, and she served as its Chief Operating Officer and President from 1994 to 2000. Dr. Nova served as Chief Operating Officer of Selective Genetics, a biotechnology company, from 1992 to 1994, and in various director-level positions with Ligand Pharmaceuticals Incorporated, a drug discovery and development company, from 1988 to 1992, most recently as Executive Director of New Leads Discovery. Dr. Nova has also held various research and management positions with Hybritech, Inc., a former subsidiary of Eli Lilly & Company, a pharmaceutical company. Dr. Nova serves as a member of the board of directors of Veracyte, Inc., a diagnostics company. Dr. Nova holds a B.S. in Biological Sciences from the University of California, Irvine and a Ph.D. in Biochemistry from the University of California, Riverside.
|
|
KEY QUALIFICATIONS AND EXPERIENCE
Dr. Nova’s extensive leadership, business and scientific expertise, including her background of founding, financing, developing and operating companies in the healthcare industry, including her background as the President and Chief Executive Officer of a publicly held company in the healthcare industry, her experience in successfully developing, launching and commercializing medical products, and her service on other boards give her the qualifications, attributes and skills to serve as one of our directors.
|
||
|
| |
|
6
|
| |
|
| |
2021 PROXY STATEMENT
|
| |
|
Nawal Ouzren
DIRECTOR SINCE: 2021
AGE: 42
|
| |
BIOGRAPHICAL INFORMATION
Nawal Ouzren has served on our Board since February 2021. Ms. Ouzren has 19 years of experience in operational and strategic management within the pharmaceutical industry. She has served as the CEO of Sensorion, a biotechnology company specializing in the development of hearing loss therapeutics, since April 2017. Previously she headed up the Global Genetic Diseases Franchise at Shire plc, a specialty pharmaceutical company, from 2016 until 2017, where she supervised all marketing, business and strategy aspects of this global division’s product portfolio. From 2014 to June 2016, she was Vice President of the Global Hemophilia Franchise at Baxalta Incorporated, a biopharmaceutical company, when Baxalta was acquired by Shire. She began her career at General Electric Company and then moved to Baxter International, Inc., where she was Strategy and Operational Excellence Manager, Quality Operations Director and Senior Director Strategy before becoming Vice President of the BioSimilars business unit. Ms. Ouzren holds a Master of Science in Chemical Engineering from the Université de Technologie de Compiègne, France. She serves as a director of Sensorion and previously served as a director of Inventiva S.A., a clinical-stage biopharmaceutical company.
|
|
KEY QUALIFICATIONS AND EXPERIENCE
Ms. Ouzren’s extensive management background in the global pharmaceutical industry, including as Chief Executive Officer and board member in Europe, give her important experience and perspective and the qualifications, attributes and skills to serve as one of our directors.
|
|
|
| |
THE BOARD OF DIRECTORS RECOMMENDS THAT
STOCKHOLDERS VOTE “FOR” EACH NAMED NOMINEE.
|
| |
✔
|
|
2021 PROXY STATEMENT
|
| |
|
| |
7
|
8
|
| |
|
| |
2021 PROXY STATEMENT
|
| |
|
•
|
Serving as the chair of Board meetings, including during executive sessions of independent directors;
|
•
|
Establishing the schedule and agenda for Board meetings and approving information to be sent to our Board;
|
•
|
Presiding over any portion of Board meetings at which the performance of our Board is presented or discussed;
|
•
|
Establishing the agenda for meetings of the independent directors and presiding over such meetings;
|
•
|
Coordinating with the committee chairs, as needed, regarding meeting agendas, informational requirements and other matters, as appropriate;
|
•
|
Serving as the liaison between the Chief Executive Officer and the independent directors, including providing feedback from the Board to the Chief Executive Officer after each regularly scheduled meeting of the Board;
|
•
|
Being available for communications with stockholders, as appropriate and in accordance with our policy on stockholder communications with our Board; and
|
•
|
Performing such other duties as our Board may establish or delegate.
|
2021 PROXY STATEMENT
|
| |
|
| |
9
|
10
|
| |
|
| |
2021 PROXY STATEMENT
|
| |
|
2021 PROXY STATEMENT
|
| |
|
| |
11
|
|
Member
|
| |
Audit
Committee
|
| |
Compensation
Committee
|
| |
Corporate
Governance and
Nominating Committee
|
|
|
Garry Neil, M.D.
|
| |
|
| |
|
| |
|
|
|
Jayson Dallas, M.D.
|
| |
|
| |
C
|
| |
|
|
|
Oliver Fetzer, Ph.D.
|
| |
|
| |
•
|
| |
C
|
|
|
Kieran T. Gallahue
|
| |
•
|
| |
|
| |
|
|
|
Jennifer Jarrett
|
| |
•
|
| |
|
| |
•
|
|
|
Katharine Knobil, M.D.
|
| |
|
| |
|
| |
•
|
|
|
Tina S. Nova, Ph.D.
|
| |
|
| |
|
| |
|
|
|
Nawal Ouzren
|
| |
|
| |
•
|
| |
|
|
|
Manmeet S. Soni
|
| |
C
|
| |
|
| |
|
|
|
Total meetings in 2020
|
| |
5
|
| |
8
|
| |
6
|
|
12
|
| |
|
| |
2021 PROXY STATEMENT
|
| |
|
•
|
selecting and evaluating the performance of our independent auditors;
|
•
|
reviewing the scope of the audit to be conducted by our independent auditors, as well as the results of their audit, and approving audit and non-audit services to be provided by them;
|
•
|
reviewing and assessing our financial reporting activities and disclosure, including our financial results press releases and periodic reports, and the accounting standards and principles followed;
|
•
|
reviewing the scope, adequacy and effectiveness of our internal control over financial reporting;
|
•
|
reviewing management’s assessment of our compliance with our disclosure controls and procedures;
|
•
|
reviewing our public disclosure policies and procedures;
|
•
|
reviewing our guidelines and policies with respect to risk assessment and management, our tax strategy and our investment policy;
|
•
|
reviewing and approving related-party transactions;
|
•
|
overseeing our Code of Business Conduct and Ethics and our Policy on Filing, Receipt and Treatment of Complaints; and
|
•
|
reviewing threatened or pending litigation matters and investigating matters brought to the committee’s attention that are within the scope of its duties.
|
•
|
overseeing Arena’s compensation strategy, policies, plans and programs;
|
•
|
assessing risk created by current and proposed compensation policies and practices;
|
•
|
reviewing and approving incentive plan performance goals relevant to the compensation of our executive officers;
|
•
|
evaluating the CEOs performance in light of relevant corporate performance goals and objectives;
|
•
|
reviewing and approving all aspects of compensation and benefits for executive officers and the Board of Directors;
|
•
|
authorizing and approving equity grants under our equity compensation plans; and
|
•
|
overseeing preparation and review of the Committee’s report and the Compensation Discussion and Analysis included in our proxy statement.
|
2021 PROXY STATEMENT
|
| |
|
| |
13
|
•
|
recommending guidelines to our Board of Directors for our corporate governance;
|
•
|
overseeing director orientation and continuing education;
|
•
|
establishing criteria for membership on our Board of Directors;
|
•
|
identifying, evaluating, reviewing and recommending to our Board of Directors qualified director candidates;
|
•
|
reviewing and assessing the performance of our Board of Directors and its standing committees;
|
•
|
reviewing and approving a management succession plan and related procedures;
|
•
|
establishing the process for receiving and considering stockholder proposals and suggestions for director nominations;
|
•
|
overseeing our strategy, initiatives and policies concerning corporate social responsibility, including environmental, social and governance matters;
|
•
|
overseeing our insider trading policy and related procedures; and
|
•
|
overseeing compliance related policies and practices that are not within the purview of the Audit Committee or are referred by our Board of Directors.
|
14
|
| |
|
| |
2021 PROXY STATEMENT
|
| |
|
•
|
applying a multi-year horizon and multi-stakeholder approach;
|
•
|
honoring our obligations to all our stakeholders; and
|
•
|
deliver on our commitment to our patients, community, environment, and shareholders.
|
2021 PROXY STATEMENT
|
| |
|
| |
15
|
16
|
| |
|
| |
2021 PROXY STATEMENT
|
| |
|
|
|
| |
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS
VOTE “FOR” THE APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS, AS DISCLOSED IN THIS PROXY STATEMENT.
|
| |
✔
|
|
2021 PROXY STATEMENT
|
| |
|
| |
17
|
•
|
Each person, group or entity who is the beneficial owner of more than 5% of our common stock;
|
•
|
Each director and nominee for director;
|
•
|
Our Named Executive Officers (as defined below in “Compensation Discussion and Analysis”); and
|
•
|
All current directors and executive officers as a group.
|
|
Name of Beneficial Owner
|
| |
Shares Beneficially
Owned
|
| |
Percentage
of Total
|
|
|
Greater than 5% Stockholders
|
| |
|
| |
|
|
|
Wellington Management Company, LLP(1)
|
| |
6,289,051
|
| |
10.38%
|
|
|
BlackRock, Inc.(2)
|
| |
5,390,560
|
| |
8.90%
|
|
|
The Vanguard Group(3)
|
| |
5,263,839
|
| |
8.69%
|
|
|
Avoro Capital Advisors, LLC(4)
|
| |
4,190,000
|
| |
6.91%
|
|
|
Directors and Named Executive Officers
|
| |
|
| |
|
|
|
Amit D. Munshi(5)
|
| |
706,083
|
| |
1.15%
|
|
|
Vincent E. Aurentz(6)
|
| |
286,475
|
| |
*
|
|
|
Kevin R. Lind(7)
|
| |
235,253
|
| |
*
|
|
|
Steven W. Spector, J.D.(8)
|
| |
179,044
|
| |
*
|
|
|
Robert Lisicki(9)
|
| |
135,482
|
| |
*
|
|
|
Tina S. Nova, Ph.D.(10)
|
| |
48,513
|
| |
*
|
|
|
Garry Neil, M.D.(11)
|
| |
46,954
|
| |
*
|
|
|
Laurie Stelzer(12)
|
| |
46,744
|
| |
*
|
|
|
Joan Schmidt(13)
|
| |
46,441
|
| |
*
|
|
|
Oliver Fetzer, Ph.D.(14)
|
| |
45,429
|
| |
|
|
|
Jayson Dallas, M.D.(15)
|
| |
44,112
|
| |
*
|
|
|
Jennifer Jarrett(16)
|
| |
42,787
|
| |
*
|
|
|
Chris Cabell, M.D., MHS, FACC(17)
|
| |
31,230
|
| |
*
|
|
|
Kieran T. Gallahue(18)
|
| |
23,925
|
| |
*
|
|
|
Manmeet S. Soni(19)
|
| |
17,552
|
| |
*
|
|
|
Katharine Knobil(20)
|
| |
5,431
|
| |
*
|
|
|
Nawal Ouzren(21)
|
| |
624
|
| |
*
|
|
|
All current directors and executive officers as a group (14 persons)(22)
|
| |
1,496,552
|
| |
2.41%
|
|
*
|
Less than one percent
|
(1)
|
Wellington Management Group LLP had shared voting power with respect to 5,521,833 shares and shared dispositive power with respect to 6,289,051 shares. The principal business office of Wellington Management Company LLP is 280 Congress Street, Boston, Massachusetts 02210.
|
(2)
|
BlackRock, Inc., had sole voting power with respect to 5,279,905 shares and sole dispositive power with respect to 5,390,560 shares. The principal business office of BlackRock, Inc. is 55 East 52nd Street, New York, New York 10055.
|
(3)
|
The Vanguard Group had sole voting power with respect to 0 shares, sole dispositive power with respect to 5,153,068 shares, shared voting power with respect to 64,094 shares and shared dispositive power with respect to 110,771 shares. The principal business office of The Vanguard Group is 100 Vanguard Blvd., Malvern, Pennsylvania 19355
|
18
|
| |
|
| |
2021 PROXY STATEMENT
|
| |
|
(4)
|
Avoro Capital Advisors LLC had the sole voting power with respect to 4,190,000 shares and sole dispositive power with respect to 4,190,000. The principal business office of Avoro Capital Advisors LLC is 110 Greene Street, Suite 800, New York, NY 10012.
|
(5)
|
Includes 698,333 shares issuable to Mr. Munshi upon the exercise of stock options that are exercisable within 60 days of March 31, 2021.
|
(6)
|
Includes 259,475 shares issuable to Mr. Aurentz upon the exercise of stock options that are exercisable within 60 days of March 31, 2021.
|
(7)
|
Represents 231,796 shares issuable to Mr. Lind upon the exercise of stock options that are exercisable within 60 days of March 31, 2021.
