UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed
by the Registrant ☑
Filed
by a Party other than the Registrant ☐
Check
the appropriate box:
☐
Preliminary Proxy Statement
☐
Confidential, For Use of the Commission Only (As Permitted by Rule
14a-6(e)(2))
☑
Definitive Proxy Statement
☐
Definitive Additional Materials
☐
Soliciting Material under Rule 14a-12
Cellular Biomedicine Group, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment
of Filing Fee (Check the appropriate box):
☑
No fee required
☐
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1)
Title of each class of securities to which transaction
applies:
(2)
Aggregate number of securities to which transaction
applies:
(3) Per
unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was
determined):
(4)
Proposed maximum aggregate value of transaction:
(5)
Total fee paid:
☐
Fee paid previously with preliminary materials.
☐
Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the form or schedule and the date
of its filing.
(1)
Amount Previously Paid:
(2)
Form, Schedule or Registration Statement No.:
(3)
Filing Party:
(4)
Date Filed:
1345 Avenue of the Americas, 15th
Floor
New York, New York
Dear
Stockholders:
You are
invited to attend the Annual Meeting of Stockholders (the
“Annual
Meeting”) of Cellular Biomedicine Group, Inc. (the
“Company”) on June 26,
2020, which will be held at Aloft Long Island City –
Manhattan View, 27-45 Jackson Avenue, Long Island City, New York
11101 at 9:00 a.m. Eastern Standard Time. Enclosed with this
letter are your Notice of Annual Meeting of Stockholders, Proxy
Statement and Proxy voting card. The Proxy Statement included with
this notice discusses each of our proposals to be considered at the
Annual Meeting. Please review our annual report for the fiscal year
ended December 31, 2019, which is on our website at http://www.cellbiomedgroup.com
(under “Investor
Relations”) and at
https://www.iproxydirect.com/CBMG.
At this
year’s meeting, you will be asked to: (1) elect three (3)
“Class II” directors, each of whom will be elected for
a term of three years; (2) ratify the appointment of BDO China Shu
Lun Pan Certified Public Accountants LLP as our independent
registered public accounting firm for the fiscal year ending
December 31, 2020; (3) conduct a non-binding advisory vote to
approve the compensation of our named executive officers; (4)
conduct a non-binding advisory vote recommending the frequency of
future advisory votes on the compensation of our named executive
officers; and (5) transact such other business as may properly come
before the Annual Meeting or any adjournments thereof.
The
Board of Directors has fixed the close of business on April 27,
2020 as the record date for determining the stockholders entitled
to notice of and to vote at the Annual Meeting and any adjournment
and postponements thereof (the “Record
Date”).
The
Board of Directors believes that it is in the best interest of the
Company and its stockholders to vote: (1) “FOR” each
candidate for a position on the Board of Directors in Proposal 1,
(2) “FOR” the ratification of BDO China Shu Lun Pan
Certified Public Accounts LLP in Proposal 2, (3) “FOR”
the approval of the compensation of our named executive officers in
Proposal 3, and (4) for future advisory votes on the compensation
of our named executive officers to occur “EVERY THREE
YEARS” in Proposal 4. The Board of Directors therefore
recommends a vote “FOR” all candidates and all other
matters as indicated above. Accordingly, we urge you to review the
accompanying material carefully and to return the enclosed proxy
promptly. On the following pages, we provide answers to frequently
asked questions about the Annual Meeting.
You are
welcome to attend the Annual Meeting in person. Whether or not you
expect to attend the meeting, you are requested to read the
enclosed proxy statement and to sign, date and return the
accompanying proxy as soon as possible. This will assure your
representation and a quorum for the transaction of business at the
meeting.
On a
special note, the coronavirus (COVID-19) outbreak recently reached
pandemic status. The pandemic is likely to impact proxy materials
and the conduct of annual meetings, for example, as a result of
health concerns or travel restrictions, or both. New York State has
ordered 100% of the non-essential workforce to stay home. We are
closely monitoring government directives and will comply with all
COVID-19 health and safety rules. Government mandated travel
restrictions and the New York City COVID-19 outbreak may cause
disruption to our Annual Meeting schedule in New York. As of this
filing, we still plan to hold the Annual Meeting on June 26, 2020
as scheduled.
We
recognize that this is a rapidly evolving situation and we continue
to monitor and adapt. In the event it is not possible or advisable
to hold the Annual Meeting as currently planned, we will announce
any additional or alternative arrangements for the meeting, which
may include a change in venue or holding the meeting solely by
means of remote communication. We will provide updates
regarding the Annual Meeting by press release and filing with the
Securities and Exchange Commission as well as on our website at
https://www.cellbiomedgroup.com/.
Sincerely,
|
|
|
|
/s/
Terry Belmont
|
|
Terry
Belmont
|
|
Chairman
of the Board of Directors
|
|
New York, New York
April
29, 2020
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Meeting Date: June 26, 2020
To the
Stockholders of Cellular Biomedicine Group,
Inc.:
The
2020 Annual Meeting of Stockholders will be held at Aloft Long
Island City – Manhattan View, 27-45 Jackson Avenue, Long
Island City, New York 11101 at 9:00 a.m. Eastern Standard Time.
During the Annual Meeting, stockholders will be asked
to:
(1)
Elect three (3)
“Class II” directors, each of whom will be elected for
a three year term, or until the election and qualification of their
successors;
(2)
Ratify the
appointment of BDO China Shu Lun Pan Certified Public Accountants
LLP as our independent registered public accounting firm for the
fiscal year ending December 31, 2020;
(3)
Conduct a
non-binding advisory vote to approve the compensation of our named
executive officers;
(4)
Conduct a
non-binding advisory vote recommending the frequency of future
advisory votes on the compensation of our named executive officers;
and
(5)
Transact any other
business properly brought before the Annual Meeting or any
adjournments thereof.
The
Board of Directors has fixed the close of business on April 27,
2020, as the record date for determining the stockholders entitled
to notice of, and to vote at, the Annual Meeting or any
adjournments thereof. If you are a stockholder as of April 27,
2020, you may vote at the meeting. The date of disseminating this
Notice of Meeting and Proxy Statement is on or about April 29,
2020.
For a
period of 10 days prior to the Annual Meeting, a stockholders list
will be kept at our office and shall be available for inspection by
stockholders during usual business hours. A stockholders list will
also be available for inspection at the Annual
Meeting.
You are
cordially invited to attend the meeting in person. Whether or not
you expect to attend the meeting, you are requested to read the
enclosed proxy statement and to sign, date and return the
accompanying proxy as soon as possible. This will assure your
representation and a quorum for the transaction of business at the
meeting. If you attend the meeting in person, the proxy will not be
used if you so request by revoking it as described in the proxy
statement.
By
order of our Board of Directors
|
|
|
|
/s/
Tony (Bizuo) Liu
|
|
Tony
(Bizuo) Liu
|
|
Chief
Executive Officer and Chief Financial Officer
|
|
IMPORTANT NOTICE REGARDING THE INTERNET AVAILABILITY OF PROXY
MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE
26, 2020:
The Notice, Proxy Statement and the Annual Report on Form 10-K for
the fiscal year ended December 31, 2019 are available at
https://www.iproxydirect.com/CBMG. If you want to receive a paper
or e-mail copy of these documents, you must request one. There is
no charge to you for requesting a copy. Please make your request
for a copy as instructed below on or before June 15,
2020 to facilitate timely
delivery.
To request by phone: 1-866-752-VOTE(8683)
To request by e-mail: proxy@iproxydirect.com
To request on the Internet:
https://www.iproxydirect.com/CBMG
If you
have any questions about accessing materials or voting, please call
Issuer Direct at 919-481-4000 ext 120 or 117.
TABLE OF CONTENTS
|
Page No.
|
|
|
The Proxy Procedure
|
i
|
|
|
Questions and Answers About the Meeting
|
1
|
|
|
Governance of the Company
|
4
|
|
|
Proposal 1 - Election of Directors
|
10
|
|
|
Proposal 2 - Ratification of Appointment of Independent Registered
Public Accountant
|
13
|
|
|
Proposal 3 - Non-Binding Advisory Vote to Approve
the Compensation of our Named
Executive Officers
|
15
|
|
|
Proposal 4 - Non-Binding Advisory Vote on the Frequency of Future
Advisory Votes on the Compensation of our Named Executive
Officers
|
16
|
|
|
Executive Compensation and Related Information
|
17
|
|
|
Security Ownership of Certain Beneficial Owners and
Management
|
37
|
|
|
Certain Relationships and Related Transactions
|
39
|
|
|
Requirements for Advance Notification of Nominations and
Stockholder Proposals
|
40
|
|
|
Other Matters
|
40
|
THE PROXY PROCEDURE
On or
about April 29, 2020, Cellular Biomedicine Group, Inc. (the
“Company,”
“CBMG,”
or “we”) will first
disseminate to our stockholders of record and beneficial owners of
shares of our common stock a Notice of Internet Availability of
Proxy Materials (the “Notice”) in connection
with the solicitation of proxies by our board of directors
(“Board”) for our annual
meeting of stockholders to be held on June 26, 2020, at 9:00 a.m.
EST at Aloft Long Island City – Manhattan View, 27-45 Jackson
Avenue, Long Island City, New York 11101 (referred to as the
“Annual
Meeting”). Stockholders who received the notice will
have the ability to access this Proxy Statement and the
accompanying proxy card over the Internet and to request a paper
copy of the proxy materials by internet, email, or telephone. Our
Board encourages you to read this document thoroughly and to take
this opportunity to vote on the matters to be decided at the Annual
Meeting. Instructions on how to access the proxy materials over the
Internet or to request a paper copy may be found in the Notice. In
addition, stockholders may request to receive proxy materials in
printed form by mail or electronically on an ongoing basis. A
stockholder’s election to receive proxy materials by mail or
electronically by email will remain in effect until the stockholder
terminates such election.
QUESTIONS AND ANSWERS ABOUT THE MEETING
What am I voting on?
At this
year’s meeting, you will be asked to:
(1)
Elect three (3)
“Class II” directors, each of whom will be elected for
a term of three years, or until the election and qualification of
their successors;
(2)
Ratify the
appointment of BDO China Shu Lun Pan Certified Public Accountants
LLP as our independent registered public accounting firm for the
fiscal year ending December 31, 2020;
(3)
Conduct a
non-binding advisory vote to approve the compensation of our named
executive officers;
(4)
Conduct a
non-binding advisory vote recommending the frequency of future
advisory votes on the compensation of our named executive officers;
and
(5)
Transact any other
business properly brought before the Annual Meeting or any
adjournments thereof.
Who is entitled to vote at the Annual Meeting, and how many votes
do they have?
Stockholders
of record at the close of business on April 27, 2020 (the
“Record
Date”) may vote at the Annual Meeting. Pursuant to the
rights of our stockholders contained in our charter documents each
share of our common stock has one vote. Each stockholder may
appoint only one proxy holder or representative to attend the
meeting on his or her behalf. There were 19,391,343 shares of
common stock outstanding on April 27, 2020. From June 15, 2020
through June 26, 2020, you may inspect a list of stockholders
eligible to vote. If you would like to inspect the list, please
call Andrew Chan, our Secretary, at (347) 905-5663 to arrange a
visit to our offices. In addition, the list of stockholders will be
available for viewing by stockholders at the Annual
Meeting.
How do I vote?
You may
vote over the Internet, by telephone, by mail or in person at the
Annual Meeting. Please be aware that if you vote by telephone or
over the Internet, you may incur costs such as telephone and
Internet access charges for which you will be
responsible.
Vote by Internet. You can vote via the Internet at
www.iproxydirect.com/CBMG. You will need to use the control number
appearing on your proxy card to vote via the Internet. You can use
the Internet to transmit your voting instructions up until 11:59
p.m. Eastern Time on June 25, 2020. Internet voting is available 24
hours a day. If you vote via the Internet, you do not need to vote
by telephone or return a proxy card.
Vote by Telephone. You can vote by telephone by calling the
toll-free telephone number 1-866-752-VOTE (8683). You will need to
use the control number appearing on your proxy card to vote by
telephone. You may transmit your voting instructions from any
touch-tone telephone up until 11:59 p.m. Eastern Time on June 25,
2020. Telephone voting is available 24 hours a day. If you vote by
telephone, you do not need to vote over the Internet or return a
proxy card.
Vote by Mail. If you received a printed proxy card, you can
vote by marking, dating and signing it, and returning it in the
postage-paid envelope provided to Cellular Biomedicine Group, Inc.,
c/o Issuer Direct, 500 Perimeter Park Drive, Suite D, Morrisville,
NC 27560. Please promptly mail your proxy card to ensure that it is
received prior to the closing of the polls at the Annual
Meeting.
Vote in Person at the Meeting. If you attend the Annual
Meeting and plan to vote in person, we will provide you with a
ballot at the Annual Meeting. If your shares are registered
directly in your name, you are considered the stockholder of record
and you have the right to vote in person at the Annual Meeting. If
your shares are held in the name of your broker or other nominee,
you are considered the beneficial owner of shares held in street
name. As a beneficial owner, if you wish to vote at the Annual
Meeting, you will need to bring to the Annual Meeting a legal proxy
from your broker or other nominee authorizing you to vote those
shares.
If you
vote by any of the methods discussed above, you will be designating
Tony (Bizuo) Liu, our Chief Executive Officer and Chief Financial
Officer, as your proxy, and Andrew Chan,
our Chief Legal Officer (General Counsel), Corporate Development
and Secretary, as your proxies, and they will vote your shares on
your behalf as your indicate.
Submitting
a proxy will not affect your right to attend the Annual Meeting and
vote in person.
If your
shares are held in the name of a bank, broker or other nominee, you
will receive separate voting instructions from your bank, broker or
other nominee describing how to vote your shares. The availability
of Internet voting will depend on the voting process of your bank,
broker or other nominee. Please check with your bank, broker or
other nominee and follow the voting instructions it
provides.
Can I receive future materials via the internet?
If you
vote by internet, simply follow the prompts for enrolling in
electronic proxy delivery service. This will reduce the
Company’s printing and postage costs in the future, as well
as the number of paper documents you will receive.
What is a proxy?
A proxy
is a person you appoint to vote on your behalf. By using the
methods discussed above, you will be appointing Tony (Bizuo) Liu,
our Chief Executive Officer and Chief Financial Officer, and Andrew
Chan, our Chief Legal Officer (General Counsel), Corporate
Development and Secretary, as your proxies. Mr. Liu or Mr. Chan
will vote on your behalf, and will have the authority to appoint a
substitute to act as proxy. If you are unable to attend the Annual
Meeting, please vote by proxy so that your shares of common stock
may be voted.
How will my proxy vote my shares?
If you
are a stockholder of record, your proxy will vote according to your
instructions. If you choose to vote by mail and complete and return
the enclosed proxy card but do not indicate your vote, your proxy
will vote “FOR” the election of the nominated slate of
Class II directors (see Proposal 1); “FOR” the
ratification of BDO China Shu Lun Pan Certified Public Accountants
LLP (“BDO
China”) as our independent registered public
accounting firm for the fiscal year ending December 31, 2020 (see
Proposal 2); “FOR” the approval of the compensation of
our named executive officers (see Proposal 3); and for future
advisory votes on the compensation of our named executive officers
to occur “EVERY THREE YEARS” (see Proposal 4). We do
not intend to bring any other matter for a vote at the Annual
Meeting, and we do not know of anyone else who intends to do so.
