UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
SCHEDULE
14A
(Rule
14a-101)
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed
by the Registrant [X]
Filed
by a Party other than the Registrant [ ]
Check
the appropriate box:
[ ]
|
Preliminary
Proxy Statement
|
|
|
[ ]
|
Confidential,
for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
|
|
|
[X]
|
Definitive
Proxy Statement
|
|
|
[ ]
|
Definitive
Additional Materials
|
|
|
[ ]
|
Soliciting
Material Pursuant to §240.14a-12
|
Lineage
Cell Therapeutics, Inc.
(Name
of Registrant as Specified in Its Charter)
(Name
of Person(s) Filing Proxy Statement if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
[X]
|
No
fee required.
|
|
|
[ ]
|
Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
|
|
|
|
|
(1)
|
Title
of each class of securities to which transaction applies:
|
|
|
|
|
(2)
|
Aggregate
number of securities to which transaction applies:
|
|
|
|
|
(3)
|
Per
unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
|
|
|
|
|
(4)
|
Proposed
maximum aggregate value of transaction:
|
|
|
|
|
(5)
|
Total
fee paid:
|
[ ]
|
Fee
paid previously with preliminary materials.
|
|
|
[ ]
|
Check
box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date
of its filing.
|
(1)
|
Amount
previously paid:
|
|
|
(2)
|
Form,
schedule or registration statement no.:
|
|
|
(3)
|
Filing
party:
|
|
|
(4)
|
Date
filed:
|
|
2173
Salk Ave.
Suite
200
Carlsbad,
CA 92008
(442)
287-8990
www.lineagecell.com
|
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
To
Be Held September 22, 2020
To
the Shareholders of Lineage Cell Therapeutics, Inc.:
The
2020 annual meeting of shareholders (the “Meeting”) of Lineage Cell Therapeutics, Inc. (“Lineage,”
“we,” “us,” and “our”) will be held at 2173 Salk
Avenue, Suite 200, Carlsbad, CA 92008 on September 22, 2020 at 7:30 a.m. Pacific Time for the following purposes:
|
1.
|
To
elect seven directors to hold office until the 2021 annual meeting of shareholders and until their respective successors
are duly elected and qualified.
|
|
2.
|
To
ratify the appointment of OUM & Co. LLP as our independent registered public accounting firm for our fiscal year ending
December 31, 2020.
|
|
3.
|
To
approve, on an advisory basis, the compensation paid to our named executive officers.
|
|
4.
|
To
transact such other business as may properly come before the Meeting or any adjournment or postponement thereof.
|
The
foregoing items of business are more fully described in the attached Proxy Statement, which forms a part of this notice and is
incorporated herein by reference.
We
intend to hold the Meeting in person. However, we are actively monitoring the COVID-19 pandemic and are sensitive to the public
health and travel concerns that our shareholders may have and the protocols that federal, state, and local governments may impose.
If it is deemed advisable, we will announce alternative or additional arrangements for the Meeting as promptly as practicable.
Any change will be announced via press release and the filing of additional proxy materials with the Securities and Exchange Commission.
All
shareholders are cordially invited to attend the Meeting. Our board of directors has fixed the close of business on July 28, 2020
as the record date for determining shareholders entitled to receive notice of, and to vote at, the Meeting or any adjournment
or postponement thereof.
We
have elected to take advantage of U.S. Securities and Exchange Commission rules that allow companies to furnish proxy materials
to their shareholders by providing access to these documents on the Internet instead of mailing printed copies. Those rules allow
a company to provide its shareholders with proxy materials, while lowering the costs of delivery and reducing the environmental
impact. Most of our shareholders will not receive printed copies of our proxy materials unless requested, but instead will receive
a notice with instructions on how they may access and review our proxy materials on the Internet and how they may cast their vote.
If you would like to receive a printed or electronic copy of our proxy materials, please follow the instructions for requesting
the materials in the Notice of Internet Availability of Proxy Materials that is being sent to you.
Your
vote is important. Whether or not you expect to attend the Meeting, please vote as soon as possible. You may authorize a proxy
to vote your shares by telephone, via the Internet, or—if you have received and/or requested paper copies of our proxy materials
by mail—by signing, dating and returning the proxy card in the envelope provided. For specific voting instructions, please
refer to the information provided in the accompanying Proxy Statement and in the Notice of Internet Availability of Proxy Materials.
By
Order of the Board of Directors,
Chase
C. Leavitt
General
Counsel and Corporate Secretary
Carlsbad,
California
August
7, 2020
PROXY
STATEMENT
FOR
THE 2020 ANNUAL MEETING OF SHAREHOLDERS
TO
BE HELD ON SEPTEMBER 22, 2020
The
board of directors (“Board”) of Lineage Cell Therapeutics, Inc. (“Lineage,”
“we,” “us” and “our”) is soliciting the enclosed
proxy for use at our 2020 annual meeting of shareholders (the “Meeting”) to be held at 2173 Salk Avenue,
Suite 200, Carlsbad, CA 92008 on September 22, 2020 at 7:30 a.m. Pacific Time.
Important
Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to be Held on September 22, 2020:
This
Proxy Statement and our Annual Report on Form 10-K are available electronically at www.proxydocs.com/LCTX.
QUESTIONS
AND ANSWERS ABOUT THE PROXY MATERIALS
AND
THE ANNUAL MEETING
Why
am I receiving these materials?
We
have prepared these proxy materials, including this Proxy Statement and the related proxy card, because our Board is soliciting
your proxy to vote at the Meeting. This Proxy Statement summarizes information related to your vote at the Meeting. All shareholders
of record at the close of business on July 28, 2020, the record date for the Meeting, and those who hold a valid proxy on their
behalf, are cordially invited to attend the Meeting in person. However, you do not need to attend the Meeting to vote your shares.
Instead, you may simply submit your proxy in accordance with the instructions provided on the Notice of Internet Availability
of Proxy Materials, or if you elected to receive printed copies of the proxy materials, you may submit your proxy by completing,
signing and returning the enclosed proxy card. See also, “How do I vote?” below.
The
proxy materials will be first sent or made available to our shareholders on or about August 12, 2020.
Why
did I receive a Notice of Internet Availability of Proxy Materials in the mail?
As
permitted by rules adopted by the U.S. Securities and Exchange Commission (“SEC”), we are making our
proxy materials available to shareholders electronically via the Internet. Accordingly, we are sending the Notice of Internet
Availability of Proxy Materials by mail to our shareholders of record containing instructions on how to access the proxy materials
and vote by proxy. All shareholders can access the proxy materials on the website referred to in the Notice of Internet Availability
of Proxy Materials or request the delivery of a printed set of proxy materials. If you received a Notice of Internet Availability
of Proxy Materials by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions
for requesting such materials included in the Notice of Internet Availability of Proxy Materials.
Who
can vote at the Meeting?
Only
shareholders of record at the close of business on July 28, 2020, the record date for the Meeting, are entitled to receive notice
of and to vote at the Meeting. On the record date, 149,981,347 of our common shares were issued and outstanding.
Shareholder
of Record: Common Shares Registered in Your Name
If
your common shares are registered directly in your name with our transfer agent, American Stock Transfer & Trust Company,
LLC, then you are the shareholder of record with respect to those common shares, and we are sending these proxy materials directly
to you. As the shareholder of record, you may vote in person at the Meeting or via one of the methods described in the Notice
of Internet Availability of Proxy Materials or in the proxy card if you received a printed or electronic copy of the proxy materials.
Whether or not you plan to attend the Meeting in person, we urge you to vote before the Meeting to ensure your vote is counted.
Beneficial
Owner: Common Shares Registered in the Name of a Broker, bank, or nominee
If
your common shares are held by a broker, bank, or nominee, then you are considered the beneficial owner of common shares held
in “street name,” and the Notice of Internet Availability of Proxy Materials or the proxy materials, as appropriate,
are being forwarded to you by the broker, bank, or nominee. As the beneficial owner of common shares held in “street name,”
you have the right to direct the broker, bank, or nominee how to vote those shares and are also invited to attend the Meeting
if you obtain a legal proxy from the broker, bank, or nominee. However, because you are not the shareholder of record, you may
not vote in person at the Meeting unless you obtain a legal proxy from the broker, bank, or nominee.
How
can I attend the Meeting?
You
are entitled to attend the Meeting only if you are: (1) a shareholder of record as of the record date; or (2) a beneficial owner
of shares held in “street name” as of the record date and you obtain a legal proxy from the broker, bank, or nominee
who holds your shares.
For
directions to the meeting, please visit www.proxydocs.com/LCTX.
What
am I voting on?
There
are four proposals scheduled for a vote at the Meeting:
|
●
|
Proposal
1: To elect seven directors to hold office until the 2021 annual meeting of shareholders and until their respective
successors are duly elected and qualified.
|
|
●
|
Proposal
2: To ratify the appointment of OUM & Co. LLP as our independent registered public accounting firm for our fiscal
year ending December 31, 2020.
|
|
●
|
Proposal
3: To approve, on an advisory basis, the compensation paid to our named executive officers.
|
How
many votes do my shares represent?
Each
Lineage common share is entitled to one vote in all matters that may be acted upon at the Meeting, except that shareholders are
entitled to cumulate their votes in the election of our directors (i.e., they are entitled to the number of votes determined
by multiplying the number of shares held by them times the number of directors to be elected) and may cast all of their votes
so determined for one person or spread their votes among two or more persons as they see fit. No shareholder shall be entitled
to cumulate votes for a director candidate unless such candidate’s name has been placed in nomination prior to the vote
and the shareholder has given notice at the Meeting, prior to the voting, of the shareholder’s intention to cumulate his
or her votes. If any one shareholder has given such notice, all shareholders may cumulate their votes for candidates in nomination.
Discretionary authority to cumulate votes is hereby solicited by our Board if any shareholder gives notice of such shareholder’s
intention to exercise the right to cumulative voting. In that event, our Board will instruct the proxy holders to vote all shares
represented by proxies in a manner that will result in the approval of the maximum number of directors from the nominees selected
by our Board that may be elected with the votes held by the proxy holders.
What
are the Board’s recommendations?
Our
Board recommends that our shareholders vote “For” each director nominee and “For” Proposals 2 and 3.
How
do I vote?
In
the election of directors, you may either vote “For” all nominees, or you may “Withhold” your vote from
one or more nominees. For Proposals 2 and 3, you may vote “For” or “Against” or “Abstain”
from voting.
Shareholder
of Record: Common Shares Registered in Your Name
If
you are the shareholder of record:
|
●
|
By
Internet: You may vote at www.proxypush.com/LCTX, 24 hours a day, seven days a week, by following the instructions
provided in the Notice of Internet Availability of Proxy Materials. Votes submitted via the Internet must be received by 11:59
p.m., Eastern Time, on September 21, 2020.
|
|
●
|
By
Telephone: You may vote using a touch-tone telephone by calling (866) 490-6839, 24 hours a day, seven days a week. You
will need the control number included on your Notice of Internet Availability of Proxy Materials or proxy card. Votes submitted
by telephone must be received by 11:59 p.m., Eastern Time, on September 21, 2020.
|
|
●
|
By
Mail: If you request printed copies of the proxy materials by mail, you may vote by completing, signing, dating and returning
the proxy card in the self-addressed, postage-paid envelope provided. If you properly complete your proxy card and send it
to us in time to vote, the individuals named in the proxy card will vote your shares as you have directed.
|
|
●
|
In
Person: You may still attend the meeting and vote in person even if you have already voted by proxy.
|
Beneficial
Owner: Common Shares Registered in the Name of a Broker, bank, or nominee
If
you are the beneficial owner of common shares held in “street name,” you may instruct your broker, bank, or nominee
how to vote those shares using the voting instruction form provided to you by your broker, bank, or nominee. Because you are not
the shareholder of record for those shares, you may not vote in person at the Meeting unless you obtain a legal proxy from your
broker, bank, or nominee giving you the right to vote at the Meeting. A legal proxy is a written document that authorizes you
to vote your shares held in street name at the Meeting. Please contact the broker, bank, or nominee that holds your shares for
instructions regarding obtaining a legal proxy.