|
(8)
|
Represents 161,607 shares issuable to Mr. Spector upon the exercise of stock options that are exercisable within 60 days of March 31, 2021.
|
(9)
|
Represents 126,041 shares issuable to Mr. Lisicki upon the exercise of stock options that are exercisable within 60 days of March 31, 2021.
|
(10)
|
Includes 34,383 shares issuable to Dr. Nova upon the exercise of stock options that are exercisable within 60 days of March 31, 2021.
|
(11)
|
Includes 41,250 shares issuable to Dr. Neil upon the exercise of stock options that are exercisable within 60 days of March 31, 2021.
|
(12)
|
Represents 38,500 shares issuable to Ms. Stelzer upon the exercise of stock options that are exercisable within 60 days of March 31, 2021.
|
(13)
|
Represents 38,500 shares issuable to Ms. Schmidt upon the exercise of stock options that are exercisable within 60 days of March 31, 2021.
|
(14)
|
Represents 41,250 shares issuable to Dr. Fetzer upon the exercise of stock options that are exercisable within 60 days of March 31, 2021.
|
(15)
|
Represents 41,250 shares issuable to Mr. Dallas upon the exercise of stock options that are exercisable within 60 days of March 31, 2021.
|
(16)
|
Represents 37,083 shares issuable to Ms. Jarrett upon the exercise of stock options that are exercisable within 60 days of March 31, 2021.
|
(17)
|
Represents 29,829 shares issuable to Mr. Cabell upon the exercise of stock options that are exercisable within 60 days of March 31, 2021.
|
(18)
|
Represents 16,527 shares issuable to Mr. Gallahue upon the exercise of stock options that are exercisable within 60 days of March 31, 2021.
|
(19)
|
Represents 14,096 shares issuable to Mr. Soni upon the exercise of stock options that are exercisable within 60 days of March 31, 2021.
|
(20)
|
Represents 5,346 shares issuable to Ms. Knobil upon the exercise of stock options that are exercisable within 60 days of March 31, 2021.
|
(21)
|
Represents 624 shares issuable to Ms. Ouzren upon the exercise of stock options that are exercisable within 60 days of March 31, 2021.
|
(22)
|
Includes 1,392,658 shares issuable upon the exercise of stock options held by our current directors and executive officers that are exercisable within 60 days of March 31, 2021.
|
|
Name
|
| |
Age
|
| |
Position
|
|
|
Current executive officers
|
| |
|
| |
|
|
|
Amit D. Munshi
|
| |
53
|
| |
President and Chief Executive Officer
|
|
|
Laurie Stelzer
|
| |
53
|
| |
Executive Vice President and Chief Financial Officer (beginning March 16, 2020)
|
|
|
Vincent E. Aurentz
|
| |
53
|
| |
Executive Vice President and Chief Business Officer
|
|
|
Robert Lisicki
|
| |
54
|
| |
Executive Vice President and Chief Commercial Officer
|
|
|
Joan Schmidt
|
| |
57
|
| |
Executive Vice President, General Counsel and Secretary (beginning March 2, 2020)
|
|
|
Certain former executive officers
|
| |
|
| |
|
|
|
Kevin R. Lind
|
| |
45
|
| |
Executive Vice President and Chief Financial Officer (through March 15, 2020)
|
|
|
Chris Cabell, M.D., MHS, FACC
|
| |
52
|
| |
Executive Vice President, Chief Medical Officer (through November 30, 2020)
|
|
|
Steven W. Spector, J.D.
|
| |
56
|
| |
Executive Vice President, General Counsel and Secretary (through March 1, 2020)
|
|
2021 PROXY STATEMENT
|
| |
|
| |
19
|
Amit D. Munshi
AGE: 53
|
| |
EXPERIENCE
Amit D. Munshi – See “ELECTION OF DIRECTORS (PROPOSAL 1)” for biographical information regarding Mr. Munshi, our President and Chief Executive Officer, who is also a director nominated for reelection at the 2021 Annual Meeting.
|
Laurie Stelzer
AGE: 53
|
| |
EXPERIENCE
Laurie Stelzer has served as our Executive Vice President and Chief Financial Officer since March 2020. Previously, Ms. Stelzer spent the last five years as the Chief Financial Officer at Halozyme Therapeutics, Inc., leading the Finance, Information Technology, Business Development, Project Management and Site Operations organizations. Prior to joining Halozyme, Ms. Stelzer held senior management roles at Shire Plc (acquired by Takeda), including Senior Vice President of Finance, Division CFO for the Regenerative Medicine Division, and Head of Investor Relations. Previously she held positions of increasing responsibility during her fifteen-year career at Amgen, Inc., spanning the areas of Finance, Treasury, Global Accounting and International/Emerging Markets. Ms. Stelzer received her B.S. in Accounting from Arizona State University, and her M.B.A. from University of California, Los Angeles, Anderson School of Management. She currently serves on the boards of Surface Oncology, Inc., an immuno-oncology company, and PMV Pharmaceuticals, Inc., a precision oncology platform company.
|
Vincent E. Aurentz
AGE: 53
|
| |
EXPERIENCE
Vincent E. Aurentz has served as our Executive Vice President and Chief Business Officer since August 2016. Mr. Aurentz has over 30 years of experience in the biopharmaceutical industry. Previously, he was the Chief Business Officer of Epirus Biopharmaceuticals, Inc. from November 2015 to July 2016. Prior to that, Mr. Aurentz served as President and was a member of the Board of Directors of HemoShear Therapeutics, LLC from July 2013 to November 2015, where he oversaw discovery programs, scientific, and business development efforts including R&D collaborations with global pharmaceutical companies. Prior to joining HemoShear Therapeutics, Mr. Aurentz was Executive Vice President and member of the Executive Management Board at Merck KGaA (Merck Serono S.A.) where he directed R&D programs, portfolio strategy and headed all deal activity and venture investments. Mr. Aurentz is a former Executive Vice President at Quintiles and a Co-founder and Managing Director of a venture capital and advisory business. He was a partner with CSC Healthcare, the life sciences strategic management consulting division of Computer Sciences Corporation, after starting his career and working for 8 years at Andersen Consulting (now Accenture). In July 2016, Epirus filed a voluntary Chapter 7 petition in the United States Bankruptcy Court for the District of Massachusetts. Mr. Aurentz serves on the Board of Directors for Longboard Pharmaceuticals, Inc., a pharmaceutical company developing therapeis to treat rare neurological diseases. Mr. Aurentz received a B.S. in mathematics from Villanova University.
|
20
|
| |
|
| |
2021 PROXY STATEMENT
|
| |
|
Robert Lisicki
AGE: 54
|
| |
EXPERIENCE
Robert Lisicki has served as our Executive Vice President and Chief Commercial Officer since November 2018. Prior to joining Arena, Mr. Lisicki most recently served as General Manager, Vice President Cardio-Metabolic and Inflammation at Regeneron Pharmaceuticals, Inc., a biotechnology company, from May 2018 to November 2018. Prior to joining Regeneron, he was Senior Vice President of Sales and Marketing and Chief Customer Officer at Daiichi Sankyo, Inc., a global pharmaceutical company, from August 2014 to April 2018. Prior to Daiichi Sankyo, Mr. Lisicki held several management positions at Amgen Inc., including Vice President and General Manager, responsible for a 700+ person sales force in the U.S. His U.S. leadership experiences included such market shaping products as Enbrel and Prolia. During his tenure he also covered several ex-U.S. regions, and worked as an International Franchise Lead running the development and international strategies and business plans across Amgen’s portfolio including Nephrology, Cardiology, Bone and Oncology. Prior to joining Amgen, Mr. Lisicki held various sales and marketing positions at Johnson & Johnson Corporation. Mr. Lisicki brings over 20 years of experience in biopharmaceutical management, sales and marketing to Arena. Mr. Lisicki holds a B.S. in Finance and Business Administration from the State University of New York at Albany.
|
Joan Schmidt, J.D.
AGE: 57
|
| |
EXPERIENCE
Joan Schmidt, J.D., has served as our Executive Vice President and General Counsel since March 2020. From June 2018 to February 2020, Ms. Schmidt served as Executive Vice President, Chief Legal Officer and Secretary at DBV Technologies SA, a French, publicly traded, clinical-stage biopharmaceuticals company. From July 2015 to May 2018, Ms. Schmidt was Executive Vice President, Legal Affairs and Human Resources, and General Counsel at Biotronik, Inc., the US subsidiary of Biotronik AG, a privately held, global commercial-stage medical device company. Ms. Schmidt’s experience includes 20 years of increasing responsibility at Novo Nordisk in both the United States and Europe from May 1995 to May 2015, most recently as Corporate Vice President, Legal Affairs of Novo Nordisk A/S, a publicly traded, Fortune 100 company. Ms. Schmidt earned a J.D. from Pace University and a B.A. from the University of Connecticut.
|
2021 PROXY STATEMENT
|
| |
|
| |
21
|
Kevin R. Lind
AGE: 45
|
| |
EXPERIENCE
Kevin R. Lind serves as President and Chief Executive Officer, and as a director, of Longboard Pharmaceuticals, Inc. (formerly Arena Neuroscience, Inc.), a pharmaceutical company. Previously, Mr. Lind served as our Executive Vice President and Chief Financial Officer from June 2016 until his appointment to Arena Neuroscience in March 2020. Prior to joining the Company, Mr. Lind was a Principal focused on healthcare at TPG Special Situations Partners, a global investment firm, from January 2009 to June 2016. Mr. Lind was a member of the TPG Pharma Partners effort at TPG-Axon, a global investment firm, from 2006 to 2008. He served in various capacities as a healthcare investment banker at Lehman Brothers, Inc., a former global financial services firm, from 1998 to 2002 and 2004 to 2006. Mr. Lind received a B.S. from Stanford University in Biological Sciences and an M.B.A. from UCLA Anderson School of Management.
|
Chris Cabell, M.D.,
M.H.S., FACC
AGE: 52
|
| |
EXPERIENCE
Chris Cabell, M.D., M.H.S., FACC, served as our Executive Vice President, Head of Research and Development, and Chief Medical Officer from June 2020 until November 2020. From August 2019 to June 2020 he served as our Senior Vice President and Chief Medical Officer, and October 2017 to July 2019 he served as our Senior Vice President and Head of Clinical Development. Over the past nearly 3 years, Dr. Cabell has been a member of the Arena senior leadership team and has been instrumental in helping to develop and shape the R&D organization which has seen a significant growth and maturity, from less than 40 team members to an organization of more than 225 experienced professionals. In addition, Dr. Cabell, as Chief Medical Officer, has been accountable for all Arena regulatory interactions and commitments over the past year. Prior to joining Arena, Dr. Cabell spent 10 years at IQVIA (formerly Quintiles, Inc. and QuintilesIMS) in a variety of executive positions including Chief Medical and Scientific Officer, and Global Head of Medical and Project Management, managing an international organization of over 1600 staff. Prior to joining IQVIA, Dr. Cabell was on faculty at Duke University, where he led efforts on multiple important collaborative consortia including the Cardiac Safety Research Consortium, a public/private partnership between academic medical centers, the Food and Drug Administration (FDA), and Industry. He is a Fellow of the American College of Cardiology with over 100 peer reviewed publications including in the New England Journal of Medicine, JAMA, and Annals of Internal Medicine. Board certified in both internal medicine and cardiovascular diseases, Dr. Cabell is an honors graduate of the Pennsylvania State University and earned his Doctor of Medicine and Masters in Health Science degrees from Duke University.
|
Steven W. Spector,
J.D.