Your proxies are authorized to vote on your behalf, however, using
their best judgment, on any other business that properly comes
before the Annual Meeting.
If your
shares are held in the name of a bank, broker or other nominee, you
will receive separate voting instructions from your bank, broker or
other nominee describing how to vote your shares.
You
should instruct your bank, broker or other nominee how to vote your
shares. If you do not give voting instructions to the bank, broker
or other nominee, the bank, broker or other nominee will determine
if it has the discretionary authority to vote on the particular
matter. Under applicable rules, brokers have the discretion to vote
on routine matters, such as the ratification of the selection of
accounting firms, but do not have discretion to vote on non-routine
matters. Under the regulations applicable to New York Stock
Exchange member brokerage firms (many of whom are the record
holders of shares of our common stock), the uncontested election of
directors is no longer considered a routine matter. Matters related
to executive compensation are also not considered routine. As a
result, if you are a beneficial owner and hold your shares in
street name, but do not give your broker or other nominee
instructions on how to vote your shares with respect to these
matters, votes may not be cast on your behalf. If your bank, broker
or other nominee indicates on its proxy card that it does not have
discretionary authority to vote on a particular proposal, your
shares will be considered to be “broker non-votes” with
regard to that matter. Broker non-votes will be counted as present
for purposes of determining whether enough votes are present to
hold our Annual Meeting, but a broker non-vote will not otherwise
affect the outcome of a vote on a proposal that requires a majority
of the votes cast. With respect to a proposal that requires a
favorable vote of a majority of the outstanding shares, a broker
non-vote has the same effect as a vote against the
proposal.
How do I change my vote?
If you
are a stockholder of record, you may revoke your proxy at any time
before your shares are voted at the Annual Meeting by:
●
Notifying our
corporate Secretary Andrew Chan, in writing at 1345 Avenue of the
Americas, 15th Floor, New York, New York 10105, that you are
revoking your proxy;
●
Submitting a proxy
at a later date via the Internet, or by signing and delivering a
proxy card relating to the same shares and bearing a later date
than the date of the previous proxy prior to the vote at the Annual
Meeting, in which case your later-submitted proxy will be recorded
and your earlier proxy revoked; or
●
Attending and
voting by ballot at the Annual Meeting.
If your
shares are held in the name of a bank, broker or other nominee, you
should check with your bank, broker or other nominee and follow the
voting instructions provided.
What constitutes a quorum?
The
holders of a majority of the Company’s eligible votes as of
the record date, either present or represented by proxy, constitute
a quorum. A quorum is necessary in order to conduct the Annual
Meeting. If you choose to have your shares represented by proxy at
the Annual Meeting, you will be considered part of the quorum. Both
abstentions and broker non-votes are counted as present for the
purpose of determining the presence of a quorum. If a quorum is not
present at the Annual Meeting, the stockholders present in person
or by proxy may adjourn the meeting to a later date. If an
adjournment is for more than 30 days or a new record date is fixed
for the adjourned meeting, we will provide notice of the adjourned
meeting to each stockholder of record entitled to vote at the
meeting.
What vote is required to approve each proposal?
Election of Directors. For Proposal 1, the election of
directors, the nominees will be elected by a plurality of the votes
of the shares of common stock present in person or represented by
proxy and entitled to vote at the Annual Meeting. You may choose to
vote, or withhold your vote, separately for each nominee. A
properly executed proxy or voting instructions marked
“WITHHOLD” with respect to the election of one or more
directors will not be voted with respect to the director or
directors indicated, although it will be counted for the purposes
of determining whether there is a quorum.
Ratification of the Appointment of Independent Registered Public
Accounting Firm. For Proposal 2, the affirmative vote of the
holders of shares of common stock entitled to vote must exceed the
votes cast against the proposal, in order for the proposal to be
approved.
Non-Binding Advisory Vote to Approve the Compensation of our Named
Executive Officers. For Proposal 3, the
affirmative vote of the holders of shares of common stock entitled
to vote must exceed the votes cast against the proposal, in order
for the proposal to be approved.
Non-Binding Advisory Vote to Approve Frequency of Future Advisory
Votes on the Compensation of our Named Executive
Officers. For Proposal 4, a
stockholder may vote for every one year, every two years or every
three years, or may abstain, and the frequency that receives the
greatest number of votes will be the frequency that the
stockholders approve, on a non-binding advisory basis
Other Proposals. Any other proposal that might properly come
before the meeting will require the affirmative vote of the holders
of shares of common stock entitled to vote to exceed the votes cast
against the proposal for the proposal to be approved, except when a
different vote is required by law, our certificate of incorporation
or our Bylaws. On any such proposal, abstentions will be counted as
present and entitled to vote on that matter for purposes of
establishing a quorum, but will not be counted for purposes of
determining the number of votes cast.
Abstentions
and broker non-votes with respect to any matter will be counted as
present and entitled to vote on that matter for purposes of
establishing a quorum, but will not be counted for purposes of
determining the number of votes cast. Accordingly, abstentions and
broker non-votes will have no effect on the outcome of voting with
respect to any of the Proposals.
What percentage of our common stock do our directors and officers
own?
As of
April 27, 2020, our current directors and executive officers
beneficially owned approximately 8.5% of our common stock
outstanding. See the discussion under the heading “Security
Ownership of Certain Beneficial Owners and Management” on
page 37 for more details.
Who is soliciting proxies, how are they being solicited, and who
pays the cost?
We, on
behalf of our Board, through our directors, officers, and
employees, are soliciting proxies primarily by mail. Further,
proxies may also be solicited in person, by telephone, or
facsimile. We will pay the cost of soliciting proxies. We will also
reimburse stockbrokers and other custodians, nominees, and
fiduciaries for their reasonable out-of-pocket expenses for
forwarding proxy and solicitation materials to the owners of our
common stock.
Who is our Independent Registered Public Accounting Firm, and will
they be represented at the Annual Meeting?
BDO
China has served as the independent registered public accounting
firm auditing and reporting on our financial statements for the
fiscal years ended December 31, 2017, 2018 and 2019. BDO China has
been appointed by our Board to serve as our independent registered
public accounting firm for the fiscal year ending December 31,
2020. We expect that representatives of BDO China will not be
present at the Annual Meeting.
What are the recommendations of our Board?
The
recommendations of our Board are set forth together with the
description of each proposal of this Proxy Statement. In summary,
the Board recommends a vote:
●
FOR the election of
the three nominated Class II directors (see Proposal
1);
●
FOR the
ratification of BDO China Shu Lun Pan Certified Public Accountants
LLP as our independent registered public accounting firm for the
fiscal year ending December 31, 2020 (see Proposal 2).
●
FOR the approval of
the compensation of our named executive officers (see Proposal 3);
and
●
for future advisory
votes on the compensation of our named executive officers to occur
EVERY THREE YEARS (see Proposal 4).
With
respect to any other matter that properly comes before the meeting,
the proxy holders will vote as recommended by the Board or, if no
recommendation is given, in their own discretion.
If you
sign and return your proxy card but do not specify how you want to
vote your shares, the persons named as proxy holders on the proxy
card will vote in accordance with the recommendations of the
Board.
GOVERNANCE OF THE COMPANY
Our
business, property and affairs are managed by, or under the
direction of, our Board, in accordance with the Delaware General
Corporation Laws and our Bylaws. Members of the Board are kept
informed of our business through discussions with the Chief
Executive Officer and other key members of management, by reviewing
materials provided to them by management, and by participating in
meetings of the Board and its committees comprised of certain
directors (“Committees”).
Stockholders
may communicate with the members of the Board, either individually
or collectively, or with any independent directors as a group by
writing to the Board at 1345 Avenue of the Americas, 15th Floor,
New York, New York, 10105. These communications will be reviewed by
the office of the corporate Secretary who, depending on the subject
matter, will (a) forward the communication to the director or
directors to whom it is addressed or who is responsible for the
topic matter, (b) attempt to address the inquiry directly (for
example, where it is a request for publicly available information
or a stock related matter that does not require the attention of a
director), or (c) not forward the communication if it is primarily
commercial in nature or if it relates to an improper or irrelevant
topic. At each meeting of the Board, the corporate Secretary
presents a summary of communications received and will make those
communications available to any director upon request.
Independence of Directors
In
determining the independence of our current and recently departed
directors, the Board applied the definition of “independent
director” provided under the listing rules of The Nasdaq
Stock Market LLC (“Nasdaq”) and pursuant to
SEC Regulation S-K. Pursuant to these rules, the Board concluded
its annual review of director independence in January 2020. After
considering all relevant facts and circumstances, the Board
affirmatively determined that Messrs. Bosun S. Hau and Nadir Patel,
who resigned as Board members on May 15, 2019 and November 11,
2019, respectively, and Messrs. Terry Belmont, Steve (Wentao) Liu,
Darren O’Brien, Edward Schafer, and Hangsheng Zhou, each of
whom are now serving on the Board and are continuing to serve their
terms, are independent within the definition of independence under
the Nasdaq rules. Tony (Bizuo) Liu, nominated for election as a
Class II director, is not an independent director. Additionally,
Chun Kwok Alan Au and Jacky (Gang) Ji , two of the directors
nominated for election as a Class II director, have been determined
to meet the definition of independence under the Nasdaq rules. If
candidates Chun Kwok Alan Au and Jacky (Gang) Ji are elected
at the Annual Meeting, and assuming our other current directors
remain in office, our Board will consist of a majority of seven
independent directors out of a total of eight directors on our
Board.
Board Meetings; Annual Meeting Attendance
Our
Board held nine formal meetings and four actions by unanimous
written consent during the most recently completed fiscal year.
Each of the members of our Board was present at all of the Board of
Directors meetings held. Other proceedings of the Board were
conducted by resolutions consented to in writing by all the
directors and filed with the minutes of the proceedings of the
directors. Such resolutions consented to in writing by the
directors entitled to vote on that resolution at a meeting of the
directors are, according to the corporate laws of the State of
Delaware and our bylaws, as valid and effective as if they had been
passed at a meeting of the directors duly called and
held.
We
currently do not have a policy regarding the attendance of board
members at the annual meeting of stockholders.
Board Committees
Name
|
|
Audit Committee
|
|
Compensation Committee
|
|
Nominating & Corporate Governance Committee
|
Chun
Kwok Alan Au
|
|
|
|
|
|
X
|
Terry
Belmont
|
|
X
|
|
|
|
|
Jacky
(Gang) Ji
|
|
|
|
X
|
|
X
|
Steve
(Wentao) Liu
|
|
X
|
|
Chair
|
|
|
Darren
O’Brien
|
|
|
|
X
|
|
X
|
Edward
Schafer
|
|
Chair
|
|
|
|
|
Hansheng
Zhou
|
|
|
|
|
|
Chair
|
Audit Committee
The
Audit Committee consists of Steve (Wentao) Liu, Terry Belmont and
Edward Schafer (serving as Chairman), each of whom are
“independent” as defined under section 5605 (a)(2) of
the Nasdaq Listing Rules. In addition, the Board has determined
that each member of the Audit Committee qualifies as an
“audit committee financial expert” as defined in the
rules of the Securities and Exchange Commission (SEC). The Audit Committee
operates pursuant to a charter, which can be viewed on our website
at www.cellbiomedgroup.com (under
“Investor
Relations”). The Audit Committee has met four times
during the year and is expected to convene regular meetings
following the Annual Meeting. The role of the Audit Committee is
to:
●
oversee
management’s preparation of our financial statements and
management’s conduct of the accounting and financial
reporting processes;
●
oversee
management’s maintenance of internal controls and procedures
for financial reporting;
●
oversee our
compliance with applicable legal and regulatory requirements,
including without limitation, those requirements relating to
financial controls and reporting;
●
oversee the
independent auditor’s qualifications and
independence;
●
oversee the
performance of the independent auditors, including the annual
independent audit of our financial statements;
●
discharge such
duties and responsibilities as may be required of the Audit
Committee by the provisions of applicable law, rule or
regulation.
Compensation Committee
The
Compensation Committee consists of Darren O’Brien, Jacky
(Gang) Ji and Steve (Wentao) Liu (serving as Chairman), each
of whom is “independent” as defined in section
5605(a)(2) of the Nasdaq Listing Rules. The Compensation Committee
has met four times during the year and is expected to convene
regular meetings after the Annual Meeting. The role of the
Compensation Committee is to:
●
develop and
recommend to the Board the annual compensation (base salary, bonus,
stock options and other benefits) for our President/Chief Executive
Officer;
●
review, approve and
recommend to the Board the annual compensation (base salary, bonus
and other benefits) for all of our executives;
●
review, approve and
recommend to the Board the aggregate number of equity awards to be
granted to employees below the executive level;
●
ensure that a
significant portion of executive compensation is reasonably related
to the long-term interest of our stockholders; and
●
prepare certain
portions of our annual Proxy Statement, including an annual report
on executive compensation.
A copy
of the charter of the Compensation Committee is available on our
website at www.cellbiomedgroup.com (under
“Investor
Relations”).
The
Compensation Committee may form and delegate a subcommittee
consisting of one or more members to perform the functions of the
Compensation Committee. The Compensation Committee may engage
outside advisers, including outside auditors, attorneys and
consultants, as it deems necessary to discharge its
responsibilities. The Compensation Committee has sole authority to
retain and terminate any compensation expert or consultant to be
used to provide advice on compensation levels or assist in the
evaluation of director, President/Chief Executive Officer or senior
executive compensation, including sole authority to approve the
fees of any expert or consultant and other retention terms. In
addition, the Compensation Committee considers, but is not bound
by, the recommendations of our Chief Executive Officer or President
with respect to the compensation packages of our other executive
officers.
Nominating and Corporate Governance Committee
The
Nominating and Corporate Governance Committee, or the
“Governance Committee”, consists of Chun Kwok Alan Au,
Jacky (Gang) Ji , Darren O’Brien, and Hangsheng Zhou (serving
as Chair), each of whom is “independent” as defined in
section 5605(a)(2) of the Nasdaq Listing Rules. The Governance
Committee has met three times during the year and is expected to
convene regular meetings following the Annual Meeting. The role of
the Governance Committee is to:
●
evaluate from time
to time the appropriate size (number of members) of the Board and
recommend any increase or decrease;
●
determine the
desired skills and attributes of members of the Board and its
committees, taking into account the needs of the business and
listing standards;
●
establish criteria
for prospective members, conduct candidate searches, interview
prospective candidates, and oversee programs to introduce the
candidate to us, our management, and operations;
●
review planning for
succession to the position of Chairman of the Board and Chief
Executive Officer and other senior management
positions;
●
annually recommend
to the Board persons to be nominated for election as directors and
appointment as members of committees;
●
adopt or develop
for Board consideration corporate governance principles and
policies; and review and report to the Board on the effectiveness
of corporate governance procedures and the Board as a governing
body, including conducting an annual self-assessment of the Board
and its standing committees; and
●
periodically review
and report to the Board on the effectiveness of corporate
governance procedures and the Board as a governing body, including
conducting an annual self-assessment of the Board and its standing
committees.
A copy
of the charter of the Governance Committee is available on our
website at www.cellbiomedgroup.com (under
“Investor
Relations”).