What
if another matter is properly brought before the Meeting?
At
this time, our Board knows of no matters that will be presented for consideration at the Meeting other than those described in
this Proxy Statement. However, if any other matter is properly brought before the Meeting, it is the intention of the persons
named in the proxy card as “proxies” to vote on those matters in accordance with the recommendation of our Board.
Who
is paying for this proxy solicitation?
We
will pay for the entire cost of soliciting proxies. In addition to the mailed Notices of Internet Availability of Proxy Materials
and/or proxy materials, our directors and employees may also solicit proxies in person, by telephone, or by other means of communication.
Our directors and employees will not be paid any additional compensation for soliciting proxies. We may also reimburse brokerage
firms, banks, and nominees for the cost of forwarding proxy materials to beneficial owners.
What
does it mean if I receive more than one Notice of Internet Availability of Proxy Materials or proxy card?
If
you receive more than one Notice of Internet Availability of Proxy Materials or proxy card, your common shares are registered
in more than one name or are registered in different accounts. To ensure that all of your shares are voted, please follow the
voting instructions in each Notice of Internet Availability of Proxy Materials or complete, sign, date and return each proxy card.
Can
I revoke or change my vote after submitting my proxy?
You
may revoke your proxy and change your vote at any time before the applicable vote deadlines for the Meeting. If you are the record
holder of your common shares, you may revoke your proxy in any one of four ways:
|
●
|
submit
another properly completed proxy with a later date;
|
|
●
|
vote
again by Internet or telephone at a later time (only the latest Internet or telephone proxy submitted prior to the Meeting
will be counted);
|
|
●
|
send
a written notice to us at 2173 Salk Avenue, Suite 200, Carlsbad, CA 92008; Attention: Corporate Secretary; or
|
|
●
|
attend
the Meeting and vote in person (however, simply attending the Meeting will not, by itself, revoke your proxy or change your
vote).
|
If
your shares are held by your broker, bank, or nominee, you should follow the instructions provided by them.
How
will my shares be voted if I do not specify how they should be voted?
Shareholder
of Record: Common Shares Registered in Your Name
If
you are a shareholder of record and you indicate when voting on the Internet or by telephone that you wish to vote as recommended
by our Board, then your common shares will be voted at the Meeting in accordance with our Board’s recommendation on all
matters presented for a vote at the Meeting. Similarly, if you sign and return a proxy card but do not indicate how you want to
vote your common shares for a particular proposal or for all of the proposals, then for any proposal for which you do not so indicate,
your shares will be voted in accordance with our Board’s recommendation.
Beneficial
Owner: Common Shares Registered in the Name of a Broker, bank, or nominee
If
you are a beneficial owner of shares held in street name and do not provide your broker, bank, or nominee that holds your shares
with specific voting instructions, then your broker, bank, or nominee may generally vote your shares in their discretion on “routine”
matters but cannot vote on “non-routine” matters. If your broker, bank, or nominee that holds your shares does not
receive instructions from you on how to vote your shares on a non-routine matter, that organization will inform the inspector
of election that it does not have the authority to vote on that matter with respect to your shares. This is generally referred
to as a broker non-vote. Proposal 1, relating to the election of directors, and Proposal 3, relating to the advisory vote on the
compensation paid to our named executive officers, are considered non-routine matters. Proposal 2, relating to the ratification
of the appointment of OUM & Co. LLP as our independent registered public accounting firm for our fiscal year ending December
31, 2020, is considered a routine matter.
What
constitutes a quorum?
The
presence at the Meeting, in person or by proxy, of holders representing a majority of our outstanding common shares as of July
28, 2020, or 74,990,674 common shares, constitutes a quorum at the meeting, permitting us to conduct business.
Your
common shares will be counted toward the quorum if you: (1) properly vote by proxy (online, by phone, or by mailing a proxy card
or a voting instruction form to your broker, fiduciary, or nominee); or (2) are entitled to vote and are present in person at
the Meeting. Abstentions and broker non-votes will be counted toward the quorum requirement. If there is no quorum, the chairman
of the Meeting or the holders of a majority of common shares present at the Meeting, either in person or by proxy, may adjourn
the Meeting to solicit additional proxies and reconvene the Meeting at a later date.
What
vote is required to approve each proposal?
The
election of directors will be determined by a plurality of the votes cast by the shareholders entitled to vote on the election.
Accordingly, the nominees receiving the most “For” votes from the shares present in person or represented by proxy
at the Meeting and entitled to vote on the election of directors will be elected.
The
approval of each of Proposals 2 and 3 requires the affirmative vote of a majority of both: (1) the shares present in person or
represented by proxy at the Meeting and entitled to vote on the matter; and (2) the shares required to constitute a quorum.
If
a quorum is present at the Meeting, what is the effect of withheld votes, abstentions, and broker non-votes on the outcome of
a proposal?
With
respect to the election of directors in Proposal 1, neither a “withhold” vote nor a broker non-vote will be counted
in determining the outcome of such proposal.
With
respect to each of Proposals 2 and 3, abstentions will have the same effect as votes “Against” the proposal, and broker
non-votes will have the same effect as votes “Against” the proposal to the extent such broker non-votes contribute
to a quorum, because the affirmative vote equal to a majority of the shares required to constitute a quorum is also required for
approval.
How
can I find out the voting results?
We
expect to announce preliminary voting results at the Meeting. Final voting results will be published in a Current Report on Form
8-K to be filed with the SEC within four business days after the Meeting.
BOARD
OF DIRECTORS
Set
forth below are the names, ages, Board committee assignments, tenure, and certain biographical information of our directors, each
of whom other than Stephen C. Farrell is being nominated for election at the Meeting. On August 3, 2020, Mr.
Farrell informed us that he has decided not to stand for reelection as a director at the Meeting. Mr. Farrell’s
decision not to stand for reelection was not due to a disagreement with Lineage.
Name
|
|
Age
|
|
Committees
|
|
Director
Since
|
Alfred
D. Kingsley
|
|
77
|
|
Financial
Strategy*
|
|
July
2009
|
Deborah
Andrews
|
|
62
|
|
Audit*,
Compensation, Nominating & Corporate Governance
|
|
April
2014
|
Don
M. Bailey
|
|
74
|
|
Nominating
& Corporate Governance*, Audit, Financial Strategy
|
|
March
2020
|
Neal
C. Bradsher, CFA
|
|
55
|
|
Nominating
& Corporate Governance, Financial Strategy
|
|
July
2009
|
Brian
M. Culley
|
|
49
|
|
None
|
|
September
2018
|
Stephen
C. Farrell
|
|
55
|
|
Compensation
|
|
March
2013
|
Michael
H. Mulroy
|
|
54
|
|
Compensation*,
Nominating & Corporate Governance, Financial Strategy
|
|
October
2014
|
Angus
C. Russell
|
|
64
|
|
Audit
|
|
December
2014
|
*
Committee chairperson
Alfred
D. Kingsley. Mr. Kingsley has been Chairman of the Board since July 2009. Mr. Kingsley has been general partner
of Greenway Partners, L.P., a private investment firm, and President of Greenbelt Corp., a business consulting firm, since 1993.
Greenbelt served as our financial advisor from 1998 until 2009. Mr. Kingsley also serves as a director of OncoCyte Corporation
(OCX), a clinical-stage diagnostics company focused on novel, non-invasive blood-based tests for the early detection of cancer.
From January 2017 to October 2018, Mr. Kingsley served as Executive Chairman of AgeX Therapeutics, Inc. (AGE), a biotechnology
company focused on the development and commercialization of novel therapeutics targeting human aging. Mr. Kingsley also served
as a director of Asterias Biotherapeutics, Inc. (AST) from 2012 until our acquisition of Asterias in March 2019. Mr. Kingsley
was Senior Vice-President of Icahn and Company and its affiliated entities for more than 25 years. Mr. Kingsley holds a B.S. degree
in economics from the Wharton School of the University of Pennsylvania and a J.D. degree and LLM in taxation from New York University
Law School. Mr. Kingsley’s long career in corporate finance and mergers and acquisitions includes substantial experience
in helping companies to improve their management and corporate governance, and to restructure their operations. Mr. Kingsley developed
an intimate knowledge of our business in his role as our financial advisor before he joined our Board. Mr. Kingsley has been instrumental
in structuring our equity and debt financings, and in the transition of our business focus into the field of stem cell technology,
and the business acquisitions that have helped us expand the scope of our business.
Deborah
Andrews. Ms. Andrews served as Chief Financial Officer of STAAR Surgical Company (STAA), a leader in the development,
manufacture, and marketing of minimally invasive ophthalmic products employing proprietary technologies, from September 2017 until
June 30, 2020 after serving as Vice President, Chief Accounting Officer since 2013. Ms. Andrews also served as STAAR Surgical’s
Vice President, Chief Financial Officer from 2005 to 2013, as its Global Controller from 2001 to 2005, and as its Vice President,
International Finance from 1999 to 2001. Ms. Andrews previously worked as a senior accountant for a major public accounting firm.
Ms. Andrews holds a B.S. degree in accounting from California State University at San Bernardino. Ms. Andrews brings to our Board
significant experience in finance, financial reporting, accounting, and auditing, and in management as a senior financial and
accounting executive of a public medical device company during a period of significant growth.
Don
M. Bailey. Mr. Bailey previously served as a director and Chairman of Asterias
Biotherapeutics, Inc. (AST) from February 2016 until our acquisition of Asterias in March 2019. Mr. Bailey served as President
and Chief Executive Officer of Questcor Pharmaceuticals, Inc. (QCOR), a biopharmaceutical company focused on the treatment of
patients with serious, difficult-to-treat autoimmune and inflammatory disorders, from 2007 until Questcor was acquired by Mallinckrodt
plc (MNK) in 2014. He was also a director of Mallinckrodt plc from August 2014 to March 2016, and during this time he was the
Chairman of its portfolio committee. He initially joined the Questcor board of directors in 2006 as an independent director and
Chairman of its audit committee. From August 2016 to November 2017, Mr. Bailey served as a director of OncoCyte Corporation (OCX).
From June 2015 until its acquisition by Acorda Therapeutics, Inc. (ACOR) in May 2016, Mr. Bailey was also an independent director
and chairman of the audit committee of Biotie Therapeutics Corp. (BITI), a clinical-stage pharmaceutical company headquartered
in Turku, Finland. Mr. Bailey was an independent director and the non-executive chairman of the board of directors of STAAR Surgical
Company (STAA), a leader in the development, manufacture, and marketing of minimally invasive ophthalmic products employing proprietary
technologies, from 2005 until 2014. Mr. Bailey served on its audit committee and was chair of its nominating and corporate governance
committee. Mr. Bailey was the chairman of the board of directors of Comarco, Inc. (CMRO), a defense services company transformed
into a wireless communication products company, from 1998 until 2007, where he served as Chief Executive Officer from 1991 until
2000. Mr. Bailey holds a B.S. degree in mechanical engineering from the Drexel Institute of Technology, an M.S. degree in operations
research from the University of Southern California and an M.B.A. from Pepperdine University. Mr. Bailey has also served as a
board member on several non-profit and academic enterprises. Mr. Bailey is a founding board member of the University of California
Irvine’s (UCI) Applied Innovation Institute. Mr. Bailey brings to our Board significant knowledge of the pharmaceuticals
industry and extensive experience as an executive and board member of publicly traded pharmaceutical companies.
Neal
C. Bradsher, CFA. Mr. Bradsher has been President of Broadwood Capital, Inc., a private investment firm, since
2002. Mr. Bradsher holds a B.A. degree in economics from Yale College and is a Chartered Financial Analyst. Mr. Bradsher was a
director of Questcor Pharmaceuticals, Inc. (QCOR), from 2004 until Questcor was acquired by Mallinckrodt plc (MNK) in 2014. Mr.