AGE: 56
|
| |
EXPERIENCE
Steven W. Spector, J.D., served as our Executive Vice President and General Counsel from February 2012 to March 2020, and previously served as our Senior Vice President and General Counsel from June 2004 to February 2012 and as our Vice President and General Counsel from October 2001 to June 2004. Mr. Spector also served as our Secretary from November 2001 to March 2020. Mr. Spector is an advisory director and a former President of the Association of Corporate Counsel, San Diego, and an Adjunct Professor at the University of San Diego School of Law. Prior to joining Arena, Mr. Spector was a partner with the law firm of Morgan, Lewis & Bockius LLP, where he worked from 1991 to October 2001. Mr. Spector holds a B.A. and a J.D. from the University of Pennsylvania.
|
22
|
| |
|
| |
2021 PROXY STATEMENT
|
| |
|
|
NEO
|
| |
Position
|
|
|
Amit D. Munshi
|
| |
President and Chief Executive Officer (Continuing NEO)
|
|
|
Laurie Stelzer
|
| |
Executive Vice President and Chief Financial Officer (New Hire NEO—joined in March 2020)
|
|
|
Vincent E. Aurentz
|
| |
Executive Vice President and Chief Business Officer (Continuing NEO)
|
|
|
Robert Lisicki
|
| |
Executive Vice President and Chief Commercial Officer (Continuing NEO)
|
|
|
Joan Schmidt, J.D.
|
| |
Executive Vice President, General Counsel and Secretary (New Hire NEO—joined in March 2020)
|
|
|
Kevin R. Lind
|
| |
Former Executive Vice President and Chief Financial Officer (Former NEO—ceased in March 2020)(1)
|
|
|
Chris Cabell, M.D., M.H.S., FACC
|
| |
Former Executive Vice President, Head of Research and Development, and Chief Medical Officer (Former NEO—ceased in November 2020)(2)
|
|
|
Steven W. Spector, J.D.
|
| |
Former Executive Vice President, General Counsel and Secretary (Former NEO—ceased in March 2020)(3)
|
|
(1)
|
Mr. Lind ceased serving as an executive officer in March 2020 at which time he transitioned to the role of President and Chief Executive Officer of our wholly owned subsidiary Arena Neuroscience. Mr. Lind remained an employee of Arena during his service as President and Chief Executive Officer of Arena Neuroscience until October 2020 when Arena Neuroscience was spun out as Longboard Pharmaceuticals and ceased to be our wholly-owned subsidiary.
|
(2)
|
Dr. Cabell ceased serving as an executive officer and employee in November 2020 and continues to provide advisory services to us.
|
(3)
|
Mr. Spector ceased serving as an executive officer and employee in March 2020 and continued to provide consulting services to us through the end of 2020.
|
2021 PROXY STATEMENT
|
| |
|
| |
23
|
•
|
Formed and spun out Arena Neuroscience into Longboard Pharmaceuticals
|
•
|
Executed a multi-target inflammation and immunology (I&I) research collaboration with Beacon Discovery
|
•
|
Maintained business continuity throughout COVID-19 pandemic as illustrated by the execution and enrollment completion of key clinical trials during 2020
|
•
|
Continued to grow our headcount 25% and successfully transitioned the workforce to virtual working conditions which leveraged technology to ensure ongoing collaboration
|
•
|
Attained the maximum stock price target established under the 2019 Performance Restricted Stock Unit program of $75, representing an 83% TSR over the grant date fair market value, and delivered shares to participants at 200% of the established target grant.
|
•
|
Initiated two new clinical programs in Eosinophilic Esophagitis (EoE) and Alopecia Areata (AA)
|
•
|
Completed and readout ADVISE Study in Atopic Dermatitis
|
•
|
Met pre-specified enrollment target for ELEVATE UC52 Study
|
•
|
Completed CAPTIVATE Study enrollment for patients with pain due to IBS
|
•
|
Conducted successful Phase I study of APD418 in healthy volunteers and commenced readying for Phase II program
|
•
|
Target Cash: Continuing NEO 2020 base salaries increased approximately 4% (ranging from 3% to 5%) from 2019 base salaries and target bonus percentages remained flat, resulting in target cash compensation that was generally within 10% of the median of our 2019 Peer Group.
|
•
|
Equity Awards: Continuing NEOs received annual 2020 equity awards in the form of stock options, at grant values below the median of the 2019 Peer Group. Each of our Continuing NEOs held outstanding PRSUs granted in 2019 that were eligible to vest upon meeting rigorous performance goals that we believed continued to provide significant incentive and retention value. New Hire NEOs, received 2020 equity awards in the form of stock options and PRSUs that reflected similar terms to the PRSUs held by our Continuing NEOs that were granted in 2019 and remained outstanding during 2020.
|
•
|
Performance Results and Payouts: We achieved our annual 2020 corporate goals at 106% of target (COVID-19 had minimal impact on business performance during 2020) and due to our strong TSR, we met our stretch PRSU stock price performance goals in 2020. As a result, we paid 2020 performance bonuses based on such corporate achievement and PRSUs granted in 2019 and 2020 completed vesting in early 2021.
|
24
|
| |
|
| |
2021 PROXY STATEMENT
|
| |
|
•
|
Total Compensation: Our CEO’s 2020 total compensation, as reported in the Summary Compensation Table, falls below the median of the 2019 Peer Group and the 2020 Peer Group and was about 23% lower in 2020 than 2019. Our CEO and other NEO total compensation for 2020, as reported in the Summary Compensation Table, consisted primarily of performance-based ‘at-risk’ pay that was dependent on our company performance, as reflected below.
|
2021 PROXY STATEMENT
|
| |
|
| |
25
|
|
Compensation Practices and Governance Highlights
|
| |||
|
Pay for Performance
|
| |
Significant link between the compensation of our NEOs and the achievement of our short- and long-term business objectives through annual cash incentives that are tied to key annual scientific, clinical, and business milestones and with long-term equity compensation that only rewards creation of stockholder value through stock options and performance-based RSUs tied to achieving considerably higher stock price goals that we believe can only be met if business objectives are achieved
|
|
|
Stockholder Alignment
|
| |
Alignment of the interests of our NEOs with those of our stockholders through the use of long-term equity incentives that require stock price growth
|
|
|
Compensation Governance
|
| |
100% independent directors on the Compensation Committee Compensation Committee meets regularly in executive session without management present Independent compensation consultant, Frederic W. Cook & Co., reports directly to the Compensation Committee Conduct an annual risk assessment of our compensation policies and practices
|
|
|
Equity Plan and Award Features
|
| |
Maximum seven-year term for stock options
Stock option exercise prices are set at the closing price of our common stock on the date of grant as reported on the Nasdaq Global Select Market (or, if there is no closing price on such date, on the last preceding date on which a closing price was reported)
No repricing of underwater stock options without prior stockholder approval
Performance-based equity awards
|
|
|
Change in Control Provisions
|
| |
No excessive change in control payments
Change in control payments contingent upon “double-trigger”
No tax gross-ups on severance or change in control benefits
|
|
|
Post-termination/Retirement Benefits
|
| |
No post-termination retirement or pension benefits
|
|
|
Prohibition on Hedging, Margin Loans and Pledging
|
| |
Prohibit hedging, purchases on margin, and pledging of our common stock by all employees and directors
|
|
|
Clawback Policy
|
| |
Maintain policy to seek repayment of incentive-based compensation in the event we experience certain accounting restatements
|
|
|
Stock Ownership Guidelines
|
| |
Maintain stock ownership guidelines to promote executive and director stock ownership
|
|
•
|
Compensation decisions are driven by a pay-for-performance philosophy; and
|
•
|
Compensation should reflect corporate and individual performance.
|
26
|
| |
|
| |
2021 PROXY STATEMENT
|
| |
|
2021 PROXY STATEMENT
|
| |
|
| |
27
|
|
2019 Peer Group
|
| ||||||
|
Acadia Pharmaceuticals Inc.
|
| |
Acceleron Pharma, Inc.
|
| |
Agios Pharmaceuticals, Inc.
|
|
|
Aimmune Therapeutics, Inc.
|
| |
Array BioPharma Inc.
|
| |
bluebird bio, Inc.
|
|
|
Blueprint Medicines Corporation
|
| |
FibroGen, Inc.
|
| |
Global Blood Therapeutics, Inc.
|
|
|
Halozyme Therapeutics, Inc.
|
| |
Immunomedics, Inc.
|
| |
Ironwood Pharmaceuticals, Inc.
|
|
|
MyoKardia, Inc.
|
| |
Neurocrine Biosciences, Inc.
|
| |
Sage Therapeutics, Inc.
|
|
|
Sarepta Therapeutics, Inc.
|
| |
Ultragenyx Pharmaceutical Inc.
|
| |
United Therapeutics Corporation
|
|
|
2020 Peer Group
|
| ||||||
|
Acadia Pharmaceuticals Inc.
|
| |
Acceleron Pharma, Inc.
|
| |
Agios Pharmaceuticals, Inc.
|
|
|
Arrowhead Pharmaceuticals
|
| |
bluebird bio, Inc.
|
| |
Blueprint Medicines Corporation
|
|
|
FibroGen, Inc.
|
| |
Global Blood Therapeutics, Inc.
|
| |
Immunomedics, Inc.
|
|
|
Intercept Pharmaceuticals
|
| |
Ironwood Pharmaceuticals, Inc.
|
| |
Mirati Therapeutics
|
|
|
MyoKardia, Inc.
|
| |
Nektar Therapeutics
|
| |
Neurocrine Biosciences, Inc.
|
|
|
Sage Therapeutics, Inc.
|
| |
Sarepta Therapeutics, Inc.
|
| |
Ultragenyx Pharmaceutical Inc.
|
|
28
|
| |
|
| |
2021 PROXY STATEMENT
|
| |
|
|
NEO
|
| |
|
| |
2019 Base Salary
|
| |
2020 Base Salary
|
| |
Increase
(%)
|
|
|
Amit D. Munshi
|
| |
Continuing NEO
|
| |
$660,000
|
| |
$693,000
|
| |
5.0%
|
|
|
Laurie Stelzer
|
| |
New Hire NEO
|
| |
—
|
| |
$480,000
|
| |
—
|
|
|
Vincent E. Aurentz
|
| |
Continuing NEO
|
| |
$420,240
|
| |
$435,369
|
| |
3.6%
|
|
|
Robert Lisicki
|
| |
Continuing NEO
|
| |
$410,000
|
| |
$432,140
|
| |
5.4%
|
|
|
Joan Schmidt
|
| |
New Hire NEO
|
| |
—
|
| |
$420,000
|
| |
—
|
|
|
Kevin R. Lind
|
| |
Former NEO
|
| |
$420,240
|
| |
$432,847
|
| |
3.0%
|
|
|
Chris Cabell, M.D., MHS, FACC(1)
|
| |
Former NEO
|
| |
$405,000
|
| |
$425,250
|
| |
5.0%
|
|
|
Steven W. Spector, J.D.
|
| |
Former NEO
|
| |
$440,232
|
| |
$440,232
|
| |
0.0%
|
|
(1)
|
Amount in the table reflects the approved base pay increase from 2019 levels in early 2020. In June 2020, the Company promoted Dr. Chris Cabell, our Senior Vice President and Chief Medical Officer, to Executive Vice President, Head of Research and Development, and Chief Medical Officer and subsequently increased Dr. Cabell’s salary to $500,000 to account for his increased responsibilities in his promoted role.
|
2021 PROXY STATEMENT
|
| |
|
| |
29
|
|
|
| |
Category and Weighting
|
| |
Corporate Goals
|
| |
Achievement and Rationale
|
|
|
1.
|
| |
Pipeline (85%)
|
| |
Clinical progress on
Etrasimod (APD334)
Clinical progress on Olorinab APD418, and other assets
Build sustainable pipeline |
| |
Achievement: 107%
(91% weighted result)
• Met pre-specified enrollment target for ELEVATE UC52 at/near target even during COVID-19
pandemic
• Completed enrollment of ADVISE and CAPTIVATE despite the challenging context of COVID-19 pandemic
|
|
|
2.
|
| |
Global Strategy (5%)
|
| |
Global strategic plan: Optimize global footprint in preparation for product launches and enhance portfolio value thru external engagement
|
| |
Achievement: 120%
(6% weighted result)
• Spun out Arena Neuroscience as Longboard
Pharmaceuticals
• Executed a multi-target inflammation and immunology (I&I) research collaboration with Beacon Discovery
|
|
|
3.
|
| |
Corporate Resource Management (10%)
|
| |
Manage cash to efficiently
reach major milestones
Build a high-performing culture and hire, engage and retain key employees
|
| |
Achievement: 90%
(9% weighted result)
• Raised $302M in financing in June 2020
• Increased headcount 25% (over 110 hires)
|
|
|
|
| |
Overall Assessment:
|
| |
|
| |
106% of Target Achievement
|
|
30
|
| |
|
| |
2021 PROXY STATEMENT
|
| |
|
|
NEO
|
| |
|
| |
Target Award
|
| |
Actual Award
|
|
|
Amit D. Munshi
|
| |
Continuing NEO
|
| |
$485,100
|
| |
$514,206
|
|
|
Laurie Stelzer
|
| |
New Hire NEO
|
| |
$191,475
|
| |
$218,282
|
|
|
Vincent E. Aurentz
|
| |
Continuing NEO
|
| |
$217,684
|
| |
$241,630
|
|
|
Robert Lisicki
|
| |
Continuing NEO
|
| |
$216,070
|
| |
$239,838
|
|
|
Joan Schmidt
|
| |
New Hire NEO
|
| |
$175,574
|
| |
$194,887
|
|
|
Kevin R. Lind
|
| |
Former NEO
|
| |
$178,475
|
| |
$178,475
|
|
|
Chris Cabell, M.D., MHS, FACC
|
| |
Former NEO
|
| |
$212,816
|
| |
$202,175
|
|
|
Steven W. Spector, J.D.