Policy and Procedures with Regard to Stockholder
Recommendations
The
Governance Committee evaluates director candidates recommended by
stockholders in the same way that it evaluates candidates
recommended by its members, other members of the Board, or other
persons. Stockholders wishing to submit recommendations for
director candidates for consideration by the Governance Committee
can submit those recommendations in writing to the Governance
Committee at our corporate address. Stockholders may nominate
persons for election to the Board by providing timely notice in
writing to the Secretary of the Company pursuant to the procedures
set forth in the Company’s Amended and Restated Bylaws. See
“Requirements for Advance Notification of Nominations And
Stockholder Proposals” for additional information on the
procedure for stockholder nominations.
Director Qualifications and Diversity
The
Board seeks independent directors who represent a diversity of
backgrounds and experiences that will enhance the quality of the
Board’s deliberations and decisions. Candidates should have
substantial experience with one or more publicly traded companies
or should have achieved a high level of distinction in their chosen
fields. The Board is particularly interested in maintaining a mix
that includes individuals who are active or retired executive
officers and senior executives, particularly those with experience
in biomedicine, medical and drug regulation in China, intellectual
property, early-stage companies, research and development,
strategic planning, business development, compensation, finance,
accounting and banking.
In
evaluating nominations to the Board, the Governance Committee also
looks for certain personal attributes, such as integrity, ability
and willingness to apply sound and independent business judgment,
comprehensive understanding of a director’s role in corporate
governance, availability for meetings and consultation on Company
matters, and the willingness to assume and carry out fiduciary
responsibilities. The Governance Committee took these
specifications into account in formulating and re-nominating its
present Board members.
The
Governance Committee may engage outside advisers, including outside
auditors, attorneys and consultants, as it deems necessary to
discharge its responsibilities.
The
current Class II director candidates, Chun Kwok Alan Au, Jacky
(Gang) Ji and Tony (Bizuo) Liu, were recommended by
management and the Governance Committee and nominated by the full
Board.
Code of Business Conduct and Ethics
We have
adopted a code of ethics, which applies to all our directors,
officers and employees and comprises written standards that are
reasonably designed to deter wrongdoing and to promote the behavior
described in Item 406 of Regulation S-K promulgated by the SEC. A
copy of our “Code of Business Conduct and Ethics” is
available on our website at www.cellbiomedgroup.com (under
“Investor
Relations/Corporate Governance”). In the event that we
make any amendments to, or grant any waivers of, a provision of our
Code of Business Conduct and Ethics for Officers, Directors and
Employees that applies to the principal executive officer,
principal financial officer or principal accounting officer that
requires disclosure under applicable SEC rules, we intend to
disclose such amendment or waiver and the reasons therefor in a
Form 8-K or in our next periodic report.
Conflicts of Interest
Members
of our management are associated with other firms involved in a
range of business activities. Consequently, there are potential
inherent conflicts of interest in their acting as officers and
directors of our company. Although the officers and directors are
engaged in other business activities, we anticipate they will
devote an important amount of time to our affairs.
Our
officers and directors are now and may in the future become
stockholders, officers or directors of other companies, which may
be formed for the purpose of engaging in business activities
similar to ours. Accordingly, additional direct conflicts of
interest may arise in the future with respect to such individuals
acting on behalf of us or other entities. Moreover, additional
conflicts of interest may arise with respect to opportunities which
come to the attention of such individuals in the performance of
their duties or otherwise. Currently, we do not have a right of
first refusal pertaining to opportunities that come to their
attention and may relate to our business operations.
Our officers and directors are, so long as they are our officers or
directors, subject to the restriction that all opportunities
contemplated by our plan of operation which come to their
attention, either in the performance of their duties or in any
other manner, will be considered opportunities of, and be made
available to us and the companies that they are affiliated with on
an equal basis. A breach of this requirement will be a breach of
the fiduciary duties of the officer or director. If we or the
companies with which the officers and directors are affiliated both
desire to take advantage of an opportunity, then said officers and
directors would abstain from negotiating and voting upon the
opportunity. However, all directors may still individually take
advantage of opportunities if we should decline to do so. Except as
set forth above, we have not adopted any other conflict of interest
policy with respect to such transactions.
Board Leadership Structure and Risk Oversight
The
Chairman of the Board, who is a different individual from the Chief
Executive Officer, presides at all meetings of the Board. The
Chairman is appointed by majority vote of the directors, excluding
the vote of the appointee. The Board believes that this structure
is appropriate for our Company and our stockholders at this time
because it provides an additional layer of oversight as to
management and management’s activities and allows the Board
to act independently of management.
Enterprise
risks are identified and prioritized by management and each
prioritized risk is assigned to a Board committee or the full Board
for oversight as follows:
Full Board - Risks and exposures associated with strategic,
financial and execution risks and other current matters that may
present material risk to our operations, plans, prospects or
reputation.
Audit Committee - Risks and exposures associated with
financial matters, particularly financial reporting, tax,
accounting, disclosure, internal control over financial reporting,
financial policies, investment guidelines and credit and liquidity
matters.
Nominating and Corporate Governance Committee - Risks and
exposures relating to corporate governance and management and
director succession planning.
Compensation Committee - Risks and exposures associated with
leadership assessment, and compensation programs and arrangements,
including incentive plans.
Delinquent Section 16 Reports
Section
16(a) of the Securities and Exchange Act of 1934, as amended (the
“Exchange
Act”) requires the Company’s directors and
executive officers, and persons who beneficially own more than ten
percent of a registered class of our equity securities, to file
with the SEC initial reports of beneficial ownership and reports of
changes in beneficial ownership of our common stock. The rules
promulgated by the SEC under Section 16(a) of the Exchange Act
require those persons to furnish us with copies of all reports
filed with the Commission pursuant to Section 16(a). The
information in this section is based solely upon a review of Forms
3, Forms 4, and Forms 5 received by us.
We
believe that all of the Company’s executive officers,
directors and 10% stockholders have timely complied with their
filing requirements during the year ended December 31, 2019, except
that in February 2020, Messrs. Tony Liu, Yihong Yao and Andrew Chan
each submitted Forms 5 reporting their tax withholding dispositions
of the Company’s securities, which transactions occurred in
2019 and Mr. O'Brien did not submit a Form 3 upon becoming a
director in May 2019.
.
REPORT OF THE AUDIT COMMITTEE
The
following Report of the Audit Committee shall not be deemed
incorporated by reference into any of our filings under the
Securities Act of 1933, as amended, or the Exchange Act, except to
the extent we specifically incorporate it by reference
therein.
The
Audit Committee of the Board has:
●
reviewed and
discussed the Company’s audited financial statements for the
year ended December 31, 2019 with management;
●
discussed with the
Company’s independent auditors the matters required to be
discussed by the applicable requirements of the Public Company
Accounting Oversight Board (“PCAOB”)and the SEC;
and
●
received the
written disclosures and letter from the independent auditors
required by the applicable requirements of the PCAOB regarding the
independent auditor communications with the Audit Committee
concerning independence and has discussed with BDO China matters
relating to its independence.
In
reliance on the review and discussions referred to above, the Audit
Committee recommended to the Board that the financial statements
audited by BDO China for the fiscal year ended December 31, 2019 be
included in its Annual Report on Form 10-K for such fiscal
year.
The
Audit Committee and the Board have also, respectively, recommended
and approved the selection of the Company’s current
independent auditor, which approval is subject to ratification by
the Company’s stockholders.
Submitted
by:
The
Audit Committee of the Board of Directors
/s/
Edward Schafer, Chairman
/s/
Steve (Wentao) Liu
/s/
Terry Belmont
PROPOSAL 1 — ELECTION OF DIRECTORS
Our
Board consists of a highly qualified, diverse group of leaders in
their respective fields. Most of our directors have senior
leadership experience at major domestic and multinational
companies. In these positions, they have gained significant and
diverse management experience, including strategic and financial
planning, public company financial reporting, compliance, risk
management, and leadership development. They also have experience
serving as executive officers, or on boards of directors and board
committees of other public companies, and have an understanding of
corporate governance practices and trends.
The
Board believe the skills, qualities, attributes, and experience of
our directors provide us with business acumen and a diverse range
of perspectives to engage each other and management to effectively
address our evolving needs and represent the best interests of our
stockholders.
The
Board considers candidates for director who are recommended by its
members, by other Board members, by stockholders,
and by management. In evaluating potential nominees to the Board,
it considers, among other things: independence; character; ability
to exercise sound judgment; diversity; age; demonstrated
leadership; and relevant skills and experience, including financial
literacy, antitrust compliance, and other experience in the context
of the needs of the Board.
Nominees for Election
The
Board determined it was in the best interest of the Company to
authorize the nomination of Chun Kwok Alan Au, Jacky (Gang)
Ji and Tony (Bizuo) Liu for a new Class II term. Accordingly,
the Board has authorized the nomination of these three nominees to
serve as Class II directors, and Class II has three director
positions up for election at the Annual Meeting.
Subsequent
to stockholder approval of this proposal, the Board will have a
total of eight members, divided into three classes as
follows:
Class
|
|
Term
|
|
Directors
|
|
|
|
|
|
Class
I
|
|
Class I
directors serve for a term of three years, and are elected by the
stockholders at the beginning of each term. The next full 3-year
term for Class I directors extends from the date of the 2019 annual
meeting to the date of the 2022 annual meeting.
|
|
1.
Terry A. Belmont
2.
Hansheng Zhou, PhD
3.
Edward Schafer
|
|
|
|
|
|
Class
II
|
|
Class
II directors serve for a term of three years, and are elected by
the stockholders at the beginning of each term. The next full
3-year term for Class II directors extends from the date of this
2020 annual meeting to the date of the 2023 annual
meeting.
|
|
4. Chun
Kwok Alan Au
5.
Jacky (Gang) Ji
6. Tony
(Bizuo) Liu
|
|
|
|
|
|
Class
III
|
|
Class
III directors serve for a term of three years, and are elected by
the stockholders at the beginning of each term. The next full
3-year term for Class III directors extends from the date of the
2018 Annual Meeting to the date of the 2021 annual
meeting.
|
|
7.
Steve (Wentao) Liu
8.
Darren O’Brien
|
Our
Board has nominated three Class II director candidates for election
at the Annual Meeting, who are the same individuals listed above in
position numbers 4, 5 and 6. Each nominee has agreed, if elected,
to serve a three-year term or until the election and qualification
of his successor. If any nominee is unable to stand for election,
which circumstance we do not anticipate, the Board may provide for
a lesser number of directors or designate a substitute. In the
latter event, shares represented by proxies may be voted for a
substitute nominee.
If a
quorum is present at the Annual Meeting, then nominees will be
elected by a plurality of the votes of the shares of common stock
present in person or represented by proxy and entitled to vote at
the meeting. There is no cumulative voting in the election of
directors.
The
following biographical information is furnished as to each nominee
for election as a Class II director:
Chun Kwok Alan Au - Director
Mr. Au
has served as a member of our Board since November 2014. He
currently serves as a member of the Nominating and Corporate
Governance Committee.
Mr. Au
has over 18 years of experience across healthcare investment
banking, private equity and venture capital investments in
Asia/China. He is Founder/Managing Partner at GT Healthcare Group,
a private equity fund focusing on cross border healthcare
investments founded in 2015.
Mr. Au
was an Adviser to Simcere Pharmaceutical Group, a leading
pharmaceutical company in China (previously listed on NYSE: SCR,
privatized in Dec 2013, when Mr. Au was Chairman of the Special
Committee of the Board ) from 2013 to 2014. He was also a member of
the Board, Audit Committee and Compensation Committee of China
Nepstar Chain Drugstore Ltd. (NYSE: NPD, privatized in Sep 2016)
from 2013 to 2016. Mr. Au also serves as a panel member for the
Entrepreneur Support Scheme (ESS Program) of the Innovation and
Technology Fund of the Hong Kong SAR Government since
2014.
Before
that, Mr. Au was Head of Asia Healthcare Investment Banking of
Deutsche Bank Group, advising healthcare IPOs and M&A in the
region between 2011 and 2012. Prior to that, he was Executive
Director at JAFCO Asia Investment Group, responsible for healthcare
investments in China from 2008 to 2010, and Investment Director at
Morningside Group, responsible for healthcare investments in Asia
from 2000 to 2005. From 1995 to 1999, Mr. Au worked at KPMG and
KPMG Corporate Finance Ltd., responsible for regional M&A
transactions and financial advisory services.
Mr. Au
is a Certified Public Accountant in the U.S. and holds the
Chartered Financial Analyst (CFA) designation. He is an associate
member of the Hong Kong Institute of Financial Analysts and member
of the American Institute of Certified Public Accountants. Mr. Au
received his Bachelor’s degree in Psychology from the Chinese
University of Hong Kong, and a Master’s degree in Management
from Columbia Business School in New York. In considering Mr.
Au’s eligibility to serve on the Board, the Board considered
Mr. Au’s investment banking and capital markets experience,
as well as healthcare and pharmaceutical industry specific
expertise.
Jacky (Gang)
Ji– Director
Mr. Ji
has been a director of the Company since October 2016. Mr. Ji has
nineteen years of experience in finance and investment. He has been
serving as Vice President of Ant Financial since January 2016
responsible for global strategic investments of Ant Financial.
Before joining Ant Financial, he served Alibaba Group as Vice
President responsible for strategic investment for seven years.
Prior to joining Alibaba, Mr. Ji worked for several venture capital
funds and also served as an auditor of KPMG. He currently serves as
a director of Asia Game Technology Ltd., a company listed on the
Hong Kong Stock Exchange (HKEX: 8279) as well as several private
technology companies. Mr. Ji holds a bachelor’s degree in
international business management from University of International
Business and Economics (Beijing). He currently serves on the
Company’s Compensation Committee. In considering Mr.
Ji’s eligibility to serve on the Board, the Board considered
Mr. Ji’s board experience, leadership, extensive accounting
and financial control background, venture capital tenure as well as
multinational corporate executive management experience in a highly
regulated industry.
Tony (Bizuo) Liu, Chief Executive Officer, Chief Financial Officer
and Director
Tony
(Bizuo) Liu has served as the Company’s Chief Executive
Officer since February 2016 and Chief Financial Officer since
January 2014. He has also served as director of the Company since
February 2013. From January 2013 until he joined the Company, Mr.
Liu served as the Corporate Vice President at Alibaba Group,
handling Alibaba’s overseas investments. Prior to that, from
the time he joined Alibaba in 2009, Mr. Liu severed in various
positions including Corporate Vice President at B2B corporate
investment, corporate finance, and General Manager for a global
ecommerce platform. From July 2011 to December 2012, he served as
CFO for HiChina, a subsidiary of Alibaba, an internet
infrastructure service provider. Prior to joining Alibaba, Mr. Liu
spent 19 years at Microsoft Corporation where he served a variety
of finance leadership roles. He was the General Manager at
Corporate Strategy looking after Microsoft China investment
strategy and Microsoft corporate strategic planning process. Mr.
Liu was a leader in Microsoft’s corporate finance
organization during the 1990s as Corporate Accounting Director. Mr.
Liu earned a B.S. degree in Physics from Suzhou University, Suzhou,
China and has completed MBA/MIS course work at Seattle Pacific
University. Mr. Liu obtained his Washington State CPA certificate
in 1992. In considering Mr. Liu’s eligibility to serve
on the Board, the Board considered Mr. Liu’s position as
Chief Executive Officer of the Company and his extensive leadership
and finance experience with global corporations.
Vote and Recommendation
The
affirmative vote of the holders of a plurality of the shares of
common stock present in person or represented by proxy and entitled
to vote on the nominees will be required to approve each nominee.
This means that the three nominees with the greatest number votes
for election will be elected.
Our Board recommends a vote “FOR” each of the
nominees.