Bradsher brings to our Board a wealth of experience in finance, management and corporate governance attained through his investments
in other companies, including companies in the pharmaceutical, biotechnology, medical device, medical diagnostics, health care
services and health care information systems sectors. He has worked with several health care companies to improve their management
and governance. Entities that Mr. Bradsher controls have invested in most of Lineage’s financing transactions over the last
several years. Mr. Bradsher is the president of the general partner of Broadwood Partners, L.P., currently our largest shareholder.
Brian
M. Culley. Mr. Culley joined Lineage as Chief Executive Officer in September
2018. Prior to joining Lineage, Mr. Culley served from August 2017 to September 2018 as interim Chief Executive Officer at Artemis
Therapeutics, Inc. (ATMS). Mr. Culley previously served as Chief Executive Officer of Mast Therapeutics, Inc. (MSTX), from 2010,
and was also a member of its board of directors from 2011, until Mast’s merger with Savara, Inc. (SVRA) in April 2017. Mr.
Culley served from 2007 to 2010 as Mast’s Chief Business Officer and Senior Vice President, from 2006 to 2007 as Mast’s
Senior Vice President, Business Development, and from 2004 to 2006 as Mast’s Vice President, Business Development. From
2002 until 2004, Mr. Culley was Director of Business Development and Marketing for Immusol, Inc. From 1999 until 2000, he worked
at the University of California, San Diego (UCSD) Department of Technology Transfer & Intellectual Property Services and from
1996 to 1999 he conducted drug development research for Neurocrine Biosciences, Inc. (NBIX). Mr. Culley has also served on the
Board of Orphagen Pharmaceuticals, Inc. since May 2017. Mr. Culley has more than 25 years of business and scientific experience
in the life sciences industry. He received a B.S. in biology from Boston College, a masters in biochemistry and molecular biology
from the University of California, Santa Barbara, and an M.B.A. from The Johnson School of Business at Cornell University. Mr.
Culley brings to our Board significant knowledge of the biotechnology industry and extensive experience as an executive and board
member of publicly traded pharmaceutical companies.
Stephen
C. Farrell. Mr. Farrell currently serves as Chief Executive Officer and Director of Convey Health Solutions (formerly
known as NationsHealth, Inc.), a healthcare business process outsourcing company headquartered in Fort Lauderdale, Florida. Convey
Health Solutions utilizes both technology and staff to manage end-to-end insurance processes for business clients. Before joining
Convey Health Solutions in 2011, he served as President of PolyMedica Corporation (PLMD), a provider of diabetes supplies and
related services that was acquired in 2007 by Medco Health Solutions, Inc. During his eight-year tenure at PolyMedica, Mr. Farrell
served as its President, Chief Operating Officer, and as Chief Financial Officer, Chief Compliance Officer, and Treasurer. Mr.
Farrell previously served as Executive Vice President and Chief Financial Officer of Stream Global Services, Inc. (SGS), a business
process outsourcing company. Earlier in his career, Mr. Farrell served as Senior Manager at PricewaterhouseCoopers LLP. Mr. Farrell
holds an A.B. from Harvard University, and an M.B.A. from the Darden School at the University of Virginia. Mr. Farrell served
on the board and was chairman of the audit committee of Questcor Pharmaceuticals, Inc. (QCOR) from 2007 until Questcor was acquired
by Mallinckrodt plc (MNK) in 2014. Mr. Farrell also currently serves as a director of STAAR Surgical Company (STAA), a leader
in the development, manufacture, and marketing of minimally invasive ophthalmic products employing proprietary technologies. Mr.
Farrell brings to our Board significant experience in finance, financial reporting, accounting, and auditing, and in management
as a senior executive of a public healthcare company during a period of significant growth.
Michael
H. Mulroy. Mr. Mulroy served as the Chief Executive Officer and a member of the board of directors of Asterias Biotherapeutics,
Inc. (AST) from June 2017 until our acquisition of Asterias in March 2019. In April 2020, Mr. Mulroy joined Magtrol Inc., a leading
manufacturer of motor test equipment and hysteresis brakes and clutches, on a part time basis, where he also serves on its board
of directors. Prior to joining Asterias, Mr. Mulroy served as a Senior Advisor to CamberView Partners, LLC (now part of PJT Partners
Inc.), which assists companies in connection with investor engagement and complex corporate governance issues. Prior to its sale
in 2014, Mr. Mulroy served as Executive Vice President, Strategic Affairs and General Counsel and Corporate Secretary of Questcor
Pharmaceuticals, Inc. (QCOR). Mr. Mulroy joined Questcor in 2011 as Chief Financial Officer, General Counsel and Corporate Secretary.
From 2003 to 2011, Mr. Mulroy was employed by the law firm of Stradling Yocca Carlson & Rauth, where he served as a partner
from 2004. From 1997 to 2003, Mr. Mulroy was an investment banker at Citigroup and Merrill Lynch. He is also a member of the Board
of Trustees of the Pegasus School, an independent primary school in Orange County, California. From January 2017 to July 2019,
Mr. Mulroy served as a member of the board of directors of AgeX Therapeutics, Inc. (AGE), a biotechnology company focused on the
development and commercialization of novel therapeutics targeting human aging. Mr. Mulroy earned his J.D. degree from the University
of California, Los Angeles and his B.A. degree in economics from the University of Chicago. Mr. Mulroy brings to our Board his
experience as the Chief Executive Officer of a publicly traded biotechnology company and member of a senior management team of
a larger biopharmaceutical company that experienced a period of rapid growth. Mr. Mulroy also brings to our Board his experience
in corporate finance and investor relations.
Angus
C. Russell. Mr. Russell served as the Chief Executive Officer of Shire plc (SHPG), a biopharmaceutical
company, from June 2008 to April 2013. Mr. Russell served as the Chief Financial Officer of Shire from 1999 to 2008 and also
served as its Principal Accounting Officer and Executive Vice President of Global Finance. Prior to joining Shire, Mr.
Russell served at ICI, Zeneca, and AstraZeneca for 19 years, most recently as Vice President of Corporate Finance at
AstraZeneca plc (AZN). Mr. Russell also serves as Chairman of the Board of Directors of Mallinckrodt plc (MNK) and Revance
Therapeutics, Inc. (RVNC) and as a director of Therapeutics MD, Inc. (TXMD). Mr. Russell previously served as a director of
Shire plc, Questcor Pharmaceuticals, Inc. (QCOR) until it was acquired by Mallinckrodt plc (MNK) in 2014, and InterMune, Inc.
(ITMN) prior to its acquisition by Roche Holdings, Inc. (RHHBY) in 2014. Mr. Russell holds an honorary Doctor of Business
Administration from Coventry University, U.K. Mr. Russell brings to our Board numerous years of experience as a Chief
Executive Officer of an international publicly traded specialty biopharmaceutical company and his substantial experience as
an officer and director in the specialty pharmaceutical industry.
Director
Independence
Our
Board has determined that Deborah Andrews, Don M. Bailey, Neal C. Bradsher, Stephen C. Farrell, Michael H. Mulroy, and Angus C.
Russell qualify as “independent” in accordance with Section 803(A) of the NYSE American Company Guide. The members
of our Audit Committee meet the additional independence standards under Section 803(B)(2) of the NYSE American Company Guide and
Section 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the members
of our Compensation Committee meet the additional independence standards under Section 805(c)(1) of the NYSE American Company
Guide.
Brian
M. Culley does not qualify as “independent” under Section 803(A) of the NYSE American Company Guide because he is
our Chief Executive Officer. Alfred D. Kingsley does not qualify as “independent” under Section 803(A) of the NYSE
American Company Guide because he was an employee of a subsidiary of ours during the past three years. Specifically, Mr. Kingsley
served as Executive Chairman of AgeX Therapeutics, Inc., which was our consolidated subsidiary until August 30, 2018.
Director
Compensation
We
compensate our non-employee directors for their service on our Board and on its committees with cash and equity as discussed below.
In addition, all of our non-employee directors are entitled to reimbursements for their out-of-pocket expenses incurred in attending
our Board and committee meetings.
The
following table shows the annual cash fees paid to the Chairman of our Board, our directors other than the Chairman, and to the
directors who served on the standing committees of our Board during 2019.
|
|
Fees Paid
|
|
Chairman of the Board
|
|
$
|
75,000
|
|
Director other than Chairman
|
|
$
|
40,000
|
|
Audit Committee Chairman
|
|
$
|
20,000
|
|
Audit Committee Member other than Chairman
|
|
$
|
10,000
|
|
Compensation Committee Chairman
|
|
$
|
15,000
|
|
Compensation Committee Member other than Chairman
|
|
$
|
7,500
|
|
Nominating and Corporate Governance Committee Chairman
|
|
$
|
15,000
|
|
Nominating and Corporate Governance Committee Member other than Chairman
|
|
$
|
7,500
|
|
Financial Strategy Committee Chairman
|
|
$
|
160,000
|
|
Financial Strategy Committee Member other than Chairman
|
|
$
|
-
|
|
In
addition to cash fees, our Chairman receives an annual stock option grant to purchase 70,000 common shares and all other directors
receive an annual stock option grant to purchase 40,000 common shares. In addition, Mr. Bailey joined our Board in 2019 and received
a stock option to purchase 60,000 common shares. All grants are made under our 2012 Equity Incentive Plan (the “2012
Plan”). The options vest and become exercisable one year after the grant date.
The
annual cash fees are paid in four equal quarterly installments, based on the director’s continued service through the last
day of the applicable quarter.
2019
Director Compensation
The
following table summarizes certain information concerning the compensation paid during our fiscal year ended December 31, 2019
to each person who served as a director during that time and who was not our employee on the date the compensation was earned.
Name
|
|
Fees Earned
or Paid in
Cash
|
|
|
Option
Award(1)
|
|
|
Total
|
|
Deborah Andrews
|
|
$
|
67,500
|
|
|
$
|
23,261
|
|
|
$
|
90,761
|
|
Don M. Bailey
|
|
$
|
43,477
|
|
|
$
|
76,553
|
|
|
$
|
120,030
|
|
Neal C. Bradsher
|
|
$
|
55,000
|
|
|
$
|
23,261
|
|
|
$
|
78,261
|
|
Stephen C. Farrell
|
|
$
|
58,352
|
|
|
$
|
23,261
|
|
|
$
|
81,613
|
|
Alfred D. Kingsley
|
|
$
|
235,000
|
|
|
$
|
40,707
|
|
|
$
|
275,707
|
|
Michael H. Mulroy
|
|
$
|
49,973
|
|
|
$
|
23,261
|
|
|
$
|
73,234
|
|
Cavan Redmond(2)
|
|
$
|
28,777
|
|
|
$
|
-
|
|
|
$
|
28,777
|
|
Angus C. Russell
|
|
$
|
50,000
|
|
|
$
|
23,261
|
|
|
$
|
73,261
|
|
(1)
|
The
dollar amounts in this column represent the aggregate fair market value of such awards determined based on the price of our common
shares on the grant date in accordance with ASC Topic 718, Compensation-Stock Compensation (ASC Topic 718). See Note 12 Stock-Based
Awards to our consolidated financial statements included in our Form 10-K for details as to the assumptions used to determine
the fair value of the awards. As of December 31, 2019, the aggregate number of option awards outstanding for Ms. Andrews and Messrs.
Bailey, Bradsher, Farrell, Kingsley, Mulroy, Redmond, and Russell was 163,600, 100,000, 163,600, 163,600, 341,920, 163,600, zero,
and 163,600, respectively.
|
(2)
|
Mr.
Redmond resigned from our Board on July 2, 2019.
|
CORPORATE
GOVERNANCE
Directors’
Meetings
During
the fiscal year ended December 31, 2019, our Board met eight times. None of our current directors attended fewer than 75% of the
meetings of our Board and its committees on which they served.
Directors
are also encouraged to attend our annual meetings of shareholders, although they are not formally required to do so. All of our
current directors who were then serving on our Board attended the 2019 annual meeting of shareholders.