|
| |
Former NEO
|
| |
—
|
| |
—
|
|
•
|
the 2019 Peer Group competitive compensation market data;
|
•
|
Our high TSR for 2019, which was 16.5%
|
•
|
The PRSUs and prior equity awards granted to our Continuing NEOs;
|
•
|
Internal equity within the Executive Leadership Team; and
|
•
|
Potential dilution of equity grants to our stockholders.
|
2021 PROXY STATEMENT
|
| |
|
| |
31
|
|
NEO
|
| |
|
| |
2020 Stock Options
(#)
|
| |
2020 Stock
Options
($)
|
| |
2020 Target
PRSUs
(#)(1)
|
| |
2020 Target
PRSUs
($)
|
|
|
Amit D. Munshi
|
| |
Continuing NEO
|
| |
270,000
|
| |
$5,676,561
|
| |
—
|
| |
|
|
|
Laurie Stelzer
|
| |
New Hire NEO
|
| |
132,000
|
| |
2,252,725
|
| |
6,300
|
| |
72,041
|
|
|
Vincent E. Aurentz
|
| |
Continuing NEO
|
| |
70,000
|
| |
1,471,701
|
| |
—
|
| |
—
|
|
|
Robert Lisicki
|
| |
Continuing NEO
|
| |
70,000
|
| |
1,471,701
|
| |
—
|
| |
—
|
|
|
Joan Schmidt
|
| |
New Hire NEO
|
| |
132,000
|
| |
2,559,916
|
| |
6,300
|
| |
108,360
|
|
|
Kevin R. Lind
|
| |
Former NEO
|
| |
70,000
|
| |
1,471,701
|
| |
—
|
| |
—
|
|
|
Chris Cabell, M.D., MHS
|
| |
Former NEO
|
| |
70,000
|
| |
1,656,225
|
| |
—
|
| |
—
|
|
|
Steven W. Spector, J.D.
|
| |
Former NEO
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
(1)
|
As described in more detail below, a number of shares of common stock that is equal to the target number of PRSUs are earned for achieving a closing stock price of $67.50, and the maximum number of common shares that may be earned under the PRSUs, which number equals 200% of the number of target PRSUs granted, are earned upon achieving a closing stock price of $75.00.
|
32
|
| |
|
| |
2021 PROXY STATEMENT
|
| |
|
2021 PROXY STATEMENT
|
| |
|
| |
33
|
34
|
| |
|
| |
2021 PROXY STATEMENT
|
| |
|
2021 PROXY STATEMENT
|
| |
|
| |
35
|
|
|
| |
THE COMPENSATION COMMITTEE
|
|
|
|
| |
Jayson Dallas, M.D., Chair
|
|
|
|
| |
Oliver Fetzer, Ph.D.
|
|
|
|
| |
Jennifer Jarrett
|
|
36
|
| |
|
| |
2021 PROXY STATEMENT
|
| |
|
|
Name and Principal Position
|
| |
Year
|
| |
Salary
($)(2)
|
| |
Bonus
($)(3)
|
| |
Stock
Awards
($)(4)
|
| |
Option
Awards ($)(5)
|
| |
Non-Equity
Incentive Plan
Compensation
($)(6)
|
| |
All Other
Compensation
($)(7)
|
| |
Total
($)
|
|
|
Amit D. Munshi
President, Chief Executive Officer and Director
|
| |
2020
|
| |
$687,500
|
| |
$—
|
| |
$—
|
| |
$5,676,561
|
| |
$514,206
|
| |
$18,342
|
| |
$6,896,609
|
|
|
2019
|
| |
656,250
|
| |
—
|
| |
1,423,539
|
| |
6,279,747
|
| |
554,400
|
| |
17,466
|
| |
8,931,402
|
| |||
|
2018
|
| |
635,938
|
| |
—
|
| |
—
|
| |
5,752,825
|
| |
455,813
|
| |
18,869
|
| |
6,863,445
|
| |||
|
Laurie Stelzer
Executive Vice President, Chief Financial Officer and Principal Financial Officer
|
| |
2020
|
| |
380,000
|
| |
40,318(8)
|
| |
144,081
|
| |
2,252,725
|
| |
202,964
|
| |
7,483
|
| |
3,027,572
|
|
|
Vincent E. Aurentz
Executive Vice President and
Chief Business Officer
|
| |
2020
|
| |
432,847
|
| |
10,884
|
| |
—
|
| |
1,471,701
|
| |
230,745
|
| |
18,342
|
| |
2,164,520
|
|
|
2019
|
| |
418,200
|
| |
—
|
| |
1,095,030
|
| |
1,652,565
|
| |
252,144
|
| |
31,466(12)
|
| |
3,449,405
|
| |||
|
2018
|
| |
407,000
|
| |
—
|
| |
—
|
| |
2,412,475
|
| |
224,400
|
| |
120,055(12)
|
| |
3,163,930
|
| |||
|
Robert Lisicki
Executive Vice President and
Chief Commercial Officer
|
| |
2020
|
| |
428,450
|
| |
10,804
|
| |
—
|
| |
1,471,701
|
| |
229,034
|
| |
18,342
|
| |
2,158,332
|
|
|
2019
|
| |
410,000
|
| |
168,308(9)
|
| |
766,521
|
| |
1,652,565
|
| |
246,000
|
| |
17,466
|
| |
3,260,860
|
| |||
|
Joan Schmidt
Executive Vice President, General Counsel and Secretary
|
| |
2020
|
| |
350,000
|
| |
8,779
|
| |
216,720
|
| |
2,559,916
|
| |
186,108
|
| |
9,723
|
| |
3,331,245
|
|
|
Kevin R. Lind
Former Executive Vice President, Chief Financial Officer and Principal Financial Officer(1)
|
| |
2020
|
| |
355,880
|
| |
—
|
| |
—
|
| |
8,541,669(10)
|
| |
178,475
|
| |
63,192
|
| |
9,139,216
|
|
|
2019
|
| |
418,200
|
| |
—
|
| |
766,521
|
| |
1,652,565
|
| |
239,537
|
| |
17,466
|
| |
3,094,289
|
| |||
|
2018
|
| |
407,000
|
| |
—
|
| |
—
|
| |
2,412,475
|
| |
224,400
|
| |
17,165
|
| |
3,061,040
|
| |||
|
Chris Cabell, M.D., MHS, FACC
Former Executive Vice President and Chief Medical Officer
|
| |
2020
|
| |
422,408
|
| |
—
|
| |
—
|
| |
1,656,225
|
| |
202,175
|
| |
62,519(13)
|
| |
2,342,055
|
|
|
Steven W. Spector, J.D.
Former Executive Vice President, General Counsel and Secretary
|
| |
2020
|
| |
145,878
|
| |
—
|
| |
—
|
| |
4,098,039(11)
|
| |
—
|
| |
1,010,248(14)
|
| |
5,254,165
|
|
|
2019
|
| |
440,232
|
| |
—
|
| |
766,521
|
| |
1,652,565
|
| |
242,128
|
| |
17,466
|
| |
3,118,912
|
| |||
|
2018
|
| |
439,153
|
| |
—
|
| |
—
|
| |
2,412,475
|
| |
242,128
|
| |
18,869
|
| |
3,112,625
|
|
(1)
|
In March 2020, Mr. Lind ceased serving as our Executive Vice President and Chief Financial Officer and was appointed the President and Chief Executive Officer of our wholly owned subsidiary, Arena Neuroscience, Inc. In October 2020, Mr. Lind’s employment with Arena Pharmaceuticals, Inc. concluded and he commenced employment with Longboard Pharmaceuticals, Inc., or Longboard (formerly Arena Neuroscience, Inc.), as President and Chief Executive Officer.
|
(2)
|
In accordance with SEC rules, the compensation described in this table does not include various health and welfare or other benefits received by our Named Executive Officers that are available generally to all of our regular, full-time employees, except as described in footnote 6 in this table. This table also does not include any perquisites and other personal benefits received by our Named Executive Officers that, in the aggregate, were less than $10,000 for any officer. Amounts earned but deferred at the election of our Named Executive Officers pursuant to our 401(k) plan are included in the “salary” column.
|
(3)
|
Except as otherwise noted, epresents the portion of the cash incentive award approved by the Compensation Committee for an NEO that exceeded our 2020 corporate goal achievement, which was approved in consideration of the high quality of the NEO’s performance and their individual contributions toward achievement of our 2020 goals.
|
(4)
|
Represents the aggregate grant date fair value of PRSUs granted in accordance with Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 718, “Compensation - Stock Compensation.” The fair value of the PRSUs granted was calculated using a Monte Carlo simulation model based on the probability of achieving the performance goals. The amounts disclosed in the table represent maximum value potential assuming the achievement of the highest level of performance goals as stipulated by the PRSUs. For the relevant assumptions used in determining these amounts, refer to Note 7 to our audited consolidated financial statements included in our Annual Report on Form 10-K as filed with the SEC on February 23, 2021.
|
(5)
|
Represents the aggregate grant date fair value of option awards granted in accordance with FASB ASC Topic 718, “Compensation - Stock Compensation.” For the relevant assumptions used in determining these amounts, refer to Note 7 to our audited consolidated financial statements included in our Annual Report on Form 10-K as filed with the SEC on February 23, 2021.
|
(6)
|
Represents cash awards earned pursuant to our annual incentive plans for 2020, 2019, and 2018, as further described below in the “Grants of Plan-Based Awards” table and the above “Compensation Discussion and Analysis.”
|
(7)
|
Represents matching contributions to our 401(k) plan made on behalf of our Named Executive Officers, group-term life insurance premiums paid by us for our Named Executive Officers and other compensation described below in these footnotes.
|
(8)
|
Of this amount, $25,000 represents the amount paid to Ms. Stelzer in the form of a signing bonus in connection with her appointment as Executive Vice President and Chief Financial Officer in March 2020 with the intention to offset a reduction in base pay as compared to her salary at her most recent prior employer. $15,318 represents an additional bonus amount paid above the 106% corporate performance achievement for 2020 and which is reflected in the non-equity incentive plan compensation column.
|
(9)
|
Represents the amount paid to Mr. Lisicki in 2019 in the form of a signing bonus of $108,308 and a relocation allowance of $60,000 provided to Mr. Lisicki in connection with his appointment as Executive Vice President and Chief Commercial Officer in October 2018.
|
(10)
|
In addition to the aggregate grant date fair value of option awards granted in 2020, amount includes $7,069,968 of incremental fair value of materially modified awards computed as of the October 2020 modification date in accordance with FASB ASC Topic 718.
|
(11)
|
Represents incremental fair value of materially modified option awards computed as of the March and December 2020 modification dates in accordance with FASB ASC Topic 718.
|
2021 PROXY STATEMENT
|
| |
|
| |
37
|
(12)
|
In addition to the items noted in footnote 7 above, “all other compensation” includes $14,000 and $87,249 provided to Mr. Aurentz in 2019 and 2018, respectively, in the form of monthly taxable housing and automobile allowances and $13,937 provided to Mr. Aurentz in 2018 for commuting airfare reimbursement, on an after-tax basis, following his appointment as Executive Vice President and Chief Business Officer in August 2016.
|
(13)
|
In addition to the items noted in footnote 7 above, “all other compensation” includes cash payments of $41,667 paid during his advisory services to the Company from December 1 through December 31, 2020.
|
(14)
|
In addition to the items noted in footnote 7 above, “all other compensation” includes a cash severance payment of $990,522.
