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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934
Filed by the Registrant
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Preliminary Proxy Statement |
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Confidential, For Use of the Commission Only (as permitted by Rule
14a6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to Rule 14a-12 |
AXOGEN, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the
Registrant)
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Payment of Filing Fee (Check all boxes that apply): |
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No fee required. |
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Fee computed on table in exhibit required by Item 25(b) per
Exchange Act Rules 14a-6(i)(1) and 0-11. |
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letter
13631 Progress Blvd.
Suite 400
Alachua, FL 32615
Dear Shareholder:
You are cordially invited to attend our 2022 Annual Meeting of
Shareholders (the “Meeting”) of Axogen, Inc. (the “Company” or
“Axogen”), which will be conducted via live audio webcast on
Wednesday, May 25, 2022, beginning at 8:15 a.m. Eastern Time. The
virtual format provides the opportunity for full and equal
participation of all shareholders regardless of location. You can
attend the Meeting via the Internet at
www.virtualshareholdermeeting.com/axogen2022 by using the 16-digit
control number that appears on your proxy card (printed in the box
and marked by the arrow) or in the instructions that accompanied
your proxy materials.
This booklet contains your official notice of the Meeting and a
Proxy Statement that includes information about the matters to be
acted upon at the Meeting. The notice of the Meeting and the Proxy
Statement are first being distributed on or about April 15, 2022.
In addition to voting on the matters described in this Proxy
Statement, we will use the Meeting as an opportunity to review our
operations.
I sincerely hope that you will be able to attend the Meeting.
Whether or not you plan to attend, your vote is important, and we
urge you to complete and return the enclosed proxy in the
accompanying envelope.
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Sincerely, |
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Karen Zaderej |
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Chairman, Chief Executive Officer and President |
April 14, 2022
2022 Annual Meeting of Shareholders
13631 Progress Blvd.
Suite 400
Alachua, FL 32615
Notice of 2022 Annual Meeting of Shareholders
You are cordially invited to attend our 2022 Annual Meeting of
Shareholders (the “Meeting”) of Axogen, Inc. (the “Company”,
“Axogen”, “we” or “our”) which will be held on Wednesday, May 25,
2022, at 8:15 a.m. Eastern Time. Shareholders may join a live
audio webcast at www.virtualshareholdermeeting.com/axogen2022. At
the Meeting, Shareholders will act on the following
matters:
1. To elect eight members to our board of
directors (the “Board of Directors”) to hold office for the
ensuing year and until their successors are elected and
qualified;
2. To ratify the selection of
Deloitte & Touche LLP as our independent registered public
accounting firm for the year ending December 31,
2022;
3. To approve, on a non-binding advisory
basis, the compensation of the Company’s named executive officers
as disclosed in the Company’s Proxy Statement;
4. To approve the Axogen, Inc. Second
Amended and Restated 2019 Long-Term Incentive Plan (the “A&R
2019 Plan”);
5. To approve an amendment to the Axogen,
Inc. Amended and Restated Bylaws to allow our Board of Directors to
determine the number of directors; and
6. To consider and act upon any other
matters that may properly come before the Meeting or any
adjournment or postponement thereof.
Only holders of record of our common stock at the close of business
on April 1, 2022, will be entitled to receive notice of and to vote
at the Meeting. Our shareholders are not entitled to any appraisal
or dissenters’ rights with respect to the matters to be acted upon
at the Meeting.
You may vote your shares by telephone (1-800-690-6903) or internet
(www.proxyvote.com) no later than 11:59 p.m. Eastern Time on
Tuesday, May 24, 2022 (as directed on the enclosed proxy card) or
vote by completing, signing and promptly returning the enclosed
proxy card by mail. If you choose to submit your proxy by mail, we
have enclosed an envelope for your use, which is prepaid if mailed
in the United States. You may also attend the Meeting, submit
questions and vote online until voting is closed at
www.virtualshareholdermeeting.com/axogen2022.
Your vote is important. Whether or not you plan to attend the
Meeting, we urge you to complete and return the enclosed proxy in
the accompanying envelope, vote online, or vote by
telephone.
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Sincerely, |
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Karen Zaderej |
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Chairman, Chief Executive Officer and President |
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April 14, 2022 |
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PROXY STATEMENT
TABLE OF CONTENTS
Axogen, Inc.
13631 Progress Blvd.
Suite 400
Alachua, FL 32615
PROXY STATEMENT
2022 Annual Meeting of Shareholders
TO BE HELD ON MAY 25, 2022
The board of directors (the “Board of Directors”) of
Axogen, Inc. (the “Company”, “Axogen”, “we” or “our”) is
soliciting proxies for use at our 2022 Annual Meeting of
Shareholders (the “Meeting”) which will be conducted via live audio
webcast and accessible at
www.virtualshareholdermeeting.com/axogen2022 on Wednesday, May 25,
2022, at 8:15 a.m. Eastern time and at any adjournment or
postponement thereof. This Proxy Statement and the enclosed proxy
card are first being mailed to shareholders on or about April 15,
2022.
Our Board of Directors has set Friday, April 1, 2022, as the record
date for the Meeting. Each shareholder of record at the close of
business on Friday, April 1, 2022, will be entitled to vote at the
Meeting. As of the record date, 41,976,886
shares of our common stock were issued and outstanding and,
therefore, eligible to vote at the Meeting. Holders of our common
stock are entitled to one vote per share. Therefore, a total of
41,976,886 votes are entitled to be cast at the Meeting. There is
no cumulative voting in the election of our directors.
Shareholders who sign and return a proxy may revoke it at any time
before it is voted at the Meeting by giving written notice to Vote
Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, New York
11717, Re: Axogen, Inc., by submitting a duly executed proxy with a
later date or by attending the Meeting by internet and withdrawing
your proxy. If your shares are held in the name of a bank or
brokerage firm, you must obtain a proxy, executed in your favor,
from the bank or broker, to be able to vote at the
Meeting.
Expenses in connection with this solicitation of proxies will be
paid by us. Proxies are being solicited primarily by mail. We have
retained the services
of D.F. King & Co., Inc., a professional proxy solicitation
firm, to aid in the solicitation of proxies for an estimated fee of
$12,500
plus expenses. The proxy solicitor may conduct this proxy
solicitation by mail, telephone, facsimile, e-mail, other
electronic channels of communication, or otherwise. In addition,
our officers and directors, who will receive no extra compensation
for their services, may solicit proxies by telephone or personally.
We also will request that brokers or other nominees who hold shares
of our common stock in their names for the benefit of others
forward proxy materials to, and obtain voting instructions from,
the beneficial owners of such stock at our expense.
Proxies that are completed, signed and returned to us prior to the
Meeting will be voted as specified. If no direction is given, the
proxy will be voted
FOR
the election of the nominees for director named in this Proxy
Statement,
FOR
the ratification of the appointment of Deloitte & Touche LLP
(“Deloitte”) as our independent registered public accounting firm
for the year ending December 31, 2022,
FOR
the approval, on an advisory basis, of the compensation of the
Company’s named executive officers as disclosed in this Proxy
Statement,
FOR
the approval of the A&R 2019 Plan, which increases the number
of shares authorized for issuance thereunder by
2,500,000 shares
and
FOR
the approval of an amendment to the Axogen, Inc. Amended and
Restated Bylaws to allow our Board of Directors to determine the
number of directors.
If a shareholder affirmatively abstains from voting as to any
matter (or indicates a “withhold vote for” as to directors), then
the shares held by such shareholder shall be deemed present at our
Meeting for purposes of determining a quorum and for purposes of
calculating the vote with respect to such matter but shall not be
deemed to have been voted in favor of such matter. Votes withheld
from one or more director nominees will have no effect on the
election of any director from whom votes are withheld.
If on the Record Date your shares were held in an account at a
brokerage firm, bank, dealer or similar organization, then you are
the beneficial owner of shares held in “street name” and these
proxy materials are being forwarded to you by that organization.
The organization maintaining your account is considered the
stockholder of record for purposes of
voting at the Annual Meeting. As a beneficial owner, you have the
right to direct your broker or other agent on how to vote the
shares in your account. You are also invited to attend the Annual
Meeting. However, since you are not the stockholder of record, you
may not vote your shares in person at the Annual Meeting unless you
request and obtain a valid proxy from your broker or other agent.
If you plan to attend the Annual Meeting, you will need to have a
valid proxy from the organization maintaining your account to vote
your shares at the Annual Meeting.
If you hold your shares in street name, and do not provide
instructions, your shares may constitute “broker non-votes” on
certain proposals. Generally, broker non-votes occur on a
non-routine proposal where a broker is not permitted to vote on
that proposal without instructions from the beneficial owner.
Broker non-votes are counted as present for purposes of determining
whether there is a quorum but are not counted for purposes of
determining whether a matter has been approved. If you properly
submit a proxy card to the organization maintaining your account,
but do not provide voting instructions, that organization will be
able to vote your shares on Proposal 2; however, that organization
will not be permitted to vote your shares on Proposal 1, Proposal
3, Proposal 4 or Proposal 5. As a result, if you do not provide
voting instructions to the organization maintaining your account,
your shares will have no effect on the outcome of the election of
directors, the approval of the advisory vote to approve the
compensation of our named executive officers, the approval of the
A&R 2019 Plan or the approval of the amendment to the Amended
and Restated Bylaws.
As a result, if you hold shares in a brokerage account and wish to
vote those shares on these proposals, we strongly encourage you to
submit your voting instructions and exercise your right to vote as
a shareholder.
Directors are elected by a plurality vote of the votes cast by the
shareholders entitled to vote at the Meeting. A plurality vote
means that the directors who receive the most votes in an election,
though not necessarily a majority, will be elected. If you
affirmatively abstain from voting, it will have no impact on the
outcome of the vote for the proposal. Similarly, broker non-votes
will have no impact on the outcome of the vote for the
proposal.
The affirmative vote of a majority of the outstanding shares of our
common stock entitled to vote and present in person or by proxy at
the Meeting will be required to approve the ratification of the
appointment of Deloitte as our independent registered public
accounting firm for the fiscal year ending December 31, 2022. If
you affirmatively abstain from voting, it will have the same effect
as a vote “AGAINST” this proposal. Because this proposal is a
routine matter, broker non-votes will not occur with respect to
this proposal.
The affirmative vote of a majority of the outstanding shares of our
common stock entitled to vote and present in person or by proxy at
the Meeting will be required to approve the non-binding advisory
approval of the compensation of our named executive officers. If
you affirmatively abstain from voting, it will have the same effect
as a vote “AGAINST” this proposal.
The affirmative vote of a majority of the outstanding shares of our
common stock entitled to vote and present in person or by proxy at
the Meeting will be required to approve the A&R 2019 Plan. If
you affirmatively abstain from voting, it will have the same effect
as a vote “AGAINST” this proposal.
The affirmative vote of a majority of the outstanding shares of our
common stock entitled to vote and present in person or by proxy at
the Meeting will be required to approve the amendment to our
Amended and Restated Bylaws. If you affirmatively abstain from
voting, it will have the same effect as a vote “AGAINST” this
proposal.
Our shareholders are not entitled to any appraisal or dissenters’
rights with respect to the matters to be acted upon at the
Meeting.
Important Notice Regarding the Availability of Proxy Materials for
the
Shareholder Meeting to Be Held on May 25, 2022:
This Proxy Statement, the accompanying Notice of Annual Meeting and
proxy card are available on our website at
http://www.axogeninc.com/proxy-statement.html, and our Annual
Report on Form 10-K is available in the “Investors” section of
our website at https://www.axogeninc.com.
PROPOSAL 1 – ELECTION OF DIRECTORS
At the Meeting, shareholders will vote on the election of eight
director nominees: Karen Zaderej, Gregory Freitag, Dr. Mark
Gold, John H. Johnson, Alan Levine, Guido Neels, Paul Thomas and
Amy Wendell. Our Board of Directors has nominated each of these
individuals to serve a one-year term commencing at the Meeting and
until each director’s successor is duly elected and qualified. All
nominees are currently members of our Board of Directors and Mses.
Zaderej and Wendell, Messrs. Freitag, Levine, Neels and Thomas
and Dr. Gold were elected by our shareholders at our 2021
Annual Meeting of Shareholders. Mr. Johnson was appointed as a
director on July 16, 2021. In the event that any nominee becomes
unable or unwilling to serve as a director for any reason, the
persons named in the enclosed proxy will vote for a substitute
nominee in accordance with their best judgment. Our Board of
Directors has no reason to believe that any nominee will be unable
or unwilling to serve as a director if elected.
Proxies cannot be voted for a greater number of persons than the
number of nominees named.
Biographical information for each director nominee is included
below. Included at the end of each director’s biography is a
description of the particular experience, qualifications,
attributes or skills that led our Board of Directors to conclude
that each of these director nominees should serve as a member of
our Board of Directors.
Karen Zaderej, Chairman, Chief Executive Officer and President (Age
60)
Ms. Zaderej has served as Axogen’s President, Chief Executive
Officer (“CEO”), and a member of our Board of Directors since
September 2011 and the Chairman of our Board of Directors
since May 2018. Since May 2010, she has served as the
Chief Executive Officer of Axogen’s wholly owned subsidiary, Axogen
Corporation, and a member of the Board of Directors of Axogen
Corporation. Ms. Zaderej joined Axogen Corporation in
May 2006 and served as Vice President of Marketing and Sales
from May 2006 to October 2007 and as Chief Operating
Officer from October 2007 to May 2010. From
October 2004 to May 2006, Ms. Zaderej worked for
Zaderej Medical Consulting, a consulting firm she founded, which
assisted medical device companies build and execute successful
commercialization plans. From 1987 to 2004, Ms. Zaderej worked
at Ethicon, Inc., a Johnson & Johnson company, where
she held senior positions in marketing, business development,
research & development, and manufacturing. Ms. Zaderej is
a member of the University of Tampa Board of Trustees and the
MedExec Women Board of Advisors. Ms. Zaderej has an M.B.A.
from the Kellogg Graduate School of Business and a B.S. in Chemical
Engineering from Purdue University. Ms. Zaderej’s
qualifications to serve on our Board of Directors include her
leadership and depth of knowledge of the Company, her extensive
experience in the medical device industry, and her financial and
management expertise.
Gregory Freitag, J.D., CPA, Director (Age 60)
Mr. Freitag has been a member of our Board of Directors since
September 2011. He was Axogen’s Special Counsel from June 2020
until his retirement in March 2021, General Counsel from September
2011 until June 2020, Chief Financial Officer from September 2011
to May 2014 and August 2015 to March 2016 and Senior Vice President
Business Development from May 2014 until October 2018.
Mr. Freitag was the Chief Executive Officer, Chief Financial
Officer and a board member of LecTec Corporation, an intellectual
property licensing and holding company that merged with Axogen in
September 2011, from June 2010 through
September 2011. From May 2009 to the present,
Mr. Freitag has been a principal of FreiMc, LLC, a healthcare
and life science consulting and advisory firm he founded that
provides strategic guidance and business development advisory
services. Prior to founding FreiMc, LLC, Mr. Freitag was a
Director of Business Development at Pfizer Health Solutions, a
former subsidiary of Pfizer, Inc., from January 2006 to
May 2009. From July 2005 to January 2006,
Mr. Freitag worked for Guidant Corporation in their business
development group. Prior to Guidant Corporation, Mr. Freitag
was the Chief Executive Officer of HTS Biosystems, a biotechnology
tools start-up company, from March 2000 until its sale in
early 2005. Mr. Freitag was the Chief Operating Officer, Chief
Financial Officer and General Counsel of Quantech, Ltd., a
public point of care diagnostic company, from December 1995 to
March 2000. Prior to that time, Mr. Freitag practiced
corporate law in Minneapolis, Minnesota. Mr. Freitag is also a
director of PDS Biotechnology Corporation (Nasdaq: PDSB), a
clinical stage biopharmaceutical company developing immunotherapies
for cancer and other disease areas such as infectious disease.
Mr. Freitag holds a J.D. from the University of Chicago and
a
B.A. in Economics & Business and Law & Society
from Macalester College, Minnesota. Mr. Freitag’s
qualifications to serve on our Board of Directors include his
proven leadership and experience as a senior level executive, his
particular knowledge of public companies, including reporting,
compliance and financial markets related thereto, his finance
management and legal expertise and over 25 years of experience
in the life sciences sector.
Mark Gold, M.D., Director (Age 73)
Dr. Gold has served as a member of our Board of Directors
since September 30, 2011, and Axogen Corporation’s board of
directors since July 2007. From 1990 until his retirement in
June 2014, Dr. Gold was a Professor at the University of
Florida College of Medicine’s McKnight Brain Institute and was
recognized as a Distinguished Professor and Eminent Scholar and was
Chairman of the Department of Psychiatry. He has also been
recognized as the 17th University of Florida Distinguished Alumni
Professor and served in that capacity for 4 years.
Dr. Gold taught neuroanatomy and medical neuroscience for four
decades and has been a pioneer in translational neuroscience
research. He has been a consultant and senior advisor to banks and
private equity and venture capital firms on medical devices,
pharmaceuticals and healthcare services throughout his career.
Dr. Gold was also a Founding Director of the Somerset Valley
Bank and Somerset Valley Financial from 1991 to 1999 which was sold
to Fulton Financial Corporation. Dr. Gold is a Director of The
Magstim Company Ltd., a United Kingdom based global leader in
brain stimulation, nerve modulation, and intraoperative nerve
monitoring. He was a Founding Director at Viewray, a public
commercial stage MR-Guided Radiotherapy company specializing in
Cancer treatment. Dr. Gold earned his M.D. from the University
of Florida College of Medicine and his B.S. from Washington
University in St. Louis. Dr. Gold’s qualifications to serve on
our Board of Directors include his expertise in medical
neuroscience and technology, in-depth knowledge of the
pharmaceutical industry, and extensive experience in business and
management.
John H. Johnson, Director (64)
Mr. Johnson has served as a member of our Board of Directors since
July 2021. He currently serves as Chief Executive Officer (CEO) and
Board Director of Reaction Biology, and has served as the Chief
Executive Officer of Strongbridge Biopharma plc., a company focused
on building a portfolio of vertical, therapeutically-aligned rare
disease franchises, from July 2020 through October 2021, when it
was sold to Xeris Biopharma Holdings, Inc. He also served as
Strongbridge Biopharma's Executive Chairman from March 2015 to
November 2019. Mr. Johnson previously served as the Chief Executive
Officer of Melinta Therapeutics, a commercial stage company
developing and commercializing novel antibiotics, from 2018 through
2020. He served as Chairman and Chief Executive Officer of Dendreon
Corporation from 2012 through 2014. Mr. Johnson previously held
various senior positions with Eli Lilly & Company, ImClone
Systems, Inc., Johnson & Johnson, and Centocor Ortho Biotech.
Mr. Johnson currently serves as non-executive chairman of the Board
of Directors for Autolus Therapeutics plc , and on the Board of
Directors of Xeris and Verastem Oncology. Mr. Johnson received his
B.S. from University of Pennsylvania East Stroudsburg. Mr.
Johnson's qualifications to serve on our Board of Directors include
his considerable leadership experience and specific knowledge of
the healthcare industry.
Alan Levine, Director (Age 54)
Mr. Levine has served as a member of our Board of Directors
since May 2019. Since February 2018, Mr. Levine has
been the Chairman, President, and Chief Executive Officer of Ballad
Health, an integrated healthcare delivery system. From
January 2014 until January 2018, he served as the
President and Chief Executive Officer of Mountain States Health
Alliance, the largest health system in upper east Tennessee and
southwest Virginia. He served as a Senior Advisor to the Board of
Directors, President of the Florida Group and Corporate Senior Vice
President during his July 2010 to January 2014 tenure at
Health Management Associates, a hospital and healthcare facilities
operator. From January 2008 until July 2010,
Mr. Levine served as Senior Health Policy Advisor to Louisiana
Governor Bobby Jindal, and as the Secretary of the Louisiana
Department of Health and Hospitals on the Governor’s cabinet. He
was the President and Chief Executive Officer of the North Broward
Hospital District, one of the largest public health and hospital
systems in the nation, from July 2006 until January 2008.
He also served as the Secretary of the Florida Agency for Health
Care Administration, the health planning and regulatory agency for
the State of Florida with responsibility for the oversight of more
than 30,000 healthcare facilities, and the $17 billion
state Medicaid program, from June 2004 until July 2006.
Mr. Levine served as the Deputy Chief of Staff and Senior
Health Policy Advisor to Governor Jeb Bush from January 2003
until June 2004. Alan holds an M.B.A., M.S. in Health Science,
and B.S. in Health Education/Community Health from the University
of Florida. He currently serves on the Board of Governors of the
State University System of Florida, where he has served as Chair of
the Audit and Compliance Committee, Chair of the Research and
Academic Excellence, Committee and Chair of the Select Committee on
2+2 Education Attainment. He also served as Chair of the State of
Florida Higher Education Coordinating Council, a policy-setting
body composed of all education entities from K-Post Secondary.
Mr. Levine’s qualifications to serve on our Board of Directors
include his broad healthcare management, policy and regulation and
patient care delivery knowledge, executive level experience with
integrated healthcare delivery systems and his knowledge as to
budgeting and financial reporting.
Guido Neels, Director (Age 73)
Mr. Neels has served as a member of our Board of Directors
since August 2015. He has been an operating partner of EW
Healthcare Partners L.P. (“EW”) since February 2013.
Mr. Neels joined EW as a Partner in August 2006, was
promoted to Managing Director in 2008 and served in that position
until being appointed to Operating Partner. From May 2004
until retiring in November 2005, Mr. Neels served as
Chief Operating Officer of Guidant Corporation (“Guidant”), a world
leader in the development of cardiovascular medical products, where
he was responsible for the global operations of Guidant’s four
operating units – Cardiac Rhythm Management, Vascular
Intervention, Cardiac Surgery, and Endovascular Solutions. From
December 2002 to May 2004, Mr. Neels was Group
Chairman, Office of the President at Guidant, responsible for
worldwide sales operations, corporate communications, corporate
marketing, investor relations and government relations. From
January 2000 to December 2002, Mr. Neels was
President of Guidant for Europe, Middle East, Africa and Canada.
Mr. Neels previously served as Vice President of Global
Marketing for Vascular Intervention and as Managing Director for
German and Central European operations. From 1982 to 1994, until
Guidant was spun off as an independent public company from Eli
Lilly and Co., Mr. Neels held general management, sales and
marketing positions at Eli Lilly in the United States and Europe.
From 1972 to 1980, he held positions in information technology,
finance and manufacturing at Raychem Corporation in Belgium and the
United States. Mr. Neels currently serves on the board of
directors of Bioventus LLC, a portfolio company of Essex Woodlands.
In addition, Mr. Neels also serves on the board of directors
for Christel House International and Amici Lovanienses, both
not-for-profit organizations. Mr. Neels holds an M.B.A. from
Stanford University and a business engineering degree from the
University of Leuven in Belgium. Mr. Neels’ qualifications to
serve on our Board of Directors include his extensive leadership
experience in the medical device and biotechnology industries and
his expertise in the commercialization of medical devices,
corporate governance and the financial markets.