PROPOSAL 2 – RATIFICATION OF APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The
Audit Committee of the Board has appointed BDO China as our
independent registered public accounting firm to audit our
financial statements for the fiscal year ending December 31, 2020.
BDO China has also served as our independent registered public
accounting firm for the fiscal years ended December 31, 2019, 2018,
2017 and December 31, 2016.
Stockholder
ratification of the selection of BDO China as our independent
registered public accounting firm is not required by our Bylaws or
the Delaware General Corporation Law. The Board seeks such
ratification as a matter of good corporate practice. Should the
stockholders fail to ratify the selection of BDO China as our
independent registered public accounting firm, the Audit Committee
will reconsider whether to retain that firm for fiscal year 2020.
In making its recommendation to the Board that stockholders ratify
the appointment of BDO China as our independent registered public
accounting firm for the fiscal year ending December 31, 2020, the
Audit Committee considered whether BDO China’s provision of
non-audit services is compatible with maintaining its
independence.
Audit Fees
The
Company paid or accrued the following fees in each of the prior two
fiscal years to its accountants, including to its principal
accountants, BDO China:
|
Year ended December 31, 2019
|
Year ended December 31, 2018
|
|
|
|
Audit
fees
|
|
|
BDO
China Shu Lun Pan Certified Public Accountants LLP
|
269,191
|
233,579
|
Shanghai
Ying Ming De CPA SGP
|
3,245
|
2,363
|
Wuxi
Zhong Xing CPA Co., Ltd.
|
1,643
|
1,709
|
|
|
|
|
274,079
|
237,651
|
|
|
|
Audit
related fees
|
|
|
BDO
China Shu Lun Pan Certified Public Accountants LLP
|
55,488
|
50,262
|
|
|
|
Tax
fees
|
|
|
Shanghai
Ying Ming De CPA SGP
|
-
|
5,339
|
Wuxi
Xing Zhong CTA Co., Ltd.
|
2,190
|
1,424
|
|
|
|
Total
tax fees
|
2,190
|
6,763
|
|
|
|
Other
fees
|
|
|
Wuxi
Zhong Xing CPA Co., Ltd.
|
1,643
|
1,709
|
|
|
|
Total
|
$333,400
|
$296,385
|
Audit fees include fees for the audit of our annual financial
statements and reviews of our quarterly financial statements. Audit
related fees include fees for services associated with SEC
registration statements, periodic reports, and other documents
filed with the SEC, or other documents issued in connection with
securities offerings. Tax fees include fees for tax services
related to annual corporate income tax filing. All other fees
include fees for capital verification services.
The
Audit Committee is required to review and approve in advance the
retention of the independent auditors for the performance of all
audit and lawfully permitted non-audit services (if any) and the
fees for such services. The Audit Committee may delegate to one or
more of its members the authority to grant pre-approvals for the
performance of non-audit services, and any such Audit Committee
member who pre-approves a non-audit service must report the
pre-approval to the full Audit Committee at its next scheduled
meeting. All of the services provided by our independent registered
public accountants described above were approved by our Audit
Committee.
Our
principal accountants did not engage any other persons or firms
other than the principal accountant’s full-time, permanent
employees.
The
Board has received and reviewed the written disclosures and the
letter from the independent registered public accounting firm
required by Public Company Accounting Oversight Board, and has
discussed with its auditors its independence from the Company. The
Board has considered whether the provision of services other than
audit services is compatible with maintaining auditor
independence.
Auditor Representatives at Annual Meeting
We
expect that representatives of BDO China will not be present at the
Annual Meeting.
Vote Required and Recommendation
The
affirmative vote of the holders of shares of common stock entitled
to vote must exceed the votes cast against this proposal for the
proposal to be approved.
The Board recommends that stockholders vote “FOR”
ratification of the appointment of BDO China Shu Lun Pan Certified
Public Accountants LLP as
our independent registered public accounting firm for the fiscal
year ending December 31, 2020 as described in this Proposal
2.
PROPOSAL 3 – NON-BINDING ADVISORY VOTE ON THE COMPENSATION OF
OUR NAMED EXECUTIVE OFFICERS
The
Dodd-Frank Act enables our stockholders to vote to approve, on a
non-binding advisory basis, the compensation of our Named Executive
Officers, as disclosed in this Proxy Statement pursuant to the
SEC’s compensation disclosure rules (commonly referred to as
a “Say-on-Pay” vote).
As
described in detail under the heading “Executive Compensation
and Related Information,” we structure our executive
compensation program with a long-standing commitment to
pay-for-performance that we implement by providing the majority of
compensation through arrangements that are designed to hold our
Named Executive Officers accountable for business results and
reward them for strong corporate performance and creation of value
for our stockholders. Please read our “Compensation
Discussion and Analysis” beginning on page 21 and the
accompanying tabular disclosure for additional details about the
compensation of our Named Executive Officers during
2019.
We are
asking stockholders to vote “FOR” the following
resolutions:
“RESOLVED,
that the compensation paid to our Named Executive Officers, as
disclosed in this Proxy Statement pursuant to the compensation
disclosures rules of the Securities and Exchange Commission,
including the Compensation Discussion and Analysis, the
compensation tables and any related material disclosed in this
Proxy Statement, is hereby APPROVED.”
Pursuant
to the Exchange Act and the rules promulgated thereunder, this vote
will not be binding on the Board or the Compensation Committee and
may not be construed as overruling a decision by the Board or the
Compensation Committee, creating or implying any change to the
fiduciary duties of the Board or the Compensation Committee or any
additional fiduciary duty by the Board or the Compensation
Committee or restricting or limiting the ability of stockholders to
make proposals for inclusion in proxy materials related to
executive compensation. The Board and the Compensation Committee,
however, may in their discretion take into account the outcome of
the vote when considering future executive compensation
arrangements.
Vote Required and Recommendation
In
voting to approve the above resolution, stockholders may vote for
the resolution, against the resolution or abstain from voting. The
affirmative vote of the holders of shares of common stock entitled
to vote must exceed the votes cast against this proposal for the
proposal to be approved. Abstentions and broker non-votes will have
no direct effect on the outcome of this proposal
The Board recommends that stockholders vote “FOR”
approval of the compensation of our Named Executive Officers as
described in this Proposal 3.
PROPOSAL
4 – NON-BINDING ADVISORY VOTE ON THE FREQUENCY OF FUTURE
ADVISORY VOTES ON THE COMPENSATION OF OUR NAMED EXECUTIVE
OFFICERS
The SEC
has also adopted final rules requiring public companies to hold an
advisory (non-binding) vote on the frequency of holding future
Say-on-Pay votes. Accordingly, as required by the SEC's rules, we
are including this proposal to give our stockholders the
opportunity to inform us as to how often they wish the Company to
hold a Say-on-Pay vote, similar to Proposal 3.
You may
cast your vote on your preferred voting frequency by choosing among
the following frequency options (not solely for or against the
recommendation of the Board):
●
Choice
1—every one year;
●
Choice
2—every two years;
●
Choice
3—every three years; or
●
Choice
4—abstain from voting
The
Board recommends that you vote for every three years as the desired
frequency for the Company to hold a Say-on-Pay vote. We believe
this frequency is appropriate for the reasons set forth
below:
1.
Our equity
compensation program for the Named Executive Officers is designed
to support long-term value creation, and a vote every three years
will allow the stockholders to better judge the equity compensation
program in relation to our long-term performance.
2.
A vote every three
years will provide the Board and the Compensation Committee with
the time to thoughtfully consider and thoroughly respond to
stockholders’ sentiments and to implement any necessary
changes in light of the timing required therefor. The Board and the
Compensation Committee will carefully review changes to the
compensation of our NEOs to maintain the effectiveness and
credibility of the program, which is important for aligning
interests and for motivating and retaining our NEOs.
3.
We are open to
input from stockholders regarding board and governance matters, as
well as the equity compensation program. We believe that the
stockholders' ability to contact us and the Board at any time to
express specific views on executive compensation holds us
accountable to stockholders and reduces the need for and value of
more frequent Say-on-Pay votes.
Pursuant
to the Exchange Act and the rules promulgated thereunder, this vote
on the frequency of future advisory votes on named executive
officer compensation is non-binding on the Board and its
committees. This vote may not be construed as overruling a decision
by the Board or its committees, creating or implying any change to
the fiduciary duties of the Board or its committees or any
additional fiduciary duty by the Board or its committees or
restricting or limiting the ability of stockholders to make
proposals for inclusion in proxy materials related to executive
compensation. Notwithstanding the Board's recommendation and the
outcome of the vote on this matter, the Board may, in the future,
decide to conduct advisory votes on a more or less frequent basis
and may vary its practice based on factors such as discussions with
stockholders and the adoption of material changes to compensation
programs.
Vote Required and Recommendation
The
frequency of the Say-on-Pay vote that receives the greatest number
of votes—every one year, every two years or every three
years—will be the frequency that the stockholders approve, on
a non-binding advisory basis. Abstentions and broker non-votes will
have no direct effect on the outcome of this proposal
The Board recommends that stockholders vote for holding future
advisory votes to approve the compensation of our Named Executive
Officers “EVERY THREE YEARS” as described in this
Proposal 4.
EXECUTIVE COMPENSATION AND RELATED INFORMATION
Executive Officers and Directors
Set
forth below is information regarding the Company’s current
directors and executive officers as of the date of this Proxy
Statement. The executive officers serve at the pleasure of the
Board.
The
directors are divided into three classes and serve three year
terms, as follows:
Name
|
|
Age
|
|
Position
|
|
Term
|
Steve (Wentao) Liu(1) (2)
|
|
64
|
|
Independent Director
|
|
Class III
|
Hansheng Zhou (3)
|
|
56
|
|
Independent Director
|
|
Class I
|
Tony (Bizuo) Liu
|
|
55
|
|
Chief Executive Officer and Chief Financial Officer
|
|
Class II
|
Chun Kwok Alan Au (3)
|
|
47
|
|
Independent Director
|
|
Class II
|
Jacky (Gang) Ji (2) (3)
|
|
45
|
|
Independent Director
|
|
Class II
|
Terry A. Belmont (1)
|
|
73
|
|
Chairman of the Board and Independent Director
|
|
Class I
|
Darren O’Brien(2) (3)
|
|
44
|
|
Independent Director
|
|
Class III
|
Edward Schafer(1)
|
|
74
|
|
Independent Director
|
|
Class I
|
Yihong Yao
|
|
52
|
|
Chief Scientific Officer
|
|
N/A
|
Andrew Chan
|
|
62
|
|
Chief Legal Officer (General Counsel), Corporate Development and
Secretary
|
|
N/A
|
(1)
|
Member
of Audit Committee
|
(2)
|
Member
of Compensation Committee
|
(3)
|
Member
of Nominating and Corporate Governance Committee
|
There
are no family relationships between any of our directors or
executive officers. There is no arrangement or understanding
between any of the directors or officers of the Company and any
other person pursuant to which any director or officer was or is to
be selected as a director or officer, and there is no arrangement,
plan or understanding as to whether non-management stockholders
will exercise their voting rights to continue to elect the current
directors to the Company’s Board. Except for the board
observer seat granted to Wuhan Dangdai as a condition of its $43.3
million investment in the Company and subsequent election of Darren
O’Brien as a Class III director of the Company, there are no
arrangements, agreements or understandings between non-management
stockholders that may directly or indirectly participate in or
influence the management of the Company’s affairs. There are
no agreements or understandings for any officer or director to
resign at the request of another person, and none of the officers
or directors are acting on behalf of, or will act at the direction
of, any other person.
The
following is a brief description of the business experience during
the past five years of our executive officers and directors as of
the date of this Proxy Statement who are not up for election at
this Annual Meeting:
Terry A. Belmont – Chairman of the Board and
Director
Mr.
Belmont has been serving CBMG as an Independent Director since
December 2013 and as Vice Chairman of the Board from March 2015 to
January 2016, when he was elected to serve as Chairman of the
Board. He also serves as a member of the Audit
Committee.
Mr.
Belmont has over 20 years of experience in leading major academic
and non-academic medical centers and healthcare entities with
multi-campus responsibility. From 2009 to 2015, Mr. Belmont was CEO
of UC Irvine Medical Center, the main campus of UC Irvine Health,
in Orange, California, and its licensed ambulatory facilities in
Orange, Irvine, Costa Mesa, Anaheim and Santa Ana and led several
expansion and renovation projects. He helped open the state-of
the-art UC Irvine Douglas Hospital and led the development of a
patient-centered healing garden and a 7-story clinical laboratory
building. Mr. Belmont launched a 10-year facility master planning
project for facility development at UC Irvine Medical Center and
clinics throughout Orange County. Mr. Belmont retired from UC
Irvine Medical Center in 2015. Prior to joining UC Irvine Medical
Center, Mr. Belmont served as CEO of Long Beach Memorial Medical
Center and Miller Children’s Hospital from 2006-2009. He has
also served as president and chief executive officer in several
entities, including St. Joseph Hospital of Orange, Pacific Health
Resources, California Hospital Medical Center and
HealthForward.
Mr.
Belmont’s substantial community involvement includes board
positions with the Orange County World Affairs Council, Southern
California College of Optometry, American Heart Association and
Children’s Fund. He serves on the Board of Trustees of the
University of Redlands. Mr. Belmont received his master’s in
public health with a major in hospital administration from UC
Berkeley, and a bachelor’s in business from the University of
Redlands. In considering Mr. Belmont’s eligibility to serve
on the Board, the Board considered Mr. Belmont’s
business acumen in the healthcare industry.
Steve (Wentao) Liu, Director
Steve
(Wentao) Liu has been a director of the Company since October 2013.
Mr. Liu has over 30 years of professional career encompassing
biomedicine, clean energy and semiconductor industries. He has led
multi-national businesses as well as entrepreneurial companies,
with a proven track record of delivering financial results and
shareholder value. Prior to joing the Company, Mr. Liu served on
board of directors of various public and private companies in the
United States, China, Hong Kong, Canada, and Australia. Mr. Liu
previously served as Chairman and CEO of Cellular Biomedicine
Group Inc from March, 2012 to September, 2013. In October 2013, he
transitioned to the role of Executive Chairman of the Board
and, in February 2016, to the role of director and strategic
advisor to CBMG’s management. Prior to CBMG, Mr. Liu served
as President and CEO of Seeo Inc. from July 2010 to Feb 2012, and
as director to Aug 2015 where he led a team of scientists and
entrepreneurs for the development of solid-state lithium ion
battery for electric vehicles and smart grid applications. Under
his leadership, Seeo received multiple funding from Department of
Energy and venture capital firms. Seeo was elected to Global
Cleantech 100 and top Energy Technology Startups in 2011. Before
that, Mr. Liu worked 25 years in semiconductor industry. From 2003
to 2009, he was President and CEO of Shanghai Huahong NEC
Electronics Company (now HHGRACE), for which he received the White
Magnolia Award from Shanghai Government for his contribution to
international collaboration and economic development of the city.
From 1989 to 2002, he was Vice President and GM of Peregrine
Semiconductor, Vice President and GM of Integrated Device
Technology, Vice President and General Manager of Quality
Semiconductor and Managing Director of Quality Semiconductor
Australia. Mr. Liu served Cypress Semiconductor in various
engineering capacity from 1984 to 1989. Mr. Liu earned a
Bachelor’s degree in Chemistry from Nanjing University,
Nanjing China. He holds a Doctorate in Physical Chemistry from
Rensselaer Polytechnic Institute, Troy New York. In considering Mr.