|
|
|
| |
|
| |
Estimated Future Payouts
Under Non-Equity
Incentive Plan Awards(1)
|
| |
Estimated Future Payouts
Under Equity Incentive
Plan Awards(2)
|
| |
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)(3)
|
| |
Exercise or
Base Price
of Option
Awards
($/sh)(4)
|
| |
Grant Date
Fair
Value of
Stock and
Option
Awards
($)(5)
|
| |||||||||
|
Name
|
| |
Grant
Date/
Modification
Date
|
| |
Target
($)
|
| |
Maximum
($)
|
| |
Threshold
(#)
|
| |
Target
(#)
|
| |
Maximum
(#)
|
| |||||||||
|
Amit D. Munshi
|
| |
—
|
| |
$485,100
|
| |
$727,650
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
$—
|
| |
$—
|
|
|
3/1/2020
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
270,000
|
| |
44.60
|
| |
5,676,561
|
| |||
|
Laurie Stelzer
|
| |
—
|
| |
240,000
|
| |
360,000
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
|
3/16/2020
|
| |
—
|
| |
—
|
| |
—
|
| |
6,300
|
| |
12,600
|
| |
—
|
| |
—
|
| |
72,041
|
| |||
|
3/16/2020
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
132,000
|
| |
36.33
|
| |
2,252,725
|
| |||
|
Vincent Aurentz
|
| |
—
|
| |
217,684
|
| |
326,526
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
|
3/1/2020
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
70,000
|
| |
44.60
|
| |
1,471,701
|
| |||
|
Robert Lisicki
|
| |
—
|
| |
216,070
|
| |
324,105
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
|
3/1/2020
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
70,000
|
| |
44.60
|
| |
1,471,701
|
| |||
|
Joan Schmidt
|
| |
—
|
| |
210,000
|
| |
315,000
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
|
3/15/2020
|
| |
—
|
| |
—
|
| |
—
|
| |
6,300
|
| |
12,600
|
| |
—
|
| |
—
|
| |
108,360
|
| |||
|
3/15/2020
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
132,000
|
| |
41.25
|
| |
2,559,916
|
| |||
|
Kevin R. Lind
|
| |
—
|
| |
216,424
|
| |
324,635
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
|
3/1/2020
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
70,000
|
| |
44.60
|
| |
1,471,701
|
| |||
|
10/27/2020
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
7,069,968(6)
|
| |||
|
Chris Cabell, M.D., MHS, FACC
|
| |
—
|
| |
250,000
|
| |
375,000
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
|
3/6/2020
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
50,000
|
| |
46.03
|
| |
1,077,265
|
| |||
|
6/15/2020
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
20,000
|
| |
63.11
|
| |
578,960
|
| |||
|
Steven W. Spector
|
| |
3/1/2020
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
3,273,842(6)
|
|
|
12/31/2020
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
824,197(6)
|
|
(1)
|
The amounts shown in the “target” column reflect the target award each Named Executive Officer was eligible to receive under the 2020 Annual Incentive Plan; the amounts shown in the “maximum” column are 150% of the respective target amounts and there is no minimum amount payable for a certain level of performance.
|
(2)
|
Amounts shown represent a contingent right to receive shares of common stock under the PRSUs granted in 2020, which shares shall vest only upon meeting certain stock price performance goals relating to the closing price of Arena’s common stock during the performance period from the date of grant through January 3, 2022, as described in more detail under the “2020 PRSUs” Section in the Compensation Discussion & Analysis.
|
(3)
|
The stock options granted to our Named Executive Officers in 2020 are exercisable once vested for up to seven years from the date of grant. The stock options vest over four years, with 25% of the shares subject to the option vesting on the first anniversary of the grant date, and the remainder of the shares vesting monthly over the following three years in equal installments (except as otherwise necessary to avoid vesting of a fractional share).
|
(4)
|
In all cases, the exercise price of the option awards was equal to the closing market price of our common stock on the grant date as reported on the Nasdaq Global Select Market.
|
(5)
|
Represents the aggregate grant date fair value of stock awards and stock options granted in accordance with FASB ASC Topic 718. The fair value of the PRSUs granted was calculated using a Monte Carlo simulation model based on the probability of achieving the performance goals. The amounts disclosed in the table represent maximum value potential assuming the achievement of the highest level of performance goals as stipulated by the PRSUs. For the relevant assumptions used in determining these amounts, refer to Note 7 to our audited consolidated financial statements included in our Annual Report on Form 10-K as filed with the SEC on February 23, 2021.
|
(6)
|
Represents the incremental fair value of the modified award, in accordance with FASB ASC Topic 718. For additional detail associated with each modification, see “Summary Compensation Table” footnotes (9) and (10) above.
|
38
|
| |
|
| |
2021 PROXY STATEMENT
|
| |
|
|
|
| |
|
| |
Option Awards
|
| |
Stock Awards
|
| ||||||||||||
|
Name
|
| |
Grant
Date
|
| |
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable(1)
|
| |
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable(1)
|
| |
Option
Exercise
Price ($)
|
| |
Option
Expiration
Date
|
| |
Number of
unearned
shares,
units or
other
rights that
have not
vested
(#)(2)
|
| |
Equity
incentive
plan awards:
Market or
payout
value of
unearned
shares,
units or
other
rights that
have not
vested
($)(3)
|
|
|
Amit D. Munshi
|
| |
5/11/2016
|
| |
238,139
|
| |
—
|
| |
$15.50
|
| |
5/11/2023
|
| |
—
|
| |
$—
|
|
|
2/13/2017
|
| |
47,905
|
| |
8,956
|
| |
14.60
|
| |
2/13/2024
|
| |
—
|
| |
—
|
| |||
|
1/19/2018
|
| |
226,041
|
| |
83,959
|
| |
35.60
|
| |
1/19/2025
|
| |
—
|
| |
—
|
| |||
|
1/4/2019
|
| |
136,562
|
| |
148,438
|
| |
40.94
|
| |
1/4/2026
|
| |
—
|
| |
—
|
| |||
|
1/4/2019
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
23,400
|
| |
1,797,822
|
| |||
|
3/1/2020
|
| |
—
|
| |
270,000
|
| |
44.60
|
| |
3/1/2027
|
| |
—
|
| |
—
|
| |||
|
Laurie Stelzer
|
| |
3/16/2020
|
| |
—
|
| |
132,000
|
| |
36.33
|
| |
3/16/2027
|
| |
—
|
| |
—
|
|
|
3/16/2020
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
12,600
|
| |
968,058
|
| |||
|
Vincent E. Aurentz
|
| |
8/15/2016
|
| |
45,000
|
| |
—
|
| |
17.10
|
| |
8/15/2023
|
| |
—
|
| |
—
|
|
|
2/13/2017
|
| |
75,355
|
| |
4,145
|
| |
14.60
|
| |
2/13/2024
|
| |
—
|
| |
—
|
| |||
|
1/19/2018
|
| |
59,791
|
| |
35,209
|
| |
35.60
|
| |
1/19/2025
|
| |
—
|
| |
—
|
| |||
|
1/4/2019
|
| |
35,937
|
| |
39,063
|
| |
40.94
|
| |
1/4/2026
|
| |
—
|
| |
—
|
| |||
|
1/4/2019
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
18,000
|
| |
1,382,940
|
| |||
|
3/1/2020
|
| |
—
|
| |
70,000
|
| |
44.60
|
| |
3/1/2027
|
| |
—
|
| |
—
|
| |||
|
Robert Lisicki
|
| |
11/26/2018
|
| |
61,145
|
| |
83,855
|
| |
40.95
|
| |
11/26/2025
|
| |
—
|
| |
—
|
|
|
1/4/2019
|
| |
35,937
|
| |
39,063
|
| |
40.94
|
| |
1/4/2026
|
| |
—
|
| |
—
|
| |||
|
1/4/2019
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
12,600
|
| |
968,058
|
| |||
|
3/1/2020
|
| |
—
|
| |
70,000
|
| |
44.60
|
| |
3/1/2027
|
| |
—
|
| |
—
|
| |||
|
Joan Schmidt
|
| |
3/15/2020
|
| |
—
|
| |
132,000
|
| |
41.25
|
| |
3/15/2027
|
| |
—
|
| |
—
|
|
|
3/15/2020
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
12,600
|
| |
968,058
|
| |||
|
Kevin R. Lind(4)
|
| |
6/15/2016
|
| |
23,089
|
| |
—
|
| |
19.40
|
| |
6/15/2023
|
| |
—
|
| |
—
|
|
|
2/13/2017
|
| |
24,901
|
| |
—
|
| |
14.60
|
| |
2/13/2024
|
| |
—
|
| |
—
|
| |||
|
1/19/2018
|
| |
128,000
|
| |
—
|
| |
35.60
|
| |
1/19/2025
|
| |
—
|
| |
—
|
| |||
|
1/4/2019
|
| |
60,937
|
| |
—
|
| |
40.94
|
| |
1/4/2026
|
| |
—
|
| |
—
|
| |||
|
1/4/2019
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
12,600
|
| |
968,058
|
| |||
|
3/1/2020
|
| |
36,458
|
| |
—
|
| |
44.60
|
| |
3/1/2027
|
| |
—
|
| |
—
|
| |||
|
Chris Cabell, M.D., MHS, FACC(5)
|
| |
11/15/2017
|
| |
1,875
|
| |
20,625
|
| |
26.28
|
| |
11/15/2024
|
| |
—
|
| |
—
|
|
|
1/19/2018
|
| |
1,146
|
| |
14,896
|
| |
35.60
|
| |
1/19/2025
|
| |
—
|
| |
—
|
| |||
|
1/4/2019
|
| |
833
|
| |
20,834
|
| |
40.94
|
| |
1/4/2026
|
| |
—
|
| |
—
|
| |||
|
1/4/2019
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
5,000
|
| |
384,150
|
| |||
|
3/6/2020
|
| |
—
|
| |
50,000
|
| |
46.03
|
| |
3/6/2027
|
| |
—
|
| |
—
|
| |||
|
6/15/2020
|
| |
—
|
| |
20,000
|
| |
63.11
|
| |
6/15/2027
|
| |
—
|
| |
—
|
| |||
|
Steven W. Spector(6)
|
| |
2/13/2017
|
| |
37,500
|
| |
—
|
| |
14.60
|
| |
2/13/2024
|
| |
—
|
| |
—
|
|
|
1/19/2018
|
| |
103,544
|
| |
—
|
| |
35.60
|
| |
1/19/2025
|
| |
—
|
| |
—
|
| |||
|
1/4/2019
|
| |
48,063
|
| |
—
|
| |
40.94
|
| |
1/4/2026
|
| |
—
|
| |
—
|
| |||
|
1/4/2019
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
12,600
|
| |
968,058
|
|
(1)
|
Stock options vest 25% after one year from the date of grant and the remainder vests monthly over 36 months. Stock options are exercisable for up to seven years from the date of grant.
|
(2)
|
The outstanding stock awards are PRSUs representing a contingent right to receive shares of common stock, which shares shall vest upon the closing price of Arena’s common stock (the “Closing Price”) reaching certain thresholds during the three-year performance period from January 4, 2019 through January 3, 2022 (the “Performance Period”) and satisfaction of a 90-day continuing service requirement. The last Closing Price target was met during 2020, and as of December 31, 2020, only the time-based continuing service requirement remained unsatisfied. The number of PRSUs presented in this table represents the number of shares that remained issuable pursuant to the PRSUs as of December 31, 2020, if the continuing service requirements were met, i.e., 200% of the target amount granted, less the shares already vested and released. As described above, the 2020 PRSUs granted to New Hire NEOs also contained a one-year minimum vesting period which would not be satisfied until March 2021, so all of the New Hire NEOs’ 2020 PRSUs remained unvested and outstanding as of December 31, 2020.
|
(3)
|
Computed by multiplying the closing market price of our common stock on December 31, 2020, of $76.83 by the number of outstanding PRSUs set forth in this table.
|
(4)
|
As part of Mr. Lind’s separation agreement, the Company accelerated the vesting of all stock option awards as of October 27, 2020 such that he immediately vested in the portion of the option awards that were scheduled to vest during the 18 months immediately
|
2021 PROXY STATEMENT
|
| |
|
| |
39
|
(5)
|
As a result of Dr. Cabell's separation, his options will terminate on August 30, 2021, which is three months following the conclusion of his advisory period, which is earlier than the option expiration dates listed in the table.
|
(6)
|
Mr. Spector, upon satisfaction of his consulting agreement, vested in all remaining unvested stock option awards on December 31, 2020. In addition, Mr. Spector remained eligible to be issued shares of common stock pursuant to the vesting and issuance criteria set forth in the PRSU Agreement. The $75 Closing Price threshold was achieved in 2020 and in January 2021, 12,600 shares vested and were released to Mr. Spector.