Paul Thomas, Director (Age 66)
Mr. Thomas has served as a member of our Board of Directors since
September 2020. Mr. Thomas currently serves on the board of
directors of Abiomed, Inc. (NASDAQ: ABMD) and Surgalign Spine
Technologies, Inc. (NASDAQ: SRGA). Mr. Thomas has more than 30
years of experience in the medtech industry and currently serves as
the CEO and Co-Founder of Prominex, Inc. Mr. Thomas also served as
the CEO of Roka Bioscience from 2009 to 2017. Prior to that, Mr.
Thomas served as Chairman and CEO of LifeCell Corporation from 1998
until it was acquired by KCI in 2008 in a transaction valued at
$1.8 billion. He also held various senior positions, including
President of the Pharmaceutical Products Division, during his
tenure of 15 years with Ohmeda, Inc. Mr. Thomas received his M.B.A.
from Columbia University Graduate School of Business and completed
his post graduate studies in Chemistry at the University of Georgia
Graduate School of Arts and Science. He received his B.S. in
Chemistry from St. Michael’s College. Mr. Thomas’
qualifications to serve on our Board of Directors include
his
extensive executive leadership and financial experience,
particularly in connection with rapid growth technology businesses,
and his experience as a director of publicly traded
companies.
Amy Wendell, Director (Age 61)
Ms. Wendell has served as a member of our Board of Directors
since September 2016 and Lead Director since May 2018.
She was a senior advisor for the healthcare investment banking
practice of Perella Weinberg Partners
(“PWP”) from January 2016 through April 2019. Her scope
of responsibilities involved providing guidance and advice with
respect to mergers and acquisitions and divestitures for clients
and assisting PWP in connection with firm-level transactions. From
2015 until October 2018, Ms. Wendell served as a senior
advisor for McKinsey and Company’s (“McKinsey”) strategy and
corporate finance practice and as a member of McKinsey’s
transactions advisory board to help define trends in mergers and
acquisitions, as well as help shape McKinsey’s knowledge agenda.
From 1986 until January 2015, Ms. Wendell held various
roles of increasing responsibility at Covidien plc (“Covidien”)
(including its predecessors, Tyco Healthcare and Kendall Healthcare
Products), including in engineering, product management and
business development. Most recently, from December 2006 until
Covidien’s acquisition by Medtronic plc in January 2015,
Ms. Wendell served as Covidien’s Senior Vice President of
Strategy and Business Development, where she managed all business
development, including acquisitions, equity investments,
divestitures and licensing/distribution, and led Covidien’s
strategy and portfolio management initiatives. Ms. Wendell is
a member of the board of directors of Hologic, Inc., a leading
developer, manufacturer and supplier of premium diagnostic
products, medical imaging systems and surgical products with a
strong position in women’s health and Baxter
International, Inc., a leading global medical products
company. She is also a director of Por Cristo, a non-profit
charitable medical service organization involved in healthcare work
for at-risk women and children in Latin America. Ms. Wendell
holds a M.S. in biomedical engineering from the University of
Illinois and a B.S. in mechanical engineering from Lawrence
Institute of Technology (n/k/a Lawrence Technological University).
Ms. Wendell’s qualifications to serve on our Board of
Directors include her broad healthcare management and governance
experience, her knowledge of healthcare policy and regulation,
patient care delivery and financing, and her knowledge of clinical
research and medical technology assessment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF THE
EIGHT DIRECTOR NOMINEES, WHICH IS DESIGNATED AS PROPOSAL
NO. 1.
CORPORATE GOVERNANCE
Director Independence
Our Board of Directors currently consists of eight directors: Karen
Zaderej, Gregory Freitag, Dr. Mark Gold, John H. Johnson, Alan
Levine, Guido Neels, Paul Thomas and Amy Wendell.
In determining whether our directors and director nominees are
independent, we use the definition of independence provided in
Rule 5605(a)(2) of the Nasdaq Stock Market’s (“Nasdaq”)
Marketplace Rules. Under this definition of independence, we
determined that Messrs. Johnson, Levine, Thomas and Neels,
Ms. Wendell and Dr. Gold are independent.
Mr. Freitag and Ms. Zaderej are not independent because
they serve (or in the case of Mr. Freitag, have served within the
past three years) as executive officers of the Company. Each member
of our Audit Committee, Compensation Committee and Governance,
Nominating and Sustainability Committee also meets the heightened
independence standards under the applicable Nasdaq independence
rules.
Attendance at Meetings
Our Board of Directors met seven
times during 2021, either in person or by teleconference, and acted
by written consent on four occasions. During 2021, each of our then
current directors attended at least 75% of the aggregate number of
the meetings of the Board of Directors. In addition, each of our
then current directors attended at least 75% of the aggregate
number of the meetings of the committees on which they served. All
of our then current directors were in attendance telephonically at
our 2021 Annual Meeting of Shareholders. Members of our Board of
Directors are encouraged, but not required, to attend each annual
meeting of shareholders.
Board Leadership Structure
Our Board of Directors is responsible for overseeing the business,
property and affairs of Axogen. Members of our Board of Directors
are kept informed of our business through discussions with our CEO
and other officers, by reviewing materials provided to them and by
participating in meetings of our Board of Directors and its
committees.
Our Board of Directors is currently composed of: (i) Karen
Zaderej, who also serves as our Chairman, CEO and President,
(ii) Gregory Freitag, who served as our General Counsel, then
our special counsel from June 2020 through his retirement in March
2021, (iii) Amy Wendell, who serves as Lead Director, and
(iv) five other directors. Our Board of Directors does not
have a policy regarding the separation of the roles of Chairman of
our Board of Directors and CEO because our Board of Directors
believes that the determination of whether to separate the roles
depends largely upon the identity of the CEO and the members of our
Board of Directors from time to time, that there is no single best
organizational model that is the most effective in all
circumstances and that the shareholders’ interests are best served
by allowing our Board of Directors to retain the flexibility to
determine the optimal organizational structure for Axogen at a
given time. At this time, we believe that we are best served by
having the same individual serve as our CEO and Chairman of our
Board of Directors.
Additionally, the Board of Directors has elected Amy Wendell as
Lead Director. The Lead Director facilitates the functioning of the
Board of Directors independently of the Company's management and
provides independent leadership to the Board of Directors. The Lead
Director had the following responsibilities:
•providing
leadership to ensure that the Board functions independently of
management of the Company and other non-independent
directors;
•providing
leadership to foster the effectiveness of the Board;
•working
with the Chair to ensure that the appropriate committee structure
is in place and assisting the Corporate Governance and Nominating
Committee in making recommendations for appointment to such
committees;
•recommending
to the Chair items for consideration on the agenda for each meeting
of the Board;
•commenting
to the Chair on the quality, quantity and timeliness of information
provided by management to the independent director;
•in
the absence of the Chair, chairing Board meetings, including,
providing adequate time for discussion of issues, facilitating
consensus, encouraging full participation and discussion by
individual directors and
confirming that clarity regarding decision-making is reached and
accurately recorded; in addition, chairing each Board meeting at
which only outside directors or independent directors are
present;
•consulting
and meeting with any or all of the independent directors, at the
discretion of either party and with or without the attendance of
the Chair, and representing such directors, where necessary, in
discussions with management of the Company on corporate governance
issues and other matters;
•working
with the Chair and the Chief Executive Officer to ensure that the
Board is provided with the resources, including external advisers
and consultants to the Board as considered appropriate, to permit
it to carry out its responsibilities and bringing to the attention
of the Chair and the Chief Executive Officer any issues that are
preventing the Board from being able to carry out its
responsibilities.
Risk Oversight by our Board of Directors
Our Board of Directors takes an active role in risk oversight
related to Axogen and primarily administers its role during Board
of Directors and committee meetings. During regular meetings of our
Board of Directors, members of our Board of Directors discuss the
operating results for each fiscal quarter. These meetings allow the
members of our Board of Directors to analyze any significant
financial, operational, competitive, economic, regulatory and legal
risks of our business model, as well as how effectively we
implement our goals. During regular Audit Committee meetings, Audit
Committee members discuss the financial results for the most recent
fiscal quarter with our independent auditors and our Chief
Financial Officer (“CFO”). Our Audit Committee also meets with, and
provides guidance to, our independent auditors outside the presence
of management and oversees and reviews with management the
liquidity, capital needs and allocation of our capital, our funding
needs and other finance matters. In addition, our Audit Committee
reviews our healthcare compliance, information technology security,
data privacy and disaster recovery capabilities and risk management
programs and treatment of whistleblower complaints regarding
internal accounting, accounting controls or audit matters. These
discussions and processes allow the members of our Audit Committee
to analyze any significant risks that could materially impact the
financial health of our business.
In furtherance of its risk oversight responsibilities, our
Compensation Committee has oversight of the Company’s culture and
human capital management, including diversity, equity and inclusion
with respect to the Company’s employees and has evaluated our
overall compensation policies and practices for our employees to
determine whether such policies and practices create incentives
that could reasonably be expected to affect the risks faced by us
and our management has concluded that the risks arising from our
policies and practices are not reasonably likely to have a material
adverse effect on the Company.
Board Committees
The standing committees of Axogen’s Board of Directors include an
Audit Committee, a Compensation Committee, a Governance, Nominating
and Sustainability Committee, and a Quality, Compliance and
Portfolio Committee. Messrs. Johnson (Chairman), and Levine
and Ms. Wendell and Dr. Gold are members of the Audit
Committee. Messrs. Neels (Chairman), Levine and Thomas are
members of the Compensation Committee. Ms. Wendell (Chairman) and
Messrs. Neels, Johnson and Thomas are members of the
Governance, Nominating and Sustainability Committee. Messrs.
Johnson (Chairman) and Freitag and Dr. Gold are members of the
Quality, Compliance and Portfolio Management Committee. The
Charters of each of the Audit Committee, the Compensation
Committee, the Governance, Nominating and Sustainability Committee,
and the Quality, Compliance and Portfolio Management Committee can
be found on our website under “Investors —
Governance.” The information contained on our website, or on
other websites linked to our website, is not part of this document.
Reference herein to our website is an inactive text reference
only.
Audit Committee
The Audit Committee was established in accordance with section
3(a)(58)(A) of the Securities Exchange Act of 1934 as amended
("the Exchange Act"). The Audit Committee is responsible for review
of audits, financial reporting and compliance, accounting and
internal controls policies, healthcare compliance, information
technology security, data privacy and disaster recovery
capabilities and risk management programs. For audit services, the
Audit Committee is responsible for the engagement and compensation
of the registered independent accounting firms,
oversight of their activities and evaluation of their independence.
The Audit Committee has instituted procedures for receiving reports
of improper record keeping, accounting or disclosure. In the
opinion of the Board of Directors, each of the members of the Audit
Committee has both business experience and an understanding of
accounting principles generally accepted in the United States
(“GAAP”) and financial statements enabling them to effectively
discharge their responsibilities as members of the Audit Committee.
Moreover, the Board of Directors has determined that each of
Messrs. Johnson and Levine, Ms. Wendell and Dr. Gold is
an “audit committee financial expert” as such term is defined in
Item 407(d)(5) of Regulation S-K promulgated by the U. S.
Securities and Exchange Commission (the "SEC") and is an
independent director.
Our
Audit Committee held six meetings and did not act by written
consent during 2021.
A current copy of the Company’s Audit Committee charter, which has
been adopted by our Board of Directors, is posted on our website
at http://ir.axogeninc.com/governance-docs.
Compensation Committee
Our Compensation Committee determines and periodically evaluates
the various levels and methods of compensation for our directors,
officers and employees, and is responsible for establishing
executive compensation and administering the Axogen, Inc.
Amended and Restated 2019 Long-Term Incentive Plan (the“ 2019
Plan”) and the Axogen, Inc. 2017 Employee Stock Purchase Plan
(the “2017 ESPP”).
Our Compensation Committee held six meetings and did not act by
written consent during 2021.
Under its charter, our Compensation Committee’s duties and
responsibilities include, without limitation: (i) periodically
review our compensation philosophy and the design of our
compensation programs; (ii) establish and oversee our
incentive and stock-based compensation plans; (iii) recommend
to our Board of Directors a compensation and benefit package for
directors; (iv) at least annually, establish and review our
CEO’s management objectives, conduct the CEO’s performance
evaluation and communicate the outcomes to our Board of Directors;
(v) review and approve payouts to participants as proposed by
our CEO under our compensation plans; (vi) review and approve,
for our CEO and our other executive officers, when and if
appropriate, employment agreements, severance agreements, change in
control provisions/agreements and any severance or similar
termination payments proposed to be made to any of our current or
former executive officers; (vii) in consultation with senior
management, oversee regulatory compliance with respect to
compensation matters; (viii) prepare the annual report on
executive compensation required to be included in our annual proxy
statement: and (ix) review and discuss with management human
capital management matters and assist the Board of Directors in its
oversight of the Company's policies relating to culture, human
capital management, diversity, equity and inclusion. Our executive
officers do not play a formal role in determining or recommending
the amount or form of director compensation.
The Compensation Committee may delegate its powers under the 2019
Plan to one or more directors (including a director who is also one
of our officers) and may authorize one or more officers to grant
awards under the 2019 Plan, except that the Compensation Committee
may not delegate
its powers to grant awards to executive officers or directors who
are subject to Section 16 of the Exchange Act, or in a way
that would violate Section 162(m) of the Internal Revenue
Code (the “Code”). Axogen’s Board of Directors may also exercise
the powers of the Compensation Committee at any time, so long as
its actions would not violate Section 162(m) of the
Code.
The Compensation Committee’s ability to delegate its powers is also
limited by the rules of the Nasdaq Stock Market on which
Axogen’s shares of common stock are listed.
Since May 2016, our Compensation Committee has engaged Aon's Human
Capital Solutions practice, a division of Aon plc, ("Aon") a
compensation consultant, for the purpose of advising upon executive
and director compensation. The Compensation Committee has reviewed
the independence of Aon’s advisory role relative to the six
consultant independence factors adopted by the SEC to guide listed
companies in determining the independence of their compensation
consultants, legal counsel and other advisors. Following its
review, the Compensation Committee concluded that Aon did not have
any conflicts of interest and provided the Compensation Committee
with objective and independent executive compensation advisory
services.
Aon was engaged in 2021 to provide the Compensation Committee with
an analysis of Axogen’s executive officers, officers and director
compensation, focusing on all compensation components including
base salary, bonus, equity, director retainers and fees and
committee fees. Aon conducted a thorough proxy review of Axogen’s
most
relevant comparative companies, and analyzed base salary, bonus,
equity, retainers, and all other compensation components in
relation to Axogen’s peer group.
The Company’s Chief Executive Officer is involved in the design and
implementation of our executive compensation and is typically
present at Compensation Committee meetings, except that the Chief
Executive Officer is not present during any voting or deliberations
on her compensation. In 2021, the Chief Executive Officer reviewed
the analysis and recommendations of Aon with the Compensation
Committee and made recommendations regarding proposed salary,
equity awards and bonus for our officers (other than herself).
The
Compensation Committee exercises its discretion in accepting,
rejecting and/or modifying any such executive compensation
recommendations and approves all compensation and equity
awards.
A current copy of the Company’s Compensation Committee charter,
which has been adopted by our Board of Directors, is posted on our
website at http://ir.axogeninc.com/governance-docs.
Governance, Nominating and Sustainability Committee
The Governance, Nominating and Sustainability Committee is
responsible for providing oversight in relation to the corporate
governance of Axogen and also identifies director nominees for
election to fill vacancies on our Board of Directors. Nominees are
approved by the Axogen Board of Directors on recommendation of the
Governance, Nominating and Sustainability Committee. In evaluating
nominees, the Governance, Nominating and Sustainability Committee
particularly seeks candidates of high ethical character with
significant business experience at the senior management level who
have the time and energy to attend to board responsibilities.
Candidates should also satisfy such other particular requirements
that the Governance, Nominating and Sustainability Committee may
consider important to Axogen’s business at the time. When a vacancy
occurs on the Axogen Board of Directors, the Governance, Nominating
and Sustainability Committee will consider nominees from all
sources, including shareholders, nominees recommended by other
parties, and candidates known to the directors or Axogen’s
management. The best candidate from all evaluated will be
recommended to the Axogen Board of Directors to consider for
nomination. No material changes have been made to the procedures by
which shareholders may recommend nominees to Axogen’s Board of
Directors.
The Governance, Nominating and Sustainability Committee’s
sustainability activities are to (1) review, and make
recommendations to the Board of Directors, the implementation of
which create value consistent with the long-term preservation and
enhancement of shareholder value and social well-being, on, the
Company’s policy and performance in relation to
sustainability-related matters, including: a) health and safety; b)
the environment; c) climate change; d) human rights; e) heritage
and land access; f) security and emergency management; and g)
community relations; and (2) assist in setting annual
sustainability performance goals and assessing achievement of such
goals if requested by the Compensation Committee.
To be a good corporate steward and citizen, our Board of Directors
believes in a long-term approach, including certain key
environmental, social and corporate governance ("ESG") objectives.
Our Board of Directors, with recommendations from our Governance,
Nominating and Sustainability Committee and with the input, time
and talent of our executive officers and employees, has overseen
the implementation of several policy and operational improvements,
including:
•the
adoption of our Anti-Human Trafficking Policy, which is our
commitment to an environment free from human trafficking, prohibits
our employees or anyone who provides services to us from engaging
in any form of human trafficking and provides a reporting website
and hotline for actual or suspected violations of the
policy;
•under
the Company’s Governance, Nominating and Sustainability Committee
charter, the Governance, Nominating and Sustainability Committee
reviews and makes recommendations to our Board of Directors
regarding environmental, social and sustainability activities. In
connection therewith, we implemented recycling programs in our
Tampa and Alachua facilities as well as investing in new purified
water systems, sanitation systems, LED lighting, hydronic HVAC
systems and energy efficient freezers, all with the goal of
reducing our environmental footprint;
•the
adoption of our Affirmative Action Plan, which continues our
commitment to equal employment opportunity to ensure the rights of
each person in all actions, including recruitment, selection,
training,
development, compensation and promotion In furtherance of this
policy, we (i) partnered with a third-party vendor to ensure that
our opportunities are posted and available on each state’s veteran
and diversity job boards; (ii) audited existing job postings,
advertisements and candidate communications for gender coding;
(iii) created custom sourcing filters to target diverse candidates;
(iv) trained leaders on issues related to discrimination and
harassment and what they can do to identify it and resolve it; (v)
ensured recruitment marketing material illustrates our authentic
diversity; (vi) promoted Axogen with members of targeted candidate
groups (Women in Tech, veteran groups, Historically Black Colleges
and Universities, Hispanic Groups, African American Groups); (vii)
initiated and maintained communication with organizations having
special interests in the recruitment of and job accommodations for
protected veterans and individuals with disabilities; (viii)
implemented interview scorecards to ensure equitable consideration
and discussion during new employee selection process; and (ix)
encouraged employee resource groups devoted to development and
support of potentially under-represented groups; and
•the
adoption of our inaugural Environmental, Social and Governance
report (the "ESG Report"), which illustrates our commitment to
running an ethical, transparent and responsible business and
highlights our recent ESG-related accomplishments, including: (i)
advancing our innovation pipeline with new products in development
and clinical studies to expand our treatment algorithms; (ii)
initiating programs in Diversity, Equity, and Inclusion ("DEI") and
launching our first Employee Resource Group to broaden our reach to
talent; (iii) renovating and developing facilities with improved
sustainability measures; (iv) improving data security; and (v)
supporting charitable organizations at all locations.
Our Governance, Nominating and Sustainability Committee held five
meetings and did not act by written consent during
2021.
A current copy of the Company’s Governance, Nominating and
Sustainability Committee charter, which has been adopted by our
Board of Directors, is posted on our website at
http://ir.axogeninc.com/governance-docs. A current copy of the ESG
Report is posted on our website at
https://www.axogeninc.com/environmental-social-and-governance/.
Quality, Compliance and Portfolio Management Committee
The Quality, Compliance and Portfolio Management Committee assists
the Board in fulfilling its oversight responsibilities with respect
to quality, and regulatory compliance matters, and portfolio
management. The Quality, Compliance and Portfolio Management
Committee oversees the following (i) risk management in the areas
of product quality and safety, including but not limited to,
reviewing the adequacy and effectiveness of the Company’s
strategies for compliance with laws and regulations, the safety and
quality of the Company’s products, and the impact of changes in
global regulatory requirements; (ii) coordinate with the Audit
Committee on its oversight of quality and compliance issues and has
primary oversight responsibility for areas of non-financial,
regulatory compliance (including compliance with the Company’s Code
of Business Conduct and Ethics as well as cybersecurity and other
information technology issues as they relate to Axogen product and
service development); and (iii) oversees the Company’s innovation
portfolio, including implementation of portfolio management,
oversight of grants both to the Company and from the Company to
third parties, review of the competitive position of the Company’s
portfolio, and review of the Company’s response to any identified
technological vulnerabilities involving its products and services.
Our Quality, Compliance and Portfolio Management Committee held one
meeting and did not act by written consent during
2021.
A current copy of the Company’s Quality, Compliance and Portfolio
Management Committee charter, which has been adopted by our Board
of Directors, is posted on our website at
http://ir.axogeninc.com/governance-docs.
Director Nominations
Director nominees are approved by our Board of Directors on
recommendation of our Governance, Nominating and Sustainability
Committee. In evaluating nominees, our Governance, Nominating and
Sustainability Committee particularly seeks candidates of high
ethical character with significant business experience at the
senior management level who have the time and energy to attend to
board responsibilities. Candidates should also satisfy such
other
particular requirements that our Governance, Nominating and
Sustainability Committee may consider important to our business at
the time. In accordance with our Governance, Nominating and
Sustainability Committee charter and policies included therein,
characteristics expected of all directors should include
independence, integrity, high personal and professional ethics,
sound business judgment, and the ability and willingness to commit
sufficient time to our Board of Directors. In evaluating the
suitability of individual directors, our Board of Directors takes
into account many factors, including: (i) general
understanding of marketing, finance, and other disciplines relevant
to the success of a small publicly traded medical device company in
today’s business environment; (ii) understanding of the
Company’s business and technology; (iii) educational and
professional background; (iv) personal accomplishment; and
(v) geographic, gender, age, and ethnic diversity. Our Board
of Directors evaluates each individual in the context of our Board
of Directors as a whole, with the objective of recommending a group
that can best perpetuate the success of the Company’s business and
represent shareholder interests through the exercise of sound
judgment, using its diversity of experience.
In addition, in accordance with our Governance, Nominating and
Sustainability Committee charter and policies included therein,
when a vacancy occurs on our Board of Directors, our Governance,
Nominating and Sustainability Committee will consider nominees from
all sources, including shareholders, nominees recommended by other
parties, and candidates known to our directors or our management.