Meetings
of Non-Management Directors
Our
non-management directors meet no less frequently than quarterly in executive session, without any directors who are Lineage officers
or employees present. These meetings allow the non-management directors to engage in open and frank discussions about corporate
governance and about our business, operations, finances, and management performance.
Shareholder
Communications with Directors
If
you wish to communicate with our Board or with individual directors, you may do so by following the procedure described on our
website at www.lineagecell.com.
Code
of Ethics
We
have adopted a Code of Business Conduct and Ethics (“Code of Ethics”) that applies to our principal
executive officers, principal financial officer and accounting officer, other executive officers, and directors. The purpose of
the Code of Ethics is to promote: (1) honest and ethical conduct, including the ethical handling of actual or apparent conflicts
of interest between personal and professional relationships; (2) full, fair, accurate, timely, and understandable disclosure in
reports and documents that we file with or submit to the SEC and in our other public communications; (3) compliance with applicable
governmental rules and regulations; (4) prompt internal reporting of violations of the Code of Ethics to an appropriate person
or persons identified in the Code of Ethics; and (5) accountability for adherence to the Code of Ethics. A copy of our Code of
Ethics has been posted on our website at www.lineagecell.com. We intend to disclose any future amendments to certain provisions
of our Code of Ethics, and any waivers of those provisions granted to our principal executive officer, principal financial officer,
principal accounting officer or controller or persons performing similar functions, by posting the information on our website
within four business days following the date of the amendment or waiver.
Board
Leadership Structure
The
role of our Chairman of the Board is separate from our Chief Executive Officer. Our Board has determined that its structure is
appropriate at this time given Lineage’s stage of development. Our Board is committed to independent Board and Committee
leadership and to fulfill board and committee duties effectively and efficiently so that our business receives the undivided attention
of our Chief Executive Officer. In addition to core Board functions, our Chairman of the Board interfaces with our management
and directors with respect to matters such as financing, strategic planning, and business acquisitions.
The
Board of Directors’ Role in Risk Management
Our
Board has responsibility for the oversight of Lineage’s risk management processes and, either as a whole or through its
committees, regularly discusses with management our major risk exposures, their potential impact on our business, and the steps
we take to manage them. The risk oversight process includes receiving regular reports from Board committees and members of senior
management to enable our Board to understand Lineage’s risk identification, risk management and risk mitigation strategies
with respect to areas of potential material risk, including operations, finance, legal, regulatory, strategic, and reputational
risk.
Our
Audit Committee provides oversight of our financial reporting processes and the annual audit of our consolidated financial statements.
In addition, our Audit Committee must review and approve any business transactions between Lineage and its executive officers,
directors, and shareholders who beneficially own 5% or more of our common shares (“5% Shareholders”).
Committees
of the Board of Directors
Our
Board has an Audit Committee, a Nominating and Corporate Governance Committee, and a Compensation Committee. The members of each
of these committees are independent in accordance with Section 803(A) of the NYSE American Company Guides and Section 10A-3 under
the Exchange Act. The members of our Audit Committee and Compensation Committee must also meet the independence tests applicable
to members of those committees under the NYSE American Company Guide. Our Board also has a Financial Strategy Committee, the members
of which are not required to be independent. Until May 2019, our Board also had a Business Integration Planning Committee.
Audit
Committee
The
members of our Audit Committee are Deborah Andrews (Chair), Don M. Bailey, and Angus C. Russell. Our Audit Committee held five
meetings during 2019. The purpose of our Audit Committee is to recommend the engagement of our independent registered public accounting
firm, to review their performance and the plan, scope, and results of the audit, and to review and approve the fees we pay to
our independent registered public accounting firm. Our Audit Committee also will review our accounting and financial reporting
procedures and controls, and all transactions between us and our executive officers, directors, and 5% Shareholders. Our Audit
Committee has a written charter that requires the members of our Audit Committee to be directors who are independent in accordance
with Section 803(A) and Section 803(B) of the NYSE American Company Guide and Section 10A-3 under the Exchange Act. A copy of
our Audit Committee Charter is posted on our website at www.lineagecell.com.
Our
Board has determined that Deborah Andrews, Don M. Bailey, and Angus C. Russell each meet the criteria of an “audit committee
financial expert” within the meaning of the SEC’s regulations. Ms. Andrews’ expertise is based on her experience
as Vice President-Chief Accounting Officer of STAAR Surgical Company and as STAAR Surgical’s Vice President-Chief Financial
Officer, and as a senior accountant at a major accounting firm. Mr. Bailey’s expertise is based on his experience as Chief
Executive Officer of Questcor Pharmaceuticals, Inc. from 2007 to 2014. Mr. Russell’s expertise is based on his experience
as the Chief Executive Officer of Shire plc, a biopharmaceutical company, from June 2008 to April 2013 and as the Chief Financial
Officer of Shire from 1999 to 2008.
Nominating
and Corporate Governance Committee and Nominating Policies and Procedures
The
members of our Nominating and Corporate Governance Committee are Don M. Bailey (Chair), Deborah Andrews, Neal C. Bradsher,
and Michael H. Mulroy. Mr. Farrell served on our Nominating and Corporate Governance Committee until August 4, 2020,
when he was replaced by Ms. Andrews and Mr. Mulroy, and Mr. Bradsher served as Chair until June 9, 2020. Our Nominating
and Corporate Governance Committee met five times during 2019. The purpose of our Nominating and Corporate Governance Committee
is to recommend to our Board individuals qualified to serve as directors and on committees of our Board and to make recommendations
to our Board on issues and proposals regarding corporate governance matters. Our Nominating and Corporate Governance Committee
also considers nominees proposed by shareholders, provided that they notify our Nominating and Corporate Governance Committee
of the nomination in writing at least 120 days before the date of the next annual meeting and they and the nominee provide our
Nominating and Corporate Governance Committee with all information that our Nominating and Corporate Governance Committee may
reasonably request regarding the nominee no later than 90 days prior to the annual meeting. A copy of our Nominating and Corporate
Governance Committee Charter is posted on our website at www.lineagecell.com.
Our
Nominating and Corporate Governance Committee has not set any specific minimum qualifications that a prospective nominee would
need to be recommended by our Nominating and Corporate Governance Committee to serve on our Board. Rather, in evaluating any new
nominee or incumbent director, our Nominating and Corporate Governance Committee will consider whether the particular person has
the knowledge, skills, experience, and expertise needed to manage our affairs in light of the knowledge, skills, experience, and
expertise of the other members of our Board as a whole. Our Nominating and Corporate Governance Committee will also consider whether
a nominee or incumbent director has any conflicts of interest with Lineage that might conflict with our Code of Ethics or that
might otherwise interfere with the ability of the nominee to perform their duties in a manner that is in the best interest of
Lineage and its shareholders. Our Nominating and Corporate Governance Committee will also consider whether including a prospective
director on our Board will result in a Board composition that complies with: (1) applicable state corporate laws; (2) applicable
federal and state securities laws; and (3) the rules of the SEC and each stock exchange on which our shares are listed.
Our
Board and our Nominating and Corporate Governance Committee have not adopted specific policies with respect to a particular mix
or diversity of skills, experience, expertise, perspectives, and background that nominees should have. However, the present Board
was assembled with a focus on attaining a Board comprised of people with substantial experience in bioscience, the pharmaceutical
industry, corporate management, finance, and law. Our Board believes that this interdisciplinary approach will best suit our needs,
as we expand our initiatives in the field of cell therapeutics. Our Nominating and Corporate Governance Committee also believes
in the benefits of a range of types of Board diversity (including diversity with respect to gender, race, ethnicity, national
origin, and experience), and our Board has had, for example, at least one female director at all times since 1995. Our Board is
also cognizant of the value of experience in international markets and operations given the growing globalization of the pharmaceutical
and biotechnology industries and world-wide focus on cell therapeutics research.
Some
of the factors considered by our Nominating and Corporate Governance Committee and our Board in selecting our Board’s nominees
for election at the Meeting are discussed in this Proxy Statement under the heading “Board of Directors.”
Compensation
Committee
The members of our Compensation Committee are Michael H. Mulroy
(Chair), Deborah Andrews, and Stephen C. Farrell. Our Compensation Committee met nine times during 2019. All members of our Compensation
Committee qualify as “independent” in accordance with Section 803(A) and Section 805(c)(1) of the NYSE American Company
Guide. Our Compensation Committee oversees our compensation and employee benefit plans and practices, including executive compensation
arrangements and incentive plans and equity-based awards under the 2012 Plan. Our Compensation Committee recommends to our Board
the terms and amount of executive compensation and grants of equity-based awards to executives, key employees, consultants, and
independent contractors. The Chief Executive Officer may make recommendations to our Compensation Committee concerning executive
compensation and performance, but our Compensation Committee makes its own determination or recommendation to our Board with respect
to the amount and components of compensation, including salary, bonus, and equity awards to executive officers, generally taking
into account factors such as company performance, individual performance, and compensation paid by peer group companies. A copy
of our Compensation Committee Charter is posted on our website at www.lineagecell.com.
During
our fiscal year ended December 31, 2019, our Compensation Committee engaged Marsh & McLennan (“Marsh”)
to provide compensation consulting services and advice to our Compensation Committee, which included market survey information
and competitive market trends in employee, executive, and director compensation programs. Marsh has also made recommendations
to our Compensation Committee with respect to pay mix components such as salary, bonus, and equity awards, and the target market
pay percentiles in which executive compensation should fall so Lineage can be competitive in executive hiring and retention. In
connection with the compensation consultant services provided by Marsh, our Compensation Committee has assessed the independence
of Marsh and does not believe Marsh work has raised any conflict of interest.
Financial
Strategy Committee
The
members of our Financial Strategy Committee are Alfred D. Kingsley (Chair), Don M. Bailey, Neal C. Bradsher, and Michael
H. Mulroy. Our Financial Strategy Committee met 25 times during 2019. Our Financial Strategy Committee regularly meets with
members of management to discuss our strategy pertaining to investor and shareholder relations and financial strategy, including
plans for raising capital. As Chair of the Financial Strategy Committee, Mr. Kingsley routinely communicates with key shareholders
and contributes to our investor relations strategy.
Report
of the Audit Committee on the Audit of Our Consolidated Financial Statements
The
following is the report of the Audit Committee of the Board with respect to Lineage’s audited consolidated financial statements
for the year ended December 31, 2019.
The
information contained in this report shall not be deemed “soliciting material” or otherwise considered “filed”
with the SEC, and such information shall not be incorporated by reference into any future filing under the Securities Act of 1933,
as amended (the “Securities Act”), or the Exchange Act, except to the extent that Lineage specifically incorporates
such information by reference in such filing.
The
Audit Committee, among other things, assists with the oversight of our accounting and financial reporting processes.
The
members of the Audit Committee held discussions with our management and representatives of OUM & Co., LLP, our independent
registered public accounting firm, concerning the audit of our consolidated financial statements for the year ended December 31,
2019. The independent public accountants are responsible for performing an independent audit of our consolidated financial statements
and issuing an opinion on the conformity of those audited consolidated financial statements with generally accepted accounting
principles in the United States. OUM & Co., LLP also audits our internal control over financial reporting. OUM & Co.,
LLP discussed with the Audit Committee the adequacy of our internal control over financial reporting. The Audit Committee does
not itself prepare financial statements or perform audits, and its members are not auditors or certifiers of Lineage’s financial
statements. The Audit Committee also met on a quarterly basis with our independent registered public accounting firm during 2019
to review and discuss our consolidated financial statements for the quarter and the adequacy of internal control over financial
reporting.