|
|
|
| |
Option Awards
|
| |
Stock Awards
|
| ||||||
|
Name
|
| |
Number of
Shares
Acquired
on Exercise
(#)
|
| |
Value
Realized on
Exercise
($)(1)
|
| |
Number of
Shares
Acquired
on Vesting
(#)
|
| |
Value
Realized
on Vesting
($)(2)
|
|
|
Amit D. Munshi
|
| |
300,000
|
| |
$14,783,203
|
| |
11,700
|
| |
$766,350
|
|
|
Laurie Stelzer
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
|
Vincent E. Aurentz
|
| |
25,000
|
| |
1,130,023
|
| |
9,000
|
| |
589,500
|
|
|
Robert Lisicki
|
| |
30,000
|
| |
671,845
|
| |
6,300
|
| |
412,650
|
|
|
Joan Schmidt
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
|
Kevin R. Lind
|
| |
138,435
|
| |
6,718,025
|
| |
6,300
|
| |
412,650
|
|
|
Chris Cabell, M.D., MHS, FACC
|
| |
124,791
|
| |
4,362,640
|
| |
2,500
|
| |
163,750
|
|
|
Steven W. Spector
|
| |
225,979
|
| |
8,945,261
|
| |
6,300
|
| |
412,650
|
|
(1)
|
Computed by multiplying the number of options exercised by the difference between the market price of our common stock at exercise and the exercise price of the stock options.
|
(2)
|
Computed by multiplying each of the shares vested by the closing market price of our common stock on the applicable vesting date.
|
40
|
| |
|
| |
2021 PROXY STATEMENT
|
| |
|
2021 PROXY STATEMENT
|
| |
|
| |
41
|
|
|
| |
Potential Payable Upon Termination
Without Cause or Resignation for Good
Reason
|
| |
Potential
Payable Upon
Disability or
Death
|
| |||
|
Name and Benefit
|
| |
Without a Change
in Control(1)
|
| |
With a Change
in Control(1)
|
| |||
|
Amit D. Munshi
|
| |
|
| |
|
| |
|
|
|
Salary
|
| |
$1,386,000
|
| |
$1,386,000
|
| |
$—
|
|
|
Bonus
|
| |
970,200
|
| |
970,200
|
| |
—
|
|
|
Benefit continuation
|
| |
59,029
|
| |
59,029
|
| |
—
|
|
|
Accelerated vesting of stock awards(2)
|
| |
15,115,981
|
| |
18,048,502
|
| |
18,048,502
|
|
|
Total
|
| |
$17,531,210
|
| |
$20,463,731
|
| |
$18,048,502
|
|
|
Laurie Stelzer
|
| |
|
| |
|
| |
|
|
|
Salary
|
| |
$720,000
|
| |
$720,000
|
| |
$—
|
|
|
Bonus
|
| |
360,000
|
| |
360,000
|
| |
—
|
|
|
Benefit continuation
|
| |
23,723
|
| |
23,723
|
| |
—
|
|
|
Accelerated vesting of stock awards(2)
|
| |
3,007,125
|
| |
5,346,000
|
| |
5,346,000
|
|
|
Total
|
| |
$4,110,848
|
| |
$6,449,723
|
| |
$5,346,000
|
|
|
Vincent E. Aurentz
|
| |
|
| |
|
| |
|
|
|
Salary
|
| |
$653,053
|
| |
$653,053
|
| |
$—
|
|
|
Bonus
|
| |
326,526
|
| |
326,526
|
| |
—
|
|
|
Benefit continuation
|
| |
33,650
|
| |
33,650
|
| |
—
|
|
|
Accelerated vesting of stock awards(2)
|
| |
3,831,508
|
| |
5,367,682
|
| |
5,367,682
|
|
|
Total
|
| |
$4,884,737
|
| |
$6,380,911
|
| |
$5,367,682
|
|
|
Robert Lisicki
|
| |
|
| |
|
| |
|
|
|
Salary
|
| |
$648,211
|
| |
$648,211
|
| |
$—
|
|
|
Bonus
|
| |
324,105
|
| |
324,105
|
| |
—
|
|
|
Benefit continuation
|
| |
31,397
|
| |
31,397
|
| |
—
|
|
|
Accelerated vesting of stock awards(2)
|
| |
4,005,187
|
| |
6,666,789
|
| |
6,666,789
|
|
|
Total
|
| |
$5,008,900
|
| |
$7,670,502
|
| |
$6,666,789
|
|
|
Joan Schmidt
|
| |
|
| |
|
| |
|
|
|
Salary
|
| |
$630,000
|
| |
$630,000
|
| |
$—
|
|
|
Bonus
|
| |
315,000
|
| |
315,000
|
| |
—
|
|
|
Benefit continuation
|
| |
23,723
|
| |
23,723
|
| |
—
|
|
|
Accelerated vesting of stock awards(2)
|
| |
2,641,815
|
| |
4,696,560
|
| |
4,696,560
|
|
|
Total
|
| |
$3,610,538
|
| |
$5,665,283
|
| |
$4,696,560
|
|
|
Kevin R. Lind(3)
|
| |
|
| |
|
| |
|
|
|
Salary
|
| |
$—
|
| |
$—
|
| |
$—
|
|
|
Bonus
|
| |
178,475
|
| |
—
|
| |
—
|
|
|
Benefit continuation
|
| |
—
|
| |
—
|
| |
—
|
|
|
Accelerated vesting of stock awards
|
| |
7,069,968
|
| |
—
|
| |
—
|
|
|
Total
|
| |
$7,248,443
|
| |
$—
|
| |
$—
|
|
|
Chris Cabell, M.D., MHS, FACC(4)
|
| |
|
| |
|
| |
|
|
|
Salary
|
| |
$250,000
|
| |
—
|
| |
—
|
|
|
Bonus
|
| |
202,175
|
| |
—
|
| |
—
|
|
|
Benefit continuation
|
| |
10,590
|
| |
—
|
| |
—
|
|
|
Accelerated vesting of stock awards
|
| |
—
|
| |
—
|
| |
—
|
|
|
Total
|
| |
$462,765
|
| |
—
|
| |
—
|
|
|
Steven W. Spector(5)
|
| |
|
| |
|
| |
|
|
|
Salary
|
| |
$660,348
|
| |
—
|
| |
—
|
|
|
Bonus
|
| |
330,174
|
| |
—
|
| |
—
|
|
|
Benefit continuation
|
| |
44,447
|
| |
—
|
| |
—
|
|
|
Accelerated vesting of stock awards
|
| |
4,098,039
|
| |
—
|
| |
—
|
|
|
Total
|
| |
$5,133,008
|
| |
—
|
| |
—
|
|
(1)
|
For purposes of this table, “change in control” means a change in control or other corporate event that triggers payments under one or more arrangements described above.
|
(2)
|
Computed by multiplying the difference between the closing market price of our common stock of $76.83 on December 31, 2020, and the exercise price of each stock option vested as a result of employment discontinuation due to the termination by the number of accelerated stock options. In the event of qualifying disability or death, the unvested stock options granted under the 2017 Long-Term Incentive Plan (as amended and restated) become fully vested and immediately exercisable. The unvested stock options granted under the 2013 Long-Term Incentive Plan (as amended and restated) become fully vested and exercisable upon the event of qualifying disability or death to the extent such stock options were scheduled to vest on or before the next anniversary of the grant date.
|
42
|
| |
|
| |
2021 PROXY STATEMENT
|
| |
|
(3)
|
In March 2020, Mr. Lind ceased serving as our Executive Vice President and Chief Financial Officer and was appointed as the President and Chief Executive Officer of our wholly owned subsidiary, Arena Neuroscience, Inc. Mr. Lind did not receive any severance benefits in connection with such change in position; his equity awards continued to be eligible to vest subject to his continued service with our subsidiary and he remained eligible for the severance and change in control benefits under the Severance Benefit Plan described above until his termination of employment effective October 27, 2020. At that time, Mr. Lind received acceleration of his option vesting representing 18 months of vesting.Additionally, the Company extended the exercise period for all vested option awards until the later of: (i) the original post-termination exercise period provided in his stock option agreement; or (ii) February 28, 2023. In addition, Mr. Lind remained eligible to be issued shares of common stock pursuant to the vesting and issuance criteria set forth in the PRSU Agreement. The $75 Closing Price threshold was achieved in 2020 and in January 2021, 12,600 shares vested and were released to Mr. Lind.
|
(4)
|
In November 2020, Dr. Cabell's employment with us ceased and he began providing advisory services to us for an advisory period scheduled to end in May 2021. During Dr. Cabell's advisory period and subject to his compliance with certain post-employment covenants (including a release of claims), Dr. Cabell is entitled to receive the benefits set forth above, which consist of his continued base salary in place at the time of his employment termination, payment for COBRA premiums, and payment of his 2020 annual incentive bonus based on actual performance in 2020. The amounts in the table above assume Dr. Cabell continues to provide advisory services to the Company and comply with his post-employment covenant for the duration of the advisory period.
|
(5)
|
In March 2020, Steven Spector, who was serving as our Executive Vice President, General Counsel and Secretary, terminated employment. As a result, Mr. Spector received severance benefits under the Severance Benefit Plan. In addition, the Company and Mr. Spector entered into a Consulting Services Agreement which continued in effect until December 31, 2020. Mr. Spector was eligible to receive a market rate hourly consulting fee, with a minimum monthly payment from March 2, 2020 to September 2, 2020. Mr. Spector’s consulting services constituted continuous service and his stock options remained outstanding, plus his outstanding PRSUs continued pursuant to the vesting and issuance criteria set forth in the applicable PRSU grant agreement until March 5, 2021. The Company accelerated the vesting of all remaining unvested option awards held by Mr. Spector and extended the exercise period of certain of Mr. Spector’s options for thirty-six (36) months after the termination of the Consulting Agreement (but not beyond the original contractual life of the options). Mr. Spector, upon satisfaction of his consulting agreement, vested in all remaining unvested stock option awards on December 31, 2020.
|
•
|
To determine our total population of employees, we included all employees other than our CEO, including employees of consolidated subsidiaries, as of December 31, 2020, regardless of their FTE schedule or anticipated employment duration.
|
•
|
To identify our median employee from our employee population, we calculated the aggregate amount of each employee’s base salary (using a reasonable estimate of the hours worked and base pay rates for our hourly employees, excluding overtime, and using actual base salary as of December 31, 2020 for our remaining employees), target bonus attributable to fiscal 2020, and the grant date fair value of equity awards granted in fiscal 2020 using the same methodology we use for estimating the value of the equity awards granted to our NEOs and reported in our Summary Compensation Table. In making this determination, we annualized the base salary and target bonus compensation of employees who were employed by us for less than the entire fiscal year and not employed on a temporary or seasonal basis.
|
•
|
Compensation paid in foreign currencies was converted to U.S. dollars based on exchange rates in effect on December 31, 2020.
|
2021 PROXY STATEMENT
|
| |
|
| |
43
|
•
|
Annual Award for Continuing Directors and New Directors:
|
•
|
Options: Continuing and new directors elected at our annual stockholders’ meeting will be granted non-qualified stock options to purchase 5,000 shares of our common stock. The options are granted effective on the date of our annual stockholders’ meeting, and vest in equal monthly installments (except as necessary to avoid vesting of a fractional share) over one year beginning on the one month anniversary of the date of grant and subject to vesting conditions set forth below. New directors appointed other than at the annual stockholders’ meeting will be granted a prorated number of the 5,000 shares effective on the date of their appointment. The prorated number of options shall be determined by multiplying 5,000 by a fraction, the numerator of which is equal to the number of full months in the Prorated Period and the denominator of which is 12. These options will vest in equal monthly installments (except as necessary to avoid vesting of a fractional share) over the Prorated Period, beginning on the one month anniversary of the date of appointment, and subject to vesting conditions set forth below. As used above, “Prorated Period” means the time between the director’s appointment and the one-year anniversary of our most recent annual stockholders’ meeting.
|
•
|
RSUs: Continuing and new directors elected at our annual stockholders’ meeting will also be granted $150,000 in RSUs, with the number of RSUs determined by dividing $150,000 by the closing stock price on the date of grant. The RSUs are granted effective on the date of our annual stockholders’ meeting, and vest upon the earlier of the one-year anniversary after grant or the next annual stockholders’ meeting, subject to vesting conditions set forth below. New directors appointed other than at the annual stockholders’ meeting will be granted a prorated amount of the $150,000 RSU award effective on the date of their appointment. The prorated number of RSUs shall be determined by multiplying the equivalent of $150,000 in RSUs, determined based on the closing stock price on the date of grant, by a fraction, the numerator of which is equal to the number of full months in the Prorated Period and the denominator of which is 12. These RSUs will vest at the next annual stockholders’ meeting, subject to vesting conditions set forth below. As used above, “Prorated Period” means the time between the director’s appointment and the one-year anniversary of our most recent annual stockholders’ meeting.
|
•
|
Inducement Award for New Directors:
|
•
|
Options: New directors will be granted non-qualified stock options to purchase 2,500 shares of our common stock effective on the date of their election or appointment, vesting over three years in equal monthly installments (except as otherwise necessary to avoid vesting of a fractional share) and subject to vesting conditions set forth below, with vesting beginning on the one month anniversary of the date of election or appointment.