Liu’s eligibility to serve on the Board, the Board considered
Mr. Liu’s board experience as well as his prior experience as
a leader and executive officer.
Darren O’Brien, Director
Mr.
O’Brien has been a director of the Company since May 2019. He
has over 20 years of experience in private equity and investment
banking. Since May 2013 to the present, Mr. O’Brien has
worked at Sailing Capital, a global private equity firm based in
Hong Kong and is a Managing Director & Partner. From 2007 to
2012, Mr. O’Brien was at Credit Suisse (Asia Pacific) lastly
serving as the Head of Power, Utilities and Infrastructure
investment banking. Previously, Mr. O’Brien worked for ABN
AMRO Bank, ING Barings and Furman Selz in investment banking in
various industry coverage sectors. Mr. O’Brien received his
Bachelor of Science in Foreign Service degree from Georgetown
University and he is a CFA charterholder. Mr. O’Brien’s
significant corporate involvement includes board positions with
Soneva Holdings Pte. Ltd, Impossible Foods Inc, Brookstone Holdings
Corp and Alphaeon Corp. In considering Mr. O’Brien’s
eligibility to serve on the Board, the Board considered Mr.
O’Brien’s professional experience in international
finance and investment management.
Edward Thomas Schafer, Director
Mr.
Schafer has been a director of the Company since October 2019. He
has served on audit and compensation committees for public
companies and has deep experience in strategic planning in both the
private and public sectors. Mr. Schafer has served as vice chairman
of Bion Environmental Technologies Inc., an agriculture technology
company, since 2011. Mr. Schafer is Co-Founder of Extend America, a
rural America wireless communication company. He is a board member
of AGCO-Amity JV, and Vice Chairman of Amity Technology LLP,
agricultural equipment companies, and serves on the board of
Northstar Capital Partners LLC, a financial services company. Mr.
Schafer is also Chairman of Dynamic Food Ingredients, and a board
member of the Center for Innovation at the University of North
Dakota and teaches a leadership class at North Dakota State
University. Mr. Schafer was elected as governor of the State of
North Dakota in two consecutive terms, is a past chair of the
Republican Governors Association, the Midwestern Governors’
Association, the Interstate Oil and Gas Compact, the Western
Governors’ Association and served as the 29th United States
Secretary of Agricultural from 2008 to 2009. Mr. Schafer holds a
Master’s degree in Business Administration from the
University of Denver. In considering Mr. Schafer’s
eligibility to serve on the Board, the Board considered Mr.
Schafer’s business acumen, administration and management
experience in the public and private sectors.
Hangsheng Zhou – Director
Dr.
Zhou has been a director of the Company since July 2016. Dr. Zhou
is a well-respected and seasoned executive with over 28 years of
experience in the science and technology industries in China. He
currently serves as Chief Executive Officer and Chairman of Wuhan
Dangdai Science & Technology Industries Group Co., Ltd.
(“Wuhan Dangdai”), a China based privately held
conglomerate with a substantial medical and pharmaceutical
portfolio in China. Dr. Zhou previously served as Chief Financial
Officer and Managing Director of Wuhan Humanwell Healthcare Group
Co., Ltd. He holds a bachelor’s degree in Cell Biology and
masters in Animal Biology from Wuhan University and has also earned
his PhD degree in Applied Chemistry from Beijing Institute of
Technology. Dr. Zhou is a member of the Company’s
Compensation Committee. In considering Dr. Zhou’s eligibility
to serve on the Board, the Board considered Mr. Zhou’s
leadership experience in managing both large pharmaceutical company
in China and multinationals in substantially similar
industries.
Yihong Yao – Chief Scientific Officer
Mr. Yao
has been Chief Scientific Officer since August 2015. Mr. Yao brings
nearly twenty years of experience in the life sciences industry and
academia with strong expertise in clinical biomarker discovery and
development, strategy and personalized medicine. From 2005 until
his appointment as Chief Scientific Officer, Mr. Yao served in
various senior scientific positions at MedImmune, including most
recently as director and head of pharmacogenomics and
bioinformatics in the department of Translational Sciences from
2011 to July 2015. From 2001 to 2005, Mr.Yao served as Senior
Scientist, Translational Science at Abbott Bioresearch Center. He
holds a bachelor’s degree in Biochemistry from Fudan
University, Shanghai, China, a master’s degree in
Bioinformatics from Boston University, and a PhD in Molecular
Biology and Biochemistry from the University of Kansas, and he was
a postdoctoral fellow at Johns Hopkins University School of
Medicine.
Andrew Chan –Chief Legal Officer (General Counsel), Corporate
Development & Secretary
Mr.
Chan served as Senior Vice President of Corporate Business
Development since January 2014, and was appointed Secretary and
General Counsel in September 2016 and February 2019, respectively.
He previously served as Secretary and Chief Financial Officer from
February 2011 to January 2014. From 2003 until 2011, Mr. Chan was
with Jazz Semiconductor and held various management roles focusing
on business operations, business and corporate development. Prior
to 2003, Mr. Chan was Vice President of Business Operations and
Supply Chain Management for Mindspeed Technologies. In 2000, Mr.
Chan served as Vice President of Supply Chain Management at
Conexant Systems. Mindspeed and Jazz were spin-offs of Conexant.
Conexant began as a division of Rockwell International, before
being spun off as a public company. Previously, Mr. Chan’s
focus was in aviation and aerospace services. He served in diverse
technical and operations management roles at Eastern Airlines,
Continental Express and at Allied Signal (now called Honeywell) as
Sr. Director of Strategic Business Development. Mr. Chan earned a
B.S. degree in Management from Embry Riddle Aeronautical University
and an MBA with specialization in Computer System Management and
Operations Research from Nova University. He also holds a
Jurisprudence Doctorate (J.D.) degree from South Texas College of
Law.
REPORT OF THE COMPENSATION COMMITTEE
The
following Report of the Compensation Committee shall not be deemed
to be “soliciting material” or to be
“filed” with the SEC, nor shall it be incorporated by
reference into any of our filings under the Securities Act of 1933,
as amended, or the Exchange Act, except to the extent we
specifically incorporate it by reference therein.
Our
Compensation Committee has reviewed and discussed with management
the Compensation Discussion and Analysis (“CD&A”)
for the fiscal year ended December 31, 2019 included in this proxy
statement. Based on that review and discussion, the Compensation
Committee has recommended to the Board that the CD&A be
included in this proxy statement and incorporated by reference into
our Annual Report on Form 10-K for the fiscal year ended December
31, 2019.
Submitted
by:
The
Compensation Committee of the Board of Directors
/s/ Steve
(Wentao) Liu, Chairman
/s/
Jacky (Gang) Ji
/s/
Darren O’Brien
COMPENSATION DISCUSSION AND ANALYSIS
This
Compensation Discussion and Analysis explains how the Compensation
Committee oversees our executive compensation programs and
discusses the compensation earned by the following individuals, who
are referred to herein as our “Named Executive
Officers” or “NEOs”, for the fiscal year ended
December 31, 2019.
Tony
(Bizuo) Liu – Chief Executive Officer and Chief Financial
Officer
Yihong
Yao – Chief Scientific Officer
Andrew
Chan – Chief Legal Officer (General Counsel), Corporate
Development and Secretary
Key Business Performance and Pay Highlights
We are a clinical-stage biopharmaceutical company committed to
using our proprietary cell-based technologies to develop
immunotherapies for the treatment of cancer and stem cell therapies
for the treatment of degenerative diseases. We view ourselves as a
leader in cell therapy industry through our diverse, multi-target,
broad pipeline ranging from immune-oncology, featuring Chimeric
Antigen Receptor-T (CAR-T,) TCR-T and TIL to regenerative medicine.
Our focus is to bring our potentially best-in-class products to
market while also aiming to reduce the manufacturing cycle time,
the aggregate cost and ensure quality products of cell therapies.
We provide comprehensive and integrated research and manufacturing
services throughout the discovery, development and manufacturing
spectrum for cell-based technologies.
As described below, we delivered a year of extraordinary
performance in 2019, as we made significant progress towards our
clinical development and business goals, among many other
accomplishments and milestones, which impacted executive
compensation. We believe the compensation paid to our Named
Executive Officers for 2019 appropriately reflects and rewards
their contribution to our performance. Following are the 2019
Achievements of management
(“Achievements”):
●
Initiated patient
recruitment for CAR088 (anti-B-cell maturation antigen (BCMA)
CAR-T) in China;
●
Obtained approval
on Phase 2 trial in China for AlloJoin® Therapy for Knee
Osteoarthritis (KOA);
●
Initiated a Phase 1
clinical trial of CAR066 (anti-CD20 CAR-T) targeting previously
anti-CD19 CAR-T treated, relapsed diffuse large B-cell lymphoma
(“DLBCL”) and small B-cell lymphoma patients in China,
and dosed the first CD19 CAR-T relapsed DLBCL patient;
●
Submitted
autologous adipose derived progenitor cell (haMPC) (Re-Join®)
KOA Phase 2 IND filing with the NMPA under the new
regulation;
●
Achieved desired in
vitro and in vivo anti-tumor activity in CD20-CD19 bi-specific
CARs. Based on scientific evidence known to the public, CD20-CD19
bi-specific CARs have shown reactivity against both single positive
and double positive tumor targets;
●
Filed a shelf
registration statement on Form S-3 to offer and sell securities of
the Company, for total gross proceeds up to
$200,000,000;
●
Entered into a
Facility Improvement and Process Validation Agreement with Duke
University, in which the Company paid for improvement of
Duke’s GMP facility for Duke to conduct a tumor infiltrating
lymphocytes clinical trial;
●
Launched allogenic
haMPC KOA Phase 2 clinical trial;
●
Entered into a
lease agreement to build an approximately 22,000 sqt. facility in
Rockville, Maryland to expand R&D and to support clinical
development in the US;
●
Improved our
communications and investors relation; and
●
Continued expansion
of key talent and capabilities.
In
2019, we focused on our research and development while assembling
and advancing our drug development pipeline. We significantly
increased our investment in research, product development,
manufacturing capabilities, quality controls system, and clinical
activities in 2019. These efforts contributed to an operating
loss of $51 million in 2019, or $10.5 million higher than 2018, and
net loss per basic and diluted share of $2.63, an increase of $0.43
per share, or 19.5% from 2017. For our stock performance graph of
years 2014 to 2019 and related discussions, please refer to Item 5-
Market for Registrant’s Common Stock, Related Stockholder
Matters and Issuer Purchases of Equity Securities of our Annual
Report on Form 10-K for the fiscal year ended December 31, 2019, a
copy of which is included on the proxy materials for the Annual
Meeting and available at https://www.iproxydirect.com/CBMG.
Pursuant
to the Long Term Incentive Plan (“LTIP”) initiated in 2017
and under the 2014 Stock Incentive Plan, we granted stock
price-vested and time-vested restricted stock units
(“RSUs”) and stock options
to our Named Executive Officers in 2017, which better aligned their
compensation with the long-term interests of CBMG stockholders by
providing a retention incentive and focusing our NEOs on TSR
performance over a four-year period. We believe the compensation
structure is commensurate with industry standards, namely for
executives in the highly in-demand immune cell therapy industry and
executives with substantial experience at larger pharmaceutical
companies in the industry. However, attracted by a potentially
large cancer immune cell therapy market in China, some U.S.
companies have made inroads in China. Specifically, these U.S.
companies had established their foothold in geographical areas
close to our China operations. The presence of these companies in
China created a talent retention risk that we addressed through the
addition of the LTIP for our NEOs in 2017.
For purposes of determining compensation for 2019, our Compensation
Committee examined our strategic goals, the cost of living, the
advancement of our clinical programs, the significant talent
recruitment achievement to help grow our Company, and the prudent
talent retention effort while substantially improving employee
morale in 2019.
Stockholder Engagement and “Say on Pay”
Vote
At our
annual meeting of stockholders in 2014, our stockholders approved
by advisory vote the Company’s compensation to its executives
and determined to conduct advisory votes every three years. We also
provided our stockholders with a nonbinding advisory vote on
executive compensation at our 2017 annual meeting of stockholders,
which received 99% support of votes cast and was considered by the
Compensation Committee in setting our executive compensation
program for 2019, although we did not make any changes to our
compensation program as a result of the vote. The Compensation
Committee and Board believe that stockholders voting
“FOR” Proposal 3, beginning on page 15, can be an
affirmation of the structural soundness of our executive
compensation programs, which include the LTIP for business
continuity and talent retention.
Compensation Principles and Process for Setting NEO
Compensation
CBMG
has a long-standing commitment to pay-for-performance that we
implement by providing the majority of compensation through
arrangements that are designed to hold our Named Executive Officers
accountable for business results and reward them for strong
corporate performance and creation of value for our stockholders.
Our executive compensation programs are periodically adjusted over
time so that they support our business goals and promote long-term
growth of the company.
The goal of our Compensation Committee is to ensure that our
compensation programs are aligned with the interests of our
stockholders and our business goals, while ensuring that the total
compensation paid to each of our executive officers is fair,
reasonable and competitive. We target our NEOs’ overall total
compensation to be within a competitive range of the market median
of similar companies in terms of industry, number of employees,
lifecycle, prevalence of programs and value provided, where
quantifiable. The overall objectives of our executive compensation
program are as follows (“Overall
Objectives”):
●
attract, motivate and retain superior
talented and dedicated named executive
officers;
●
correlate
discretionary annual cash bonuses to the achievement of operational
and financial objectives; and
●
provide
our Named Executive Officers with appropriate long-term incentives
that directly correlate to the enhancement of stockholder value, as
well as facilitate executive retention.
The
Compensation Committee believes the year 2019 saw steady growth of
the capital market, little volatility in our stock price and a
steadily developing biotech industry segment. The Compensation
Committee decided to make little change to the current compensation
program and plans to monitor our compensation program, its
structure and its individual components to ensure we provide a
competitive executive compensation scheme commensurate to retain
and attract talented leaders to bolster our continued journey to
advance our clinical trials and to bring our cell therapies to
commercialization.
Guiding Principles
Team-Based Approach. We apply a team-based approach to
the compensation of our Named Executive Officers with internal pay
equity as a primary consideration.
Performance Expectations. We establish clear, quantitative
performance goals focused on CBMG’s
overall success rather than on objectives specific to each Named
Executive Officer’s areas of
responsibility.
Emphasis on Long-Term Equity Incentives. We emphasize long-term
performance, retention, and alignment between the interests of our
Named Executive Officers and stockholders by significantly
weighting the NEOs’ compensation toward long-term equity
awards.
Key elements of our compensation programs include the
following:
Element
|
Purpose
|
Features
|
Base salary
|
To
attract and retain highly skilled executives.
|
Fixed component of pay to provide financial stability, based on
responsibilities, experience, individual contributions and cost of
living data, at levels that we believe are competitive with base
salaries of executive officers in other comparable publicly-held
biopharmaceutical companies
|
Discretionary year-end annual cash bonus
|
To
promote and reward the achievement of our key short-term strategic
and business goals, as well as individual performance; to motivate
and attract executives.
|
Variable component of pay based on quantitative and qualitative
annual Company and individual goals.
|
Long-term equity
incentive
compensation
|
To align the NEO’s long-term interests with those of our
stockholders, with the ultimate objective of affording our NEOs an
appropriate incentive to help us to improve stockholder
value.
|
Typically, subject to multi-year vesting based on continued service
primarily in the form of stock options and RSUs, the value of which
depends on the performance of our common stock.
|
Our Compensation Committee evaluates both employee performance and
compensation to maintain our ability to attract and retain
highly-qualified executives in key positions and to assure that
compensation provided to our Named Executive Officers remains
competitive when compared to the compensation paid to similarly
situated executives of companies that we consider comparable to our
company.