In
the performance of its oversight function and in connection with the audited financial statements contained in our Annual Report
on Form 10-K for the fiscal year ended December 31, 2019, the Audit Committee:
|
●
|
reviewed
and discussed the audited financial statements as of and for the fiscal year ended December 31, 2019 with our management and
with representatives of OUM & Co., LLP;
|
|
●
|
discussed
with representatives of OUM & Co., LLP the matters required to be discussed by the applicable requirements of the Public
Company Accounting Oversight Board (“PCAOB”) and the SEC;
|
|
●
|
received
and reviewed the written disclosures and the letter from OUM & Co., LLP required by applicable requirements of the PCAOB
regarding OUM & Co., LLP’s communications with the Audit Committee concerning independence, and discussed with representatives
of OUM & Co., LLP its independence from Lineage; and
|
|
●
|
based
on the reviews and discussions described in the bullet points above, the Audit Committee unanimously recommended to our Board
that the audited financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2019 for
filing with the SEC.
|
The
Audit Committee:
Deborah
Andrews (Chair), Don M. Bailey, Angus C. Russell
EXECUTIVE
OFFICERS
Set
forth below are the names, ages, offices held, tenure, and certain biographical information of each of our executive officers.
Name
|
|
Age
|
|
Offices
|
|
Officer Since
|
Brian M. Culley
|
|
49
|
|
Chief Executive Officer and Director
|
|
September 2018
|
Brandi L. Roberts
|
|
46
|
|
Chief Financial Officer
|
|
January 2019
|
Chase C. Leavitt
|
|
39
|
|
General Counsel and Corporate Secretary
|
|
May 2019
|
Gary S. Hogge, D.V.M., Ph.D.
|
|
52
|
|
Senior Vice President of Clinical & Medical Affairs
|
|
March 2019
|
Mr.
Culley’s biographical information is included above with those of the other members of our Board.
Brandi
L. Roberts. Ms. Roberts joined Lineage as Chief Financial Officer in January 2019.
Prior to joining Lineage, Ms. Roberts served from August 2017 to January 2019 as Chief Financial Officer at REVA Medical, Inc.
Ms. Roberts previously served as Chief Financial Officer at Mast Therapeutics, Inc. (MSTX), a publicly traded US-based biopharmaceutical
company, from January 2013 to April 2017, having served as its Senior Vice President, Finance from March 2011 to January 2013.
Previously, she held senior positions at Alphatec Spine, Artes Medical, Stratagene and Pfizer. Ms. Roberts brings more than 24
years of public accounting and finance experience, including 21 years at publicly traded pharmaceutical, medical technology, and
life science companies to her position. Ms. Roberts is a certified public accountant with the State of California and received
her B.S. degree in business administration from the University of Arizona and her M.B.A. from the University of San Diego. Ms.
Roberts has served on the Board of Temple Therapeutics BV since November 2019. She also currently serves as Chair of the Southern
California Chapter of the Association of Bioscience Financial Officers.
Chase
C. Leavitt. Mr. Leavitt joined Lineage as General Counsel and Corporate Secretary
in May 2019. Prior to joining Lineage, Mr. Leavitt served as Vice President of Legal Affairs of Tang Capital Management, LLC,
a life sciences-focused investment company, and its affiliate Odonate Therapeutics, Inc. (ODT), a publicly traded biotechnology
company, from June 2018 to May 2019. From May 2017 to May 2018, Mr. Leavitt served as the Deputy General Counsel of Switch, Inc.
(SWCH), a publicly traded technology company, and previously served as its Associate General Counsel from July 2014 to May 2017.
From 2007 to 2014, Mr. Leavitt was a corporate attorney at Latham & Watkins LLP, where his practice focused on public company
representation, mergers and acquisitions and capital markets, serving life sciences and technology companies. Mr. Leavitt received
a B.S. degree in business administration and a J.D. from the University of Southern California and is admitted to practice law
by the State Bar of California.
Gary
Hogge, D.V.M., Ph.D. Dr. Hogge joined Lineage as Senior Vice President of Clinical and Medical Affairs in February 2018.
Dr. Hogge has 20 years of experience developing and supporting the commercialization of a number of products over a broad range
of therapeutic areas. Dr. Hogge has held a variety of roles of increasing responsibility across multiple therapeutic areas in
both clinical development and medical affairs. Previously Dr. Hogge was the Vice President of Medical Affairs at Questcor Pharmaceuticals,
Inc. (QCOR) and before that held multiple leadership roles in both clinical development and medical affairs at Elan Pharmaceuticals
including various responsibilities in the global clinical development of Tysabri® (natalizumab) in Crohn’s disease and
multiple sclerosis, and for building and leading the medical affairs function. He served as medical director following the approval
and launch of Tysabri. Prior to those accomplishments, he worked in clinical development for Ceplene® (histamine dihydrochloride)
at Maxim Pharmaceuticals and in the immunology research and development group at Pfizer. Dr. Hogge obtained his B.S. degree and
D.V.M. from Colorado State University, his M.S. and Ph.D. from the University of Wisconsin-Madison and was a visiting scientist
at the Queensland Institute of Medical Research (QIMR) in Brisbane, Australia.
EXECUTIVE
COMPENSATION
Overview
We
are a “smaller reporting company” under Item 10 of Regulation S-K promulgated under the Exchange Act and the following
compensation disclosure is intended to comply with the requirements applicable to smaller reporting companies. Although the rules
allow us to provide less detail about our executive compensation program, our Compensation Committee is committed to providing
the information necessary to help our shareholders understand its executive compensation-related decisions. Accordingly, this
section includes supplemental narratives that describe our executive compensation practices.
Our
Compensation Committee oversees our compensation and employee benefit plans and practices, including executive compensation arrangements
and incentive plans and awards of stock options and other equity-based awards under the 2012 Plan. Our Compensation Committee
recommends to our Board the terms and amount of executive compensation and grants of equity-based awards to executives, key employees,
consultants, and independent contractors. The Chief Executive Officer may make recommendations to our Compensation Committee concerning
executive compensation and performance, but our Compensation Committee makes its own determination or recommendation to our Board
with respect to the amount and components of compensation, including salary, bonus, and equity awards to executive officers, generally
taking into account factors such as company performance, individual performance and compensation paid by peer group companies.
During
2019, our Compensation Committee engaged Marsh to provide compensation consulting services and advice to our Compensation Committee,
which included market survey information and competitive market trends in employee, executive, and director compensation programs.
Marsh has also made recommendations to our Compensation Committee with respect to pay mix components such as salary, bonus, and
equity awards, and the target market pay percentiles in which executive compensation should fall so Lineage can be competitive
in executive hiring and retention.
In
reviewing each executive’s overall compensation, our Compensation Committee considers an aggregate view of base salary and
bonus opportunities, equity incentive grants, and the dollar value of benefits and perquisites. These factors have been balanced
against our financial position and capital resources. In making 2019 compensation decisions, our Compensation Committee reviewed
market data for each named executive officer’s position, compiled from Marsh, from the following peer group companies for
2019:
Abeona
Therapeutics, Inc.
|
|
Concert
Pharmaceuticals, Inc.
|
|
Inovio
Pharmaceuticals, Inc.
|
Aeglea
Biotherapeutics, Inc.
|
|
Curis,
Inc.
|
|
Mersana
Therapeutics, Inc.
|
Aravive,
Inc.
|
|
Fate
Therapeutics, Inc.
|
|
Neon
Therapeutics, Inc.
|
Athersys,
Inc.
|
|
Genocea
Biosciences, Inc.
|
|
NewLink
Genetics Corporation
|
Bellicum
Pharmaceuticals, Inc.
|
|
Geron
Corporation
|
|
Proteostasis
Therapeutics, Inc.
|
Calithera
Biosciences, Inc.
|
|
Harpoon
Therapeutics, Inc.
|
|
Syndax
Pharmaceuticals, Inc.
|
Celldex
Therapeutics, Inc.
|
|
Idera
Pharmaceuticals, Inc.
|
|
Synlogic,
Inc.
|
Chimerix,
Inc.
|
|
Infinity
Pharmaceuticals, Inc.
|
|
|
The
2019 peer group was recommended by Marsh and consisted of companies operating in the biopharmaceutical industry, generally with
fewer than 150 employees, less than $50 million in revenue, less than $400 million in market capitalization and a lead development
program in Phase 1 or 2. A limited number of companies fell outside of these parameters but were included due to their having
similar areas of focus.
Summary
Compensation Table
The
table below shows the compensation earned by the following, who we refer to as our named executive officers, during the fiscal
years indicated: (1) our principal executive officer during the year ended December 31, 2019; (2) our two most highly compensated
executive officers other than the principal executive officer who were serving as executive officers as of December 31, 2019;
and (3) our former Chief Medical Officer, who would have been one of our two most highly compensated executive officers other
than the principal executive officer had he been serving as an executive officer at December 31, 2019.
Name and Principal Position(1)
|
|
Fiscal Year
|
|
|
Salary ($)
|
|
|
Bonus ($)(2)
|
|
|
Option Awards ($)(3)
|
|
|
Stock Awards ($)(4)
|
|
|
All Other Compensation ($)(5)
|
|
|
Total ($)
|
|
Brian M. Culley
|
|
2019
|
|
|
$
|
535,800
|
|
|
$
|
214,300
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
22,642
|
|
|
$
|
772,742
|
|
Chief Executive Officer
|
|
2018
|
|
|
|
154,923
|
|
|
|
70,000
|
|
|
|
1,917,320
|
|
|
|
693,000
|
|
|
|
27,464
|
|
|
|
2,862,707
|
|
Brandi L. Roberts
|
|
2019
|
|
|
|
376,137
|
|
|
|
169,900
|
|
|
|
397,948
|
|
|
|
—
|
|
|
|
3,978
|
|
|
|
947,963
|
|
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chase C. Leavitt
|
|
2019
|
|
|
|
210,146
|
|
|
|
102,100
|
|
|
|
277,310
|
|
|
|
—
|
|
|
|
9,542
|
|
|
|
599,098
|
|
General Counsel and Corporate Secretary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edward D. Wirth, III, M.D., Ph.D.
|
|
2019
|
|
|
|
285,000
|
|
|
|
—
|
|
|
|
379,754
|
|
|
|
—
|
|
|
|
30,038
|
|
|
|
694,792
|
|
Former Chief Medical Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Mr.
Culley was appointed as our Chief Executive Officer on September 17, 2018, Ms. Roberts was appointed as our Chief Financial
Officer on January 7, 2019, Mr. Leavitt was appointed as our General Counsel and Corporate Secretary on May 20, 2019, and
Dr. Wirth was appointed as our Chief Medical Officer on March 19, 2019. Dr. Wirth resigned from Lineage effective December
15, 2019. The amounts reported in the table for each named executive officer represent the portion of earned compensation
during the period of time such officer was in service with us.
|
(2)
|
The
amounts in this column represent: (a) annual bonuses as described below under “Elements of Compensation;” and
(b) for Ms. Roberts and Mr. Leavitt, sign-on bonuses of $50,000 and $35,000, respectively.
|
(3)
|
The
amounts in this column represent the grant date fair value of stock options granted to the applicable individual during the
applicable year. The grant date fair value and incremental fair value of the stock options were determined in accordance with
ASC Topic 718, Compensation – Stock Compensation (ASC Topic 718). See Note 12, Stock-Based Awards to our consolidated
financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC on
March 12, 2020 (“Form 10-K”) for details as to the assumptions used to determine grant date fair
value of the awards.
|
(4)
|
The
amounts in this column represent the grant date fair value of restricted stock units that were granted to Mr. Culley in 2018,
determined in accordance with ASC Topic 718.
|
(5)
|
The
amounts in this column represent: (a) for Mr. Culley, Ms. Roberts, Mr. Leavitt and Dr. Wirth, 401(k) plan company-matching
contributions of $9,224, $3,978, $9,542 and $13,458, respectively; (b) for Mr. Culley, a housing allowance of $13,418 for
2019, which ceased on August 12, 2019; and (c) for Dr. Wirth, $16,580 in the payout of accrued paid time off at termination.
|
Narrative
to Summary Compensation Table
Employment
Agreements and Termination of Employment & Change in Control Arrangements
Below
are descriptions of the material terms of the employment arrangements entered into with our current named executive officers.
Brian
M. Culley, Chief Executive Officer
In
September 2018, we entered into an employment agreement with Mr. Culley (the “Culley Agreement”). The
Culley Agreement initially provided Mr. Culley with a base salary of $530,000 annually, which was raised by 1.1% to $535,800 for
2019 and by 3% to $551,900 for 2020. Mr. Culley is also eligible to receive an annual performance bonus of up to 50% of his base
salary based upon the attainment of certain corporate and individual objectives as determined by our Board or Compensation Committee.