The best candidate(s) from all evaluated will be recommended
to our Board of Directors to consider for nomination.
Shareholders wishing to recommend a director nominee to our
Governance, Nominating and Sustainability Committee may do so by
sending to our Governance, Nominating and Sustainability Committee,
on or before January 1 of each year, the following
information: (i) name of the candidate and a brief
biographical sketch and resume; (ii) contact information for
the candidate and a document evidencing the candidate’s willingness
to serve as a director if elected; and (iii) a signed
statement as to the submitting shareholder’s current status as a
shareholder and the number of shares currently held. No candidates
for director nominations were submitted to our Governance,
Nominating and Sustainability Committee by any shareholder in
connection with the Meeting . Such recommendation should be
addressed to Governance, Nominating and Sustainability Committee,
c/o General Counsel, Axogen, Inc., 13631 Progress Blvd.,
Suite 400, Alachua, FL 32615.
Diversity Policy Statement
Our Governance, Nominating and Sustainability Committee believes
that diversity promotes the inclusion of different perspectives and
ideas that are valuable to the Company and our Board of Directors.
Our Governance, Nominating and Sustainability Committee will take
the opportunity, as and when appropriate, to further improve
diversity in its broadest sense. The structure, size and
composition (including skills, knowledge, experience and diversity)
of our Board of Directors shall be considered as part of the annual
evaluation of performance and effectiveness of our Board of
Directors. Our Governance, Nominating and Sustainability Committee
believes that actively encouraging diversity, while ensuring board
members have the required governance skills, knowledge and
competencies, is a primary component of its duties.
Diversity Matrix
The following table summarizes certain self-identified
characteristics of our directors, in accordance with
Nasdaq
Listing Rules 5605(f) and 5606. Each term used in the table has the
meaning given to it in the rule and related
instructions.
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Total Number of Directors
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8 |
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Part I: Gender Identity |
Female
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Male
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Non-Binary
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Did Not Disclose Gender
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Directors
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2
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6 |
— |
— |
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Part II: Demographic Background
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African American of Black
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— |
— |
— |
— |
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Alaskan Native or Native American
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— |
— |
— |
— |
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Asian
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— |
— |
— |
— |
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Hispanic or Latinx
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— |
— |
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Native Hawaiian or Pacific Islander
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— |
— |
— |
— |
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White
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2
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6 |
— |
— |
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Two or More Races or Ethnicities
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— |
— |
— |
— |
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LGBTQ+
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— |
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Did Not Disclose Demographic Background
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Shareholder Communications with our Board of Directors
Shareholders may send written communications to the attention of
our Board of Directors. Any shareholder desiring to communicate
with our Board of Directors, or one or more of our directors, may
send a letter addressed to: Board of Directors, c/o General
Counsel, Axogen, Inc., 13631 Progress Blvd., Suite 400,
Alachua, FL 32615. Our General Counsel has been instructed by our
Board of Directors to promptly forward all communications so
received to our full Board of Directors or the individual members
of our Board of Directors specifically addressed in the
communication.
Compensation Committee Interlocks and Insider
Participation
None of our executive officers serves as a member of the board of
directors or compensation committee, or other committee serving an
equivalent function, of any other entity that has one or more of
its executive officers serving as a member of our Board of
Directors or Compensation Committee.
Director Stock Ownership Guidelines
On December 29, 2016, our Board of Directors adopted the
Non-Employee Director Equity Ownership Guidelines (the
“Guidelines”) under which each non-employee director is required to
own, within five years of
joining the Board of Directors, a specified dollar value of
Axogen’s common stock, or common stock underlying vested stock
options held by the non-employee director to the extent such
options are "In-The-Money". Value is to equal at least three times
the director’s annual retainer, excluding any committee retainers
or other fees the director may receive. As of January 1, 2022,
the annual determination date under the Guidelines, all of Axogen’s
non-employee directors were in compliance with the Guidelines, with
the exception of John Johnson, who has five years from the date he
joined our Board of Directors to be in compliance with the
Guidelines.
In February 2022, the Board of Directors amended the forms of
equity interests included in the policy to exclude the
"In-The-Money" value of vested stock option awards and include the
value of unvested Restricted Stock Units. Board members were
provided a new 5-year policy to become compliant with this amended
guideline.
A current copy of the Company’s Non-Employee Director Equity
Ownership Guidelines is posted on our website
at http://ir.axogeninc.com/governance-docs.
Code of Business Conduct and Ethics
We have adopted a Code of Business Conduct and Ethics that applies
to our employees (including our principal executive officer, chief
financial officer and other members of our finance and
administration department) and our directors.
Our Code of Business Conduct and Ethics is posted on our website at
http://ir.axogeninc.com/governance-docs. In addition, we intend to
post on our website all disclosures that are required by law or
Nasdaq Stock Market listing standards concerning any amendments to,
or waivers from, any provision of our Code of Business Conduct and
Ethics.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Review and Approval of Related Person Transactions
In accordance with our Audit Committee Charter, our Audit Committee
reviews and approves (with the concurrence of a majority of the
disinterested members of our Board of Directors) any related-party
and affiliated-party transactions. Our Code of Business Conduct and
Ethics generally addresses such situations as to conflicts of
interest and is the starting basis for disclosure and review. The
Code of Business Conduct and Ethics provides that a conflict
situation can arise when an employee or officer takes actions or
has interests that may make it difficult to perform his or her
Company work objectively and effectively. Conflicts of interest may
also arise when an employee or officer, or a member of his or her
family, receives improper personal benefits as a result of his or
her position in the Company. Loans to, or guarantees of obligations
of, employees and officers and their family members by the Company
may create conflicts of interest.
In addition, the Code of Business Conduct and Ethics provides that
all related person transactions that meet the minimum threshold for
disclosure in a proxy statement under the relevant SEC
rules must be reported to and approved by the Audit Committee.
Company officers and directors are required to bring promptly to
the attention of our CFO or General Counsel any transaction or
series of transactions that may result in a conflict of interest
between that person and the Company. The Company CFO on a
continuous basis, and annually, reviews with Company accounting
personnel any situations that appear to have a conflict. Following
any disclosure or discovery, our CFO or General Counsel will then
review with the Chairman of our Audit Committee the relevant facts
disclosed by the officer or director in question or the uncovered
situation. After this review, the Chairman of the Audit Committee
and the CFO or General Counsel determines whether the matter should
be brought to the Audit Committee or the full Board of Directors
for approval. In considering any such transaction, the Audit
Committee or the Board of Directors, as the case may be, will
consider various relevant factors, including, among others, the
reasoning for the Company to engage in the transaction, whether the
terms of the transaction are arm’s length and the overall fairness
of the transaction to the Company. If a member of the Audit
Committee or the Board of Directors is involved in the transaction,
he or she will not participate in any of the discussions or
decisions about the transaction. The transaction must be approved
in advance whenever practicable, and if not practicable, must be
ratified as promptly as practicable.
Related Person Transactions
The Company had no related party transactions in 2021, nor are
there currently any proposed transactions which in accordance with
the SEC rules would require disclosure.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth certain information with respect to
the beneficial ownership of our common stock as of April 1, 2022,
by each person, or group of affiliated persons, who is known by us
to beneficially own more than 5% of our common stock, each of our
directors,
each of our named executive officers and
all of our directors and named executive officers as a
group.
Beneficial ownership is determined in accordance with the
rules of the SEC. Except as otherwise noted, each shareholder
named in the table has sole voting and investment power for the
shares shown as beneficially owned by them, and such shares are not
subject to any pledge. Shares of common stock underlying options
held by a person that are currently exercisable, or exercisable
within 60 days of April 1, 2022, are considered outstanding
and to be beneficially owned by the person holding such option for
purposes of computing such person’s percentage ownership but are
not considered outstanding for the purpose of computing the
percentage ownership of any other person. Percentage of
ownership is based on 41,976,886 of common stock outstanding on
April 1, 2022.
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|
|
Number of Shares |
|
Number of Shares |
|
|
|
|
|
Beneficially Owned |
|
Underlying Options |
|
|
|
|
|
(including shares |
|
Currently Exercisable or |
|
|
|
|
|
reflected in the |
|
Exercisable within 60 days |
|
Percent of Shares |
|
Name of Beneficial Owner
(1)
|
|
third column)(2)
|
|
of April 1, 2022(2)
|
|
Outstanding (%) |
|
ArrowMark Colorado Holdings LLC
(3)
|
|
5,660,779 |
|
|
— |
|
|
13.62 |
% |
|
BlackRock, Inc.
(4)
|
|
3,009,148 |
|
|
— |
|
|
7.2% |
|
First Light Asset Management, LLC
(5)
|
|
2,322,382 |
|
|
— |
|
|
5.59% |
|
Karen Zaderej |
|
1,305,516 |
|
|
339,183 |
|
|
3.09% |
|
Gregory Freitag |
|
438,775 |
|
|
83,000 |
|
|
1.04% |
|
Peter Mariani |
|
355,084 |
|
|
320,500 |
|
|
* |
|
Mark Gold
(7)
|
|
324,361 |
|
|
28,095 |
|
|
* |
|
Guido Neels |
|
96,859 |
|
|
48,095 |
|
|
* |
|
Paul Thomas |
|
— |
|
|
— |
|
|
* |
|
Amy Wendell |
|
108,942 |
|
|
76,845 |
|
|
* |
|
Alan Levine |
|
48,034 |
|
|
39,270 |
|
|
* |
|
John Johnson |
|
— |
|
|
— |
|
|
* |
|
Maria Martinez |
|
60,783 |
|
|
44,500 |
|
|
* |
|
Eric Sandberg |
|
40,923 |
|
|
28,125 |
|
|
* |
|
Angelo Scopelianos |
|
70,742 |
|
|
50,562 |
|
|
* |
|
All directors, named executive officers and other executive
officers as a group (16 persons)
(7)
|
|
3,029,380 |
|
|
1,261,711 |
|
|
7.51 |
% |
* Less than 1%.
(1)Unless
otherwise specified, the address of each beneficial owner is c/o
Axogen, Inc., 13631 Progress Blvd., Suite 400 Alachua, FL
32615.
(2)Does
not include shares of common stock underlying Restricted Stock
Units or Performance Stock Units subject to vesting 60 days
beyond April 1, 2022.
(3)This
information is based solely on a review of Schedule 13G/A filed on
February 14, 2022, with the SEC by ArrowMark Colorado Holdings,
LLC. The Schedule 13G/A states that ArrowMark has sole voting power
with respect to 5,660,779
shares and sole dispositive powers with respect to 5,660,779
shares. The principal business address of ArrowMark Colorado
Holdings LLC is 100 Fillmore Street, Suite 325, Denver, Colorado
80206.
(4)This
information is based solely on a review of Schedule 13G/A filed on
February 1, 2022, with the SEC by BlackRock Inc. The Schedule 13G/A
states that BlackRock has sole voting power with respect to
2,958,853 shares and sole dispositive powers with respect to
3,009,148 shares. The principal business address of BlackRock Inc.
is 55 East 52nd Street, New York, NY 10055.
(5)This
information is based solely on a review of Schedule 13G/A filed on
February 14, 2022, with the SEC by First Light Asset Management,
LLC. The Schedule 13G/A states that First Light and certain of its
affiliates have shared voting power with respect to 2,322,382
shares and shared dispositive powers with respect to 2,322,382
shares. The principal business address of First Light Asset
Management, LLC is 3300 Edinborough Way, Suite 201, Edina, MN
55435.
(6)The
shares of common stock for Dr. Gold include 159,575 shares
held jointly by Dr. Gold and his wife, indirect ownership of
20,000 shares held by Dr. Gold’s spouse and indirect ownership
of 92,000 shares held by MJSK, Ltd., a decedent investment
trust held by Dr. Gold’s family.
(7)Includes
179,361 shares of common stock and 203,536 shares of common stock
underlying options exercisable within 60 days of April 1, 2022 held
by our other executive officers.
Equity Compensation Plan Information
The following table summarizes, with respect to the Company’s
equity compensation plans, the number of shares of the Company’s
common stock to be issued upon exercise of outstanding options,
warrants and other rights to acquire shares of common stock, the
weighted-average exercise price of these outstanding options,
warrants and rights and the number of shares of common stock
remaining available for future issuance under the Company’s equity
compensation plans as of December 31, 2021.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Category |
|
Number of Securities to be Issued Upon Exercise of Outstanding
Options, Warrants and Rights |
|
Weighted-Average Exercise Price of Outstanding Options,
Warrants and Rights ($) |
|
Number of Securities Remaining Available for Future Issuance Under
Equity Compensation Plans (Excluding Securities Reflected in the
First Column) |
|
Equity compensation plans approved by security holders |
|
5,209,999 |
|
|
15.64 |
|
|
3,630,823 |
|
|
Equity compensation plans not approved by security
holders |
|
80,000 |
|
|
16.26 |
|
|
— |
|
|
Total |
|
5,289,999 |
|
|
15.65 |
|
|
3,630,823 |
|
On or before April 1, 2022, an additional 2,935,310 securities were
granted or reserved, net of forfeitures, as equity compensation
under the Axogen, Inc. Amended and Restated 2019 Long-Term
Incentive Plan. 695,513 shares remain available for issuance as of
April 1, 2022.
EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis (“CD&A”) provides an
overview of our executive compensation philosophy, the objectives
of our executive compensation program and each compensation
component that we provide. In addition, we explain how and why our
Compensation Committee arrived at specific compensation policies
and decisions involving our named executive officers for the fiscal
year ended December 31, 2021. This CD&A is intended to be read
in conjunction with the tables which immediately follow, which
include historical context of pay.
The following executive officers constituted our named executive
officers:
|
|
|
|
|
|
|
|
|
Karen Zaderej |
Chief Executive Officer and President |
|
Peter Mariani |
Executive Vice President and Chief Financial Officer |
|
Maria Martinez |
Chief Human Resource Officer |
|
Eric Sandberg |
Chief Commercial Officer |
|
Angelo Scopelianos Ph.D. |
Chief Research and Development Officer |
For Ms. Zaderej's biography, see "Proposal 1 - Election of
Directors" above.
Peter Mariani, Executive Vice President and Chief Financial Officer
(Age 58)
Mr. Mariani has served as Axogen’s Chief Financial Officer since
March 2016 and was promoted to Executive Vice President and Chief
Financial Officer in March of 2021. He brings more than 25 years of
experience as a financial executive in private and public
companies. He previously served as Chief Financial Officer of
Lensar, Inc, a privately held laser refractive cataract surgery
company, from July 2014 through January 2016, following the sale of
Lensar in December 2015. From June 2011 to June 2014, he served as
Chief Financial Officer of Hansen Medical, a publicly traded
medical device company developing robotic solutions for
intravascular procedures. He served as Chief Financial Officer for
two privately held companies Harlan Laboratories from 2007 through
2009; and BMW Constructors from 2009 through 2010. From 1994
through 2006 he served in various senior financial roles with
Guidant Corporation, a publicly traded leader in the development
and sale of medical devices for the treatment of cardiovascular
disease. Mr. Mariani began his career with Guidant as Director of
Corporate Financial Reporting where he supported the initial IPO of
Guidant and ultimately served as Vice President, Controller and
Chief Accounting Officer. His experience at Guidant included two
years as Director of Financial Reporting, Guidant Vascular
Intervention in Santa Clara, California, and four years in Tokyo,
Japan, primarily as Vice President Finance and Administration.
While in Japan he helped to facilitate the conversion and scale of
the Japanese business from a distributor network to a direct sales
and marketing organization. Following the 2006 sale of Guidant to
Boston Scientific Corporation, he co-led the initial integration of
the two companies. From 1987 to 1994 Mr. Mariani worked with Ernst
and Young, LLP, where he served a diverse client base as a
Certified Public Accountant. Mr. Mariani earned a Bachelor of
Science in Accounting from Indiana University.
Maria Martinez, Chief Human Resources Officer (Age 54)
Ms. Martinez has served as Axogen’s Chief Human Resource Officer
since October 2018. She brings more than 25 years of human resource
("HR") leadership experience to the Company. From January 2018
until joining Axogen, Ms. Martinez provided HR consulting and
leadership services through her firm, MDM Consulting Services, LLC.
From June 2014 to December 2017, Ms. Martinez served as Chief Human
Resource Officer at HSNi, a multi-billion dollar direct to consumer
retail portfolio with thousands of employees in nine locations. She
held the Senior Vice President Talent Management role at HSNi from
July 2010 until June 2014 prior to being promoted. Ms. Martinez
originally joined HSNi as Manager in 1995 and left the company in
2005 as Vice President, Human Resources. From September 2008 to
June 2010, Ms. Martinez served as the Vice President, Human
Resources for
Laser Spine Institute, an organization dedicated to performing
minimally invasive spine surgery, where she established the
company’s human resources function and supported the expansion of
the organization’s business to multiple sites. She held the role of
Human Resources leader for Bausch & Lomb’s U.S. Pharmaceutical
division from April 2007 to September 2008. From July 2005 to April
2007, she served as Sr. Director Human Resources for Darden
Restaurants. Ms. Martinez serves on the Board of Directors of
Good360, a national not for profit organization. Ms. Martinez
earned a Master of Arts in Industrial/Organizational Psychology
from Florida Institute of Technology, a Bachelor of Science in
Psychology and a Bachelor of Arts in French from the University of
South Florida.
Eric A. Sandberg, Chief Commercial Officer (Age 57)
Mr. Sandberg
has served as Axogen’s Chief Commercial Officer since January 2019.
Mr. Sandberg has extensive leadership experience in commercializing
medical technologies. He held leadership positions across sales,
marketing, corporate accounts, and business development for more
than twelve years at medical device manufacturers Guidant
Corporation and Boston Scientific. While at Guidant, Mr. Sandberg
built and led commercial teams that challenged the standard of care
with innovative new solutions; including the Company’s first
coronary stent system, which achieved market leadership in three
months post launch and generated $700 million in sales within 15
months. He built and led the sales organization for CardioDx, a
genomic diagnostic company, spearheading efforts to launch and
create market demand for the company’s inaugural product. As
President and CEO for Tangent Medical Technologies, Mr. Sandberg
led all aspects of the company as it commercialized an innovative
IV catheter system. Most recently, he served as CEO for Visura
Technologies, successfully leading the development, patenting, FDA
process, and commercialization of a novel transesophageal
echocardiography camera assist device system, and as Chief Business
Officer of gene therapy company Rhythm Therapeutics. Mr. Sandberg
earned an MBA from Harvard Business School and a Bachelor of
Science from Bradley University.
Angelo G. Scopelianos, Ph.D., Chief Research and Development
Officer (Age 67)
Dr. Scopelianos has served as Axogen’s Vice President of Research
and Development since September 2018 and on January 4, 2021, began
serving as the Chief Research and Development Officer. From 2012
until joining Axogen, Dr. Scopelianos was an independent consultant
specializing in medical devices. He began consulting after his
retirement from a 24-year career at Johnson & Johnson
(J&J). Dr. Scopelianos began at J&J in 1988 as Section
Manager of R&D progressing to Manager of R&D, Director of
R&D, Vice President of R&D and from October 2010 to
September 2012 Senior Vice President of R&D. He joined J&J
after holding research leadership positions at EI Dupont de Nemours
in Wilmington, DE, and Pennwalt Corporation. Dr. Scopelianos earned
a Ph.D. in Organic Chemistry from Pennsylvania State University and
a Bachelor of Science from the State University of New
York—Oneonta. He holds over 35 U.S. patents and numerous
international patents, and his awards include the Outstanding
Science Alumni Award by Pennsylvania State University; the
Scientific Leadership Award in Biomaterials Science awarded by a
consortium of NJ research universities.
This Compensation Discussion and Analysis contains forward-looking
statements that are based on our current plans, considerations,
expectations and determinations regarding future compensation
programs. The actual compensation programs that we adopt in the
future may differ materially from currently planned programs as
summarized in this discussion.
EXECUTIVE SUMMARY
We are the leading company focused specifically on the science,
development and commercialization of technologies for peripheral
nerve regeneration and repair. We are passionate about providing
the opportunity to restore nerve function and quality of life for
patients with peripheral nerve injuries. We provide innovative,
clinically proven and economically effective repair solutions for
surgeons and healthcare providers.
We have grown revenue rapidly and have delivered a seven-year
compounded annual growth rate of 29%, while maintaining significant
gross margins above 80%. We intend to increase market penetration
and share by increasing
awareness of the impact of nerve damage on quality of life and
improving the adoption of nerve repair techniques and our products
through the continued use of educational conferences and
presentations, surgical resident and fellow training, clinical data
development and publication, digital communications, and a
knowledgeable and professional sales team.
In March 2020, the World Health Organization declared the outbreak
of the 2019 novel coronavirus (“COVID-19”) a pandemic. The global
impact of COVID-19 has had a negative effect on the global economy,
disrupting the financial markets and significantly impacting the
medical industry. In response to COVID-19, our top priority has
been the health and safety of those we serve, including healthcare
professionals and their patients, as well as our employees,
communities, and suppliers. We ensured employee compliance with
state and local mandates as well as implemented certain cost
mitigation initiatives in 2020 such as a reduction in pay levels,
temporary suspension of tissue processing, and deferral of certain
projects, among other efforts. As economic activity began to
normalize, we lifted these cost mitigation
initiatives.
Effective June 30, 2020, we signed a seven-year, interest only
financing agreement that provided up to $75 million in total
financing commitments. The Company drew an initial tranche of $35
million at closing of the agreement, and a second tranche of $15
million on June 30, 2021, providing a total of $50 million
outstanding as of December 31, 2021.
This financing agreement strengthened our balance sheet and
provided liquidity protection in the event of a prolonged down-turn
from the pandemic.
During 2020, we continued to keep our sales team and broader
commercial organization intact and took the opportunity to provide
extensive sales training. Our sales team developed skills and
shared best practices around remote case support where hospital
access had been restricted. We believe this remote support was
appreciated by customers and expanded our sales team’s ability to
support surgeons and their patients during COVID-19 and
beyond.
In addition, our professional education team was able to quickly
develop virtual surgeon training programs; and combined with our
marketing initiatives, was successful in developing new customers
and revenue growth through product penetration. We were able to
return to in-person surgeon education events in the second half of
2021 and will continue to offer a mix of hybrid, in-person and
virtual training opportunities for surgeons. As a result of these
efforts, we have been able to train approximately 75% of
microsurgery fellows in both 2020 and 2021.
We have always made clinical evidence generation an important
priority and believe that our collection of meaningful data
publications is the most comprehensive in the area of peripheral
nerve repair. The unparalleled amount of evidence in nerve repair
is expected by our surgeons when making clinical care decisions. We
had 181 peer-reviewed papers including growing numbers across all
of our nerve repair applications. We remain committed to developing
the clinical evidence to demonstrate safety, performance, and
utility of our nerve repair solutions to support the continued
adoption of the Axogen algorithm across our full portfolio of
products.