In addition to our direct compensation elements, we are committed
to sound executive compensation policies and practices, as
highlighted in the following table, which are designed to align our
NEOs with stockholder interests and market best
practices:
What We Do
|
What We Don’t Do
|
✓ Maintain commitment to
pay-for-performance philosophy
|
×
No hedging or pledging of our stock
|
✓Set challenging short- and long-term incentive award
goals
|
× No repricing of stock options without stockholder
approval
|
✓ Maintain
general stock ownership guidelines for
our non-employee directors and executive
officers
|
× No excessive perquisites
|
✓ Target compensation
based on market norms
|
×
No excise tax gross-ups
|
✓ Offer market-competitive benefits for named
executive officers that are consistent with the rest of our
employees
|
×
No supplemental executive retirement plans
|
✓ Maintain an independent Compensation
Committee
|
× No guaranteed annual bonuses or salary
increases
|
Determination of Compensation Amounts
A
number of factors impact the determination of compensation amounts
for our executives, including the individual’s role in our
company and individual performance, length of service with us,
competition for talent, individual compensation package,
assessments of internal pay equity and industry data. Stock price
performance has generally not been a significant factor in
determining annual compensation because the price of our common
stock is subject to a variety of factors outside of our
control.
Other performance factors we consider when determining the
compensation of our named executive officers include:
●
achievement of
Chinese commercialization readiness goals with respect to
Kymriah®;
●
key research and
development achievements, including advances in our clinical
product candidates;
●
initiation and
progress of clinical trials and achievement of regulatory
milestones;
●
expansion of
manufacturing and operational capabilities;
●
establishment/maintenance
of key strategic relationships and new business initiatives,
including financings;
●
development of
organizational capabilities and managing our growth;
and
●
continued expansion
of operations.
Our executive compensation program is designed to motivate and
reward exceptional performance in a straightforward and effective
way, while also recognizing the size, scope, and success of
CBMG’s business. The compensation of our named executive
officers has three primary components: annual base salary, annual
cash incentive, and long-term equity awards. After reviewing
the macro environment of the pharmaceutical industry and market
trend in 2019, the Compensation
Committee believes there are no significant change in the
macroenvironment to warrant a major change in our compensation
program.
Executive Compensation Evaluation Process
Our Compensation Committee intends that if we achieve our corporate
goals and an NEO performs at the level expected, the NEO should
have the opportunity to receive compensation that is competitive
with industry norms. In order to accomplish its objectives
consistent with its philosophy for executive compensation, the
Compensation Committee typically takes the following actions
annually:
●
reviews Chief
Executive Officer performance;
●
seeks input from
our Chief Executive Officer on the performance of the Named
Executive Officers;
●
reviews all
components of executive officer compensation, including base
salary, cash bonus targets and awards, equity compensation and the
estimated payout obligations under severance and change in control
scenarios;
●
holds executive
sessions without management present; and
●
reviews information
regarding the performance and executive compensation of other
companies.
In
assessing each Named Executive Officer’s individual
performance, the Compensation Committee further agreed that in 2019
the following Named Executive Officers have achieved:
Mr. Liu, CEO & CFO:
●
achievements
substantially exceeded all of the 2019 Overall Objectives comprised
of the Company’s operational and strategic
goals;
●
established
strategic relationships to benefit the pipeline and commercial
aspects of our business;
●
advanced drug
candidates into pivotal trails with routes to approval in China and
the United States;
●
evaluated emerging
regenerative medicine technology platform for other indications and
review recent developments in the competitive
landscape;
●
acted as industry
thought leader, strong advocate for digital platform through
partnership with well-established industry leaders;
●
demonstrated
exemplary leadership in support of expanding organizational
capabilities;
●
advanced the
scale-up of an efficient global, fully-integrated organization;
and
●
fostered an
engaging culture that embodies our mission, vision and shared
values.
Mr. Yao, CSO:
●
executed clinical
trial sponsorship with U.S. based Principal Investigators (PI) to
develop our clinical assets in the U.S.;
●
continued to build
organizational capabilities;
●
advanced our
product and technology portfolio; and
●
continued to
progress pre-clinical and emerging programs.
Mr. Chan, CLO, Corporate Development & Secretary:
●
attained various
corporate financial, capital raising and strategic
objectives;
●
improved
organizational efficiency;
●
negotiated
Rockville lease with favorable terms and championed U.S.
expansion;
●
implemented CFIUS
and Export Control review Protocol, training and
process.
●
led Novartis
Alliance Management and integration process;
●
successfully
oversaw internal and external financial management and SEC
compliance;
●
led legal team and
internal resources to support commercial organization and fortify
our intellectual property portfolio and scientific
development;
●
facilitated ease of
financing with for total gross proceeds up to $200,000,000;
and
●
identified,
monitored and managed enterprise-level risks to the
Company.
As
illustrated below, approximately 74% of targeted total direct
compensation in 2019 for Mr. Liu, our Chief Executive Officer, was
performance-based, consisting of approximately 47% realized equity
value (reflecting the value of the shares of our common stock and
any cash received upon vesting of previously granted equity awards)
and 27% annual incentive cash bonus. Only 26% of his compensation,
in the form of base salary, was fixed, ensuring a strong link
between his targeted total direct compensation and the
Company’s performance.
Elements
of 2019 Compensation of Named Executive
Officers
2019 Base Salaries
Base
salary is a customary, fixed element of compensation intended to
attract and retain executives. Base salary is used to recognize the
leadership, experience, skills, knowledge, execution, and
responsibilities required of our executives as well as recognizing
the fiercely competitive nature of the biopharmaceutical industry.
When setting the annual base salaries of our Named Executive
Officers, the Compensation Committee considers market data,
internal pay equity, and CBMG’s business results and size and
the cost of living adjustment data. We provide our Named Executive
Officers with a base salary to compensate them for services
rendered during the year. Generally, the base salaries reflect the
experience, skills, knowledge and responsibilities required of each
Named Executive Officer, as well as such Named Executive
Officer’s overall performance and contributions to our
business.
During
its review of base salaries for the Named Executive Officers, the
Compensation Committee primarily considers:
●
the negotiated
terms of each NEO’s employment agreement, if
applicable;
●
an internal review
of the NEO’s compensation, both individually and relative to
other NEOs; and
●
base salaries paid
by comparable companies in the biopharmaceutical industry that have
a similar business and financial profile.
Salary
levels are considered annually as part of the company’s
performance review process. Merit-based increases to salaries are
based on management’s assessment of the individual’s
performance, the recommendations made by the Chief Executive
Officer to the Compensation Committee, and cost of living
data.
As reflected in the table below and commensurate with industry
practice, Mr. Tony (Bizuo) Liu, Mr. Yihong Yao, and Mr. Andrew
Chan’s salary were increased to reflect increased
responsibilities.
|
|
|
|
Tony (Bizuo)
Liu
|
385,875
|
367,500
|
5%
|
Yihong
Yao
|
292,005
|
278,100
|
5%
|
Andrew
Chan
|
304,500
|
290,000
|
5%
|
On January 16, 2020, the Compensation Committee reviewed
compensation programs, incentive information, competitive landscape
of the cell therapy industry as well as major aspects of the
management’s achievements in 2019, including key financing,
launch of the GMP facility, significant strategic partnerships,
achievements in clinical trials and addition of key talents. Based
on review of such factors, the Compensation Committee approved
salary increases of the three executive officers as listed in the
above table.
2019 Performance Cash Incentive Bonus Payouts
We have
an annual performance cash incentive program under which bonuses
are paid to our NEOs based on achievement of our performance goals
and objectives established by the Compensation Committee and/or our
Board as well as on individual performance. This program is a
variable, at-risk component of our named executive
officers’ compensation that is aligned with CBMG’s
annual business results. The program is discretionary and is
intended to: (i) strengthen the connection between individual
compensation and the Company’s corporate achievements;
(ii) encourage teamwork among all disciplines within our
Company; (iii) reinforce our pay-for-performance philosophy by
awarding higher bonuses to higher performing employees; and
(iv) help ensure that our cash compensation is competitive.
The annual cash incentive
program provides payout opportunities based on the achievement
of business goals that require our named executive officers to
meet high standards of performance to receive a payout. .The
Compensation Committee and our Board also has the discretion, after
consulting with our CEO, to not pay cash bonuses in order that we
may conserve cash and support ongoing development programs and
commercialization efforts.
We
provide an opportunity for each of our Named Executive Officers to
receive an annual cash incentive bonus based on the satisfaction of
individual and company objectives established by our Board. For any
given year, these objectives may include individualized goals or
company-wide goals that relate to operational, strategic or
financial factors such as progress in developing our product
candidates, achieving certain manufacturing, intellectual property,
clinical and regulatory objectives, and raising certain levels of
capital.
Historically,
at its annual year-end meeting to consider Named Executive Officer
compensation, the Compensation Committee, in consultation with
management, has established corporate goals for the upcoming fiscal
year for purposes of, among other things, making its
recommendations regarding its discretionary annual bonus awards
(and stock option grants) for the upcoming year to our named
executive officers and all employees. Such corporate goals are established
based on factors relevant to the fiscal year. The Compensation
Committee also considers prior years’
business results as a
reference point, but focuses on setting goals that reflect current
business conditions and drive an
appropriate pay-for-performance outcome. When setting the
goals for 2019, the Compensation Committee considered many factors,
including the macroeconomic environment, trade conditions, foreign
exchange headwinds, long-term strategic investments, alignment
between appropriate payout opportunities and performance levels,
and the level of performance required by our named executive
officers to deliver against the goals. The target goals represented
a level of performance that would be challenging to achieve based
on the considerations noted above, but also representing strong
business performance commensurate with the target payout
opportunity.
For
2019, each Named Executive Officer’s annual target cash bonus
was determined by the Compensation Committee based on the Chief
Executive Officer’s recommendation (for all NEOs other than
himself) and each Named Executive Officer’s employment
agreement. For 2019, the annual target cash bonus for each Named
Executive Officer was set at 50% of such NEO’s base
salary.
The
Compensation Committee evaluates the achievement level of
individual and corporate objectives as it relates to annual cash
bonuses for named executive officers and makes it views known to
the full Board as part of its final compensation deliberations. The
Compensation Committee also considers the bonuses paid by
comparable companies, as we strive to be competitive with other
similarly situated companies in our industry. The process of
developing biopharmaceutical products and bringing those products
to market is a long-term proposition and outcomes may not be
measurable for several years. Therefore, in order to build
long-term value for us and our stockholders, and in order to
achieve our business objectives, we believe that we must compensate
our officers and employees in a competitive and fair manner that
reflects our current activities but also reflects contributions to
building long-term value. The Compensation Committee, or where
appropriate, our Board may approve bonuses based on the foregoing
determinations or, after considering market conditions, our
financial position or other factors, may, in its sole discretion,
determine not to award any bonuses or to award larger or smaller
bonuses.
The
table below summarizes the 2019 performance goals criteria which
the Compensation Committee uses to evaluate the performance of the
NEOs and determine their incentive compensation
payouts.
Category
|
|
2019 Goals
|
Financials
|
|
Financing; progress
in clinical trials development, talents acquisition, and management
of approved budget
|
Corporate Development
|
|
Develop
strategic partnership and acquisition of complementary
technologies
|
Product Development
|
|
Manage
Clinical Trials execution
|
Manufacturing Development
|
|
Build
out CMC capabilities
|
Based
on the 2019 significant achievements comprised of $17 million
raised in equity, execution of license and collaboration agreement
with Novartis, China NMPA IND application for the allogeneic KOA
clinical trial, addition of key talents, expansion of our
cross-border development effort and establishment of the new
Maryland facility, as well as build out of the world class GMP
facility in Shanghai, the Chief Executive Officer received a
performance cash bonus of $275,625 for 2019.
On
January 16, 2020, the Compensation Committee reviewed the 2019
annual performance results evaluated how each listed officer met
his/her respective performance targets in 2019 and determined the
final performance-based payouts as follows:
|
2019
Target Annual Cash Bonus
|
2019
Percentage Payout
(as
a % of Target)
|
2019
Annual Performance Payout
|
Tony (Bizuo)
Liu
|
$183,750
|
150%
|
$275,625
|
Andrew
Chan
|
$145,000
|
83%
|
$120,000
|
Yihong
Yao
|
$139,050
|
86%
|
$120,000
|
Equity Incentive Compensation
We view
long-term compensation, currently in the form of stock options and
RSUs, as a tool to align the interests of our executives and
employees generally with the creation of stockholder value, to
motivate our employees to achieve and exceed corporate and
individual objectives and to encourage them to remain employed by
us. While cash compensation is a significant component of
employees’ overall compensation, the Compensation Committee
and our Board, together with our CEO, believe that the driving
force of any employee working in a small biotechnology company
should be strong equity participation. We believe that this not
only creates the potential for substantial longer-term corporate
value but also motivates employees and fosters loyalty and
commitment with appropriate personal compensation. The Compensation
Committee believes that equity awards vesting over time constitute
a significant retention incentive and a tool to foster continuity
of management, an important factor in business continuity in a
company with rich talents in a rapidly growing industry in
China.
The market for qualified, talented executives in our industry is
highly competitive. Accordingly, we believe equity compensation is
a crucial component of our competitive executive compensation
package and, as such, makes up a substantial part of our total
executive compensation package. In January 2017, in
anticipation of the commencement of substantial clinical trials
initiation towards product commercialization and to mitigate risk
of talent retention, the Compensation Committee approved our LTIP.
The LTIP is designed to:
●
serve as an
attractive incentive for our senior management to focus on creating
stockholder
value for us by advancing the clinical trials towards product
commercialization;
●
reflect long-term
stockholder value creation over a sustained period;
●
align financial
interests of employees with stockholders;
●
recognize current
performance as well as the expectation of future
contributions;
●
provide meaningful
awards to support and encourage stock ownership; and
The
LTIP is a four-year long-term incentive award comprised of the
following grants from the 2014 Stock Incentive Plan:
1)
Stock Price
Sensitive Performance RSU awards (“Performance RSUs”)
to be vested and delivered in 2021 depending on the achievement of
stock price performance, with a threshold of $30, resulting in 50%
payout, and a maximum of $60, resulting 200% payout;
and
2)
Time Sensitive RSUs and Stock Options,
which vest monthly over a period of 48 months.
Except
as described below, we have not granted additional equity awards
since the implementation of the LTIP in 2017, as these equity
grants were intended to compensate our Named Executive Officers
throughout the four-year period, including during 2019. In January
2019, the Compensation Committee determined it was appropriate to
grant Mr. Chan an additional 20,000 time-based vesting RSUs to
append his award under the LTIP. These additional RSUs vest in
accordance with the remaining portion of the vesting schedule
applicable to the time-based RSUs granted to Mr. Chan in
2017.