The Culley Agreement provided Mr. Culley with reimbursement for certain travel costs to our former headquarters in Alameda, California
and a monthly stipend not to exceed $3,900 for housing costs near our former headquarters, each of which ceased in August 2019.
The
Culley Agreement provides that if Mr. Culley’s employment is terminated without cause or he resigns for good reason, he
may be eligible for certain severance payments, including the payment of an amount equal to 12 months of his base salary, his
full annual bonus amount and the payment of 6 months of health insurance premiums pursuant to our group health insurance plans
as provided pursuant to COBRA. If Mr. Culley’s employment is terminated without cause or he resigns for good reason within
12 months following a change of control, then he is entitled to the acceleration of all outstanding equity awards.
Brandi
L. Roberts, Chief Financial Officer
In
January 2019, we entered into an employment agreement with Ms. Roberts (the “Roberts Agreement”). The
Roberts Agreement initially provided Ms. Roberts with a base salary of $381,924 annually, which was raised by 3% to $393,200 for
2020. Ms. Roberts is also eligible to receive an annual performance bonus of up to 40% of her base salary based upon the attainment
of certain corporate and individual objectives as determined by our Board or Compensation Committee.
The
Roberts Agreement provides that if Ms. Roberts’ employment is terminated without cause or she resigns for good reason, she
may be eligible for certain severance payments, including the payment of an amount equal to three months of her base salary (if
terminated on or before January 7, 2020) or nine months base salary (if terminated after January 7, 2020), her prorated annual
bonus amount, and the payment of 6 months of health insurance premiums pursuant to our group health insurance plans as provided
pursuant to COBRA. If Ms. Robert’s employment is terminated without cause or she resigns for good reason within 12 months
following a change of control, then she is entitled to the acceleration of 50% of all outstanding equity awards (if terminated
on or before January 7, 2020) or all outstanding equity awards (if terminated after January 7, 2020).
In
connection with her appointment, we granted Ms. Roberts an option to purchase 500,000 common shares in January 2019 and 150,000
common shares in June 2019, each of which vest and become exercisable as follows, subject to Ms. Roberts’ continued service:
25% of the shares subject to the option on January 7, 2020 and the balance of the shares subject to the option in 36 monthly installments
thereafter.
Chase
C. Leavitt, General Counsel and Corporate Secretary
In
May 2019, we entered into an employment agreement with Mr. Leavitt (the “Leavitt Agreement”). The Leavitt
Agreement initially provided Mr. Leavitt with a base salary of $340,000 annually, which was raised by 1.9% to $346,300 for 2020,
and a one-time sign-on bonus of $35,000. Mr. Leavitt is also eligible to receive an annual performance bonus of up to 40% of his
base salary based upon the attainment of certain corporate and individual objectives as determined by our Board or Compensation
Committee.
The
Leavitt Agreement provides that if Mr. Leavitt’s employment is terminated without cause or he resigns for good reason, he
may be eligible for certain severance payments, including the payment of an amount equal to three months of his base salary (if
terminated on or before May 20, 2020) or nine months base salary (if terminated after May 20, 2020), his prorated annual bonus
amount and the payment of 6 months of health insurance premiums pursuant to our group health insurance plans as provided pursuant
to COBRA. If Mr. Leavitt’s employment is terminated without cause or he resigns for good reason within 12 months following
a change of control, then he is entitled to the acceleration of 50% of all outstanding equity awards (if terminated on or before
May 20, 2020) or all outstanding equity awards (if terminated after May 20, 2020).
In
connection with his appointment, we granted Mr. Leavitt an option to purchase 300,000 common shares in May 2019 and 125,000 common
shares in July 2019, each of which vest and become exercisable as follows, subject to Mr. Leavitt’s continued service: 25%
of the shares subject to the option on May 20, 2020 and the balance of the shares subject to the option in 36 monthly installments
thereafter.
Edward
D. Wirth, III, M.D., Ph.D., Former Chief Medical Officer
In
March 2019, we entered into an employment agreement with Dr. Wirth (the “Wirth Agreement”). The Wirth
Agreement initially provided Dr. Wirth with a base salary of $380,000 annually. Dr. Wirth was also eligible to receive an annual
performance bonus of up to 35% of his base salary based upon the attainment of certain corporate and individual objectives as
determined by our Board or Compensation Committee.
The
Wirth Agreement provided that if Dr. Wirth’s employment was terminated without cause or he resigned for good reason, he
would be eligible for certain severance payments, including the payment of an amount equal to six months of his base salary (if
terminated on or before March 18, 2020) or nine months base salary (if terminated on or after March 18, 2020). If Dr. Wirth’s
employment were terminated without cause or he resigned for good reason within 12 months following a change of control, then he
would have been entitled to the acceleration of 50% of all outstanding equity awards (if terminated on or before March 18, 2020)
or all outstanding equity awards (if terminated after March 18, 2020). Dr. Wirth resigned voluntarily effective December 15, 2019,
and no severance payments or acceleration of equity awards occurred.
Elements
of Compensation
Base
Salary
Our
Compensation Committee or Board reviews the base salaries of our executive officers, including our named executive officers, from
time to time and makes adjustments as it determines to be reasonable and necessary to reflect the scope of an executive officer’s
performance, contributions, responsibilities, experience, prior salary level, position (in the case of a promotion), and market
conditions.
Annual
Performance Bonuses
Each
of our named executive officers are eligible to receive an annual performance bonus based on a specific target bonus amount, expressed
as a percentage of base salary, and our overall achievement of specific corporate goals and objectives set by our Board and Compensation
Committee each year. After the end of the year, our Board and Compensation Committee conducts an annual performance review process
that evaluates achievement of overall corporate goals and achievement of specific goals and objectives by each individual executive.
Any
final bonus payments to our named executive officers are recommended by our Compensation Committee and approved by our Board (excluding
Mr. Culley), which retains full discretion to adjust individual target bonus awards. The actual bonuses, if any, awarded in a
given year may vary from target, depending on individual performance and the achievement of corporate objectives and may also
vary based on other factors at the discretion of our Compensation Committee.
For
2019, the corporate performance objective categories and respective weightings toward overall corporate bonus achievement were
as follows:
|
(1)
|
advancement
of OpRegen, OPC1, and VAC2 product candidates (30% weighting);
|
|
(2)
|
integration
of Asterias Biotherapeutics, Inc. (“Asterias”) and simplification of affiliate and subsidiary structure
(30% weighting);
|
|
(3)
|
business
development and licensing activities (20% weighting); and
|
|
(4)
|
organizational
improvements, including adequate capital and resource deployment (20% weighting).
|
In
March 2020, our Board and Compensation Committee assessed each of the corporate performance objectives and determined that Lineage
had an overall corporate achievement level of 80% for 2019, with the expectation that the efforts of Lineage’s employees
during the year would help position Lineage for future success. Specifically, our Board and Compensation committee considered
the following in its assessment:
|
(1)
|
Lineage
successfully advanced its OpRegen Phase 1/2a clinical trial with a new thaw-and-inject formulation and a new delivery device;
|
|
(2)
|
Lineage
reduced costs by about 50% in the integration of Asterias by eliminating duplicative costs and rationalizing non-key projects;
|
|
(3)
|
Lineage
entered into multiple license agreements relating to different parts of its intellectual property portfolio; and
|
|
(4)
|
Lineage
raised capital through sources reducing the need to conduct dilutive equity issuances.
|
The
Board and Compensation Committee determined that it was appropriate to pay each of Mr. Culley, Ms. Roberts, and Mr. Leavitt performance
bonuses for 2019 equivalent to their target amounts multiplied by the 80% corporate achievement level, prorated in the case of
Ms. Roberts and Mr. Leavitt for the period of time employed with us in 2019. Accordingly, Mr. Culley, Ms. Roberts, and Mr. Leavitt
received cash bonuses in the amount of $214,300, $119,900, and $67,100, respectively, in March 2020. Mr. Wirth did not receive
a performance cash bonus for 2019 because he ceased serving as an executive officer during 2019.
Other
Benefits
We
maintain a 401(k) defined contribution employee retirement plan for all of our employees. Employee contributions are voluntary
and are determined on an individual basis, limited to the maximum amounts allowable under U.S. federal tax regulations. We match
employee contributions up to 5% of their annual compensation, subject to statutory limits.
We
do not have any annuity, pension or deferred compensation plan or other arrangements for our executive officers or any employees.
Outstanding
Equity Awards at Fiscal Year-End
The
following table sets forth information concerning equity awards held by our named executive officers that were outstanding as
of December 31, 2019:
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Number of securities underlying unexercised options
(#) exercisable
|
|
|
Number of securities
underlying
unexercised
options
(#) unexercisable
|
|
|
Option
exercise price
($)
|
|
|
Option expiration date
|
|
|
Number of shares or units of stock that have not vested
(#)
|
|
|
Market value of shares of units of stock that have not vested
($)(1)
|
|
Brian M. Culley
|
|
|
579,375
|
|
|
|
1,274,625
|
(2)
|
|
$
|
1.87
|
|
|
|
9/16/2028
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
154,500
|
|
|
$
|
137,505
|
|
Brandi L. Roberts
|
|
|
-
|
|
|
|
500,000
|
(3)
|
|
$
|
1.08
|
|
|
|
1/6/2029
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
150,000
|
(3)
|
|
$
|
1.10
|
|
|
|
6/29/2029
|
|
|
|
-
|
|
|
|
-
|
|
Chase C. Leavitt
|
|
|
-
|
|
|
|
300,000
|
(4)
|
|
$
|
1.13
|
|
|
|
5/19/2029
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
125,000
|
(4)
|
|
$
|
1.10
|
|
|
|
7/31/2029
|
|
|
|
-
|
|
|
|
-
|
|
Edward D. Wirth, III, M.D., Ph.D.
|
|
|
-
|
|
|
|
350,000
|
(5)
|
|
$
|
1.57
|
|
|
|
3/19/2029
|
|
|
|
-
|
|
|
|
-
|
|
|
(1)
|
The
dollar amounts shown in this column are calculated by multiplying the number of shares shown in the adjacent column by the
closing market price of our common shares as reported on NYSE American on December 31, 2019 ($0.89), the last trading day
of our fiscal year.
|
|
(2)
|
Subject
to Mr. Culley’s continued service, one quarter of the options vested on September 17, 2019, and the balance of the options
vest in 36 equal monthly installments thereafter. This grant was approved by the independent members of our Board in reliance
on the employment inducement exemption to shareholder approval provided under the NYSE American Company Guide.
|
|
(3)
|
Subject
to Ms. Roberts’ continued service, one quarter of the options vested on January 7, 2020, and the balance of the options
vest in 36 equal monthly installments thereafter.
|
|
(4)
|
Subject
to Mr. Leavitt’s continued service, one quarter of the options vested on May 20, 2020, and the balance of the options
vest in 36 equal monthly installments thereafter.
|
|
(5)
|
Subject
to Dr. Wirth’s continued service, one quarter of the options vested on March 18, 2020, and the balance of the options
vest in 36 equally monthly installments thereafter.
|
Consideration
of Shareholder Advisory Vote on Executive Compensation
The
results of the advisory vote of our shareholders on the compensation of our named executive officers (commonly called the “say-on-pay”
vote) at our 2019 Annual Meeting of Shareholders showed that more than 91% of our shareholders that voted approved the compensation
of our named executive officers during 2018. Our Compensation Committee carefully evaluated and considered the results of this
advisory vote. Aligned with the voting feedback of more than two-thirds of the shares voted, our Compensation Committee concluded
that our shareholder generally supported our executive pay program and we did not make significant changes to our program for
2020. Our Compensation Committee expects to continue to consider the outcome of our “say
on pay” votes and our shareholders’ views when making future compensation decisions for our named executive officers.