Although COVID-19 had a significant impact on our revenue growth,
we were able to deliver revenue growth in 2020 and 2021 of 5% and
13% respectively. The rapid development and fluidity of the
situation surrounding COVID-19 prevents any prediction as to the
ultimate impact COVID-19 will have on our business given the
potential for additional variants, and the impact on the global
supply chain, labor shortages and inflationary
conditions.
The labor shortages have particularly impacted hospitals where a
shortage of nursing and other staff have negatively impacted
surgical schedules which is negatively impacting nerve repair
procedure volumes. Although we are confident that hospitals will
address these challenges and return to more normalized surgical
schedules over time, we anticipate that our growth will continue to
be negatively impacted through the first half of 2022 and returning
to more normalized growth levels in the second half of 2022.
.
We are confident that we have built the right organization with a
solid foundation of clinical evidence that will allow us to deliver
sustainable long-term growth as the impact of COVID-19 wanes, and
the hospital operating
environments improve. We continue to view Axogen as a long-term
growth company, delivering sustainable annual revenue growth in the
high teens to low 20% range. Some of our recent business highlights
include:
Executing our Strategy:
We have made great progress toward our commercial strategy of
driving strong surgeon adoption of our technology. Some highlights
of our progress include:
a.Revenue
CAGR of 29% over past 7 years
b.Maintain
gross margins > 80%
c.Ended
2021 with 115 direct sales representatives.
d.Ended
2021 with 181 peer-reviewed clinical publications featuring
Axogen’s nerve repair products
e.More
than 50,000 Avance®
Nerve Grafts have been implanted since launch
Continued Revenue Growth:
2021 was another year of strong revenue growth, with an increase of
approximately 13% from 2020.
As our Company has continued to evolve with rapid growth and
clinical success, it has been imperative that the Compensation
Committee continually evaluate and transform the executive
compensation program to appropriately structure pay packages
considering company size, investor expectations, and industry
standards. Our Compensation Committee firmly believes that
executive compensation should be linked to our overall performance
with particular focus on driving long-term, sustainable revenue
growth. As such, our executive compensation program is designed to
attract highly qualified individuals, retain those individuals in a
competitive marketplace and motivate performance in a manner that
supports achievement of our corporate goals while ensuring that
these programs do not encourage excessive risk-taking. We believe
our executive compensation program, as presented in this CD&A,
achieves these objectives.
Key Compensation Decisions and Outcomes in 2021
In 2021, the Compensation Committee and the Company continued to
undertake reviews of the appropriateness of key elements of
executive compensation and continued to grant a mix of performance
share units (PSU's), restricted share units (RSUs) and stock
options in the first quarter of the year.
During 2021, the Compensation Committee determined that the PSU
award programs that had been implemented with certain revenue
growth targets for 2021 and 2022 were not likely to be achieved and
would be forfeited by the executives upon completion of their
respective performance periods and made no adjustments to these
programs.
Say on Pay Vote and Investor Feedback
At our 2021 annual meeting, our non-binding advisory vote on
executive compensation (commonly referred to as a “say-on-pay”
vote) received overwhelming support from our shareholders, with
approximately 97% of votes in support of the proposal. The
Compensation Committee believes this vote demonstrated our
shareholders’ positive view of our pay-for-performance philosophy
and the appropriateness of our executive compensation structure.
The Company annually conducts a say-on-pay vote.
The Compensation Committee values and continues to consider
shareholder input and feedback, including the results of say-on-pay
votes, on our compensation program structure. The Compensation
Committee determined that the structure of our executive
compensation policies continues to be appropriately aligned to the
achievement of Company goals and objectives and the best interests
of shareholders. We believe that compensation program enhancements
of the past several years, as well as our commitment to improved
transparency in our CD&A disclosure, have resulted in a
compensation program that best serves our Company, our executives,
and our shareholders.
Pay Program Overview
We believe that the design and structure of our pay program, and in
particular our incentive plans, support our business strategy and
organizational objectives while successfully aligning executive
focus and interest with that of shareholders. Our compensation
programs are designed to attract, motivate and retain qualified and
talented executives, motivating them to achieve our business goals
and rewarding them for superior short- and long-term performance.
All pay elements, and the safeguards and governance features of the
program, have been carefully chosen and implemented to align with
our pay philosophy and objectives.
In doing so, we have selected the following framework to achieve
these objectives:
|
|
|
|
|
|
|
|
|
Base Salary
|
Base salaries are set to be competitive within our industry and are
important in attracting and retaining talented executives. Base
salaries are fixed pay set with consideration for responsibilities,
market data and individual contribution.
|
|
Annual Cash Incentives
|
The annual cash incentive award plan is intended to motivate and
reward our executives for the achievement of certain strategic
goals of the Company.
In 2021, our annual incentives were based on key corporate
objectives, including revenue and certain other operational
goals.
|
|
Long-Term Equity Incentives
|
Long-term equity awards incentivize executives to deliver long-term
shareholder value, while also providing a retention vehicle for our
top executive talent.
Equity awards are typically delivered as:
a.Performance-based
PSUs
b.RSUs
c.Stock
options
|
2021 Target Pay Mix
Consistent with our philosophy of aligning executive pay with the
short- and long-term performance of the Company and the interests
of management and shareholders, the Company’s compensation programs
are designed to provide the majority of executive compensation in
the form of variable, at-risk, and incentive pay. Our 2021
pay
mix is shown below, which includes equity granted in March 2021;
these grants are an essential component of our fiscal year 2021
compensation program and were considered when designing our pay
mix.
Compensation Governance
Our Compensation Committee is responsible for oversight of the
Company’s compensation program and practices. A significant part of
this responsibility is aligning management interests with the
Company’s business strategies and goals, as well as the interest of
our shareholders, while also mitigating excessive risk taking. To
that end, the Company has committed to numerous governance
practices and safeguards to ensure the compensation program does
not misalign those interests.
|
|
|
|
|
|
|
|
|
What We Do
|
|
|
✔ Pay-for-performance philosophy and culture
|
✔ Engage an independent compensation consultant
|
|
✔ Provide an appropriate mix of performance-based and time-vesting
awards to executives
|
✔ Appropriate stock ownership requirements for all executives and
non-executive directors
|
|
✔ Strong emphasis on performance-based incentive
awards
|
✔ Perform an annual risk assessment of our compensation
program
|
|
✔ Responsible use of shares under our long-term incentive
program
|
|
|
What We Don’t Do
|
|
|
X
Hedging or pledging of Company securities
|
X
Excessive perquisites
|
|
X
Excise tax gross-ups
|
X
Backdating or repricing of stock option awards
|
EXECUTIVE COMPENSATION PHILOSOPHY AND OBJECTIVES
Axogen’s compensation philosophy is designed to pay for performance
and achieve the following principal objectives:
•align
our executive officers’ compensation with our business objectives
and the interests of our shareholders;
•enable
us to attract, motivate and retain the level of successful,
qualified senior executive leadership talent necessary to achieve
our long-term goals; and
•reward
performance, company growth and advancement of our long-term
strategic initiatives.
We carefully construct pay packages to appropriately balance fixed
and variable elements to achieve the aforementioned
objectives.
COMPENSATION-SETTING PROCESS
Role of Compensation Committee
Our Compensation Committee is responsible for, among other things,
overseeing our executive compensation philosophy and our executive
compensation program, determining and approving the compensation
for our named executive officers, negotiating executive employment
contracts, and helping to establish appropriate compensation for
directors and other key employees. Our Compensation Committee
regularly reports to our Board of Directors on its deliberations,
but is ultimately responsible for compensation decisions, as
described in the Compensation Committee’s Charter.
Our Compensation Committee reviews, on at least an annual basis,
our executive compensation program, including our incentive
compensation plans, to determine whether they are appropriate,
properly coordinated, and achieve their intended purposes, and
recommends to our Board of Directors any modifications or new plans
or programs. It also reviews the compensation of our named
executive officers and makes decisions about the various components
that comprise their compensation packages.
Role of Management
The Company’s Chief Executive Officer (“CEO”), Chief Financial
Officer (“CFO”) and Chief Human Resources Officer (“CHRO”) are
involved in the design and implementation of our executive
compensation and, along with our General Counsel,
are typically present at Compensation Committee meetings, except
that the CEO, CFO and CHRO are not present during any voting or
deliberations on their salary and equity compensation. In 2021, the
CEO, CFO and CHRO reviewed the analysis and recommendations of Aon
with the Compensation Committee and made recommendations regarding
proposed salary, equity awards and bonus for our officers (other
than themselves). The Compensation Committee exercises its
discretion in accepting, rejecting and/or modifying any such
executive compensation recommendations and approves all
compensation and equity awards.
Role of Consultants
Since May 2016, our Compensation Committee has engaged Aon, part of
the Rewards Solutions practice at Aon plc, to provide the
Compensation Committee with a thorough analysis of our executive
compensation, focusing on all compensation components.
In 2021, Aon assisted the Compensation Committee with, among other
things:
•Executive
and director market pay analysis;
•Reviewing
and modifying the compensation peer group;
•Assisting
the Company with COVID-related compensation actions;
•Development
of executive and director pay programs; and
•Reviewing
our Compensation, Discussion & Analysis
disclosure.
The Compensation Committee annually evaluates the independent
compensation consultant’s independence and performance under the
applicable SEC and Nasdaq listing standards. The Compensation
Committee believes that working with an independent compensation
consultant furthers the Company’s objectives to recruit and retain
qualified executives, align their interests with those of
shareholders and ensure that their compensation packages will
appropriately motivate and reward ongoing achievement of business
goals. The Compensation Committee conducted a specific review of
its relationship with Aon in 2021 and determined that Aon’s work
for the Compensation Committee did not raise any conflicts of
interest.
Use of Competitive Data
To assess the competitiveness of our executive compensation program
and compensation levels, our Compensation Committee, with the
assistance of Aon, examines the competitive compensation data for
senior executives of our peer companies.
The Compensation Committee uses the peer group to reference recent
market data and understand the marketplace. However, the Committee
also recognizes the importance of flexibility and considers other
factors as well, such as individual performance, experience,
history and scope of responsibility, current market conditions and
the specific needs of the business at critical points in
time.
2021 Peer Group
For our 2021 Peer Group, Compensation Committee conducted its
regular review of companies similar to us with respect to sector
and market capitalization, as well as revenue and headcount, to
provide a broad perspective on competitive pay levels and
practices.
•Sector
– HealthCare Equipment & Supplies companies; also considered
biotech/biopharma companies to broaden our market
perspective
•Market
Capitalization – 0.5x to 4x Axogen’s market
capitalization
•Revenue
– 1/3x to 4x Axogen’s projected revenues
•Headcount
– 1/3x to 4x Axogen’s projected headcount
In September 2020, the Compensation Committee, with the assistance
of Aon, evaluated the appropriateness of the continued inclusion of
each company in our 2021 peer group. Using the criteria listed
above, our Committee removed three companies from the peer group:
Insulet, Penumbra and Quidel, and added the following four
companies: Alphatec, Flexion Therapeutics, SI-BONE and Vericel, for
a total of 18 companies that comprise the Company's 2021 Peer
Group:
|
|
|
|
|
|
|
|
|
|
Alphatec |
Intersect ENT
|
NovoCure
|
|
AtriCure
|
iRhythm Technologies
|
Repligen
|
|
Cardiovascular Systems
|
Luminex
|
STAAR Surgical
|
|
CryoLife
|
Natera
|
SI-Bone |
|
Flexion Therapeutics |
Neogen
|
Tactile Systems Technology
|
|
Glaukos
|
Nevro
|
Vericel |
Consideration of Compensation Risk
Our pay-for-performance philosophy and compensation governance
practices provide an appropriate framework to our executives to
achieve our strategic goals without encouraging them to take
excessive risks in their business decisions.
On an annual basis, the Compensation Committee conducts a thorough
risk assessment of the Company’s compensation programs and
practices to analyze whether they encourage employees to take
excessive or inappropriate risks. To help with this assessment, Aon
provides a detailed review of the Company’s compensation program
and associated risks. The assessment focuses on the following areas
of the Company’s practices and policies:
•Total
direct compensation and benchmarking (level of pay and approach to
setting pay)
•Annual
incentive plan risk
•Equity
plan risk
•Change-in-control
policies
•Investor
risk and other policies
After completing this review, the Compensation Committee concluded
the Company’s compensation programs are, on balance, consistent
with market practice and do not present material risks to the
Company.
EXECUTIVE COMPENSATION PROGRAM COMPONENTS
The key elements of our executive compensation packages are base
salary, annual cash incentives, and long-term equity-based awards.
Our Compensation Committee believes that a combination of these
elements offers the best approach to achieving our compensation
goals, including attracting and retaining talented executives and
motivating our executives and other officers to expend maximum
effort to achieve our strategic business goals, including the
creation of long-term, sustainable growth of shareholder
value.
The following describes each component of our executive
compensation program, the rationale for each component and how
compensation amounts, and awards were determined for 2020
compensation.
Base Salaries
Base salary represents the fixed portion of our named executive
officers’ compensation, which we view as an important element to
attract, retain and motivate highly talented executives by
rewarding the individual value that each executive officer brings
to us through experience and past and expected future contributions
to our success.
The Compensation Committee annually reviews the base salaries of
our executive team with input from our CEO, CFO and CHRO (other
than with respect to their own base salary). In addition to this
input, for each executive the Compensation Committee
considers:
•The
individual’s role and responsibilities;
•Individual
contribution and performance of the past year;
•Overall
experience and expertise;
•Prior
base salary;
•Corporate
performance; and
•Salaries
for similar positions within our industry.
Base salaries were adjusted as follows for our named executive
officers in 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive |
2020 Base Salary |
2021 Base Salary |
% Change |
|
Karen Zaderej
|
$ |
623,150 |
|
$ |
651,200 |
|
4.5 |
% |
|
Peter Mariani(1)
|
$ |
402,000 |
|
$ |
443,080 |
|
10.2 |
% |
|
Maria Martinez |
$ |
338,500 |
|
$ |
352,040 |
|
4.0 |
% |
|
Eric Sandberg |
$ |
350,000 |
|
$ |
364,000 |
|
4.0 |
% |
|
Angelo Scopelianos Ph.D.(2)
|
$ |
369,500 |
|
$ |
395,000 |
|
6.9 |
% |
|
(1)
Mr. Mariani was promoted to Executive Vice President and Chief
Financial Officer effective March 1, 2021
|
|
(2)
Mr. Scopelianos was promoted to Chief Research and Development
Officer effective January 4, 2021.
|
2021 Annual Cash Incentive
We provide our executives, including the named executive officers,
with the opportunity to annually earn cash incentives to encourage
the achievement of corporate and individual objectives and to
reward those individuals who significantly impact our corporate
results.
In February 2021, our Compensation Committee approved, and our
Board ratified, our performance-based bonus award plan for 2021
(the “2021 Annual Cash Incentive”). Under this plan each named
executive officer was eligible to receive an annual cash bonus
based on the extent to which Axogen achieved certain key corporate
objectives during the 2021 fiscal year relating to revenue and
certain operational goals. Total bonus payouts were capped at 200%
of target.
The Compensation Committee approved these performance goals of the
bonus plan because, in its view, they were closely linked to our
successful execution of our annual operating plan and because
achieving the target level of success in the above-mentioned
programs would require a focused and consistent effort by our
executive officers throughout the 2021 fiscal year.
Individual bonuses paid, if any, are calculated by multiplying the
executive’s annual base salary, target bonus percentage, and
percentage achievement of the corporate goals, which may be
measured by reference to pre-established goals with respect to the
metrics, weighting and the ultimate achievement, as summarized
below.
|
|
|
|
|
|
|
|
|
|
Metrics |
% of Target Bonus |
Earned % of Target Bonus |
|
Revenues |
70% |
40.6% |
|
Achieve OPEX/Revenue Ratio |
10% |
—% |
|
Clinical Data Objective |
10% |
22.0% |
|
Product Development Objective |
5% |
4.0% |
|
Product and Quality Systems Management |
5% |
10.0% |
|
Total |
100% |
76.6% |
For our named executive officers, annual cash incentives earned
were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive |
Salary |
Target Bonus % |
Target Bonus 2021 |
2021 Actual Bonus Paid |
|
Karen Zaderej |
$651,200 |
100% |
$651,200 |
$499,347 |
|
Peter Mariani |
$443,080 |
55% |
$243,694 |
$186,850 |
|
Maria Martinez |
$352,000 |
50% |
$176,000 |
$134,982 |
|
Eric Sandberg |
$364,000 |
55% |
$200,200 |
$153,400 |
|
Angelo Scopelianos, Ph.D. |
$395,000 |
50% |
$197,500 |
$151,422 |
Equity Compensation
We use equity awards to motivate and reward our named executive
officers, to encourage long-term corporate performance based on the
value of our common stock and to align the interests of our named
executive officers with those of our shareholders. We firmly
believe that a large percentage of an executive’s compensation
package should be at-risk and linked to performance.
Since 2020, we have evaluated individual executive performance in
the first quarter of each year to allow for completion of the
calendar year and give us the ability to review full-year
performance.
We typically utilize the following mix of equity awards as the
long-term incentive component of their compensation
packages:
•Performance
share units (“PSUs”)
◦PSUs
are granted subject to achievement of certain performance
milestones as documented in the PSU agreement, and approved by the
Compensation Committee
◦Executives
may earn between 0% to 200% of the target number of units based
upon actual performance against a range of outcomes as documented
in the PSU agreement
◦Once
the number of PSUs has been determined, 33.33% will vest on the
date of determination and then annually over the next two years,
provided that the executive has been continuously employed through
each vesting date
•Restricted
share units (“RSUs”)
◦Vesting
occurs over 4 years from the date of grant, typically with 50%
vesting after 24 months and an additional 25% vesting on the third
and fourth anniversaries of the grant date.
•Stock
options
◦All
shares underlying the options will be fully vested four years from
the option grant date, with 50% of the aggregate shares vesting 24
months from the option grant date and an additional 12.5% of
aggregate shares vest every six months thereafter.
2021 Equity Grants
Our Compensation Committee strives to balance these various
long-term incentive vehicles to provide an appropriate balance of
performance-based and time-vesting awards. On March 8, 2021, the
Compensation Committee approved, and the Board of Directors
ratified, our annual equity award grants to our named executive
officers as part of their 2021 pay packages. These equity grants
consisted of:
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive |
PSUs (#) |
RSUs (#) |
Stock Options (#) |
|
Karen Zaderej
|
110,500 |
50,000 |
76,600 |
|
Peter Mariani
|
30,500 |
30,500 |
61,000 |
|
Maria Martinez
(!)
|
11,800 |
24,900 |
23,500 |
|
Eric Sandberg |
23,600 |
11,800 |
23,500 |
|
Angelo Scopelianos Ph.D.
|
11,800 |
16,500 |
34,000 |
|
(1)
Includes a special recognition grant of 13,100 restricted share
units that vest in three equal annual installments over three
years.
|
Achievement of PSU Grants
On December 27, 2018, the Company issued PSUs with the performance
metrics tied to 2020 revenue. On February 5, 2021, the award was
forfeited as the award had 0% achievement, resulting from the
negative impact of COVID-19 on the Company's revenue achievement in
2020.
In March 2020, the Company issued PSUs with the performance metrics
tied to 2021 revenue. On January 24, 2022, the award was forfeited
as the award had a 0% achievement
In July 2020, the Company issued PSUs with the performance metrics
tied to 2020 revenue. On February 5, 2021, the award was issued at
110% of achievement as the Company's actual revenue for 2020
exceeded the target established for the PSU.
In March 2021, the Company issued PSUs with the performance metrics
tied to 2022 revenue. In the fourth quarter of 2021, it was
determined that the performance metrics tied to this grant were no
longer probable and the Company expects that these PSUs will be
forfeited upon final determination of the performance period in
February of 2023.
ADDITIONAL COMPENSATION PRACTICES AND POLICIES
Executive Stock Ownership Guidelines
The Board of Directors has adopted stock ownership guidelines for
our executive officers. Under these guidelines, the Chief Executive
Officer and each other individual serving as an executive officer
must hold a specified dollar value of Axogen’s common stock, or
common stock underlying vested stock options held by such person to
the extent such options are “In-The-Money.”
|
|
|
|
|
|
|
Position |
Requirement |
|
Chief Executive Officer
|
3x base salary
|
|
Executive Officers other than CEO
|
1x base salary
|
|
All other Section 16(b) Reporting Officers
|
1x base salary
|
For the purposes of determining stock ownership levels, the
following forms of equity interests are included: shares owned by
the executive officer directly, or held in trust for the benefit of
the executive officer or his or her immediate family members
residing in same household or through trusts; and “In-The-Money”
value of vested stock option awards. The applicable guidelines must
be met within the earliest of five years from: (i) joining the
Company, (ii) promotion to an officer level or (iii) establishment
of the guidelines. All of our executive officers are in compliance
with the policy.
In February 2022, consistent with evolving practices regarding
Board and Executive ownership guidelines, the Board of Directors
amended the forms of equity interests included in the policy to
exclude the "In-The-Money" value of vested stock option awards and
include the value of unvested Restricted Stock Units. Unearned
performance stock units remain excluded from the policy. Based upon
the significant change in the policy Executives and Board Members
were provided a new 5-year period to achieve compliance. Each of
our executive officers is in compliance with this amended
policy.
Anti-Hedging and Pledging Policies
All of our executive officers and members of our Board of Directors
are prohibited from entering into hedging or pledging transactions
in respect of our common stock or other securities issued by
Axogen.
Compensation Recovery Policy
We have not implemented a policy regarding retroactive adjustments
to any cash or equity-based incentive compensation paid to our
named executive officers and other employees where the payments
were predicated upon the achievement of financial results that were
subsequently the subject of a financial restatement.
Retirement and Other Benefits
Our named executive officers are eligible to participate in our
tax-qualified Section 401(k) retirement savings plan on the same
basis as our other employees. Employees are eligible to participate
in the 401(k) plan immediately upon commencing employment, and
enrollment is available any time during employment. Participating
employees may make annual pretax contributions to their accounts up
to a maximum amount as limited by law. The 401(k) plan requires us
to make matching contributions of between 3% and 4% of the
employee’s annual salary as long as the employee participates in
the 401(k) plan. Both employee contributions and our contributions
are fully vested at all times. In 2021, our matching contribution
was 3% for the first 3% of compensation contributed and 1% for the
next 2% of compensation contributed of each named executive
officer’s annual base salary. We contributed, on an aggregate
basis, approximately $40,000 in matching funds for our named
executive officers in 2021.
Additional benefits received by our named executive officers
include medical, dental, vision, short-term disability, long term
disability, life and accidental death and dismemberment insurance.
These benefits are provided on substantially the same basis as to
all our full-time employees.
Historically, we have not provided perquisites or other personal
benefits to our named executive officers. We do not view
perquisites or other personal benefits as a component of our
executive compensation program. Our future practices with respect
to perquisites or other personal benefits will be approved and
subject to periodic review by our Compensation
Committee.