Other Compensation
Under
the terms of the 2017 Employment Agreements (as discussed below
under “Narrative Disclosure to Summary Compensation
Table—Executive Employment Agreement” and
“Potential Payments Upon Termination or Change in
Control”), our NEOs have certain severance benefits and
“double trigger” change in controls benefits. We
believe this double trigger requirement creates the potential to
maximize stockholder value because it prevents an unintended
windfall to management as no benefits are triggered solely in the
event of a change in control, while providing appropriate
incentives to act in furtherance of a change in control that may be
in the best interests of the stockholders. We believe these
severance and change in control benefits are important elements of
our compensation program that assist us in retaining talented
individuals at the executive and senior managerial levels and that
these arrangements help to promote stability and continuity of our
executives and senior management team. We also believe that the
interests of our stockholders will be best served if the interests
of these members of our management are aligned with theirs.
Furthermore, we believe that providing change in control benefits
lessens or eliminates any potential reluctance of members of our
management to pursue potential change in control transactions that
may be in the best interests of the stockholders. Finally, we
believe that it is important to provide severance benefits to our
NEOs in order to promote stability, business continuity and focus
on the job at hand.
We do
not maintain any nonqualified deferred compensation plans, pension
arrangements or post-retirement health coverage for our employees,
including our Named Executive Officers. Under our 401(k) savings
plan, which the Named Executive Officers are eligible to
participate in, we match employee contributions up to 5% of each
employee’s eligible compensation, subject to applicable
limitations under the law. All matching contributions are fully
vested when made. The 401(k) savings plan also includes an
automatic opt-in feature which defers, on a pre-tax basis, 3% of an
employee’s eligible compensation should they not make any
election otherwise.
Changes to Compensation Program Following the Fiscal-Year
End
We
believe that 2019 was an outstanding year for us. We have
bifurcated our markets, launch clinical studies in the U.S., and
significantly improved our manufacturing capabilities and quality
system. We executed Execute, the technology transfer and align the
manufacturing processes with the global CAR-T leader Novartis to
support the development of the world’s first CAR-T therapy
Kymriah® in China. We have amassed significant talent
recruitment and achieved talent retention in a fiercely competitive
China market and made substantial progress in clinical,
manufacturing, strategic alliance and funding milestones. Attracted
by a potentially large cancer immune cell therapy market in China,
U.S. biopharmaceutical companies started to make inroads in China,
establishing their foothold in geographical areas close to our
China operations. We have spent many years recruiting talent and
training our people. Our employees are highly coveted and have
cultivated valuable relationships with the cell therapy clinical
partners. However, cell therapy is a relatively new science, the
talent pool is limited and there is a dearth of trained specialists
in this discipline. Against this backdrop, the Compensation
Committee conducted a review of our compensation program in late
January 2020. The Compensation Committee reviewed the overall
compensation structure and its individual components to ensure we
provide a competitive executive compensation scheme commensurate to
retain and attract talented leaders to bolster our continued
journey to advance our clinical trials and to bring our cell
therapies to commercialization. Following this review, the
Compensation Committee decided on January 16, 2020 to adjust each
Named Executive Officer’s annual salary as
follows:
●
Mr. Liu from
$367,500 to $385,875
●
Mr. Yao from
$278,100 to $292,005
●
Mr. Chan from
$290,000 to $304,500
Stock Ownership Guidelines
Under
our general stock ownership guidelines, each Named Executive
Officer is expected to own meaningful shares of our stock that
align with the stockholders’ interest; however, no specific
ownership levels are required. The Compensation Committee reviewed
and concluded, in its discretion, that each NEO currently satisfies
the general stockholders’ interest-alignment stock ownership
guidelines.
Pay Ratio Disclosure
In
August 2015 pursuant to a mandate of the Dodd-Frank Wall Street
Reform and Consumer Protection Act (the “Dodd–Frank Act”),
the SEC adopted a rule requiring annual disclosure of the ratio of
the median employee’s annual total compensation to the total
annual compensation of the principal executive officer
(‟PEO”). The
Company’s PEO is Mr. Liu. The purpose of the new required
disclosure is to provide a measure of the equitability of pay
within the organization.
We
identified the median employee by examining the 2019 total cash and
equity compensation for all individuals, excluding our CEO, who
were employed by us as of December 31, 2019. We included all
employees, whether employed on a full-time, part-time, or seasonal
basis. In terms of geographic locations, 197 of our 217 employees
are based in China while the rest are based in the United
States.
The
following assumptions, adjustments, or estimates applied to our
analysis of total compensation: (i) share-based compensation has
been taken into consideration of total annual compensation, which
is calculated based on the grant date fair value calculated
according to U.S. GAAP without amortizing over the vesting periods;
and (ii) compensation for all full-time and temporary employees as
of December 31, 2019 was annualized. We believe that the use of
cash and equity compensation for all employees is a consistently
applied compensation measure because annual equity awards to
employees are a key component of our compensation program and
approximately 30% of our current employees receive annual equity
awards as part of their compensation. After identifying the median
employee based on total cash and equity compensation, we calculated
annual total compensation of such employee in accordance with Item
402(c)(2)(x) of Regulation S-K.
As
illustrated in the table below, our 2019 PEO to median employee pay
ratio is 10:1.
Median
Employee total annual compensation
|
$55,990
|
Mr. Liu
(‟PEO”) total annual compensation
|
$541,328
|
Ratio of PEO
to Median Employee Compensation
|
10:1
|
Compensation Risk Assessment
We believe that our executive compensation program and our employee
compensation program as a whole do not encourage excessive or
unnecessary risk taking. This is primarily due to the fact that our
compensation programs are designed to encourage our executive
officers and other employees to remain focused on both short-term
and long-term strategic goals, in particular in connection with our
pay-for-performance compensation philosophy. As a result, we do not
believe that our compensation programs are reasonably likely to
have a material adverse effect on us.
Summary Compensation Table
The
following table sets forth for the years ended December 31, 2019,
2018, and 2017 compensation awarded to, paid to, or earned by
our Named Executive Officers.
Name and Principal Position
|
|
|
|
|
|
All Other
Compensation
($) (1)
|
|
Bizuo
(Tony) Liu, Chief Executive Officer, Chief Financial Officer and
Director
|
2019
|
261,328
|
280,000
|
-
|
-
|
-
|
541,328
|
|
2018
|
337,201
|
150,000
|
1,335,625
|
-
|
-
|
1,822,826
|
|
2017
|
300,000
|
100,000
|
238,750
|
1,384,800
|
27,513
|
2,051,063
|
Andrew
Chan, Chief Legal Officer (General Counsel), Corporate Development
and Secretary
|
2019
|
292,766
|
168,000
|
372,600
|
-
|
14,318
|
847,684
|
|
2018
|
278,602
|
115,000
|
256,005
|
-
|
12,319
|
661,926
|
|
2017
|
259,796
|
80,000
|
45,745
|
351,630
|
38,028
|
775,199
|
Yihong
Yao, Chief Scientific Officer
|
2019
|
278,100
|
72,900
|
-
|
-
|
13,975
|
364,975
|
|
2018
|
269,475
|
78,600
|
294,956
|
-
|
10,678
|
653,709
|
|
2017
|
259,375
|
75,000
|
52,716
|
244,065
|
25,225
|
656,381
|
(1)
The amounts
reported in the “All Other Compensation” column for
2019 reflects Company contributions to each Named Executive
Officer’s 401(k) plan account.
(2)
On October 1, 2018,
the Company changed the nature in which the Company’s tax
withholding obligations were satisfied in connection with the
vesting of outstanding RSUs. As a result, the accounting treatment
of the outstanding awards for U.S. GAAP purposes was modified. In
accordance with the revised accounting treatment, the value
reported in the “Stock Awards” column for 2018 has been
modified to reflect a total amount equal to (i) the fair value of
the shares and cash delivered upon settlement of vested RSUs prior
to October 1, 2018, plus
(ii) the grant date fair value calculated according to U.S. GAAP of
the remaining outstanding RSUs on October 1, 2018. For 2019, the
value reported in the “Stock Awards” column reflects
the grant date fair value calculated according to U.S. GAAP of RSUs
granted to Mr. Chan during 2019.
(3)
The value reported
in the “Option Awards” column for 2017 reflects the
grant date fair value calculated according to U.S. GAAP. No option
awards were granted during 2018 and 2019.
Narrative Disclosure to Summary Compensation Table
Executive Employment Agreements
On
March 3, 2017, the Company amended and restated its existing
employment agreements (each, a “2017 Employment
Agreement”) with each of Tony (Bizuo) Liu, Andrew Chan
and Yihong Yao to implement the LTIP and make certain other
changes. The 2017 Employment Agreements each have a four year
initial term with automatic 12-month renewals, unless either party
provides the other party with notice of non-renewal prior to the
end of the applicable term. The 2017 Employment Agreements provide
for minimum base salaries of $300,000 for Tony (Bizuo) Liu,
$240,000 for Andrew Chan and $250,000 for Yihong Yao and target
annual performance opportunities of 50% of base salary for each
NEO. Each 2017 Employment Agreement also includes a
non-solicitation and a non-competition provision that will apply
during each officer’s employment and for a period of two
years following termination. In addition, the 2017 Employment
Agreements provide for certain severance benefits upon a
termination by the Company without cause or a resignation by the
executive with good reason, as described below under
“Potential Payments Upon Termination or Change in
Control.”
Outstanding Equity Awards at Fiscal
Year-End
The
following table sets forth information concerning outstanding stock
options and RSUs for each Named Executive Officer as of December
31, 2019.
|
Outstanding Equity Awards at Fiscal
Year-End
|
Name
|
|
|
|
Number of securities underlying unexercised options(#)
exercisable
|
Number of securities underlying unexercised options (#)
unexercisable
|
Equity incentive plan awards: Number of securities underlying
unexercised unearned options (#)
|
Option exercise price ($)
|
Option expiration date
|
Number of shares or units of stock that have not
vested(#)
|
Market value of shares of units of stock that have not
vested($)
|
Equityincentive plan awards: Number of unearned shares, units or
other rights that have not vested (#)
|
Equityincentive plan awards: Market or payout value of unearned
shares, units or other rights that have not vested ($)
|
(a)
|
|
|
|
|
|
|
|
|
|
Andrew
Chan, Chief Legal Officer (General Counsel), Corporate Development
and Secretary (1)
|
38,880
|
-
|
-
|
$3.00
|
2/20/2023
|
-
|
-
|
-
|
-
|
Andrew
Chan (2)
|
37,904
|
-
|
-
|
$5.61
|
5/16/2024
|
-
|
-
|
-
|
-
|
Andrew
Chan (3)
|
4,500
|
-
|
-
|
$18.61
|
4/8/2026
|
-
|
-
|
-
|
-
|
Andrew
Chan (4)
|
10,500
|
-
|
-
|
$18.61
|
4/8/2026
|
-
|
-
|
-
|
-
|
Andrew
Chan (5)
|
15,000
|
-
|
-
|
$12.55
|
1/20/2027
|
-
|
-
|
-
|
-
|
Andrew
Chan (6)
|
16,286
|
6,714
|
-
|
$12.40
|
3/3/2027
|
-
|
-
|
-
|
-
|
Bizuo
(Tony) Liu, Chief Executive Officer and Chief Financial Officer
(7)
|
255,000
|
-
|
-
|
$5.00
|
1/3/2024
|
-
|
-
|
-
|
-
|
Bizuo
(Tony) Liu (8)
|
5,300
|
-
|
-
|
$7.23
|
3/5/2023
|
-
|
-
|
-
|
-
|
Bizuo
(Tony) Liu (9)
|
15,000
|
-
|
-
|
$20.63
|
7/23/2021
|
-
|
-
|
-
|
-
|
Bizuo
(Tony) Liu (10)
|
15,000
|
-
|
-
|
$20.63
|
8/14/2021
|
-
|
-
|
-
|
-
|
Bizuo
(Tony) Liu (11)
|
97,800
|
-
|
-
|
$15.53
|
12/31/2021
|
-
|
-
|
-
|
-
|
Bizuo
(Tony) Liu (12)
|
8,000
|
-
|
-
|
$15.53
|
12/31/2021
|
-
|
-
|
-
|
-
|
Bizuo
(Tony) Liu (13)
|
30,000
|
-
|
-
|
$35.53
|
4/6/2025
|
-
|
-
|
-
|
-
|
Bizuo
(Tony) Liu (14)
|
40,000
|
-
|
-
|
$20.00
|
4/11/2026
|
-
|
-
|
-
|
-
|
Bizuo
(Tony) Liu (15)
|
30,000
|
-
|
-
|
$12.55
|
1/21/2027
|
-
|
-
|
-
|
-
|
Bizuo
(Tony) Liu (16)
|
85,000
|
35,000
|
-
|
$12.40
|
3/3/2027
|
-
|
-
|
-
|
-
|
Yihong
Yao, Chief Scientific Officer (17)
|
25,000
|
-
|
-
|
$26.53
|
8/4/2025
|
-
|
-
|
-
|
-
|
Yihong
Yao (18)
|
10,000
|
-
|
-
|
$18.61
|
4/8/2026
|
-
|
-
|
-
|
-
|
Yihong
Yao (19)
|
18,768
|
7,732
|
-
|
$12.40
|
3/3/2027
|
-
|
-
|
-
|
-
|
Bizuo
(Tony) Liu (20)
|
-
|
-
|
-
|
-
|
N/A
|
35,000
|
568,400
|
60,000
|
974,400
|
Andrew
Chan (21)
|
-
|
-
|
-
|
-
|
N/A
|
18,384
|
298,556
|
12,000
|
194,880
|
Yihong
Yao (22)
|
-
|
-
|
-
|
-
|
N/A
|
7,732
|
125,568
|
13,500
|
219,240
|
(1)
Represents an
option to purchase up to 46,667 shares that were issued on
2/20/2013 with a monthly vesting schedule over a 36-month period,
an exercise price of $3.00 and an expiration date of 2/20/2023,
within which 7,787 shares has been exercised in 2015 and
2016.
(2)
Represents an
option to purchase up to 47,000 shares that were issued on
5/16/2014 with a monthly vesting schedule over a 31-month period,
an exercise price of $5.61 and an expiration date of 5/16/2024,
within which 9,096 shares has been exercised in 2015 and
2016.
(3)
Represents an
Incentive Stock Option (ISO) to purchase up to 4,500 shares that
were issued on 4/8/2016, with full vesting at the one year
anniversary of the grant date, an exercise price of $18.61 and an
expiration date of 4/8/2026.
(4)
Represents an
option to purchase up to 10,500 shares that were issued on
4/8/2016, with 4,500 shares vesting on February 7, 2018 and 6,000
shares vesting on February 7, 2019, an exercise price of $18.61 and
an expiration date of 4/8/2026.
(5)
Represents an
option to purchase up to 15,000 shares that were issued on
1/20/2017, with an exercise price of $12.55 and an expiration date
of 1/20/2027, which were all vested and became exercisable on
1/20/2017.
(6)
Represents an
option to purchase up to 23,000 shares that were issued on 3/3/2017
with a monthly vesting schedule over a 48-month period, an exercise
price of $12.4 and an expiration date of 3/3/2027.
(7)
Represents an
option to purchase up to 255,000 shares that were issued on
1/3/2014 with a monthly vesting schedule over a 36-month period, an
exercise price of $5 and an expiration date of
1/3/2024.
(8)
Represents an
option to purchase up to 5,300 shares that were issued on 3/5/2013
with a monthly vesting schedule over a 36-month period, an exercise
price of $7.23 and an expiration date of 3/5/2023.
(9)
Represents an
option to purchase up to 15,000 shares that were issued on
2/11/2015 vesting 1/3 on 7/23/2015 and each anniversary, an
exercise price of $20.63 and an expiration date of
7/23/2021.