|
•
|
RSUs: New directors will also be granted $75,000 in RSUs, determined based on the closing stock price on the date of grant, effective on the date of their election or appointment, vesting in three equal installments (except as otherwise necessary to avoid vesting of a fractional share) on the date of the next three annual stockholder meetings after grant, subject to vesting conditions set forth below.
|
•
|
Exercise Price and Vesting
|
•
|
The exercise price of options shall be the Fair Market Value on the date of grant.
|
•
|
In the event of a director’s Separation From Service due to death, Disability, or a Change in Control of Arena that occurs upon or prior to a Separation From Service, all of the director’s options and RSUs become fully
|
44
|
| |
|
| |
2021 PROXY STATEMENT
|
| |
|
•
|
“Change in Control” means an event that: (a) is a “Change in Control” as such term is defined in the applicable long-term incentive plan, and (b) also qualifies as either: (i) a change in the ownership of Arena, (ii) a change in the effective control of Arena, or (iii) a change in the ownership of a substantial portion of Arena’s assets (as each of these events are defined in Treas. Reg. § 1.409A-3(i)(5), or as these definitions may later be modified by other regulatory pronouncements).
|
•
|
“Director” or “director” as used herein refers only to non-employee directors.
|
•
|
“Disability” means the participant’s becoming disabled within the meaning of Section 22(e)(3) of the Code, or as otherwise determined by the Compensation Committee in its discretion.
|
•
|
“Fair Market Value” is as defined in the applicable long-term incentive plan.
|
•
|
“Separation From Service” means the director has had a separation from service with Arena for purposes of Section 409A of the Code.
|
•
|
Annual retainer for directors: $13,750 per quarter, paid in advance. New directors will receive a prorated amount of the quarterly payment for the quarter within which they are appointed or elected. The proration calculation shall be made for the number of days until the beginning of the next quarter.
|
•
|
Additional annual retainer for Chair of the Board: An additional $8,750 per quarter, paid in advance. New Chairs will receive a prorated amount of the quarterly payment for the quarter within which they are appointed to such position. The proration calculation shall be made for the number of days until the beginning of the next quarter.
|
•
|
Annual retainer for committee members (including committee chairs):
|
•
|
Audit: $10,000 for members; additional $10,000 for chair
|
•
|
Compensation: $7,500 for members; additional $10,000 for chair
|
•
|
Corporate Governance & Nominating: $5,000 for members; additional $5,000 for chair
|
2021 PROXY STATEMENT
|
| |
|
| |
45
|
|
Name
|
| |
Fees Earned
or Paid in
Cash
($)(1)
|
| |
Stock
Awards
($)(2)
|
| |
Option
Awards
($)(3)
|
| |
Total
($)
|
|
|
Tina S. Nova, Ph.D.(4)
|
| |
$90,000
|
| |
$149,964
|
| |
$140,998
|
| |
$380,962
|
|
|
Jayson Dallas, M.D.(5)
|
| |
72,500
|
| |
149,964
|
| |
140,998
|
| |
363,462
|
|
|
Oliver Fetzer, Ph.D.(6)
|
| |
67,500
|
| |
149,964
|
| |
140,998
|
| |
358,462
|
|
|
Kieran T. Gallahue(7)
|
| |
65,000
|
| |
149,964
|
| |
140,998
|
| |
355,962
|
|
|
Jennifer Jarrett(8)
|
| |
69,142
|
| |
149,964
|
| |
140,998
|
| |
360,104
|
|
|
Garry Neil, M.D.(9)
|
| |
62,761
|
| |
149,964
|
| |
140,998
|
| |
353,723
|
|
|
Manmeet S. Soni(10)
|
| |
75,000
|
| |
149,964
|
| |
140,998
|
| |
365,962
|
|
|
Katharine Knobil, M.D. (11)
|
| |
33,132
|
| |
224,946
|
| |
211,497
|
| |
469,575
|
|
|
Randall E. Woods(12)
|
| |
32,666
|
| |
—
|
| |
—
|
| |
32,666
|
|
(1)
|
For each director, includes cash retainer and other fees earned or paid in the fiscal year ended December 31, 2020.
|
(2)
|
Represents the aggregate grant date fair value of RSUs granted in accordance with FASB ASC Topic 718. The fair value was calculated based on the closing market price of our common stock on the grant date. All directors were awarded 2,446 RSU awards on June 12, 2020, which vest in full on the earliest of June 12, 2021, or the date of Arena’s 2021 annual meeting of stockholders.
|
(3)
|
Represents the aggregate grant date fair value of stock options granted in accordance with FASB ASC Topic 718. The fair value was calculated based on the closing market price of our common stock on the grant date. All directors were awarded 5,000 options on June 12, 2020, which vest in approximately equal monthly installments over one year, are exercisable once vested and expire on the seventh anniversary of the grant date.
|
(4)
|
Dr. Nova had a total of 34,800 options and 2,446 RSUs outstanding at December 31, 2020.
|
(5)
|
Dr. Dallas had a total of 41,667 options and 5,100 RSUs outstanding at December 31, 2020.
|
(6)
|
Dr. Fetzer had a total of 41,667 options and 5,100 RSUs outstanding at December 31, 2020.
|
(7)
|
Mr. Gallahue had a total of 17,083 options and 5,658 RSUs outstanding at December 31, 2020.
|
(8)
|
Ms. Jarrett had a total of 37,500 options and 5,100 RSUs outstanding at December 31, 2020.
|
(9)
|
Dr. Neil had a total of 41,667 options and 2,446 RSUs outstanding at December 31, 2020.
|
(10)
|
Mr. Soni had a total of 15,000 options and 3,054 RSUs outstanding at December 31, 2020.
|
(11)
|
Dr. Knobil had a total of 7,500 options and 3,669 RSUs outstanding at December 31, 2020. In accordance with the Non-Employee Director Compensation program, on the date of her appointment, Dr. Knobil was awarded 7,500 options to purchase shares of our common stock with exercise prices of $61.31 per share, and 3,669 restricted stock units. The stock options and restricted stock units were granted under the Arena Pharmaceuticals, Inc. 2020 Long-Term Incentive Plan, which was approved by the Company’s stockholders at the 2020 Annual Meeting of Stockholders.
|
(12)
|
Mr. Woods served as a director until our 2020 Annual Meeting of Stockholders. He had no options or RSUs outstanding at December 31, 2020.
|
46
|
| |
|
| |
2021 PROXY STATEMENT
|
| |
|
2021 PROXY STATEMENT
|
| |
|
| |
47
|
•
|
Stockholder approval is required for additional shares. The 2021 Plan does not contain an annual “evergreen” provision. The 2021 Plan authorizes a fixed number of shares, so that stockholder approval is required to issue any additional shares.
|
•
|
No liberal share counting. The following shares will not become available again for issuance under the 2021 Plan: (i) shares that are reacquired or withheld (or not issued) by us to satisfy the exercise or purchase price of an award; (ii) shares that are reacquired or withheld (or not issued) by us to satisfy a tax withholding obligation in connection with an award; (iii) shares repurchased by us on the open market with the proceeds of the exercise or purchase price of an award; and (iv) in the event that a stock appreciation right is settled in shares, the gross number of shares subject to such stock appreciation right.
|
•
|
Minimum vesting requirement. The 2021 Plan provides that no award may vest until at least the first anniversary of the date the award is granted, subject to certain limited exceptions (including that shares up to 5% of the share reserve of the 2021 Plan may be issued pursuant to awards that do not meet such vesting requirement).
|
•
|
Repricing is not allowed. The 2021 Plan prohibits the repricing of stock options and stock appreciation rights without prior stockholder approval.
|
•
|
No discounted stock options or stock appreciation rights. All stock options and stock appreciation rights granted under the 2021 Plan must have an exercise price equal to or greater than the fair market value of our common stock on the date the stock option or stock appreciation right is granted.
|
•
|
Reasonable limits on maximum terms of stock options and stock appreciation rights. Stock options and stock appreciation rights granted under the 2021 Plan have a maximum permitted term of seven years.
|
•
|
Restrictions on dividends. The 2021 Plan provides that (i) no dividends or dividend equivalents may be paid with respect to any shares of our common stock subject to an equity award before the date such shares have vested, (ii) any dividends or dividend equivalents that are credited with respect to any such shares will be subject to all of the terms and conditions applicable to such shares under the terms of the applicable equity award agreement (including any vesting conditions), and (iii) any dividends or dividend equivalents that are credited with respect to any such shares will be forfeited to us on the date such shares are forfeited to or repurchased by us due to a failure to vest.
|
•
|
Specific disclosure of equity award vesting upon a corporate transaction or change in control. The 2021 Plan specifically provides that in the event of a corporate transaction or change in control of the Company, if the surviving or acquiring corporation (or its parent company) does not assume or continue outstanding awards under the 2021 Plan, or substitute similar awards for such outstanding awards, then with respect to any such awards that have not been assumed, continued or substituted and that are held by participants whose continuous service has not terminated prior to the corporate transaction or change in control, the vesting of such awards will be accelerated in full (and with respect to any performance-based awards, vesting will be deemed to be satisfied at the greater of (i) the target level of performance or (ii) the actual level of performance measured in accordance with the applicable performance goals as of the date of the corporate transaction or change in control).
|
•
|
Limit on non-employee director compensation. The aggregate value of all cash and equity-based compensation (including awards granted under the 2021 Plan and any other equity-based awards) paid or granted by the Company to any individual for service as a non-employee director of the Board with respect to any period commencing on the date of the Company’s annual meeting of stockholders for a particular year and ending on the day immediately prior to the date of the Company’s annual meeting of stockholders for the next subsequent year will not exceed (i) $750,000 in total value for any non-employee director who is not in a lead director or chairman role or (ii) $1,000,000 in total value for any non-employee director who is (a) in a lead director or chairman role or (b) first appointed or elected to our Board of Directors during such period, in each case calculating the value of any equity-based awards based on the grant date fair value of such awards for financial reporting purposes.
|
48
|
| |
|
| |
2021 PROXY STATEMENT
|
| |
|
•
|
Awards subject to forfeiture/clawback. Awards granted under the 2021 Plan will be subject to recoupment in accordance with any clawback policy that we are required to adopt pursuant to the listing standards of any national securities exchange or association on which our securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable law, and any other clawback policy that we adopt. In addition, our Board of Directors may impose other clawback, recovery or recoupment provisions in an award agreement. As disclosed in the section of this proxy statement titled “Compensation Discussion & Analysis,” we currently maintain a clawback policy that applies to current and former executive officers. Under the policy, following an accounting restatement that is required to be prepared due to material noncompliance with any financial reporting requirements under the securities laws, we will seek repayment from any current or former executive officer of any incentive-based compensation (cash and equity) that was: (i) based on the erroneous data; (ii) paid during the three-year period preceding the date on which the accounting restatement is required to be prepared; and (iii) in excess of what would have been paid under the accounting restatement. In addition, in the event that legislation is enacted or the SEC adopts rules or promulgates regulations defining the circumstances under which we are entitled to seek repayment from a current or former executive officer, such legislation, rules or regulations will apply.
|
|
Fiscal Year
|
| |
2018
|
| |
2019
|
| |
2020
|
|
|
Stock options granted
|
| |
3,513,833
|
| |
3,069,690
|
| |
2,838,902
|
|
|
Full value awards granted (time-based vesting)
|
| |
26,694
|
| |
21,232
|
| |
246,315
|
|
|
Performance Restricted Stock Units vested
|
| |
32,322
|
| |
140,900
|
| |
126,040
|
|
|
Weighted-average common shares outstanding(1)
|
| |
47,041,054
|
| |
49,778,993
|
| |
54,767,152
|
|
|
Gross burn rate(2)
|
| |
7.6%
|
| |
6.5%
|
| |
5.9%
|
|
(1)
|
The number of common shares outstanding as of the Record Date was not used for the annual gross burn rate calculations.
|
(2)
|
The gross burn rate is calculated as follows: (a) shares subject to options and nonperformance-based full-value shares granted and Performance Restricted Stock Unit awards vested in the fiscal year, divided by (b) weighted-average common shares outstanding for the applicable fiscal year.
|
|
|
| |
As of
March 31, 2021
|
|
|
Shares subject to outstanding stock options(1)
|
| |
9,042,334
|
|
|
Shares subject to outstanding restricted stock units and performance restricted stock units(2)
|
| |
794,173
|
|
|
Weighted-average exercise price of outstanding stock options
|
| |
$46.15
|
|
|
Weighted-average remaining term of outstanding stock options (years)
|
| |
4.66
|
|
|
Shares available for grant under the 2020 LTIP(3)
|
| |
783,439
|
|
|
Potential dilution(4)
|
| |
14.9%
|
|
(1)
|
Includes 1,305,349 shares subject to outstanding stock options that were granted as Inducement Awards outside of the stockholder-approved share reserves of our long-term incentive plans, pursuant to Nasdaq Listing Rule 5635(c)(4), or Inducement Awards.