Post-Employment Compensation Arrangements
The employment agreements provide each of our named executive
officers with certain protection in the event of his or her
termination of employment under specified circumstances, including
following a change in control of our Company. We believe that these
protections serve our executive retention objectives by helping our
named executive officers maintain continued focus and dedication to
their responsibilities to maximize shareholder value, including in
the event that there is a potential transaction that could involve
a Change in Control of our Company. The terms of these agreements
were determined after review by our Compensation Committee of our
retention goals for each named executive officer and an analysis of
competitive market data.
For a summary of the material terms and conditions of these
severance and Change in Control arrangements, see the section
entitled “Executive Compensation — Potential Payments Upon
Termination or Change in Control.”
Tax and Accounting Considerations
Taxation of “Parachute” Payments and Deferred
Compensation
Sections 280G and 4999 of the Internal Revenue Code provide that
named executive officers and directors who hold significant equity
interests and certain other service providers may be subject to an
excise tax if they receive payments or benefits in connection with
a Change in Control of our Company that exceed certain prescribed
limits, and that we (or a successor) may forfeit a deduction on the
amounts subject to this additional tax. Section 409A of the
Internal Revenue Code imposes significant additional taxes in the
event that an employee, including a named executive officer,
director, or service provider receives “nonqualified deferred
compensation” that does not satisfy the conditions of Section
409A.
We did not provide any named executive officer with a “gross-up” or
other reimbursement payment for any tax liability that he or she
might owe as a result of the application of Sections 280G, 4999 or
409A of the Internal Revenue Code during 2021. We have not agreed
and are not otherwise obligated to provide any named executive
officer with a “gross-up” or other reimbursement under these
sections.
Accounting for Stock-Based Compensation
We follow the FASB ASC Topic 718 for our stock-based compensation
awards. ASC 718 requires companies to calculate the grant date
“fair value” of their stock-based awards using a variety of
assumptions. This calculation is performed for accounting purposes
and reported in the compensation tables that accompany this
Compensation Discussion and Analysis, even though recipients may
never realize any value from their awards. ASC 718 also requires
companies to recognize the compensation cost of their stock-based
awards in their statements of operations over the period that the
recipient of the award is required to render service in exchange
for the award.
COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed with
management the Compensation Discussion and Analysis required by
Securities and Exchange Commission regulations. Based on its review
and discussions, the Compensation Committee recommended to the
Board that the Compensation Discussion and Analysis be included in
this proxy statement and, through incorporation by reference, in
the Company’s Annual Report on Form 10-K for the fiscal year
ended December 31, 2021.
Submitted by:
The Compensation Committee of the Board of Directors
Guido J. Neels (Chairman)
Alan Levine
Paul Thomas
Summary Compensation Table
The following table sets forth the compensation for the fiscal
years 2021, 2020 and 2019 for our named executive
officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Principal Position |
|
Year |
|
Salary($)(1)
|
|
Stock Awards($)(2)
|
|
Option Awards($)(3)
|
|
Non-Equity Incentive Plan Compensation ($)(4)
|
|
All Other Compensation ($)(4)
|
|
Total |
|
Karen Zaderej |
|
2021 |
|
651,200 |
|
|
3,356,055 |
|
|
847,962 |
|
|
499,347 |
|
|
6,011 |
|
|
5,360,575 |
|
|
President, CEO |
|
2020 |
|
560,835 |
|
|
2,161,653 |
|
|
351,276 |
|
|
966,971 |
|
|
10,747 |
|
|
4,051,482 |
|
|
|
|
2019 |
|
605,000 |
|
|
— |
|
|
— |
|
|
382,602 |
|
|
12,361 |
|
|
999,963 |
|
|
Peter Mariani |
|
2021 |
|
438,257 |
|
|
1,275,510 |
|
|
675,270 |
|
|
186,850 |
|
|
71,296 |
|
|
2,647,183 |
|
|
Executive Vice President , CFO |
|
2020 |
|
361,800 |
|
|
502,623 |
|
|
188,623 |
|
|
434,032 |
|
|
— |
|
|
1,487,078 |
|
|
2019 |
|
390,100 |
|
|
— |
|
|
— |
|
|
145,117 |
|
|
12,815 |
|
|
548,032 |
|
|
Maria Martinez |
|
2021 |
|
352,040 |
|
|
767,397 |
|
|
260,145 |
|
|
134,982 |
|
|
11,600 |
|
|
1,526,164 |
|
|
Chief Human Resources |
|
2020 |
|
304,650 |
|
|
355,215 |
|
|
105,120 |
|
|
262,589 |
|
|
11,400 |
|
|
1,038,974 |
|
|
Officer |
|
2019 |
|
326,900 |
|
|
— |
|
|
— |
|
|
121,607 |
|
|
11,200 |
|
|
459,707 |
|
|
Eric Sandberg |
|
2021 |
|
364,000 |
|
|
740,214 |
|
|
260,145 |
|
|
153,400 |
|
|
11,600 |
|
|
1,529,359 |
|
|
Chief Commercial Officer |
|
2020 |
|
315,000 |
|
|
482,273 |
|
|
105,120 |
|
|
298,661 |
|
|
92,964 |
|
|
1,294,018 |
|
|
2019 |
|
323,077 |
|
|
282,975 |
|
|
373,050 |
|
|
122,709 |
|
|
11,631 |
|
|
1,113,442 |
|
|
Angelo Scopelianos, Ph.D. |
|
2021 |
|
394,659 |
|
|
591,753 |
|
|
376,380 |
|
|
151,422 |
|
|
67,913 |
|
|
1,582,127 |
|
|
Chief Research and Development Officer |
|
2020 |
|
332,550 |
|
|
398,265 |
|
|
105,120 |
|
|
286,685 |
|
|
76,259 |
|
|
1,198,879 |
|
|
|
2019 |
|
357,700 |
|
|
— |
|
|
— |
|
|
119,758 |
|
|
76,678 |
|
|
554,136 |
|
(1)Salary
amounts for 2020 reflect amounts actually received by the NEOs
after giving effect to the 20% reduction in base salaries that
became effective on April 27, 2020, and expired on October 25,
2020, as a result of cost mitigation initiatives put in place by
the Company during COVID-19.
(2)Stock
award amounts are calculated based on the aggregate grant date fair
value computed in accordance with ASC Topic 718 as of
December 31, 2021. For information regarding assumptions
underlying the valuation of such, see Note 11 of the
Consolidated Financial Statements in our Annual Report on
Form 10-K for the fiscal year ended December 31,
2021, filed on February 25, 2022.
(3)Option
award amounts are calculated based on the aggregate grant date fair
value computed in accordance with ASC Topic 718 as of
December 31, 2021. For information regarding assumptions
underlying the valuation of such, see Note 11 of the
Consolidated Financial Statements in our Annual Report on Form 10-K
for the fiscal year ended December 31, 2021, filed on
February 25, 2022.
(4)Bonuses
were earned in the respective year and paid in the following
year after final Compensation Committee approval.
(5)All
other compensation, as summarized in the following table for
2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
401(k) Company Match
($)
|
|
Relocation and Related Tax Assistance ($) |
|
Total
($)
|
|
Karen. Zaderej
|
|
6,011 |
|
|
— |
|
|
6,011 |
|
|
Peter Mariani
|
|
8,269 |
|
|
63,027 |
|
|
71,296 |
|
|
Maria Martinez |
|
11,600 |
|
|
— |
|
|
11,600 |
|
|
Eric Sandberg |
|
11,600 |
|
|
|
|
11,600 |
|
|
Angelo Scopelianos Ph.D.
|
|
2,913 |
|
|
65,000 |
|
|
67,913 |
|
CEO Pay Ratio Disclosure
As required by the Dodd-Frank Wall Street Reform and Consumer
Protection Act and Regulation S-K promulgated under the Exchange
Act, we are providing the following information about the
relationship of the annual total compensation of our CEO and the
annual total compensation of our employees for fiscal year
2021 (our “CEO pay ratio”). Our CEO pay ratio information is a
reasonable good faith estimate calculated in a manner consistent
with
Item 402(u) of Regulation S-K.
For fiscal year 2021, the annual total compensation for the
median employee of the Company (other than our CEO) was $174,840
and the annual total compensation of our CEO was $5,360,575. Based
on this information, for fiscal year 2021 the ratio of the
annual total compensation of our CEO to the annual total
compensation of the median employee was 31:1.
We identified
our median employee from among our employees as of
December 31, 2021, the last day of our fiscal year. We
did not use the same median employee used in our disclosure for the
fiscal year ended December 31, 2020, due to a change in the make-up
of our employees as a whole. We felt it to be a more accurate
representation and better metric for purposes of this disclosure to
use a new median employee, identified based on estimated annual
base pay, incentive compensation and grant date fair value of
equity granted to each of our employees as of December 31, 2021. We
then calculated the elements of the identified median employee’s
compensation for 2021 in accordance with the requirements of
Item 402(c)(2)(x) of Regulation S-K, resulting in annual
total compensation in the amount of $174,840. With respect to the
annual total compensation of our CEO, in accordance with SEC rules,
we included the amount
reported for Ms. Zaderej in the “Total” column for 2021 in the
Summary Compensation Table included in this Proxy Statement. We did
not make any cost-of-living adjustments in identifying the median
employee. Compensation amounts were determined from our human
resources and payroll systems of record.
Grants of Plan-Based Awards
The following table provides information regarding plan-based
awards granted to our named executive officers in 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name |
Grant Date |
Estimated Future Payouts Under Non-Equity Incentive Plan
Awards |
|
Estimated Future Payouts Under Equity Incentive Plan
Awards |
All Other Stock Awards: Number of Shares of Stock or
Units |
Exercise or Base Price of Option Awards ($/Sh) |
Grant Date Fair Value of Stock and Option Awards
($)(1)
|
|
Threshold ($) |
Target ($) |
Maximum ($) |
|
Threshold (#) |
Target (#) |
Maximum (#) |
|
Karen Zaderej |
|
|
|
|
|
|
|
|
|
|
|
PSU |
3/16/2021 |
— |
|
— |
|
— |
|
|
— |
|
110,500 |
|
221,000 |
|
— |
|
20.91 |
|
2,310,555 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSU |
3/16/2021 |
— |
|
— |
|
— |
|
|
— |
|
— |
|
— |
|
50,000 |
|
20.91 |
|
1,045,500 |
|
|
Options |
3/16/2021 |
— |
|
— |
|
— |
|
|
— |
|
— |
|
— |
|
76,600 |
|
20.91 |
|
847,962 |
|
|
Non Equity Incentive Plan Award |
— |
|
651,200 |
1,302,400 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
Peter Mariani |
|
|
|
|
|
|
|
|
|
|
|
PSU |
3/16/2021 |
— |
|
— |
|
— |
|
|
— |
|
30,500 |
|
61,000 |
|
— |
|
20.91 |
|
637,755 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSU |
3/16/2021 |
— |
|
— |
|
— |
|
|
— |
|
— |
|
— |
|
30,500 |
|
20.91 |
|
637,755 |
|
|
Options |
3/16/2021 |
— |
|
— |
|
— |
|
|
— |
|
— |
|
— |
|
61,000 |
|
20.91 |
|
675,270 |
|
|
Non Equity Incentive Plan Award |
— |
|
243,694 |
|
487,388 |
|
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
Maria Martinez |
|
|
|
|
|
|
|
|
|
|
|
PSU |
3/16/2021 |
— |
|
— |
|
— |
|
|
— |
|
11,800 |
|
23,600 |
|
— |
|
20.91 |
|
246,738 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSU |
3/16/2021 |
— |
|
— |
|
— |
|
|
— |
|
— |
|
— |
|
24,900 |
|
20.91 |
|
520,659 |
|
|
Options |
3/16/2021 |
— |
|
— |
|
— |
|
|
— |
|
— |
|
— |
|
23,500 |
|
20.91 |
|
260,145 |
|
|
Non Equity Incentive Plan Award |
— |
|
176,000 |
|
352,000 |
|
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
Eric Sandberg |
|
|
|
|
|
|
|
|
|
|
|
PSU |
3/16/2021 |
— |
|
— |
|
— |
|
|
— |
|
23,600 |
|
47,200 |
|
— |
|
20.91 |
|
493,476 |
|
|
RSU |
3/21/2021 |
— |
|
— |
|
— |
|
|
— |
|
— |
|
— |
|
11,800 |
|
20.91 |
|
246,738 |
|
|
Options |
3/21/2021 |
— |
|
— |
|
— |
|
|
— |
|
— |
|
— |
|
23,500 |
|
20.91 |
|
260,145 |
|
|
Non Equity Incentive Plan Award |
— |
|
200,200 |
|
400,400 |
|
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
Angelo Scopelianos, Ph.D. |
|
|
|
|
|
|
|
|
|
|
|
PSU |
3/16/2021 |
— |
|
— |
|
— |
|
|
— |
|
11,800 |
|
23,600 |
|
— |
|
20.91 |
|
246,738 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSU |
3/16/2021 |
— |
|
— |
|
— |
|
|
— |
|
— |
|
— |
|
16,500 |
|
20.91 |
|
345,015 |
|
|
Options |
3/16/2021 |
— |
|
— |
|
— |
|
|
— |
|
— |
|
— |
|
34,000 |
|
20.91 |
|
376,380 |
|
|
Non
Equity Incentive Plan Award |
— |
|
197,500 |
|
395,000 |
|
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(1) The table below provides the Grant Fair Value of PSU awards at
the Target Value and Maximum Value (in dollars):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant Date Fair Value of PSU |
|
|
|
Target Value ($) |
|
Maximum Value ($) |
|
Karen Zaderej
|
|
2,310,555 |
|
|
4,621,110 |
|
|
Peter Mariani
|
|
637,755 |
|
|
1,275,510 |
|
|
Maria Martinez
|
|
246,738 |
|
|
493,476 |
|
|
Eric Sandberg |
|
493,476 |
|
|
986,952 |
|
|
Angelo Scopelianos, Ph.D.
|
|
246,738 |
|
|
493,476 |
|
Outstanding Equity Awards at 2021 Fiscal Year End
The following tables summarize the equity awards granted to our
named executive officers that remain outstanding as of
December 31, 2021.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
Stock Awards |
|
Name |
Number of Securities Underlying Unexercised Options (#)
Exercisable(1)
|
Number of securities Underlying Unexercised Options (#)
Unexercisable(1)
|
|
Option Exercise Price ($) |
Option Expiration Date |
|
Number of Shares or Units of Stock That Have Not Vested
(#)(2)
|
Market Value of Shares of Units of Stock That Have Not Vested
($)(3)
|
Equity Incentive Plan Awards: Number of Unearned Shares, Units or
Other Rights That Have Not Vested (#)(2)
|
Equity Incentive Plan Awards: Payout Value of Unearned Shares,
Units or Other Rights That Have Not Vested ($)(3)
|
|
Karen Zaderej |
|
|
|
|
|
|
|
|
|
|
12/28/2015 |
26,746 |
|
— |
|
|
5.09 |
|
12/28/2022 |
|
— |
|
— |
|
— |
|
— |
|
|
12/29/2016 |
157,125 |
|
— |
|
|
8.95 |
|
12/29/2026 |
|
— |
|
— |
|
— |
|
— |
|
|
12/18/2017 |
75,000 |
|
— |
|
|
27.00 |
|
12/28/2027 |
|
— |
|
— |
|
19,334 |
|
181,160 |
|
|
12/27/2018 |
44,775 |
|
14,925 |
|
|
19.17 |
|
12/27/2028 |
|
4,400 |
|
41,228 |
|
20,033 |
|
187,709 |
|
|
3/16/2020 |
— |
|
80,200 |
|
|
8.61 |
|
3/16/2030 |
|
51,900 |
|
486,303 |
|
115,400 |
|
1,081,298 |
|
|
7/17/2020 |
— |
|
— |
|
|
— |
|
— |
|
— |
|
— |
|
— |
|
40,066 |
|
375,418 |
|
|
3/16/2021 |
— |
|
76,600 |
|
|
20.91 |
3/16/2031 |
|
50,000 |
|
468,500 |
|
110,500 |
|
1,035,385 |
|
|
Peter Mariani |
|
|
|
|
|
|
|
|
|
|
03/01/2016 |
145,000 |
|
— |
|
|
5.04 |
|
3/01/2023 |
|
— |
|
— |
|
— |
|
— |
|
|
12/29/2016 |
110,000 |
|
— |
|
|
8.95 |
|
12/29/2026 |
|
— |
|
— |
|
— |
|
— |
|
|
12/18/2017 |
45,000 |
|
— |
|
|
27.00 |
|
12/18/2027 |
|
— |
|
— |
|
4,367 |
|
40,919 |
|
|
12/27/2018 |
31,350 |
|
10,450 |
|
|
19.17 |
|
12/27/2028 |
|
2,625 |
|
24,596 |
|
3,366 |
|
31,539 |
|
|
03/16/2020 |
— |
|
43,000 |
|
|
8.61 |
|
3/16/2030 |
|
22,000 |
|
206,140 |
|
22,300 |
|
208,951 |
|
|
07/17/2020 |
— |
|
— |
|
|
— |
|
— |
|
— |
|
— |
|
— |
|
6,733 |
|
63,088 |
|
|
03/16/2021 |
— |
|
61,000 |
|
|
20.91 |
|
3/16/2031 |
|
30,500 |
|
285,785 |
|
30,500 |
|
285,785 |
|
|
Maria Martinez |
|
|
|
|
|
|
|
|
|
|
11/01/2018 |
30,000 |
|
10,000 |
|
|
38.25 |
|
12/27/2028 |
|
— |
|
— |
|
1,833 |
|
17,175 |
|
|
12/27/2018 |
17,400 |
|
5,800 |
|
|
19.17 |
|
12/27/2018 |
|
1,150 |
|
10,776 |
|
2,333 |
|
21,860 |
|
|
3/16/2020 |
— |
|
24,000 |
|
|
8.61 |
|
3/16/2030 |
|
17,000 |
|
159,290 |
|
14,500 |
|
135,865 |
|
|
7/17/2020 |
— |
|
— |
|
|
— |
|
— |
|
|
— |
|
— |
|
4,666 |
|
43,720 |
|
|
3/16/2021 |
— |
|
23,500 |
|
|
20.91 |
|
3/16/2031 |
|
24,900 |
|
233,313 |
|
11,800 |
|
110,566 |
|
|
Eric Sandberg |
|
|
|
|
|
|
|
|
|
|
01/22/2019 |
28,125 |
|
16,875 |
|
|
16.17 |
|
1/22/2029 |
— |
|
— |
|
— |
|
5,833 |
|
54,655 |
|
|
03/16/2020 |
— |
|
24,000 |
|
|
8.61 |
|
3/16/2030 |
12,000 |
|
12,000 |
|
112,440 |
|
23,967 |
|
224,571 |
|
|
07/17/2020 |
— |
|
— |
|
|
— |
|
— |
|
|
— |
|
— |
|
8,000 |
|
74,960 |
|
|
03/16/2021 |
— |
|
23,500 |
|
|
20.91 |
|
3/16/2031 |
|
11,800 |
|
110,566 |
|
23,600 |
|
221,132 |
|
|
Angelo Scopelianos, Ph.D. |
|
|
|
|
|
|
|
|
|
|
09/04/2018 |
30,000 |
|
10,000 |
|
|
45.00 |
|
9/04/2028 |
|
— |
|
— |
|
1,833 |
|
17,175 |
|
|
12/27/2018 |
24,675 |
|
8,225 |
|
|
19.17 |
|
12/27/2028 |
|
1,150 |
|
10,776 |
|
14,014 |
|
131,311 |
|
|
03/16/2020 |
— |
|
24,000 |
|
|
8.61 |
|
3/16/2030 |
|
22,000 |
|
206,140 |
|
14,500 |
|
135,865 |
|
|
07/17/2020 |
— |
|
— |
|
|
— |
|
— |
|
|
— |
|
— |
|
4,666 |
|
43,720 |
|
|
03/16/2021 |
— |
|
57,892 |
|
|
20.91 |
|
3/16/2031 |
|
16,500 |
|
154,605 |
|
11,800 |
|
110,566 |
|
(1)Stock
options are fully vested four years from the option grant dated
based upon a vesting schedule whereby 50% of the aggregate shares
vested on the second anniversary of the option grant date with an
additional 12.5% of aggregate shares vesting every six months
thereafter. Prior to 2017, the options granted were based upon a
vesting schedule whereby 25% of
the aggregate shares vested on the first anniversary of the option
grant date with an additional 12.5% of aggregate shares vested
every six months thereafter.
(2)Unvested
shares and units are comprised of (i) PSUs granted in 2016, 2017,
2018, 2020 and 2021, (ii) RSUs granted in 2017, 2018, February
2020, June 2020 and March 2021 and (iii) the 2018 BLA PSU
Agreements. The vesting terms for each type of award are described
below:
a.PSUs
- Each PSU represents the Company’s commitment to issue one Share
at a future date, subject to certain eligibility, performance,
vesting and other conditions set forth in the respective plan and
award agreement. All shares are subject to satisfaction of certain
performance criteria. Upon certification of the Compensation
Committee that the performance criteria is achieved, one-third of
the shares are immediately vested with the shares vesting in equal
annual installments each year thereafter,
provided that the particular officer has been continuously employed
through each vesting date as to the particular number of Shares
vesting. In the event of a “Change in Control” (as defined in the
respective award agreement), all or a portion of the PSUs shall
accelerate.
b.RSUs
- Each RSU represents the Company’s commitment to issue one Share
at a future date, subject to certain eligibility, vesting and other
conditions set forth in the respective plan and award agreement.
All shares of Axogen common stock underlying the RSUs will be fully
vested on the fourth anniversary of the grant date, based upon a
vesting schedule whereby 50% of the aggregate shares vest on second
anniversary of the grant date and an additional 25% of the
aggregate shares vest each 12 months thereafter. In the event
of a “Change in Control” (as defined in the award agreement) of the
Company, all of the RSUs shall accelerate and become fully
vested.
c.2018
BLA PSU Agreements - Each 2018 BLA PSU represents the Company’s
commitment to issue one Share at a future date, subject to certain
eligibility, performance, vesting and other conditions set forth in
the 2010 Plan and 2018 BLA PSU Agreements. Dr. Scopelianos was the
only named executive officer to receive the BLA PSUs.
(3)The
market value of unvested shares and units is based on the closing
price of our common stock on the last day of fiscal year 2021,
which was $9.37 and, with respect to PSUs, assumes target
performance.