PRINCIPAL
SHAREHOLDERS
The
tables below sets forth certain information, as of July 28, 2020, regarding the beneficial ownership of our common shares for:
(1) each person known by us to be 5% Shareholders; (2) each of our directors; (3) each of our named executive officers; and (4)
all of our current directors and executive officers as a group.
We
have determined beneficial ownership in accordance with applicable SEC rules, and the information reflected in the table below
is not necessarily indicative of beneficial ownership for any other purpose. Under applicable SEC rules, beneficial ownership
includes any common shares as to which a person has sole or shared voting power or investment power and any common shares that
the person has the right to acquire within 60 days after the date set forth in the paragraph above through the exercise of any
option, warrant or right or through the conversion of any convertible security. Unless otherwise indicated in the footnotes to
the table below and subject to community property laws where applicable, we believe, based on the information furnished to us
and on SEC filings, that each of the persons named in table below has sole voting and investment power with respect to the shares
indicated as beneficially owned.
The
information set forth in the tables below is based on 149,981,347 common shares issued and outstanding on July 28, 2020. In
computing the number of common shares beneficially owned by a person and the percentage ownership of that person, we deemed to
be outstanding all common shares subject to options, warrants, rights or other convertible securities held by that person that
are currently exercisable or will be exercisable within 60 days after such date. We did not deem these shares outstanding, however,
for the purpose of computing the percentage ownership of any other person. Except as otherwise noted, the address for each person
listed in the table below is c/o Lineage Cell Therapeutics, Inc., 2173 Salk Avenue, Suite 200, Carlsbad, CA 92008.
Name and Address of Beneficial Owner
|
|
Number of Shares Beneficially Owned
|
|
|
Percentage of Shares Beneficially Owned
|
|
5% Shareholders
|
|
|
|
|
|
|
|
|
Broadwood Partners, L.P.(1)
|
|
|
34,207,167
|
|
|
|
22.8
|
%
|
Named Executive Officers and Directors
|
|
|
|
|
|
|
|
|
Neal C. Bradsher(1)
|
|
|
34,207,167
|
|
|
|
22.8
|
%
|
Alfred D. Kingsley(2)
|
|
|
7,124,762
|
|
|
|
4.7
|
%
|
Brian M. Culley(3)
|
|
|
1,092,388
|
|
|
|
*
|
|
Michael H. Mulroy(4)
|
|
|
365,701
|
|
|
|
*
|
|
Brandi L. Roberts(5)
|
|
|
275,835
|
|
|
|
*
|
|
Stephen C. Farrell(4)
|
|
|
236,330
|
|
|
|
*
|
|
Angus C. Russell(4)
|
|
|
206,380
|
|
|
|
*
|
|
Don M. Bailey(6)
|
|
|
193,970
|
|
|
|
*
|
|
Deborah Andrews(4)
|
|
|
148,880
|
|
|
|
*
|
|
Chase C. Leavitt(7)
|
|
|
146,666
|
|
|
|
*
|
|
Edward D. Wirth, III, M.D., Ph.D.(8)
|
|
|
131,250
|
|
|
|
*
|
|
All executive officers and directors as a group (12 persons)(9)
|
|
|
44,361,951
|
|
|
|
29.0
|
%
|
*
Less than 1%
|
(1)
|
Includes
34,005,379 shares owned by Broadwood Partners, L.P., 62,908 shares owned by Neal C. Bradsher, and 138,880 shares that may
be acquired by Mr. Bradsher upon the exercise of certain stock options that are presently exercisable or may become exercisable
within 60 days. Broadwood Capital, Inc. is the general partner of Broadwood Partners, L.P., and Mr. Bradsher is the President
of Broadwood Capital, Inc. Mr. Bradsher and Broadwood Capital, Inc. may be deemed to beneficially own the shares that Broadwood
Partners, L.P. owns. The Address of the foregoing entities and Mr. Bradsher is c/o Broadwood Capital, Inc., 724 Fifth Avenue,
9th Floor, New York, New York 10019.
|
|
(2)
|
Includes
1,043,346 shares owned by Greenbelt Corporation, 375,351 shares owned by Greenway Partners, L.P., 5,425,945 shares owned solely
by Alfred D. Kingsley, and 280,120 shares that may be acquired by Mr. Kingsley upon the exercise of certain stock options
that are presently exercisable or may become exercisable within 60 days. Mr. Kingsley controls Greenbelt Corp. and Greenway
Partners, L.P. and may be deemed to beneficially own the shares that Greenbelt Corp. and Greenway Partners, L.P. own. Mr.
Kingsley currently has options to purchase common shares or ordinary shares of certain Lineage subsidiaries, which are presently
exercisable or may become exercisable within 60 days, and if exercised would entitle him to acquire: 1.3% of the outstanding
shares of BioTime Asia and 1.2% of the outstanding shares of OrthoCyte Corporation.
|
|
(3)
|
Includes
927,000 shares that may be acquired upon the exercise of certain options that are presently exercisable or that may become
exercisable within 60 days.
|
|
(4)
|
Includes
138,880 shares that may be acquired upon the exercise of certain options that are presently exercisable or that may
become exercisable within 60 days.
|
|
(5)
|
Includes
270,835 shares that may be acquired upon the exercise of certain options that are presently exercisable or that may
become exercisable within 60 days.
|
|
(6)
|
Includes
100,000 shares that may be acquired upon the exercise of certain options that are presently exercisable or that may become
exercisable within 60 days and 31,323 shares that may be acquired upon the exercise of warrants that are presently exercisable.
|
|
(7)
|
Includes
141,666 shares that may be acquired upon the exercise of certain options that are presently exercisable or that may
become exercisable within 60 days.
|
|
(8)
|
Includes
131,250 shares that may be acquired upon the exercise of certain options that are presently exercisable or that may become
exercisable within 60 days.
|
|
(9)
|
Includes
2,749,448 shares that may be acquired upon the exercise of certain options that are presently exercisable or that may
become exercisable within 60 days and 31,323 shares that may be acquired upon the exercise of warrants that are presently
exercisable.
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Related
Transactions
Since
July 1, 2009, Alfred D. Kingsley has made available to us the use of approximately 900 square feet of office space in New York
City. We currently pay the office building owner $5,050 per month for the use of the space. These monthly payments are expected
to cease in March 2021 when the office space lease expires.
In
April 2019, Lineage issued 251,835 common shares of Lineage to Broadwood Partners, L.P., a shareholder of Lineage and Asterias,
in exchange for the settlement of warrants to purchase shares of Asterias common stock in connection with our acquisition of Asterias
(the “Asterias Merger”).
In
connection with the putative shareholder class action lawsuits filed in February 2019 and October 2019 challenging the Asterias
Merger, Lineage has agreed to pay for the legal defense of Neal Bradsher, director, and Broadwood Partners, L.P., a shareholder
of Lineage, and Broadwood Capital, Inc., which manages Broadwood Partners, L.P., all of which were named in the lawsuits. Through
December 31, 2019, Lineage has incurred a total of $221,000 in legal expenses on behalf of the director, shareholder, and the
manager of the shareholder.
As
part of financing transactions in which there were multiple other purchasers, Broadwood Partners, L.P. purchased 1,000,000, 2,000,000,
and 623,090 shares of common stock of OncoCyte Corporation (“OncoCyte”) from Lineage in July 2019, September
2019, and January 2020, respectively.
Shared
Facilities and Services Agreement with OncoCyte and AgeX
During
2019 and 2018, we invoiced OncoCyte $1.2 and $1.6 million, respectively for certain “Use Fees” and other charges under
the terms of a Shared Facilities and Services Agreement (the “Shared Facilities Agreement”) between
Lineage and OncoCyte. Under the Shared Facilities Agreement, Lineage allowed OncoCyte to use Lineage’s premises and equipment
located at Alameda, California for the sole purpose of conducting business. Lineage also provided accounting, billing, bookkeeping,
payroll, treasury, payment of accounts payable, and other similar administrative services to OncoCyte. The Shared Facilities Agreements
also allowed Lineage to provide the services of attorneys, accountants, and other professionals who may provide professional services
to Lineage. Lineage also provided OncoCyte with the services of laboratory and research personnel, including Lineage employees
and contractors, for the performance of research and development work for OncoCyte at the premises. Shared services with OncoCyte
were terminated with respect to the use of Lineage’s office and laboratory facilities on September 30, 2019, and December
31, 2019 with respect to all other remaining shared services.
We
entered into a similar Shared Facilities Agreement with AgeX in 2018. During 2019 and 2018, we invoiced AgeX $0.9 and $0.6 million,
respectively, for certain “Use Fee” and other charges and expenses for that period. Shared services with AgeX were
terminated on July 31, 2019 with respect to the use of Lineage’s office and laboratory facilities and September 30, 2019
with respect to all other remaining shared services
At
the time of our acquisition of Asterias, two of our directors, Alfred D. Kingsley, and Michael H. Mulroy, and an officer of Broadwood,
were directors of Asterias. Immediately following the acquisition, Don M. Bailey joined our Board, and Edward D. Wirth, III, M.D.,
Ph.D. joined as our Chief Medical Officer. Mr. Bailey was a director of Asterias, and Dr. Wirth was an executive officer of Asterias.
All of our directors and executive officers (including Mr. Bailey and Dr. Wirth) and 5% Shareholders as reported in this proxy,
in the aggregate beneficially owned approximately 12% of the outstanding shares of Asterias common stock as of December
31, 2018, and approximately 12% of the outstanding shares of Asterias common stock immediately prior to the acquisition
on March 8, 2019.
Mr.
Kingsley is a director of OncoCyte. Broadwood beneficially owns more than 20% of the outstanding common stock of OncoCyte, and
all of our directors and executive officers and 5% Shareholders as reported in report, including Neal C. Bradsher who may be deemed
to beneficially own the shares owned by Broadwood, in the aggregate beneficially own more than 20% of the outstanding shares of
OncoCyte common stock. The fact that certain of our executive officers and directors own shares of OncoCyte common stock should
not be considered to mean that they constitute or are acting in concert as a “group” with respect to those shares
or that they otherwise share power or authority to vote or dispose of the shares that each of them own.
Related
Person Transaction Policy
We
have adopted a Related Person Transaction Policy that applies to transactions exceeding $120,000 in which any of our officers,
directors, 5% Shareholders, or any member of their immediate family, has a direct or indirect material interest, determined in
accordance with the policy (a “Related Person Transaction”). A Related Person Transaction must be reported
to our Chief Financial Officer and General Counsel or outside legal counsel and will be subject to review and approval by our
Audit Committee prior to effectiveness or consummation, to the extent practical. In addition, any Related Person Transaction that
is ongoing in nature will be reviewed by our Audit Committee annually to ensure that the transaction has been conducted in accordance
with any previous approval and that all required disclosures regarding the transaction are made.
As
appropriate for the circumstances, our Audit Committee will review and consider:
|
●
|
the
interest of the officer, director, 5% Shareholder, or any member of their immediate family (“Related Person”)
in the Related Person Transaction;
|
|
●
|
the
approximate dollar value of the amount involved in the Related Person Transaction;
|
|
●
|
the
approximate dollar value of the amount of the Related Person’s interest in the transaction without regard to the amount
of any profit or loss;
|
|
●
|
whether
the transaction was undertaken in the ordinary course of our business;
|
|
●
|
whether
the transaction with the Related Person is proposed to be, or was, entered into on terms no less favorable to us than terms
that could have been reached with an unrelated third party;
|
|
●
|
the
purpose of, and the potential benefits to the transaction to us; and
|
|
●
|
any
other information regarding the Related Person Transaction or the Related Person in the context of the proposed transaction
that would be material to investors in light of the circumstances of the particular transaction.
|
Our
Audit Committee will review all relevant information available to it about a Related Person Transaction. Our Audit Committee may
approve or ratify the Related Person Transaction only if our Audit Committee determines that, under all of the circumstances,
the transaction is in, or is not in conflict with, our best interests. Our Audit Committee may, in its sole discretion, impose
such conditions as it deems appropriate on us or the Related Person in connection with approval of the Related Person Transaction.