|
(2)
|
Includes 204,323 shares issuable pursuant to Performance Restricted Stock Units, or PRSUs, at target payout (100%) that were outstanding as of March 31, 2021. Of that number, 3,500 were granted as Inducement Awards. The maximum number of shares that remain issuable pursuant to the PRSUs if all currently outstanding Closing Price targets are met during the remaining Performance Period and subsequent continuing service requirements are met is 408,646, i.e., 200% of the target amount granted.
|
(3)
|
As of March 31, 2021, there were no shares available for grant under any of our other long-term incentive plans.
|
(4)
|
Potential dilution is calculated by dividing the number of shares subject to outstanding awards (as reported on the first two rows of the table) and number of shares available for grant by the sum of common shares outstanding as of March 31, 2021, the number of shares subject to outstanding awards, and the number of shares available for grant. Arena’s potential dilution is at the 15th percentile of our 2020 peer group, which has a median dilution rate of 21%..
|
2021 PROXY STATEMENT
|
| |
|
| |
49
|
50
|
| |
|
| |
2021 PROXY STATEMENT
|
| |
|
2021 PROXY STATEMENT
|
| |
|
| |
51
|
•
|
the exercise price of the ISO must be at least 110% of the fair market value of our common stock on the date of grant; and
|
52
|
| |
|
| |
2021 PROXY STATEMENT
|
| |
|
•
|
the term of the ISO must not exceed five years from the date of grant.
|
2021 PROXY STATEMENT
|
| |
|
| |
53
|
54
|
| |
|
| |
2021 PROXY STATEMENT
|
| |
|
(i)
|
a person, entity or group acquires, directly or indirectly, our securities representing more than 50% of the combined voting power of our then outstanding securities eligible to vote for the election of our Board of Directors (the “Company Voting Securities”), other than by virtue of a merger, consolidation, or similar transaction;
|
(ii)
|
there is consummated a merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company or any of its affiliates that requires the approval of the Company’s stockholders, whether for
|
2021 PROXY STATEMENT
|
| |
|
| |
55
|
(iii)
|
there is consummated a sale or other disposition of all or substantially all of our consolidated assets, other than a sale or other disposition to an entity in which more than 50% of the entity’s combined voting power is owned by our stockholders in substantially the same proportions as their ownership of the outstanding Company Voting Securities immediately prior to such sale or other disposition;
|
(iv)
|
over a period of 24 months or less, individuals who, on the date the 2021 Plan was approved by the Compensation Committee, are members of the Board (the “Incumbent Directors”) cease for any reason to constitute at least a majority of the members of the Board; provided, however, that if the appointment or election (or nomination for election) of any new Board member was approved or recommended by a majority vote of the Incumbent Directors then still in office, such new member will be considered as an Incumbent Director; provided, however, that, no individual initially elected or nominated as a member of the Board as a result of an actual or threatened election contest with respect to Board membership or as a result of any other actual or threatened solicitation of proxies by or on behalf of any person other than the Board will be deemed to be an Incumbent Director; or
|
(v)
|
The stockholders of the Company approve a plan of complete liquidation or dissolution of the Company.
|
56
|
| |
|
| |
2021 PROXY STATEMENT
|
| |
|
2021 PROXY STATEMENT
|
| |
|
| |
57
|
|
|
| |
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS
VOTE “FOR” THE APPROVAL OF THE 2021 LONG-TERM INCENTIVE PLAN.
|
| |
✔
|
|
58
|
| |
|
| |
2021 PROXY STATEMENT
|
| |
|
|
Plan category
|
| |
Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights
(a)
|
| |
Weighted-average
exercise price
of outstanding options,
warrants and rights
(b)(1)
|
| |
Number of securities
remaining available for
future issuance under equity
compensation plans
(excluding securities
reflected in column (a))
(c)
|
|
|
Equity compensation plans approved by security holders
|
| |
7,546,766(2)
|
| |
$39.35
|
| |
3,304,605(3)
|
|
|
Equity compensation plans not approved by security holders
|
| |
1,531,830(4)
|
| |
45.29
|
| |
—
|
|
|
Total
|
| |
9,078,596
|
| |
$40.33
|
| |
3,304,605(3)
|
|
(1)
|
Weighted-average exercise price does not include restricted stock units and performance stock units as there is no exercise price for such units.
|
(2)
|
Includes stock options to purchase 7,253,894 shares of our common stock. Also includes (i) 156,452 restricted stock unit awards with no exercise price and (ii) 136,420 shares issuable pursuant to Performance Restricted Stock Units that were outstanding as of December 31, 2020, representing achievement of performance goals at target levels (100%). The maximum number of shares that remain issuable pursuant to the PRSUs if all outstanding Closing Price targets are met during the remaining Performance Period and subsequent continuing service requirements are met is 272,840, i.e., 200% of the target amount granted, less the 100% already vested.
|
(3)
|
Represents stock options to purchase 2,369,061 shares of our common stock reserved for future grants under our 2020 Long-Term Incentive Plan, as amended and restated, or 2020 LTIP, and 935,544 shares reserved for issuance under our 2019 Employee Stock Purchase Plan, or 2019 ESPP, which became effective on June 13, 2019. Awards granted under our 2020 LTIP reduce the available number of shares under our 2020 LTIP by 1 share for every share issued. In addition, shares that are released from awards granted under any of our prior long-term incentive plans or the 2020 LTIP because the awards expire, are forfeited or are settled for cash will increase the number of shares available under our 2020 LTIP by 1 share for each share released from a stock option or stock appreciation right and by 1 share for each share released from a restricted stock award or restricted stock unit award. Shares we withhold to satisfy any tax withholding obligation with respect to an award under any of our prior long-term incentive plans or the 2020 LTIP will not increase the share reserve. As of December 31, 2020, 64,456 shares have been issued under the 2019 ESPP.
|
(4)
|
Includes inducement stock options to purchase 1,445,080 shares of our common stock reserved for inducement awards. Also includes 86,750 restricted stock unit awards with no exercise price.
|
2021 PROXY STATEMENT
|
| |
|
| |
59
|
|
|
| |
THE AUDIT COMMITTEE
|
|
|
|
| |
Manmeet S. Soni, Chair
|
|
|
|
| |
Kieran T. Gallahue
|
|
|
|
| |
Jennifer Jarrett
|
|
60
|
| |
|
| |
2021 PROXY STATEMENT
|
| |
|
|
|
| |
Fiscal Years
Ended December 31,
|
| |||
|
|
| |
2020
|
| |
2019
|
|
|
Audit Fees(1)
|
| |
$877,431
|
| |
$880,744
|
|
|
Tax Fees(2)
|
| |
$58,700
|
| |
—
|
|
|
Total
|
| |
$936,131
|
| |
$880,744
|
|
(1)
|
Consisted of fees paid for professional services for the integrated audit of our annual consolidated financial statements, review of condensed consolidated financial statements included in our quarterly reports and services provided in conjunction with the statutory audits for our Swiss subsidiaries Arena Pharmaceuticals GmbH and Arena Pharmaceuticals Development GmbH. Also included are fees related to comfort letter procedures in connection with equity offerings and review of registration statements on Forms S-3 and S-8.
|
(2)
|
Fees were primarily related to services in connection with transfer pricing valuation services.
|
2021 PROXY STATEMENT
|
| |
|
| |
61
|
|
|
| |
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS
VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF
KPMG LLP TO SERVE AS OUR INDEPENDENT AUDITORS
FOR THE FISCAL YEAR ENDING DECEMBER 31, 2021.
|
| |
✔
|
|
62
|
| |
|
| |
2021 PROXY STATEMENT
|
| |
|
1.
|
Why am I receiving these materials?
|
2.
|
Why did I receive a Notice Regarding the Availability of Proxy Materials?
|
3.
|
How can I attend and participate in the 2021 Annual Meeting? Who can I contact if I need technical support?
|
2021 PROXY STATEMENT
|
| |
|
| |
63
|
4.
|
Who can vote at the 2021 Annual Meeting?
|
5.
|
What is a proxy?
|
6.
|
What am I voting on?
|
1.
|
Election of the nine nominees for director named herein to our Board of Directors to serve until the next annual meeting of stockholders and until their respective successors are elected and qualified or until their earlier resignation or removal (Proposal 1);
|
2.
|
Advisory approval of the compensation of our named executive officers, as disclosed in this proxy statement in accordance with rules of the SEC (Proposal 2);
|
3.
|
Approval of the Arena Pharmaceuticals, Inc. 2021 Long-Term Incentive Plan (Proposal 3);
|
4.
|
Ratification of the appointment of KPMG LLP, an independent registered public accounting firm, as our independent auditors for the fiscal year ending December 31, 2021 (Proposal 4); and
|
5.
|
Such other proposals as may properly come before the meeting or any adjournment or postponement thereof.
|
7.
|
What if another matter is properly brought before the 2021 Annual Meeting?
|
8.
|
What if I return a proxy card or otherwise vote but do not make specific choices?
|
64
|
| |
|
| |
2021 PROXY STATEMENT
|
| |
|
9.
|
How do I vote?
|
10.
|
What does it mean if I receive more than one Internet Notice or proxy card?
|
11.
|
Can I change my vote after submitting my proxy?
|
2021 PROXY STATEMENT
|
| |
|
| |
65
|
12.
|
How many shares must be present to hold the 2021 Annual Meeting?
|
•
|
is present at the meeting, or
|
•
|
has properly submitted a proxy (including voting on the Internet or by telephone).
|
13.
|
What are broker non-votes?
|
14.
|
When do brokers have discretionary voting authority to vote my shares without my instruction?
|
15.
|
How many votes must the nominees receive to be elected as directors, as described in Proposal 1?
|
16.
|
How many votes must be received to approve the compensation of our named executive officers, as described in Proposal 2?
|
66
|
| |
|
| |
2021 PROXY STATEMENT
|
| |
|
17.
|
How many votes must be received to approve the Arena Pharmaceuticals, Inc. 2021 Long-Term Incentive Plan, as described in Proposal 3?
|
18.
|
How many votes must be received to ratify the appointment of KPMG LLP as our independent auditors for the fiscal year ending December 31, 2021, as described in Proposal 4?
|
19.
|
How are votes counted?
|
20.
|
Who will bear the cost of soliciting votes for the 2021 Annual Meeting?
|
21.
|
How can I find out the results of the voting at the 2021 Annual Meeting?
|
22.
|
Where can I find information about the company’s corporate governance?
|
2021 PROXY STATEMENT
|
| |
|
| |
67
|
68
|
| |
|
| |
2021 PROXY STATEMENT
|
| |
|
|
|
| |
By Order of our Board of Directors
|
|
|
|
| |
|
|
|
|
| |
Joan Schmidt
|
|
|
|
| |
Executive Vice President, General Counsel and Secretary
|
|
2021 PROXY STATEMENT
|
| |
|
| |
69
|
2021 PROXY STATEMENT
|
| |
|
| |
A-1
|
A-2
|
| |
|
| |
2021 PROXY STATEMENT
|
| |
|
2021 PROXY STATEMENT
|
| |
|
| |
A-3
|
A-4
|
| |
|
| |
2021 PROXY STATEMENT
|
| |
|
2021 PROXY STATEMENT
|
| |
|
| |
A-5
|
A-6
|
| |
|
| |
2021 PROXY STATEMENT
|
| |
|
2021 PROXY STATEMENT
|
| |
|
| |
A-7
|
A-8
|
| |
|
| |
2021 PROXY STATEMENT
|
| |
|
2021 PROXY STATEMENT
|
| |
|
| |
A-9
|
A-10
|
| |
|
| |
2021 PROXY STATEMENT
|
| |
|
2021 PROXY STATEMENT
|
| |
|
| |
A-11
|
A-12
|
| |
|
| |
2021 PROXY STATEMENT
|
| |
|
2021 PROXY STATEMENT
|
| |
|
| |
A-13
|
A-14
|
| |
|
| |
2021 PROXY STATEMENT
|
| |
|
2021 PROXY STATEMENT
|
| |
|
| |
A-15
|
A-16
|
| |
|
| |
2021 PROXY STATEMENT
|
| |
|
2021 PROXY STATEMENT
|
| |
|
| |
A-17
|
A-18
|
| |
|
| |
2021 PROXY STATEMENT
|
| |
|