Option Exercises and Stock Vested
The following provides information regarding the exercise of stock
options by our named executive officers and vesting of stock awards
held by our named executive officers, during 2021.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
Stock Awards |
|
|
|
Number of Shares Acquired on Exercise (#) |
|
Value Realized on Exercise ($)(1)
|
|
Shares Acquired on Vesting (#) |
|
Value Realized on Vesting ($)(1)
|
|
Karen Zaderej |
|
316,629 |
|
|
3,451,267 |
|
|
59,601 |
|
|
1,077,489 |
|
|
Peter Mariani |
|
— |
|
|
— |
|
|
19,047 |
|
|
323,052 |
|
|
Maria Martinez |
|
— |
|
— |
|
|
5,047 |
|
|
86,667 |
|
|
Eric Sandberg |
|
— |
|
— |
|
|
6,939 |
|
|
134,337 |
|
|
Angelo Scopelianos |
|
— |
|
— |
|
|
5,047 |
|
|
86,667 |
|
(1)Based
upon the closing price as reported by Nasdaq of our Common Stock at
the exercise date or vesting date, as applicable.
Potential Payments Upon Termination or Change in
Control
In this section, we described payments that may be made to our
named executive officers upon several events of termination,
including termination in connection with a Change in
Control.
Employment Agreements
Axogen Corporation is a party to employment agreements with each of
(i) Karen Zaderej, effective October 15, 2007, as amended
September 29, 2011
and as further amended and restated on November 1, 2020
(ii) Peter Mariani, effective February 25, 2016,
as amended and restated on November 1, 2020
(iii) Maria Martinez, effective October 29, 2018, as amended and
restated on November 1, 2020
(iv) Eric Sandberg
effective January 22, 2019, as amended
and restated on November 1, 2020
and (v) Angelo
Scopelianos, effective September 4, 2018, as amended and restated
on November 20, 2020 and as further amended and restated on January
4, 2021.
Axogen Corporation employs Ms. Zaderej on an "at will" basis.
In the event that termination occurs without "Substantial Cause"
(as defined below) upon or within 365 days following a "Change
in Control" (as defined below) (or 90 days preceding a Change in
Control), or for "Good Reason" (as defined below) following a
Change in Control, Ms. Zaderej will receive: (a) a separation
payment of twenty-four (24) months of base salary paid in a lump
sum within 60 days; (b) an amount equal to 200% of any bonuses or
commissions paid to Ms. Zaderej during the twelve (12) months prior
to her termination of employment; (c) payment of premiums for Ms.
Zaderej and her covered dependents’ COBRA for the first eighteen
(18) months of the COBRA continuation period; and (d) the full
acceleration of the vesting of all of Ms. Zaderej’s equity
awards.
In the event that termination occurs in the absence of a Change in
Control, Ms. Zaderej will receive (a) a separation payment of
twelve (12) months base salary paid in a lump sum within 60 days;
(b) an amount equal to 100% of any bonuses or commissions paid to
Ms. Zaderej during the year prior to her termination of employment;
and (c) payment of premiums for Ms. Zaderej and her covered
dependents’ COBRA for the first twelve (12) months of the COBRA
continuation period.
Under their respective employment agreements, each of Messrs.
Mariani and Sandberg, Dr. Scopelianos and Ms. Martinez is employed
by Axogen Corporation on an “at will” basis.
In the event Messrs. Mariani and Sandberg and Dr. Scopelianos
and Ms..Martinez are terminated without Substantial Cause upon or
within 365 days following a Change in Control (or 90 days
preceding a Change in Control), or for Good Reason following a
Change in Control, each is entitled to: (a) a separation payment of
eighteen (18) months of base salary paid in a lump sum within 60
days; (b) an amount equal to 150% of any bonuses or commissions
paid during the year prior to termination of employment; and (c)
payment of premiums for themselves and their covered dependents’
COBRA for the first eighteen (18) months of the COBRA continuation
period.
In the event Messrs. Mariani and Sandberg Dr. Scopelianos and
Ms. Martinez are terminated in the absence of a Change in Control,
each will receive, among other things, (a) a separation payment of
twelve (12) months base salary paid in a lump sum within 60 days;
(b) an amount equal to 100% of any bonuses or commissions paid
during the year prior to termination of employment and (c) a
payment of premiums for themselves and their covered dependents’
COBRA for the first twelve (12) months of the COBRA continuation
period
Messrs. Mariani,and Sandberg, Dr. Scopelianos and Ms. Martinez
are also entitled to have the Company pay the premiums for their
COBRA (i) for the first twelve (12) months of the COBRA
continuation period, or (ii) until such time as they obtain
new employment that provides reasonable and comparable healthcare
coverage (including without limitation, coverage of dependents),
whichever period is shorter.
For purposes of each of Mses. Zaderej’s and Martinez's,
Messrs. Mariani’s and Sandberg’s and Dr. Scopelianos’s employment
agreements, “Change in Control” means the occurrence of any of the
following events:
•any
person who holds less than 20% of the combined voting power of the
securities of Axogen Corporation or Axogen, becomes the beneficial
owner, directly or indirectly, of securities of Axogen Corporation
or Axogen, representing 50% or more of the combined voting power of
the securities of Axogen Corporation or Axogen then
outstanding;
•during
any period of 24 consecutive months, individuals who at the
beginning of such period constitute all members of the Board of
Directors cease, for any reason, to constitute at least a majority
of our Board of Directors, unless the election of each director who
was not a director at the beginning of the period was either
nominated for election by, or was approved by a vote of, at least
two-thirds of the directors then still in office who were directors
at the beginning of the period;
•Axogen
Corporation or Axogen consolidates or merges with another company
and Axogen Corporation or Axogen is not the continuing or surviving
corporation; provided, however, that any consolidation or
merger
whereby Axogen continues as the majority holder of Axogen
Corporation securities or a merger or consolidation of Axogen
Corporation and Axogen will not constitute a Change in
Control;
•shares
of Axogen Corporation’s or Axogen’s common stock are converted into
cash, securities, or other property (other than by a merger set
forth above) in which the holders of the Axogen Corporation’s or
Axogen’s common stock immediately prior to the merger have the same
proportionate ownership of common stock of the surviving
corporation as immediately after the merger;
•Axogen
Corporation or Axogen sells, leases, exchanges, or otherwise
transfers all or substantially all of its assets (in one
transaction or in a series of related transactions);
or
•the
holders of Axogen’s common stock approve a plan or proposal for the
liquidation or dissolution of Axogen Corporation or
Axogen.
The employment agreements of Mses. Zaderej and Martinez,
Messrs. Mariani and Sandberg and Dr. Scopelianos do not
provide for Section 280G gross up payments.
For purposes of Mses. Zaderej’s and Martinez's,
Messrs. Mariani’s and Sandberg’s and Dr. Scopelianos’s
employment agreements, “Substantial Cause” means:
•Commission
of any act of fraud, theft, or embezzlement;
•material
breach of the employment agreement, provided that Axogen
Corporation shall have first delivered to the executive officer
written notice of the alleged breach, specifying the exact nature
of the breach in detail, and provided, further, that the executive
officer shall have failed to cure or substantially mitigate such
breach within ten days after receiving such written
notice;
•material
failure to adhere to Axogen Corporation’s corporate codes, policies
or procedures which have been adopted in good faith for a valid
business purpose as in effect from time to time;
•the
failure to meet reasonable performance standards as determined by
Axogen Corporation; or
•commission
or conviction of any felony, or of any misdemeanor involving moral
turpitude, or entry of a plea of guilty or nolo contendere to any
felony or misdemeanor.
For purposes of Ms. Zaderej’s and Ms. Martinez's, Messrs.
Mariani’s and Sandberg’s and Dr. Scopelianos’ employment
agreements, “Good Reason” means the occurrence of any one or more
of the following:
•the
assignment of any duties inconsistent in any respect with such
executive officer’s position (including status, offices, titles,
and reporting requirements), authorities, duties, or other
responsibilities as in effect immediately prior to a Change in
Control or any other action by Axogen that results in a material
diminishment in such position, authority, duties, or
responsibilities, other than an insubstantial and inadvertent
action which is remedied by Axogen after receipt of notice thereof
given by the executive officer;
•a
material reduction by Axogen Corporation in the person’s base
salary absent Substantial Cause; or
•the
executive is required to perform a substantial portion of her
duties at a facility that is more than 50 miles from the facility
for which the executive performed a substantial portion of his or
her duties immediately prior to the Change in Control.
2021 Potential Payments Upon Termination or Change in
Control
In connection with a termination of employment, including if there
is a termination in connection with a Change in Control of the
Company, our named executive officers would be eligible to receive
certain payments, benefits and treatment of the various forms of
equity that such named executive officer holds (provided, in some
cases, that certain conditions are met).
The amounts that the named executive officers would receive are set
forth below based on the termination scenarios discussed
above.
In accordance with SEC rules, we have used certain assumptions in
determining the amounts shown. We have assumed that the termination
of employment or Change in Control occurred on December 31,
2021, and that the value of an Axogen share on that day was $9.37,
the closing price on Nasdaq on December 31, 2021, the last
trading day of 2021.
Contractual provisions relating to cash severance are set forth
above under “Employment Agreements.” With respect to the treatment
of outstanding equity awards upon a termination or Change in
Control, the treatment is as follows. For terminations not in
connection with a Change in Control, unvested stock options,
restricted stock units and performance stock units do not vest and
are forfeited. Upon a Change in Control, unless assumed, continued
or
substituted (and in the case of stock options issued under our 2010
stock incentive plan, in the event that within twelve
(12) months following the Change in Control, the employee is
terminated without Substantial Cause or leaves the Company for Good
Reason), stock options shall automatically accelerate and, become
fully exercisable. Upon a Change in Control (unless it was issued
under our 2019 Plan and was assumed, continued or substituted),
restricted stock units become fully-vested and nonforfeitable upon
the Change in Control; and performance stock units (unless it was
issued under our 2019 Plan and was assumed, continued or
substituted), prior to the end of the applicable performance
period, become fully vested upon a Change in Control based on the
greater of: (i) Target Performance or (ii) the expected
performance as determined by the Committee. Amounts shown in the
tables below for performance stock units are based on target
performance. All performance stock units earned but not vested will
vest immediately prior to the consummation of the Change in
Control. Amounts shown under stock options, restricted stock units
and performance stock units reflect the value based upon the
December 31, 2021, stock price of $9.37 for the option,
restricted stock unit or performance stock unit as to which vesting
will be accelerated upon the occurrence of the Change in Control or
termination event.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Karen Zaderej |
|
|
|
|
|
|
|
|
|
Qualified |
|
Qualified |
|
Upon |
|
|
|
Termination |
|
Termination |
|
Change in |
|
|
|
Prior to |
|
After |
|
Control |
|
|
|
Change in |
|
Change in |
|
Without |
|
Payment Type |
|
Control |
|
Control |
|
Termination |
|
Severance |
|
$ |
1,640,963 |
|
|
$ |
3,281,926 |
|
|
$ |
— |
|
|
Health and Welfare Benefits |
|
$ |
20,941 |
|
|
$ |
31,412 |
|
|
$ |
— |
|
|
Stock Options1
|
|
$ |
— |
|
|
$ |
60,952 |
|
|
$ |
— |
|
|
Restricted Stock Units2
|
|
$ |
— |
|
|
$ |
996,031 |
|
|
$ |
— |
|
|
Performance Stock Units1,2
|
|
$ |
— |
|
|
$ |
2,860,970 |
|
|
$ |
2,860,970 |
|
|
TOTAL |
|
$ |
1,661,904 |
|
1661904 |
$ |
7,231,291 |
|
|
$ |
2,860,970 |
|
1.All
outstanding equity vests upon a termination in connection with a
Change in Control as per her employment agreement.
2.Pursuant
to the form of award agreement, performance based restricted stock
units fully vest upon a Change in Control.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter Mariani |
|
|
|
|
|
|
|
|
|
Qualified |
|
Qualified |
|
Upon |
|
|
|
Termination |
|
Termination |
|
Change in |
|
|
|
Prior to |
|
After |
|
Control |
|
|
|
Change in |
|
Change in |
|
Without |
|
Payment Type |
|
Control |
|
Control |
|
Termination |
|
Severance |
|
$ |
800,290 |
|
|
$ |
1,200,435 |
|
|
$ |
— |
|
|
Health and Welfare Benefits |
|
$ |
28,008 |
|
|
$ |
42,012 |
|
|
$ |
— |
|
|
Stock Options
|
|
$ |
— |
|
|
$ |
32,680 |
|
|
$ |
— |
|
|
Restricted Stock Units1
|
|
$ |
— |
|
|
$ |
516,521 |
|
|
$ |
— |
|
|
Performance Stock Units2
|
|
$ |
— |
|
|
$ |
630,282 |
|
|
$ |
630,282 |
|
|
TOTAL |
|
$ |
828,298 |
|
|
$ |
2,421,930 |
|
|
$ |
630,282 |
|
1.Pursuant
to the form of award agreement, certain awards are subject to
double trigger vesting.
2.Pursuant
to the form of award agreement, performance based restricted stock
units fully vest upon a Change in Control.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maria Martinez |
|
|
|
|
|
|
|
|
|
Qualified |
|
Qualified |
|
Upon |
|
|
|
Termination |
|
Termination |
|
Change in |
|
|
|
Prior to |
|
After |
|
Control |
|
|
|
Change in |
|
Change in |
|
Without |
|
Payment Type |
|
Control |
|
Control |
|
Termination |
|
Severance |
|
$ |
627,654 |
|
|
$ |
941,481 |
|
|
$ |
— |
|
|
Health and Welfare Benefits |
|
$ |
28,008 |
|
|
$ |
42,012 |
|
|
$ |
— |
|
|
Stock Options
|
|
$ |
— |
|
|
$ |
18,240 |
|
|
$ |
— |
|
|
Restricted Stock Units1
|
|
$ |
— |
|
|
$ |
403,379 |
|
|
$ |
— |
|
|
Performance Stock Units²
|
|
$ |
— |
|
|
$ |
329,187 |
|
|
$ |
329,187 |
|
|
TOTAL |
|
$ |
655,662 |
|
|
$ |
1,734,299 |
|
|
$ |
329,187 |
|
1.Pursuant
to the form of award agreement, certain awards are subject to
double trigger vesting.
2.Pursuant
to the form of award agreement, performance based restricted stock
units fully vest upon a Change in Control.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Eric
Sandberg |
|
|
|
|
|
|
|
|
Qualified |
|
Qualified |
|
Upon |
|
Termination |
Termination |
|
Change in |
|
Prior to |
After |
|
Control |
|
Change in |
Change in |
|
Without |
|
Payment Type |
Control |
Control |
|
Termination |
|
Severance |
|
$66,301 |
|
$999,452 |
|
$ |
|
Health and Welfare Benefits |
|
$40,212 |
|
60.318 |
|
$ |
|
Stock Options1 |
|
$ |
|
18,240 |
|
$ |
|
Restricted Stock Units1 |
|
$ |
|
$233,006 |
|
$ |
|
Performance Stock Units2 |
|
$ |
|
$575,318 |
|
$575,318 |
|
TOTAL |
|
$706,513 |
|
$1,876,334 |
|
$575,318 |
1.Pursuant
to the form of award agreement, certain awards are subject to
double trigger vesting.
2.Pursuant
to the form of award agreement, performance based restricted stock
units fully vest upon a Change in Control.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Angelo Scopelianos |
|
|
|
|
|
|
|
|
|
Qualified |
|
Qualified |
|
Upon |
|
|
|
Termination |
|
Termination |
|
Change in |
|
|
|
Prior to |
|
After |
|
Control |
|
|
|
Change in |
|
Change in |
|
Without |
|
Payment Type |
|
Control |
|
Control |
|
Termination |
|
Severance |
|
$ |
693,535 |
|
|
$ |
1,040,303 |
|
|
$ |
— |
|
|
Health and Welfare Benefits |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
Stock Options
|
|
$ |
— |
|
|
$ |
18,240 |
|
|
$ |
— |
|
|
Restricted Stock Units1
|
|
$ |
— |
|
|
$ |
371,521 |
|
|
$ |
— |
|
|
Performance Stock Units2
|
|
$ |
— |
|
|
$ |
438,638 |
|
|
$ |
438,638 |
|
|
TOTAL |
|
$ |
693,535 |
|
|
$ |
1,868,702 |
|
|
$ |
438,638 |
|
1.Pursuant
to the form of award agreement, certain awards are subject to
double trigger vesting.
2.Pursuant
to the form of award agreement, performance based restricted stock
units fully vest upon a Change in Control.
DIRECTOR COMPENSATION
Our Compensation Committee reviews and makes recommendations to our
Board of Directors regarding compensation to be paid to our
non-employee directors. For the fiscal year 2021, each
non-employee director received a quarterly cash retainer payment of
$10,000, with the Lead Director receiving an additional quarterly
cash retainer payment of $6,875 for services to the Company, which
cash payment is paid in advance each quarter. The quarterly
non-Chairman committee member retainers are $2,500 for the Audit
Committee, $1,875 for the Compensation Committee, $1,250 for the
Governance, Nominating and Sustainability Committee and $1,250 for
the Science and Technology Committee. The Chairman of the Audit
Committee receives a quarterly retainer of $5,000, the Chairman of
the Compensation Committee a quarterly retainer of $3,750, the
Chairman of the Governance, Nominating and Sustainability Committee
a quarterly retainer of $2,500 and the Chairman of the Science and
Technology Committee (now known as the Quality, Compliance, and
Portfolio Management Committee) received a quarterly retainer of
$2,500. Newly elected directors receive a non-qualified stock
option grant to purchase shares of the Company’s common stock with
an equity value of $275,000 to be issued at an exercise price equal
to the fair market value of our shares of common stock on the date
of grant, which option shall vest in three equal annual
installments. Each calendar year the day after election or
re-election, all non-employee directors will receive an annual
equity grant valued at $120,000 to be issued at an exercise price
equal to the fair market value of our shares of common stock on the
date of the grant, which equity shall be issued as to one half of
the value as non-qualified stock option grant and the remaining
half of the value as Restricted Stock Units, which options and
Restricted Stock Units will vest one year from the anniversary
of the date of the grant. Such stock options are for a term of
ten years.
We also reimburse our directors for travel related
expenses.
The following table sets forth information concerning the
compensation of our non-employee directors during the year ended
December 31, 2021. Ms. Zaderej is a named executive officer who
does not receive additional compensation for her service as a
director, and therefore is not included in the table
below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned |
|
Stock |
|
|
|
All Other |
|
|
|
|
or Paid in |
|
Awards |
|
Option |
|
Compensation |
|
|
|
Name |
|
Cash ($) |
|
($)(1)
|
|
Awards($)(1)
|
|
($)(5)
|
|
Total ($) |
|
Gregory Freitag |
|
33,750 |
|
|
59,991 |
|
|
312,959 |
|
|
|
|
406,700 |
|
|
Mark Gold, M.D. |
|
65,000 |
|
|
59,991 |
|
|
59,999 |
|
|
— |
|
|
184,990 |
|
|
Amy Wendell |
|
90,625 |
|
|
59,991 |
|
|
59,999 |
|
|
— |
|
|
210,615 |
|
|
Guido J. Neels
(2)
|
|
67,500 |
|
|
59,991 |
|
|
59,999 |
|
|
— |
|
|
187,490 |
|
|
Quentin Blackford(3)
|
|
77,500 |
|
|
59,991 |
|
|
59,999 |
|
|
— |
|
|
197,490 |
|
|
Alan Levine |
|
50,000 |
|
|
59,991 |
|
|
59,999 |
|
|
— |
|
|
169,990 |
|
|
Paul Thomas |
|
50,625 |
|
|
59,991 |
|
|
59,999 |
|
|
— |
|
|
170,615 |
|
|
John Johnson
(4)
|
|
23,207 |
|
|
— |
|
|
274,998 |
|
|
17,361 |
|
|
315,566 |
|
1.The
amounts in this column are calculated based on the aggregate grant
date fair value computed in accordance with Accounting Standards
Codification (“ASC”) Topic 718 as of December 31, 2021. For
information regarding assumptions underlying the valuation of
equity awards, see Note 12 of the Consolidated Financial Statements
in our Annual Report on Form 10-K for the fiscal year
ended December 31, 2021, filed on February 25,
2022.
2.Mr. Neels
is a managing partner of EW and is EW’s director nominee pursuant
to the Stock Purchase Agreement, dated March 26, 2015, between
the Company and EW. Cash fees earned by Mr. Neels as a
director are paid to Essex, while option grants are retained by
Mr. Neels.
3.Mr.
Blackford resigned from the Board effective as of March 30,
2022.
4.Mr.
Johnson was appointed to our Board of Directors, effective as of
July 2021.
5.All
other compensation includes amounts paid to the director for
non-director services.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of our Board of Directors is currently composed
of the following directors: John Johnson, Alan Levine, Amy Wendell
and Dr. Mark Gold, all of whom qualify as an “audit committee
financial expert” under the definition promulgated by the SEC.
Mr. Johnson currently serves as the Chairman of the Audit
Committee. The Audit Committee operates under a written charter
adopted by our Board of Directors. The Audit Committee recommends
to our Board of Directors, and submits for shareholder
ratification, the appointment of our independent registered public
accounting firm.
Management is responsible for the Company’s internal controls and
the financial reporting process. Deloitte & Touche LLP is
responsible for conducting an audit of our consolidated financial
statements and internal controls in accordance with the standards
established by the Public Company Accounting Oversight Board
(“PCAOB”) and expressing an opinion on the consolidated financial
statements and internal controls in accordance with GAAP. The Audit
Committee’s responsibility is to monitor and oversee these
processes.
The Audit Committee reports as follows:
1. Management represented to the Audit
Committee that the Company’s audited consolidated financial
statements were prepared in accordance with GAAP, and the Audit
Committee has reviewed and discussed the Company’s audited
consolidated financial statements with management and the
independent auditors.
2. The Audit Committee has discussed with
the independent auditors the matters required to be discussed by
the applicable requirements of the PCAOB and the
Commission.
3. The Audit Committee has received written
disclosure and a letter from the independent accountant required by
applicable requirements of the PCAOB regarding the independent
accountant’s communications with the Audit Committee regarding the
independent accountant’s independence and the Audit Committee
concerning independence. The Audit Committee also considered
whether non-audit services provided by the independent accountant
during the last fiscal year were compatible with maintaining
the independent accountant’s independence.
Based upon the review and discussion referred to in paragraphs 1
through 3 above, the Audit Committee recommended to our Board of
Directors that the Company’s audited consolidated financial
statements be included in the Company’s Annual Report on
Form 10-K for the fiscal year ended December 31,
2021, filed with the SEC.
|
|
|
|
|
|
|
|
|
Members of the Audit Committee of the Board of
Directors: |
|
|
|
John Johnson, Chairman |
|
Dr. Mark Gold |
|
Alan Levine |
|
Amy Wendell |
PROPOSAL 2 – RATIFICATION OF APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
Our Board of Directors, based upon the recommendation of our Audit
Committee, has appointed Deloitte & Touche LLP as our
independent registered public accounting firm to examine our
financial statements and internal controls for the current
fiscal year ending December 31, 2022, and to perform
other appropriate accounting services. Deloitte & Touche
LLP has no relationship with us other than that arising from their
employment as our independent registered public accounting
firm.