A
copy of our Related Person Transaction Policy can be found on our website at www.lineagecell.com.
Delinquent
Section 16(a) Reports
Section
16(a) of Exchange Act requires our directors and executive officers and persons who own more than 10% of a registered class of
our equity securities to file with the SEC initial reports of ownership and reports of changes in ownership of common shares and
other equity securities.
To
our knowledge, based solely on our review of the copies of such reports furnished to us and written representations from reporting
persons, all Section 16(a) filing requirements applicable to our officers, directors, and greater than 10% beneficial owners were
complied with during the fiscal year ended December 31, 2019, except one Form 4 reporting one transaction was inadvertently filed
late for each of Michael H. Mulroy, Don M. Bailey, Alfred D. Kingsley and Chase C. Leavitt.
PROPOSAL
1 – ELECTION OF DIRECTORS
Our
Board, upon the recommendation of our Nominating and Corporate Governance Committee, has nominated Deborah Andrews, Don Bailey,
Neal C. Bradsher, Brian M. Culley, Alfred D. Kingsley, Michael H. Mulroy and Angus C. Russell for election
at the Meeting and to serve until the 2021 annual meeting of shareholders and until their respective successors are duly elected
and qualified. For more information about each nominee, see the section titled “Board of Directors” in this Proxy
Statement. The director nominees have indicated that they are willing and able to serve as directors.
Unless
authority to vote for any of the director nominees is withheld in a proxy, shares represented by proxies will be voted “For”
all director nominees identified above. In the event that any director nominee becomes unavailable for reelection as a result
of an unexpected occurrence, such shares will be voted for the election of such substitute nominee, if any, as our Board may propose.
It
is the intention of the persons named in the proxy solicited by our Board, unless the proxy specifies otherwise, to vote the shares
represented by such proxy “For” the election of the nominees identified above. In the unlikely event that any nominee
should be unable to serve as a director, proxies may be voted in favor of a substitute nominee designated by our Board.
Vote
Required
If
a quorum is present at the Meeting, the election of directors will be determined by a plurality of the votes cast by the shareholders
entitled to vote on the election. Accordingly, the nominees receiving the most “For” votes from the holders of shares
present during the Meeting or represented by proxy and entitled to vote on the election of directors will be elected. You may
vote “For” or “Withhold” authority to vote for each of the director nominees. If you “Withhold”
authority to vote with respect to one or more director nominees, your vote will have no effect on the election of such nominees.
Broker non-votes will have no effect on the election of directors.
OUR
BOARD RECOMMENDS A VOTE “FOR” EACH NOMINEE NAMED ABOVE.
PROPOSAL
2 - RATIFICATION OF THE SELECTION OF OUR INDEPENDENT REGISTERED
PUBLIC
ACCOUNTING FIRM
Our
Board has selected OUM & Co., LLP (“OUM”) as our independent registered public accounting firm.
Our Board proposes and recommends that the shareholders ratify the selection of the firm of OUM to serve as our independent registered
public accounting firm for the fiscal year ending December 31, 2020. OUM has served as our independent registered public accounting
firm since July 2014.
We
expect that a representative of OUM will be present at the Meeting, in person or by phone, and will have an opportunity to make
a statement if he or she so desires and may respond to appropriate questions from shareholders.
Audit
Fees, Audit Related Fees, Tax Fees and Other Fees
The
following table shows the fees billed by OUM for the audit of our annual consolidated financial statements for our last two fiscal
years and for other services rendered by OUM during our last two fiscal years.
|
|
2019
|
|
|
2018
|
|
Audit Fees(1)
|
|
$
|
503,000
|
|
|
$
|
614,000
|
|
Audit Related Fees(2)
|
|
|
37,000
|
|
|
|
28,000
|
|
Total Fees
|
|
$
|
540,000
|
|
|
$
|
642,000
|
|
|
(1)
|
Audit
Fees consist of fees billed for professional services rendered for the audit of the consolidated annual financial statements
of Lineage and its several subsidiaries included in our Annual Report on Form 10-K, the reviews of the interim consolidated
financial statements included in our Quarterly Reports on Form 10-Q, and services that are normally provided by our independent
registered public accountants in connection with statutory and regulatory filings or engagements. Fees in the table include
$92,000 paid for AgeX by Lineage for 2018.
|
|
(2)
|
Audit-Related
Fees consist of fees billed for assurance and related services that are reasonably related to the performance of the audit
or review of Lineage’s consolidated financial statements and are not reported under “Audit Fees.” This category
includes fees related to non-routine SEC filings.
|
Pre-Approval
of Audit and Permissible Non-Audit Services
Our
Audit Committee requires pre-approval of all audit and non-audit services. Other than de minimis services incidental to
audit services, non-audit services shall generally be limited to tax services such as advice and planning and financial due diligence
services. All fees for such non-audit services must be approved by the Audit Committee, except to the extent otherwise permitted
by applicable SEC regulations. The Committee may delegate to one or more designated members of the Committee the authority to
grant pre-approvals, provided such approvals are presented to the Committee at a subsequent meeting.
Vote
Required
If
a quorum is present at the Meeting, the approval of Proposal 2 requires the affirmative vote of a majority of both: (1) the shares
present in person or represented by proxy at the Meeting and entitled to vote on this proposal; and (2) the shares required to
constitute a quorum.
OUR
BOARD RECOMMENDS A VOTE “FOR” RATIFICATION OF THE SELECTION OF OUM AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM.
PROPOSAL
3 - ADVISORY VOTE ON EXECUTIVE COMPENSATION
The
Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 added Section 14A to the Exchange Act, which provides our shareholders
with the opportunity to vote to approve, on an advisory basis, the compensation of our named executive officers as disclosed in
this Proxy Statement in accordance with the SEC’s rules. As described in detail under the heading “Executive Compensation—Overview,”
our executive compensation programs are designed to:
|
●
|
attract,
motivate, and retain highly qualified executives;
|
|
●
|
align
management and shareholder interests by tying a substantial percentage of executives’ compensation to financial performance
of Lineage and its subsidiaries through the grant of equity awards;
|
|
●
|
reward
superior performance by basing decisions regarding cash incentive compensation on the overall performance of executives; and
|
|
●
|
compensate
executives at levels competitive with peer companies.
|
Our
Compensation Committee seeks to provide our named executive officers’ total compensation at a level competitive with the
compensation paid to officers in similar positions at our peer companies in the biotechnology industry. Our Compensation Committee
has approved salary increases and authorized the payment of cash bonuses based on its review of the performance of Lineage and
its subsidiaries, the performance of individual executive officers, and the compensation paid by our peer companies. Our executive
compensation program also includes performance-based compensation through the grant of equity awards. Equity awards are intended
to align the interest of our executives with those of our shareholders because the value realized, if any, by the recipient from
an equity award depends upon the increases in the price of Lineage shares. Please read the “Executive Compensation”
portion of this Proxy Statement for additional details about our executive compensation programs, including information about
the fiscal year 2019 compensation of our named executive officers.
We
are asking our shareholders to indicate their support for our named executive officer compensation as described in this Proxy
Statement. This proposal, sometimes called “say-on-pay,” gives our shareholders the opportunity to express their views
on our named executive officers’ compensation. Accordingly, our Board is asking our shareholders to cast a non-binding advisory
vote “For” the following resolution at the Meeting:
“RESOLVED,
that Lineage’s shareholders approve, on an advisory basis, the compensation paid to Lineage’s named executive officers,
as disclosed in Lineage’s Proxy Statement for the 2020 Annual Meeting of Shareholders pursuant to Item 402 of Regulation
S-K, including the compensation tables and narrative discussion.”
Our
shareholders’ vote on this proposal is only advisory and is not binding on Lineage, our Compensation Committee, or our Board.
However, our Compensation Committee, which is responsible for designing and administering our executive compensation program,
values the opinions expressed by our shareholders in their vote on this proposal and will consider the outcome of the vote when
making future compensation decisions for named executive officers.
Vote
Required
If
a quorum is present at the Meeting, the approval of Proposal 3 requires the affirmative vote of a majority of both: (1) the shares
present in person or represented by proxy at the Meeting and entitled to vote on this proposal; and (2) the shares required to
constitute a quorum.
OUR
BOARD RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS, AS DISCLOSED IN THIS
PROXY STATEMENT PURSUANT TO THE COMPENSATION DISCLOSURE RULES OF THE SEC.
IMPORTANT
NOTICE REGARDING DELIVERY OF SHAREHOLDER DOCUMENTS
The
rules promulgated by the SEC permit companies, brokers, banks or other intermediaries to deliver a single copy of proxy materials,
or, where applicable, a Notice of Internet Availability of Proxy Materials, to households at which two or more shareholders reside.
Each shareholder, however, still receives a separate proxy card if he or she receives paper copies. This practice, known as “householding,”
is designed to reduce duplicate mailings and save significant printing and postage costs as well as natural resources. Shareholders
sharing an address who have been previously notified by their broker, bank, or other intermediary and have consented to householding
will receive only one copy of our Proxy Statement and Annual Report or Notice of Internet Availability of Proxy Materials. If
you would like to opt out of this practice for future mailings and receive a separate Proxy Statement and Annual Report or Notice
of Internet Availability of Proxy Materials for each shareholder sharing the same address, please contact your broker, bank, or
other intermediary. You may also obtain a separate Proxy Statement or Annual Report or Notice of Internet Availability of Proxy
Materials without charge by sending a written request to Lineage Cell Therapeutics, Inc., 2173 Salk Avenue, Suite 200, Carlsbad,
CA 92008, Attention: Corporate Secretary. You may also contact us at the above address if you are presently receiving multiple
copies of the Proxy Statement and Annual Report but would prefer to receive a single copy instead.
PROPOSALS
OF SHAREHOLDERS
Shareholders
who intend to present a proposal for action at our 2021 annual meeting of shareholders must notify us of such intention by written
notice received at our principal executive offices not later than April 14, 2021, which is 120 days prior to the one-year anniversary
of the date this Proxy Statement was released to shareholders, for such proposal to be included in our Proxy Statement and form
of proxy relating to such meeting, unless the date of the 2021 annual meeting is changed by more than 30 days from the anniversary
of our 2020 annual meeting, in which case the deadline for such proposals will be a reasonable time before we begin to print and
send our proxy materials. These proposals must comply with the requirements as to form and substance established by the SEC in
Rule 14a-8 of the Exchange Act for such proposals to be included in the Proxy Statement.
In
addition, our bylaws establish an advance notice procedure with regard to certain matters, including shareholder proposals and
nominations of any person for election to our Board not included in our Proxy Statement, to be brought before an annual meeting
of shareholders. In general, notice that meets the requirements set forth in our amended and restated bylaws must be received
at our principal executive offices not less than 90 days prior to the one-year anniversary of the preceding year’s annual
meeting. Therefore, to be presented at our 2021 annual meeting of shareholders, such a proposal must be received by us no later
than June 24, 2021. However, if the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary
date, notice must be received no later than the later of the close of business on the 90th calendar day prior to such
annual meeting and the close of business on the tenth day following the day on which public disclosure of the date of such annual
meeting was first made. Shareholders are advised to review our amended and restated bylaws which also specify requirements as
to the form and content of a shareholder’s notice
ANNUAL
REPORT
Our
Annual Report on Form 10-K, filed with the SEC for the fiscal year ended December 31, 2019, without exhibits, may be obtained
by a shareholder without charge, upon written request to the Corporate Secretary of Lineage. At a shareholder’s request,
we will also furnish any exhibit to such Annual Report upon the payment of a fee to cover our reasonable expenses in furnishing
such exhibit.
By
Order of the Board of Directors,
Chase
C. Leavitt
General
Counsel and Corporate Secretary
August
7, 2020
Lineage Cell Therapeutics (AMEX:LCTX)
Historical Stock Chart
From Apr 2024 to May 2024
Lineage Cell Therapeutics (AMEX:LCTX)
Historical Stock Chart
From May 2023 to May 2024