Independent Registered Public Accounting Firm
Fees
Deloitte & Touche LLP provided audit services to us and
has served as our independent registered public accounting since
March 2018. Fees for professional services provided by our
independent auditors in each of the last two fiscal years, in each
of the following categories are provided in the table below. Our
Audit Committee has approved, pursuant to its pre-approval policies
described below, all of the services listed below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deloitte & Touche, LLP |
|
|
2021 |
|
2020 |
|
Audit Fees
(1)
|
|
$ |
529,434 |
|
|
$ |
543,488 |
|
|
Audit-Related Fees
(2)
|
|
15,000 |
|
|
15,000 |
|
|
Tax Fees |
|
— |
|
|
— |
|
|
All Other Fees |
|
— |
|
|
— |
|
|
Total Fees |
|
$ |
544,434 |
|
|
$ |
558,488 |
|
(1) Audit Fees consists of fees billed for professional services
rendered and expenses incurred relating to the audit of our
financial statements and internal control over financial reporting
and the review of our interim financial statements.
(2) Audit-Related Fees consist of fees billed for the work
performed in connection with our registration
statements.
Our Audit Committee reviews and pre-approves the performance of all
audit and non-audit accounting services to be performed by our
independent registered accounting firm, other than with respect to
de minimis exceptions permitted under applicable rules and
regulations. All audit
and audit-related services provided by Deloitte & Touche
LLP during 2021 and 2020 were pre-approved by our Audit
Committee.
Information Regarding Independent Registered Public Accounting
Firm
The shareholders are being asked to ratify the appointment of
Deloitte &
Touche LLP as the Company’s independent registered public
accounting firm for the fiscal year ending December 31,
2021. Although ratification is not required by law or our Amended
and Restated Bylaws, we are submitting the appointment of
Deloitte & Touche LLP to serve as our independent
registered public accounting firm for the fiscal year ending
December 31, 2021, for ratification as a matter of good
corporate governance. In the event of a negative vote on such
ratification, the Audit Committee may reconsider its selection.
Even if this appointment is ratified, the Audit Committee, in its
discretion, may direct the appointment of a different independent
registered public accounting firm at any time during the year
if the Audit Committee determines that such a change would be in
the best interests of the Company and its
shareholders.
Representatives of Deloitte & Touche LLP will be present
at the Annual Meeting, will have an opportunity to make a statement
if they desire to do so and will be available to respond to
appropriate questions from shareholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE
RATIFICATION OF DELOITTE & TOUCHE LLP AS OUR INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING
DECEMBER 31, 2022, WHICH IS DESIGNATED AS PROPOSAL
NO. 2.
PROPOSAL 3 – NON-BINDING ADVISORY VOTE ON NAMED EXECUTIVE
OFFICER COMPENSATION
We are providing our shareholders with an opportunity to vote to
approve, on an advisory, non-binding basis, the compensation of our
named executive officers as disclosed in this proxy statement. This
proposal, which is often referred to as a “say-on-pay” proposal, is
required
pursuant to Section 14A of the Securities Exchange Act and by the
Dodd-Frank Wall Street Reform and Consumer Protection Act (the
“Dodd-Frank Act”). We intend to continue our practice to hold an
advisory vote to approve our named executive officer compensation
annually based on the recommendation of our shareholders at the
2020 annual meeting.
Our executive compensation program is designed to attract,
motivate, and retain our executive officers, who are critical to
our success. As described in the tabular and narrative disclosures
regarding executive compensation set forth in this proxy statement,
our executive compensation program contains elements of cash and
equity-based compensation. We believe our program is designed to
align the interests of our named executive officers with those of
our shareholders and to reward our named executive officers for the
achievement of our near-term and longer-term financial and
strategic goals.
Our Board of Directors is asking our shareholders to approve a
non-binding advisory vote on the following resolution:
RESOLVED, that the compensation paid to our named executive
officers, as disclosed in our proxy statement for the 2022 Annual
Meeting pursuant to the rules of the SEC, including the
compensation tables and any other related disclosure, is hereby
APPROVED.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ADVISORY VOTE TO
APPROVE THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS,
WHICH IS DESIGNATED AS PROPOSAL NO. 3.
PROPOSAL 4 - APPROVAL OF THE AXOGEN, INC. SECOND AMENDED AND
RESTATED 2019 LONG-TERM INCENTIVE PLAN
The Axogen, Inc. 2019 Long-Term Incentive Plan was adopted by our
Board of Directors on May 20,
2019,
and approved by the Axogen shareholders on August 14, 2019, and an
amendment and restatement of the Axogen Inc. 2019 Long-Term
Incentive Plan was adopted by our Board of Directors on March 8,
2021, and approved by the Axogen shareholders on May 10, 2021 ( the
"2019 Plan").
On March 30, 2022, our Board of Directors unanimously approved a
second amendment and restatement of the 2019 Plan (the “A&R
2019 Plan”) to increase the maximum number of shares of common
stock that may be issued under the 2019 Plan from 5,500,000 to
8,000,000. There are no other material differences between the 2019
Plan and the A&R 2019 Plan. Our Board of Directors approved the
increase in the number of shares reserved and available for
issuance under the 2019 Plan, subject to shareholder approval and,
accordingly, our Board of Directors directed that the A&R 2019
Plan be submitted to our shareholders for approval at the
Meeting.
Current Plan Status
The 2019 Plan currently authorizes 5,500,000 shares as the maximum
aggregate number of shares that may be issued to employees,
non-employee directors, and consultants of Axogen and its
subsidiaries who are participating in the 2019 Plan. If the
shareholders do not approve the A&R 2019 Plan at the Meeting,
the proposed share increase to 8,000,000 in the maximum aggregate
number of shares of common stock that may be issued under the 2019
Plan will not occur.
Factors Regarding our Equity Usage and Needs under the A&R 2019
Plan
•Equity
is Essential to Talent Acquisition &
Retention:
A significant focus of our strategic priorities is on investing in
our people and strengthening our employee value proposition to help
us drive better outcomes for our customers, which will in turn help
us create value for stockholders. Equity-based compensation is a
critical component of our ability to both attract and retain talent
in a very competitive industry. Our Board of Directors has
concluded that our ability to attract, retain and motivate top
quality employees, non-employee directors, and consultants is
important to our success and would be enhanced by our continued
ability to make grants under the A&R 2019 Plan. In addition,
our Board of Directors believes that our interests and the
interests of our shareholders will be advanced if we can continue
to offer our employees, non-employee directors and consultants and
advisors the opportunity to acquire or increase their proprietary
interests in us. Our Board of Directors believes that the current
number of shares that may be issued under the 2019 Plan is not
sufficient in light of our compensation structure and strategy. We
expect that because of new hiring, the issuance of grants in March
2022, and other compensation needs prior to the Meeting, there will
not be sufficient shares left for anticipated grants in 2023 under
the 2019 Plan. The Board of Directors believes that additional
shares are necessary to meet our anticipated equity compensation
needs for 2023. However, a change in business conditions, our
strategy, the growth of our businesses, organically and by
acquisitions, or equity market performance, could alter this
projection.
•Estimated
Equity Usage and Share Pool Duration:
Our estimate is based on a forecast that takes into account our
anticipated rate of growth in hiring, an estimated range of our
stock price over time and our historical forfeiture rates. In
determining the amount of the increase contemplated by the proposed
amendment to the 2019 Plan, the Board of Directors has taken into
consideration the fact that, as of April 1, 2022, there were
41,976,886 shares of our common stock outstanding, If the
shareholders approve the A&R 2019 Plan, the number of shares
available for issuance under the 2019 Plan would increase by
2,500,000 to 8,000,000 shares. The requested increase represents
approximately 5.96% of the outstanding shares of common stock and
the total number of shares available for issuance under the A&R
2019 Plan would represent approximately 7.61% of our common
stock.
Historic Use of Equity and Outstanding Awards
Our Compensation Committee takes a thoughtful approach to managing
dilution and burn rate usage, by taking into account industry peer
usage and market competitiveness levels in approving equity grants
throughout the Company as part of our broader human capital
management strategy.
Burn Rate
Our historical burn rates have been 3.77 % in 2021, 4.18% in 2020
and 1.43% in 2019, calculated by dividing the number of shares
issuable pursuant to equity awards granted during the fiscal year
by the weighted-average number of shares outstanding during the
period. The historical burn rate and the potential dilution
described above may not be indicative of what the actual amounts
are in the future. Without additional shares, we would be at a
competitive disadvantage in seeking to retain and to recruit
officers and other key employees and directors on whose efforts and
skills our future success will depend.
Overhang
As of April 1, 2022, we had
4,141,676 outstanding stock options with a weighted average
exercise price of $14.10
and a weighted average remaining term of 7.02 years and
full value awards outstanding consisting of 3,555,656 restricted
stock awards, restricted stock units and performance stock units.
As of April 1, 2022, 695,513 shares remain available for issuance
out of the maximum of 5,500,000 shares currently authorized for
issuance under the 2019 Plan.
Shareholder approval is being sought to meet the NASDAQ listing
requirements applicable to equity plans. The proposed A&R 2019
Plan is attached as Appendix A to this Proxy Statement. The
material terms of the A&R 2019 Plan are summarized below. This
summary is not intended to be a complete description of the A&R
2019 Plan and is qualified in its entirety by reference to the full
text of the A&R 2019 Plan.
Material Features of the A&R 2019 Plan
Administration
Our Compensation Committee of our Board of Directors is the
administrator of the A&R 2019 Plan administers and has plenary
authority to grant awards pursuant to the terms of the A&R 2019
Plan to eligible individuals, determine the types of awards and the
number of shares covered by the awards, establish the terms and
conditions for awards and take all other actions necessary or
desirable to carry out the purpose and intent of the A&R 2019
Plan.
The Compensation Committee or Board of Directors may delegate to
other officers and employees, limited authority to perform
administrative actions under the A&R 2019 Plan to assist in its
administration to the extent permitted by applicable law and stock
exchange rules.
This delegation of authority, however, may not extend to the
exercise of discretion with respect to awards to participants who
are “covered employees” within the meaning of Section 16 of the
Securities Exchange Act.
With respect to any award to which Section 16 of the Securities
Exchange Act applies, the administrator shall consist of either our
Board of Directors or the Compensation Committee, which committee
shall consist of two or more directors, each of whom is intended to
be a “non employee director” as defined in Rule 16b-3 of the
Securities Exchange Act and an “independent director” to the extent
required by the NASDAQ Stock Market.
Any member of the administrator who does not meet the foregoing
requirements shall abstain from any decision regarding an award and
shall not be considered a member of the administrator to the extent
required to comply with Rule 16b-3 of the Securities Exchange
Act.
Eligible Participants
Any non-employee directors, officers and employees of, and other
individuals providing services to Axogen or any of its affiliates,
and who is approved by the Compensation Committee, is eligible to
receive an award under the
A&R 2019 Plan. As of April 1, 2022, approximately 403 employees
and 8 non-employee directors are eligible to receive grants under
the A&R 2019 Plan.
Shares Available For Awards
The aggregate number of shares of Axogen common stock that may be
issued under all stock-based awards made under the A&R 2019
Plan currently is 5,500,000 shares. If this Proposal 4 is approved
by the Axogen shareholders, the total number of shares authorized
for issuance under the A&R 2019 Plan will be 8,000,000 shares.
The A&R 2019 Plan includes the following limits:
•no
person may be granted any share-based award including stock options
or stock appreciation rights denominated in shares which in the
aggregate are for more than 1,000,000 shares in any taxable year;
and
•no
person may be granted cash-based performance units greater than
$1,000,000 in any taxable year.
The Compensation Committee will adjust the number of shares and
share limits described above in the event of merger, consolidation,
stock rights offering, liquidation, statutory share exchange or
similar event affecting the Company or a stock dividend, stock
split, reverse stock split, separation, spinoff, reorganization,
extraordinary dividend of cash or other property, share combination
or subdivision, or recapitalization or similar event affecting the
capital structure of the Company, to prevent dilution or
enlargement of the benefits or potential benefits intended to be
provided under the A&R 2019 Plan.
Types of Awards and Terms and Conditions
The A&R 2019 Plan permits grants of:
•stock
options (including both incentive and nonqualified stock
options);
•stock
appreciation rights (“SARs”);
•restricted
stock and restricted stock units;
•dividend
equivalents;
•performance
shares and cash-based performance units;
•stock
awards; and
•other
stock-based and cash awards.
Stock options and stock appreciation rights must have an exercise
price equal to or above the fair market value of our shares of
common stock on the date of grant except as provided under
applicable law or with respect to stock options and stock
appreciation rights that are granted in substitution of similar
types of awards of a company acquired by us or an affiliate or with
which we or our affiliate combine (whether in connection with a
corporate transaction, such as a merger, combination, consolidation
or acquisition of property or stock, or otherwise) to preserve the
intrinsic value of such awards. The term of awards may not be
longer than ten years from the date of grant. The Compensation
Committee will adjust the number of shares and share limits
described above in the event of merger, consolidation, stock rights
offering, liquidation, statutory share exchange or similar event
affecting the Company or a stock dividend, stock split, reverse
stock split, separation, spinoff, reorganization, extraordinary
dividend of cash or other property, share combination or
subdivision, or recapitalization or similar event affecting the
capital structure of the Company to prevent dilution or enlargement
of the benefits or potential benefits intended to be provided under
the A&R 2019 Plan.
Stock Options.
The holder of an option will be entitled to purchase a number of
shares of Axogen common stock at a specified exercise price during
a specified time period, all as determined by the Compensation
Committee. Stock options may be granted in the form of incentive
stock options, which are intended to qualify for favorable
treatment for the recipient under U.S. federal tax law, or as
nonqualified stock options, which do not qualify for this favorable
tax treatment. Only employees of the Company or its subsidiaries
may receive tax-qualified incentive stock options. The Compensation
Committee may establish sub-plans under the A&R 2019 Plan
through which to grant stock options that qualify for preferred tax
treatment for recipients in jurisdictions outside the United
States. As of April 1, 2022, the fair market value of a share of
Axogen common stock was $8.16 as reported on the Nasdaq Capital
Market.
Stock Appreciation Rights.
The holder of a SAR is entitled to receive an amount in cash,
shares of our common stock or both equal to the fair market value
of the shares subject to the award on the date of exercise minus
the exercise price of the award.
Restricted Stock and Restricted Stock Units.
The holder of restricted stock will own actual shares of our common
stock that are issued to the participant, but that are subject to
forfeiture if the participant does not remain employed by us for a
certain period of time and/or if certain performance goals are not
met. Except for these restrictions and any others imposed by the
Compensation Committee, the participant will generally have all of
the rights of a shareholder with respect to the restricted stock,
including the right to vote the restricted stock, but will not be
permitted to sell, assign, transfer, pledge or otherwise encumber
shares of restricted stock before the risk of forfeiture lapses.
Dividends declared payable on shares of restricted stock that are
granted subject to risk of forfeiture conditioned solely on
continued service over a period of time or subject to risk of
forfeiture conditioned on satisfaction of performance goals will be
held by us and made subject to forfeiture at least until the
applicable service condition or performance goal related to such
shares of restricted stock has been satisfied. An award of
restricted stock units represents a contractual obligation of the
Company to deliver a number of shares of our common stock, an
amount in cash equal to the fair market value of the specified
number of shares subject to the award, or a combination of shares
and cash. Until shares of our common stock are issued to the
participant in settlement of stock units, the participant will not
have any rights of a shareholder of the Company with respect to the
stock units or the shares issuable pursuant to the stock units.
Vesting of restricted stock units may be made subject to
performance goals, the continued service of the participant or
both. The Compensation Committee may provide that dividend
equivalents will be paid or credited with respect to restricted
stock units, but such dividend equivalents will be held by us and
made subject to forfeiture at least until any applicable
performance goal or time-based vesting condition related to the
restricted stock units has been satisfied.
Performance Awards.
An award of performance shares, as that term is used in the A&R
2019 Plan, refers to shares of our common stock or stock units that
are expressed in terms of our common stock, the issuance, vesting,
lapse of restrictions or payment of which is contingent on
performance as measured against predetermined objectives over a
specified performance period. An award of performance units, as
that term is used in the A&R 2019 Plan, refers to
dollar-denominated units valued by reference to designated criteria
established by the Compensation Committee, other than our common
stock, whose issuance, vesting, lapse of restrictions or payment is
contingent on performance as measured against predetermined
objectives over a specified performance period. The applicable
award agreement will specify whether performance shares and
performance units will be settled or paid in cash or shares of our
common stock or a combination of both, or will reserve to the
Compensation Committee or the participant the right to make that
determination prior to or at the payment or settlement
date.
The Compensation Committee will, prior to or at the time of grant,
condition the grant, vesting or payment of, or lapse of
restrictions on, an award of performance shares or performance
units upon (A) the attainment of performance goals during a
performance period or (B) the attainment of performance goals and
the continued service of the participant. The length of the
performance period, the performance goals to be achieved during the
performance period, and the measure of whether and to what degree
such performance goals have been attained will be conclusively
determined by the Compensation Committee in the exercise of its
absolute discretion. Performance goals may include minimum, maximum
and target levels of performance, with the size of the award or
payout of performance shares or performance units or the vesting or
lapse of restrictions with respect thereto based on the level
attained. An award of performance shares or performance units will
be settled as and when the award vests or at a later time specified
in the award agreement or in accordance with an election of the
participant, if the Compensation Committee so permits, that meets
the requirements of Section 409A of the Code.
Other Stock-Based Awards.
The Compensation Committee may from time to time grant to eligible
individuals awards in the form of other stock-based or cash awards
on such terms and conditions as the Compensation Committee may
determine, including, without limitation, cash awards in connection
with any short-term or long-term cash incentive program established
by the Company or an affiliate. Other stock-based or cash awards in
the form of dividend equivalents may be settled in cash or common
stock as determined by the Compensation Committee; provided,
however, that dividend equivalents payable on other stock-based or
cash awards will be accrued and made subject to forfeiture at least
until achievement of the applicable service condition or
performance goal related to such other stock-based or cash awards.
Any such settlements, and any such crediting of
dividend
equivalents, may be subject to such conditions, restrictions and
contingencies as the Compensation Committee may
establish.
Accounting for Awards
When the 2019 Plan first became effective, 3,000,000 shares of our
common stock plus those shares that were available under the
Axogen, Inc. 2010 Stock Incentive Plan (Amended and Restated as of
April 5, 2017) (the “Prior Plan”) immediately prior to the
effective date of the 2019 Plan plus future forfeitures from the
Prior Plan were issuable pursuant to awards to be granted under the
2019 Plan (the “Share Pool”).
No further awards were granted under the Prior Plan once the 2019
Plan became effective.
The Share Pool will be reduced by one share for each share of our
common stock made subject to an award granted under the A&R
2019 Plan. The Share Pool will be increased by the number of
unissued shares of our common stock underlying or used as a
reference measure for any award or portion of an award granted
under the 2019 A&R Plan or the Prior Plan that is cancelled,
forfeited, expired, terminated unearned or settled in cash, in any
such case without the issuance of shares. The Share Pool will be
increased by the number of shares of our common stock that are
forfeited back to us after issuance due to a failure to meet an
award contingency or condition with respect to any award or portion
of an award granted under the 2019 Plan or the Prior Plan. The
Share Pool will not be increased, however, by (i) shares of common
stock used as a reference measure for any award that are not issued
upon settlement of such award due to a net settlement or (ii) the
number of shares of our common stock withheld by or surrendered
(either actually or through attestation) to us in payment of the
exercise price or any tax withholding obligation that arises in
connection with any award granted under the 2019 Plan or the Prior
Plan.
Duration, Termination and Amendment
Unless terminated by our Board of Directors, the A&R 2019 Plan
will expire on March 7, 2032. No awards may be made after that
date. Our Board of Directors may terminate, amend or modify the
A&R 2019 Plan, or any portion of it, at any time, although
shareholder approval must be obtained for any amendment to the
A&R 2019 Plan that would: (i) materially increase the benefits
accruing to participants under the A&R 2019 Plan, (ii) increase
the number of shares of our common stock which may be issued under
the A&R 2019 Plan or to a participant, (iii) materially expand
the eligibility for participation in the A&R 2019 Plan, (iv)
eliminate or modify the prohibition on repricing of stock options
and stock appreciation rights, (v) lengthen the maximum term or
lower the minimum exercise price or base price permitted for stock
options and stock appreciation rights, or (vi) modify the
prohibition on the issuance of reload or replenishment
options.
Prohibition on Repricing Awards and Award Adjustments, and
Additional Governance-Related Protections
Except in connection with a corporate transaction involving the
Company (including, without limitation, any stock dividend, stock
split, extraordinary cash dividend, recapitalization,
reorganization, merger, consolidation, split-up, spin-off,
combination, or exchange of shares), the terms of stock options and
stock appreciation rights granted under the A&R 2019 Plan may
not be amended, after the date of grant, to reduce the exercise
price of such stock options or stock appreciation rights, nor may
outstanding stock options or stock appreciation rights be canceled
in exchange for (i) cash, (ii) stock options or stock appreciation
rights with an exercise price that is less than the exercise price
of the original outstanding stock options or stock appreciation
rights, or (iii) other awards, unless such action is approved by
our shareholders.
The A&R 2019 Plan does not contain an evergreen provision, and
shareholder approval is required to increase the number of shares
of our common stock that may be issued under the A&R 2019 Plan.
Except as provided above, each award granted under the A&R 2019
Plan will be subject to a minimum restriction period of 12 months
from: (a) the date of grant if vesting is time based; or (b) the
lapse of restrictions on such award if based on the satisfaction of
performance goals. Generally, the Compensation Committee does not
have discretionary authority to waive the minimum restriction
period applicable to an award, except in the case of death,
disability, retirement, or a Change in Control of the Company and
subject to a de minimis rule. The Compensation Committee, however,
does have discretion to grant awards that do not adhere to these
minimum restriction period requirements, or otherwise may waive the
requirements, with respect to awards for up to 5% of the initial
share pool. The A&R 2019 Plan does not provide for dividend
payments on unvested awards.
Transferability of Awards
Except in certain limited situations permitted under the A&R
2019 Plan, awards (other than incentive stock options) under the
A&R 2019 Plan may only be transferred by will or by the laws of
descent and distribution.
The Compensation Committee may impose share transferability
restrictions on any shares acquired pursuant to an award as it may
deem advisable, including, without limitation, restrictions under
applicable federal securities laws, under the requirements of any
stock exchange or market upon which such shares are then listed
and/or traded, and under any blue sky or state securities laws
applicable to such shares.
U.S. Federal Income Tax Consequences
The following discussion is intended only as a general summary of
the material U.S. federal income tax consequences of awards issued
under the A&R 2019 Plan, based upon the provisions of the Code
as of the date of this proxy statement, for the purposes of
shareholders considering how to vote on this proposal. It is not
intended as tax guidance to participants in the A&R 2019 Plan.
This summary does not take into account certain circumstances that
may change the income tax treatment of awards for individual
participants, and it does not describe the state income tax
consequences of any award or the taxation of awards in
jurisdictions outside of the U.S.
Stock Options and Stock Appreciation Rights.
The grant of a stock option or stock appreciation right generally
has no income tax consequences for a participant or the Company.
Likewise, the exercise of an incentive stock option generally does
not have income tax consequences for a participant or the Company,
except that it may result in an item of adjustment for alternative
minimum tax purposes for the participant. A participant usually
recognizes ordinary income upon the exercise of a nonqualified
stock option or stock appreciation right equal to the fair market
value of the shares or cash payable (without regard to income or
employment tax withholding) minus the exercise price, if
applicable. We should generally be entitled to a deduction for
federal income tax purposes equal to the amount of ordinary income
recognized by the participant as a result of the exercise of a
nonqualified stock option or stock appreciation right.
If a participant holds the shares acquired under an incentive stock
option for the time specified in the Code (at least two years
measured from the grant date and one year measured from the
exercise date), any gain or loss arising from a subsequent
disposition of the shares will be taxed as long-term capital gain
or loss. If the shares are disposed of before the holding period is
satisfied, the participant will recognize ordinary income equal to
the lesser of (1) the amount realized upon the disposition and (2)
the fair market value of such shares on the date of exercise minus
the exercise price paid for the shares. Any ordinary income
recognized by the participant on the disqualifying disposition of
the shares generally entitles us to a deduction by us for federal
income tax purposes. Any disposition of shares acquired under a
nonqualified stock option or a stock appreciation right will
generally result only in capital gain or loss for the participant,
which may be short- or long-term, depending upon the holding period
for the shares.
Full Value Awards.
Any cash and the fair market value of any shares of common stock
received by a participant under a full value award are generally
includible in the participant’s ordinary income. In the case of
restricted stock awards, this amount is includible in the
participant’s income when the awards vest, unless the participant
has filed an election with the Internal Revenue Service to include
the fair market value of the restricted shares in income as of the
date the award was granted. In the case of restricted stock units,
performance shares and performance units, generally the value of
any cash and the fair market value of any shares of common stock
received by a participant are includible in income when the awards
are paid. Any dividends or dividend equivalents paid on unvested
full value awards are also ordinary income for
participants.
Cash-Based Awards/Incentive Awards.
Any cash payments an employee receives in connection with
cash-based awards, including cash incentive awards, are includible
in income by the participant in the year received or made available
to the participant without substantial limitations or
restrictions.
Deductibility of Compensation.
Section 162(m) of the Code generally limits our ability to deduct
for tax purposes compensation in excess of $1.0 million per year
for each of our principal executive officer, our principal
financial officer and additional highest compensated officers
during any taxable year beginning after December 31,
2016. Compensation resulting from awards under the 2019 Equity
Incentive Plan will be counted toward the $1.0 million
limit.
Section 409A.
Section 409A of the Code provides special tax rules applicable to
programs that provide for a deferral of compensation. Failure to
comply with those requirements will result in accelerated
recognition of U.S. federal income tax purposes along with an
additional tax equal to 20% of the amount included in U.S. federal
income, and interest on deemed underpayments in certain
circumstances. The 2019 Plan and awards are intended to comply with
or be exempt from the requirements of Section 409A.
Awards Granted
No awards have been previously granted under the A&R 2019 Plan.
The number of awards (if any) that may be received by individual
employees or groups of employees under the A&R 2019 Plan is in
the discretion of the Compensation Committee and therefore cannot
be determined in advance.
For illustrative purposes only, the following table sets forth (i)
the number shares of our Common Stock subject to stock options,
restricted stock awards and performance stock awards granted during
the year ended December 31, 2021 under our 2019 Plan, and (ii) the
weighted average exercise price per share of these options, for all
named executive officers as a group, for all non-employee directors
as a group and for all employees (excluding named executive
officers) as a group.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Identity of Group |
Number of Options
|
Weighted Average Exercise Price Per Option |
Number of Restricted Stock Awards |
Number of Performance Stock Awards |
|
All named executive officers, as a group
|
1,255,271 |
|
15.80 |
|
267,925 |
|
515,944 |
|
|
All non-employee directors, as a group |
357,259 |
|
16.29 |
|
18,216 |
|
— |
|
|
All employees (excluding named executive officers), as a
group
|
1,582,208 |
|
15.40 |
|
680,927 |
|
612,249 |
|
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
APPROVAL OF THE AXOGEN, INC. SECOND AMENDED AND RESTATED LONG-TERM
INCENTIVE 2019 PLAN, WHICH IS DESIGNATED AS PROPOSAL NO.
4.
PROPOSAL 5
APPROVAL OF AN AMENDMENT TO THE AXOGEN, INC. AMENDED AND RESTATED
BYLAWS TO ALLOW OUR BOARD OF DIRECTORS TO DETERMINE THE NUMBER OF
DIRECTORS
Subject to shareholder approval, on March 30, 2022, our Board of
Directors approved an amendment to our Amended and Restated Bylaws
(the “Current Bylaws”) to allow our Board of Directors to determine
the number of authorized directors.
Current Bylaw Provision
Currently, Article 3, Section 3.2 of the Current Bylaws provides
that the number of directors shall be nine, which number may be
increased or decreased from time to time by resolution of the
shareholders (subject to the authority of our Board of Directors to
increase or decrease the number of directors as permitted by
law).
Summary of Bylaw Amendment and Background
Proposal 5, if approved, would amend and restate Article 3, Section
3.2 of the Current Bylaws as follows:
“3.2
Number, Qualification and Terms of Office.
The number of directors shall be
nine, which number of directors may be increased or decreased from
time to time by resolution of the shareholders (subject to the
authority of the Board of Directors to increase or decrease the
number of directors as permitted by law)
The business and affairs of this corporation shall be managed by or
under its Board of Directors which shall be comprised of one or
more members as determined from time to time by resolution of the
directors serving at the time such action is
taken.
Directors need not be shareholders or residents of the State of
Minnesota. Each of the directors shall hold office until the
regular meeting of shareholders next held after such director’s
election and until such director’s successor shall have been
elected and shall qualify, or until the earlier death, resignation,
removal or disqualification of such director.
Our Board of Directors believe that the foregoing proposed
amendment to the Current Bylaws is in our best interests because it
will provide us with flexibility to determine the size of our Board
of Directors which will allow us to properly accommodate our needs
in the future. The Current Bylaws require a shareholder vote each
time the Board of Directors believes it is in the best interest of
the Company to decrease the size of the Board which in turn means
that the implementation of any decrease in the size of the Board of
the Directors would be delayed until a shareholder meeting could
take place.
If Proposal 5 is approved by the shareholders, the shareholders
will no longer have the ability to set or change the number of
directors. Instead, the then current Board of Directors would be
able to set or change the number of directors, based on a
resolution duly approved by the Board of Directors.
Required Vote
Section 302A.181 of the Minnesota Business Corporation Act provides
that “After the adoption of the initial bylaws, the board shall not
adopt, amend, or repeal a bylaw fixing a quorum for meetings of
shareholders, prescribing procedures for removing directors or
filling vacancies in the board, or fixing the number of directors
or their classifications, qualifications, or terms of office, but
may adopt or amend a bylaw to increase the number of directors.”
Furthermore, Article 3, Section 3.2 of the Current Bylaws requires
the approval of shareholders to approve any increase or decrease in
the size of our Board of Directors (subject to the authority of our
Board of Directors to increase or decrease the number of directors
as permitted by law). Accordingly, because this Proposal 5 would
change the bylaw fixing the number of directors and our Board of
Directors authority to increase or decrease the same, shareholder
approval is required to adopt the proposed amendment to Article 3,
Section 3.2 of the Current Bylaws.
The amendment described in this Proposal 5 will not become
effective unless approved by the affirmative vote of at least a
majority of the shareholders entitled to vote and represented at
the Meeting. If this Proposal 5 is approved, the proposed amendment
to the Current Bylaws will be effective immediately following the
conclusion of the Meeting. If this Proposal 5 is not approved,
Article 3, Section 3.2 of the Current Bylaws will not be
amended.
The description of the proposed amendment to the Current Bylaws set
forth in this Proposal 5 is only a summary and is qualified in its
entirety by reference to the full text of Amendment No. 1 to
Axogen, Inc.’s Amended and Restated Bylaws, a copy of which is
provided in
Appendix B
to this Proxy Statement.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” THE
APPROVAL OF AMENDMENT NO. 1 TO THE AXOGEN, INC. AMENDED AND
RESTATED BYLAWS TO ALLOW OUR BOARD OF DIRECTORS TO DETERMINE THE
NUMBER OF DIRECTORS, WHICH IS DESIGNATED AS PROPOSAL NO.
5.
PROPOSALS FOR OUR 2023 ANNUAL MEETING
In connection with any matter to be proposed by a shareholder to be
considered at our 2023 Annual Meeting of Shareholders, a written
notice of business that a shareholder wishes to present for
consideration at our 2023 Annual Meeting of Shareholders (including
nominees for election to our Board of Directors at our 2023 Annual
Meeting of Shareholders) must be delivered to our principal
executive offices, 13631 Progress Blvd., Suite 400, Alachua, FL
32615, Attention: Corporate Secretary not later than the close of
business 90 days nor earlier than the close of business on the
120th day prior to the anniversary date of the Meeting;
provided, however,
if the regular meeting is called for a date that is not within 30
days before or after such anniversary date, notice must be so
received not later than the close of business on the 10th day
following the day on which such notice of the date of the meeting
was mailed or public disclosure of the date of the meeting was
made, whichever occurs first. The notice must also meet other
requirements specified in Section 2.3 and 2.4, as applicable, of
our Amended and Restated Bylaws.
ANNUAL REPORT ON FORM 10-K
Our Annual Report on Form 10-K including financial statements
for the year ended December 31, 2021, accompanies, or has
been mailed to you immediately prior to, this Proxy Statement. Our
2021 Annual Report on Form 10-K is also available in the
“Investors” section of our website at https://www.axogeninc.com. If
requested in writing by a person solicited by this Proxy Statement,
we will provide you without charge a copy of our Annual Report on
Form 10-K as filed with the SEC for our most recently
completed fiscal year. Such request should be sent to our
General Counsel at Axogen, Inc., 13631 Progress Blvd.,
Suite 400, Alachua, FL 32615.
“HOUSEHOLDING” OF PROXY MATERIALS
The SEC rules allow a single copy of this Proxy Statement and our
2021 Annual Report on Form 10-K to be delivered to multiple
shareholders sharing the same address in a manner provided by these
rules unless contrary instructions have been received from
such shareholders. This practice is referred to as “householding”
and can result in significant savings of paper and mailing costs.
Although we do not household for our registered shareholders, some
brokers household Axogen proxy statements and annual reports,
delivering a single copy of each to multiple shareholders sharing
an address unless contrary instructions have been received from the
affected shareholders. Once you have received notice from your
broker that they will be householding materials to your address,
householding will continue until you are notified otherwise or
until you revoke your consent. If, at any time, you no longer wish
to participate in householding and would prefer to receive a
separate copy of our proxy statement or annual report, or if you
are receiving multiple copies of either document and wish to
receive only one, please notify your broker. We will deliver
promptly upon written or oral request a separate copy of our Proxy
Statement, Notice of Internet Availability of Proxy Materials
and/or our 2021 Annual Report on Form 10-K as applicable, to a
shareholder at a shared address to which a single copy of either
document was delivered. For copies of any or all such documents,
shareholders should write to or call our Corporate Secretary at
Axogen, Inc., 13631 Progress Blvd., Suite 400, Alachua,
FL 32615, or (368) 462-6800, respectively.
OTHER MATTERS
Our Board of Directors does not know of any other business to come
before our 2022 Annual Meeting of Shareholders. If any other
matters are properly brought before the meeting, however, the
persons named in the accompanying proxy will vote in accordance
with their best judgment.
Your cooperation in giving this matter your immediate attention and
in returning your proxy promptly will be appreciated.
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Sincerely, |
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Karen Zaderej |
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Chairman, Chief Executive Officer and President |
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April 14, 2022 |
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APPENDIX A
AXOGEN, INC.
SECOND AMENDED AND RESTATED 2019 LONG-TERM INCENTIVE
PLAN
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TABLE OF CONTENTS |
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Page
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1 |
History; Effective Date |
1 |
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2 |
Purposes of the Plan
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1 |
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3 |
Terminology
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1 |
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4 |
Administration
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1 |
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(a) Administration of the Plan
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1 |
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(b) Powers of the Administrator
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1 |
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(c) Delegation of Administrative Authority
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3 |
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(d) Non-Uniform Determinations |
3 |
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(e) Limited Liability; Advisors
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3 |
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(f) Indemnification
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3 |
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(g) Effect of Administrator’s Decision
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3 |
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5 |
Shares Issuable Pursuant to Awards
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4 |
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(a) Initial Share Pool |
4 |
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(b) Adjustments to Share Pool |
4 |
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(c) Subject to adjustment as provided in Section 10 of the
Plan |
4 |
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(d) Non-Employee Director Award Limit |
5 |
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(e) ISO Limit |
5 |
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(f) Source of Shares |
5 |
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6 |
Participation
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5 |
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7 |
Awards
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5 |
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(a) Awards, In General |
5 |
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(b) Vesting Restrictions |
6 |
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(c) Stock Options |
6 |
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(d) Rights of a Stockholder; Dividends |
6 |
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(e)
Stock Appreciation Rights
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7 |
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(f) Repricing
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7 |
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(g) Stock Awards
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8 |
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(h) Stock Units
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9 |
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(i) Performance Shares and Performance Units
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9 |
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(j) Other Stock-Based Awards
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10 |
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(k) Awards to Participants Outside the United States
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11 |
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(l) Limitation on Dividend Reinvestment and Dividend
Equivalents
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11 |
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8 |
Withholding of Taxes
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11 |
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9 |
Transferability of Awards
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11 |
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(a) General Nontransferability Absent Administrator
Permission |
11 |
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(b) Administrator Discretion to Permit Transfers Other Than For
Value |
12 |
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10 |
Adjustments for Corporate Transactions and Other Events |
12 |
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(a) Mandatory Adjustments
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12 |
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(b) Discretionary Adjustments
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12 |
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(c) Adjustments to Performance Goals
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13 |
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(d) Statutory Requirements Affecting Adjustments
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13 |
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(e) Dissolution or Liquidation
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13 |
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11 |
Change in Control Provisions
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13 |
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(a) Termination of Awards
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13 |
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(b) Continuation, Assumption or Substitution of Awards
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14 |
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(c) Other Permitted Actions
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14 |
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(d) Section 409A Savings Clause
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14 |
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12 |
Substitution of Awards in Mergers and Acquisitions
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15 |
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13 |
Compliance with Securities Laws; Listing and
Registration
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15 |
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14 |
Section 409A Compliance
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16 |
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15 |
Plan Duration; Amendment and Discontinuance
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16 |
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(a) Plan Duration
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16 |
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(b) Amendment and Discontinuance of the Plan
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17 |
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(c) Amendment of Awards
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17 |
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16 |
General Provisions
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17 |
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(a) Non-Guarantee of Employment or Service
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17 |
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(b) No Trust or Fund Created
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17 |
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(c) Status of Awards
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18 |
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(d) Subsidiary Employees
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18 |
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(e) Governing Law and Interpretation
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18 |
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(f) Use of English Language
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18 |
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(g) Recovery of Amounts Paid
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18 |
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17 |
Glossary |
19 |
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1.History;
Effective Date.
AXOGEN, INC., a Minnesota corporation, (“Axogen”),
has established the AXOGEN, INC. 2019 LONG-TERM INCENTIVE PLAN, as
set forth herein, and as the same may be amended from time to time
(the “Plan”).
The Plan was first adopted by the Board of Directors of Axogen (the
“Board”)
on May 20, 2019 and approved by the shareholders on August 14, 2019
and as amended and restated, was adopted by the Board on March 8,
2021 and approved by the shareholders on May 10, 2021. The Plan, as
amended and restated herein, was adopted by the Board on March 30,
2022. The Plan as amended and restated herein shall be subject to
approval by the shareholders of the Company at the meeting of
shareholders of the Company to be held on May 25, 2022, and the
amended and restated Plan shall be effective as of the date of such
shareholder approval (the “Effective
Date”).
No awards will be made under the Axogen, Inc. 2010 Stock Incentive
Plan (Amended and Restated as of April 5, 2017) (the
“Prior Plan”)
on or after the Effective Date.
2.Purposes
of the Plan.
The Plan is designed to:
(a) promote the long-term financial interests and growth of Axogen
and its Subsidiaries (together, the “Company”)
by attracting and retaining management and other personnel and key
service providers with the training, experience and ability to
enable them to make a substantial contribution to the success of
the Company’s business;
(b) motivate management personnel by means of growth-related
incentives to achieve long-range goals; and
(c) further the alignment of interests of Participants with those
of the stockholders of Axogen through opportunities for increased
stock or stock-based ownership in Axogen.
Toward these objectives, the Administrator may grant stock options,
stock appreciation rights, stock awards, stock units, performance
shares, performance units, and other stock-based awards to eligible
individuals on the terms and subject to the conditions set forth in
the Plan.
3.Terminology.
Except as otherwise specifically provided in an Award Agreement,
capitalized words and phrases used in the Plan or an Award
Agreement shall have the meaning set forth in the glossary at
Section 17 of the Plan or as defined the first place such word or
phrase appears in the Plan.
4.Administration.
a.Administration
of the Plan.
The Plan shall be administered by the Administrator.
b.Powers
of the Administrator.
The Administrator shall, except as otherwise provided under the
Plan, have plenary authority, in its sole and absolute discretion,
to grant Awards pursuant to the terms of the Plan to Eligible
Individuals and to take all other actions necessary or desirable to
carry out the purpose and intent of the Plan. Among other things,
the Administrator shall have the authority, in its sole and
absolute discretion, subject to the terms and conditions of the
Plan to:
(i) determine the Eligible Individuals to whom, and the time or
times at which, Awards shall be granted;
(ii) determine the types of Awards to be granted any Eligible
Individual;
(iii) determine the number of shares of Common Stock to be covered
by or used for reference purposes for each Award or the value to be
transferred pursuant to any Award;
(iv) determine the terms, conditions and restrictions applicable to
each Award (which need not be identical) and any shares acquired
pursuant thereto, including, without limitation, (A) the purchase
price of any shares of Common Stock, (B) the method of payment for
shares purchased pursuant to any Award, (C) the method for
satisfying any tax withholding obligation arising in connection
with any Award, including by the withholding or delivery of shares
of Common Stock, (D) the timing, terms and conditions of the
exercisability, vesting or payout of any Award or any shares
acquired pursuant thereto, (E) the Performance Goals applicable to
any Award and the extent to which such Performance Goals have been
attained, (F) the time of the expiration of any Award, (G) the
effect of the Participant’s Termination of Service on any of the
foregoing, and (H) all other terms, conditions and restrictions
applicable to any Award or shares acquired pursuant thereto as the
Administrator shall consider to be appropriate and not inconsistent
with the terms of the Plan;
(v) subject to Sections 7(e), 10(c) and 15, modify, amend or adjust
the terms and conditions of any Award;
(vi) accelerate or otherwise change the time at or during which an
Award may be exercised or becomes payable and waive or accelerate
the lapse, in whole or in part, of any restriction, condition or
risk of forfeiture with respect to such Award;
provided,
however,
that, except in connection with death, disability or a Change in
Control, no such change, waiver or acceleration shall be made to
any Award that is considered “deferred compensation” within the
meaning of Section 409A of the Code if the effect of such action is
inconsistent with Section 409A of the Code;
(vii) determine whether an Award will be paid or settled in cash,
shares of Common Stock, or in any combination thereof and whether,
to what extent and under what circumstances cash or shares of
Common Stock payable with respect to an Award shall be deferred
either automatically or at the election of the
Participant;
(viii) for any purpose, including but not limited to, qualifying
for preferred or beneficial tax treatment, accommodating the
customs or administrative challenges or otherwise complying with
the tax, accounting or regulatory requirements of one or more
jurisdictions, adopt, amend, modify, administer or terminate
sub-plans, appendices, special provisions or supplements applicable
to Awards regulated by the laws of a particular jurisdiction, which
sub-plans, appendices, supplements and special provisions may take
precedence over other provisions of the Plan, and prescribe, amend
and rescind rules and regulations relating to such sub-plans,
supplements and special provisions;
(ix) establish any “blackout” period, during which transactions
affecting Awards may not be effectuated, that the Administrator in
its sole discretion deems necessary or advisable;
(x) determine the Fair Market Value of shares of Common Stock or
other property for any purpose under the Plan or any
Award;
(xi) administer, construe and interpret the Plan, Award Agreements
and all other documents relevant to the Plan and Awards issued
thereunder, and decide all other matters to be determined in
connection with an Award;
(xii) establish, amend, rescind and interpret such administrative
rules, regulations, agreements, guidelines, instruments and
practices for the administration of the Plan and for the conduct of
its business as the Administrator deems necessary or
advisable;
(xiii) correct any defect, supply any omission or reconcile any
inconsistency in the Plan or in any Award or Award Agreement in the
manner and to the extent the Administrator shall consider it
desirable to carry it into effect; and
(xiv) otherwise administer the Plan and all Awards granted under
the Plan.
c.
Delegation of Administrative Authority.
The Administrator may designate officers or employees of the
Company to assist the Administrator in the administration of the
Plan and, to the extent permitted by applicable law and stock
exchange rules, the Administrator may delegate to officers or other
employees of the Company the Administrator’s duties and powers
under the Plan, subject to such conditions and limitations as the
Administrator shall prescribe, including without limitation the
authority to execute agreements or other documents on behalf of the
Administrator; provided, however, that such delegation of authority
shall not extend to the granting of, or exercise of discretion with
respect to, Awards to Eligible Individuals who are officers under
Section 16 of the Exchange Act.
d.Non-Uniform
Determinations.
The Administrator’s determinations under the Plan (including
without limitation, determinations of the persons to receive
Awards, the form, amount and timing of such Awards, the terms and
provisions of such Awards and the Award Agreements evidencing such
Awards, and the ramifications of a Change in Control upon
outstanding Awards) need not be uniform and may be made by the
Administrator selectively among Awards or persons who receive, or
are eligible to receive, Awards under the Plan, whether or not such
persons are similarly situated.
e.Limited
Liability; Advisors.
To the maximum extent permitted by law, no member of the
Administrator shall be liable for any action taken or decision made
in good faith relating to the Plan or any Award thereunder. The
Administrator may employ counsel, consultants, accountants,
appraisers, brokers or other persons. The Administrator, Axogen,
and the officers and directors of Axogen shall be entitled to rely
upon the advice, opinions or valuations of any such
persons.
f.Indemnification.
To the maximum extent permitted by law, by Axogen’s charter and
by‑laws, and by any directors’ and officers’ liability insurance
coverage which may be in effect from time to time, the members of
the Administrator and any agent or delegate of the Administrator
who is a director, officer or employee of Axogen or an Affiliate
shall be indemnified by Axogen against any and all li