(10)
Represents an
option to purchase up to 15,000 shares that were issued on
2/11/2015 vesting 1/3 on 8/14/2015 and each anniversary, an
exercise price of $20.63 and an expiration date of
8/14/2021.
(11)
Represents an
option to purchase up to 97,800 shares that were issued on
2/11/2015 vesting 1/3 on 12/31/2015 and each anniversary, an
exercise price of $15.53 and an expiration date of
12/31/2021.
(12)
Represents an
option to purchase up to 8,000 shares that were issued on 2/11/2015
vesting 1/3 on 12/31/2015 and each anniversary, an exercise price
of $15.53 and an expiration date of 12/31/2021.
(13)
Represents an
option to purchase up to 30,000 shares that were issued on
4/6/2015, with full vesting of 30%, 30% and 40% at each year
anniversary of the grant date for 3 years, an exercise price of
$35.53 and an expiration date of 4/6/2025.
(14)
Represents an
option to purchase up to 40,000 shares that were issued on
4/11/2016, with full vesting of 30%, 30% and 40% at each year
anniversary of February 6, 2016 for 3 years, an exercise price of
$20 and an expiration date of 4/11/2026.
(15)
Represents an
option to purchase up to 30,000 shares that were issued on
1/21/2017, with an exercise price of $12.55 and an expiration date
of 1/21/2027, which were all vested and became exercisable on
1/21/2017.
(16)
Represents an
option to purchase up to 120,000 shares that were issued on
3/3/2017 with a monthly vesting schedule over a 48-month period, an
exercise price of $12.4 and an expiration date of
3/3/2027.
(17)
Represents an
option to purchase up to 25,000 shares that were issued on
8/4/2015, with full vesting of 30%, 30% and 40% at each year
anniversary of the grant date for 3 years, an exercise price of
$26.53 and an expiration date of 8/4/2025.
(18)
Represents an
option to purchase up to 10,000 shares that were issued on
4/8/2016, with full vesting of 30%, 30% and 40% at each year
anniversary of the grant date for 3 years, an exercise price of
$18.61 and an expiration date of 4/8/2026.
(19)
Represents an
option to purchase up to 26,500 shares that were issued on 3/3/2017
with a monthly vesting schedule over a 48-month period, an exercise
price of $12.4 and an expiration date of 3/3/2027.
(20)
Pursuant to the
LTIP, Mr. Tony (Bizuo) Liu holds 35,000 unvested RSUs, which vest
pro-rata on a monthly basis through 2/27/2021. In addition, Mr.
Tony (Bizuo) Liu holds Performance RSUs, which vest in linear 1%
increments when the Company’s common stock’s 20-day
volume weighted average price (“VWAP”) is over $30 per
share and up to $60 per share at closing between 2/27/2017 and
2/27/2021. The number of shares received in settlement of the
Performance RSUs will be delivered on 2/27/2021 and could vary from
60,000 shares to 240,000 shares based on the Company’s VWAP
achievement during the four-year performance period, which based on
performance as of December 31, 2019 are reported herein at the
threshold level. The shares earned, if any, for the Performance
RSUs will be delivered on 2/27/2021.
(21)
Pursuant to the
LTIP, Mr. Andrew Chan holds 18,384 unvested RSUs, which vest
pro-rata on a monthly basis through 2/27/2021. In addition, Mr.
Andrew Chan holds Performance RSUs, which vest in linear 1%
increments when the Company’s common stock’s 20-day
VWAP is over $30 per share and up to $60 per share at closing
between 2/27/2017 and 2/27/2021. The number of shares received in
settlement of the Performance RSUs will be delivered on 2/27/2021
and could vary from 12,000 shares to 48,000 shares based on the
Company’s VWAP achievement during the four-year performance
period, which based on performance as of December 31, 2019 are
reported herein at the threshold level. The shares earned, if any,
for the Performance RSUs will be delivered on
2/27/2021.
(22)
Pursuant to the
LTIP, Mr. Yihong Yao holds 7,732 unvested RSUs, which vest pro-rata
on a monthly basis through 2/27/2021. In addition, Mr. Yihong Yao
holds Performance RSUs, which vest in linear 1% increments when the
Company’s common stock’s 20-day VWAP is over $30 per
share and up to $60 per share at closing between 2/27/2017 and
2/27/2021. The number of shares received in settlement of the
Performance RSUs will be delivered on 2/27/2021 and could vary from
13,500 shares to 54,000 shares based on the Company’s VWAP
achievement during the four-year performance period, which based on
performance as of December 31, 2019 are reported herein at the
threshold level. The shares earned, if any, for the Performance
RSUs will be delivered on 2/27/2021.
(23)
The amounts
reflected in these columns represent the number of stock awards
reported in the immediately preceding column, multiplied by the
closing price of our common stock on December 31,
2019.
Potential Payments Upon Termination or Change in
Control
Under
the 2017 Employment Agreements, each Named Executive Officer is
eligible to receive severance and other benefits upon (a) a
termination by the Company without “cause” or (b)
within one year following a “change of control,” a
resignation by the officer for “good reason.” Upon such
terminations, subject to execution of a release, the officer will
be eligible to receive: (i) severance equal to two times such
officer’s base salary, (ii) pro-ration portion of the
officer’s bonus for the year in which such termination
occurs, (iii) payment for a portion of such officer’s
premiums for 12 months of continuation coverage under the
Company’s health and welfare plans, (iv) up to $35,000 in
reimbursement for outplacement services, and (v) full acceleration
of any outstanding equity awards (with any outstanding options
having a post-termination exercise period of 15
months).
Pursuant
to the 2017 Employment Agreements, upon the officer’s
voluntary termination without good reason, termination by the
Company for cause or non-renewal, such officer will not be entitled
to any severance or other benefits in connection with such
termination.
As used
in the 2017 Employment Agreements:
●
“Cause”
includes (i) material and intentional breach of the agreement
(subject to notice and cure), (ii) willful and continued failure to
substantially perform duties (subject to notice and cure), (iii)
intentional misconduct causing material harm to the Company, (iv)
conviction or indictment for any felony, (v) intentional or knowing
violation of any material antifraud provisions of securities laws,
(vi) willful misconduct or criminal activity that is materially
harmful to the Company, (vii) current use or abuse of illegal
substance that affects performance, and (viii) knowing and material
violations of the Company’s code of ethics.
●
“Change of
control” occurs upon (i) the acquisition by any person of
beneficial ownership of 30% or more of the combined voting power of
the Company, (ii) a majority of the Board ceases to be comprised of
continuing directors during a one-year period, (iii) a merger or
consolidation (unless following the transaction the pre-transaction
stockholders held more than 80% of the combined voting securities
of the surviving entity), (iv) approval of a plan of complete
liquidation of the Company, and (v) sale of more than 50% of the
Company’s assets.
●
“Good
reason” is defined in each 2017 Employment Agreement to
include: (i) a material deduction in base salary, (ii) a relocation
by more than 50 miles, and (iii) for Messrs. Liu and Chan, a
material adverse change in title, duties or responsibilities, in
each case subject to certain notice and cure
provisions.
Director Compensation
During
2019, in accordance with the terms of the agreements with each
non-executive director, the annual cash compensation (prorated
daily based on a 360 day year for any portion of the year if such
director serves for less than a full term) to be paid to each
non-executive director consisted of: (i) $36,000 per year for
services as a director, plus (ii) either (x) $40,000 for each
committee on which such director serves, or (y) $110,000 for each
committee on which such director serves as chairperson (or, if such
director is the chairman of the full board, for such chair
position). Such compensation shall be paid, at each
director’s election, in either (a) 30% in cash and 70% in
non-qualified stock options, or (b) 50% in cash and 50% in
non-qualified stock options.
After
reviewing the macro environment of the pharmaceutical industry and
market trend in 2019, the Compensation
Committee believes there are no significant change in the macro
environment to warrant a major change in our director compensation
program.
With respect to the special committee formed in connection
with the non-binding proposal letters the Company received to
acquire all of the outstanding shares of common stock, the Board
decided that, based on going private transaction precedents and
market practice, the chairman of the special committee should
receive an additional $7,500 per month and the other members of the
special committee should each receive an additional $5,000 per
month, in each case, until the going proposed transaction
terminates or is consummated.
Consulting Agreement with Steve (Wentao) Liu
The
Company entered into a three-year consulting agreement with Steve
(Wentao) Liu in February of 2016 (the “2016
Agreement”), pursuant to which Mr. Liu advised the Chief
Executive Officer on strategic opportunities, advised the Company
on Chinese hospital management and provided other consulting
services and advice as reasonably requested by the Company from
time to time. In early 2019, the Compensation Committee
approved the renewal of the 2016 Agreement for an additional
two-year term. In connection with the renewal of the 2016
Agreement, the Compensation Committee increased the cash
compensation from $3,666 per month to $5,333 per month and
increased the continuation coverage under the Company’s
existing employee healthcare plan from $20,000 to $36,000.
Following the 2019 Annual Meeting, the Board found Mr. Liu met the
independence director requirement and Mr. Liu will continue to
serve the Company, and be compensated, as an independent director.
In light of his receipt of compensation as an independent director,
the Company and Mr. Liu terminated the 2016 Agreement.
Compensation for Edward Schafer
On
October 12, 2019, the Board elected Edward Schafer as a
non-executive Class I director of the Company. Mr. Schafer was also
elected to serve as a member of the Audit Committee of the
Company.
In
connection with his service on the Board and the Audit Committee,
Mr. Schafer will be entitled to an annual director fee of $36,000
and an additional $40,000 fee as a member of the Audit Committee,
payable monthly. In addition, as leader of the Company’s
Strategic Task Force, Mr. Schafer will be entitled $110,000
remuneration, payable in equal monthly installments from November
2019 to April 2020. Half of the foregoing compensation will be paid
in cash, with the remaining half to be paid in a stock option
grant. As part of his compensation, on October 12, 2019, Mr.
Schafer received a non-qualified stock option to purchase 5,044
shares of the Company’s common stock under the 2014 Stock
Incentive Plan with an exercise of $14.93 per share, all of which
have vested on April 24, 2020.
Director Compensation Table
Accordingly,
compensation for independent non-executive directors in calendar
year 2019, as expressed on an annualized basis (reflecting
adjustments during the year due to changes in committee
composition), was as follows:
|
Fees Earned or Paid in Cash ($)
|
|
All Other Compensation ($)
|
|
Terry
Belmont
|
68,633.00
|
92,781
|
(2)
|
-
|
161,414
|
Steve
(Wentao) Liu (5)
|
79,958.00
|
66,270
|
(2)
|
33,332
|
179,560
|
Chun
Kwok Alan Au
|
64,816.00
|
56,062
|
(3)
|
-
|
120,878
|
Edward
Schafer
|
16,567.00
|
55,003
|
(4)
|
18,333
|
89,903
|
Hansheng
Zhou
|
48,300.00
|
72,828
|
(2)
|
-
|
121,128
|
Jacky
(Gang) Ji
|
22,800.00
|
37,908
|
(2)
|
-
|
60,708
|
Nadir
Patel (6)
|
80,083.00
|
66,270
|
(2)
|
-
|
146,353
|
Bosun
S. Hau (6)
|
13,050.00
|
-
|
|
-
|
13,050
|
Darren
O’Brien (7)
|
-
|
-
|
|
-
|
-
|
(1)
The amounts in the
“Option Awards” column reflects the aggregate grant
date fair value of the non-qualified options granted to the
non-executive directors during 2019, computed in accordance with
FASB Accounting Standards Codification Topic 718. As of December
31, 2019, the non-executive directors held the following
outstanding options: Mr. Belmont, 58,737 options; Mr. Liu, 152,144
options; Mr. Au, 43,802 options; Mr. Schafer, 5,044 options; Dr.
Zhou, 30,588 options; Mr. Ji, 14,626 options; and Mr. Patel, 38,701
options. Messrs. Hau and O’Brien did not have any outstanding
options as of December 31, 2019.
(2)
These non-qualified
options were granted on March 15, 2019 with an exercise price of
$17. They have vested in full on April 24, 2020, subject to each
director’s continued service.
(3)
Chun Kwok Alan Au
was granted 3,133 shares of non-qualified options on May 15, 2019
with an exercise price of $17 on May 15, 2019, which have been
fully vested on April 24, 2020 subject to Mr. Au’s continued
service. On July 3, 2019, Mr. Au elected to change the ratio of his
cash and option compensation, and as a result, 895 of these
non-qualified options were forfeited. On November 11, 2019, Mr. Au
was elected as the chairman of the Special Committee of the Board,
and as such, he was granted an additional 1,390 shares of
non-qualified options with an exercise price of $17.89, which
have
been fully vested on April 24, 2020.
(4)
Edward Schafer was appointed as a
non-executive Class I director of the Company on October 12, 2019, and he was granted 1,360
shares of non-qualified options upon his election with an exercise
price of $14.93, which have been
fully vested on April 24, 2020.
(5)
Mr.
Liu’s fees described herein are included as all other
compensation in above table. Details of the consulting agreement
could be referred to in the section entitled
“—Consulting Agreement with Steve (Wentao) Liu”
above. On January 28, 2019, the Board’s Compensation
Committee resolved to increase the consulting fee to $5,333 per
month and annual medical coverage to be raised to $36,000. On April
30, 2019, above consulting agreement was terminated.
(6)
Nadir
Patel and Bosun S. Hau resigned as Board members on November 11,
2019 and May 15, 2019, respectively, and all options granted to
each of them on May 15, 2019 were forfeited.
(7)
Darren
O’Brien was appointed as a non-executive director of the
Company on May 15, 2019. Pursuant to the policies of the
designating investor, Mr. O’Brien is not eligible to receive
any compensation as a non-executive director.
Equity Compensation Plan Information Table
The
following table presents securities authorized for issuance under
the Company’s equity compensation plans, as of December 31,
2019:
|
Number of
securities to be issued upon exercise of outstanding options,
warrants and rights (#) (2)
|
Weighted-average
exercise price of outstanding options, warrants and rights
($)
|
Number of
securities remaining available for future issuance under equity
compensation plans
|
Equity compensation
plans approved by stockholders (1)
|
2,592,710
|
$12.37(3)
|
1,682,855
|
Equity compensation
plans not approved by stockholders
|
—
|
—
|
—
|
Total
|
2,592,710
|
$12.37
|
1,682,855
|
(1)
The securities
reflected in these rows represent shares to be issued or securities
remaining available under the 2009 Stock Option Plan, the Amended
and Restated 2011 Incentive Stock Option Plan, the 2013 Stock
Incentive Plan, the 2014 Stock Incentive Plan and the 2019 Stock
Incentive Plan (collectively, the “Equity
Plans”).
(2)
This column
reflects (i) the maximum number of shares of our common stock
subject to outstanding performance-based RSUs and (ii) the number
of shares of our common stock subject to outstanding
time-based RSUs and stock options, in each case, granted under the
Equity Plans. Because the number of shares of our common stock to
be issued upon settlement of outstanding performance-based RSUs is
subject to the achievement of performance conditions, the number of
shares of common stock actually issued may be substantially less
than the number reflected in this column.
(3)
The calculation of
the weighted-average exercise price of outstanding options,
warrants and rights excludes time-based RSUs and performance-based
RSUs granted under the Equity Plans, as such awards do not contain
an exercise price.
Compensation Committee Interlocks and Insider
Participation
None of
the members of the Compensation Committee is or has been an
executive officer of the Company, nor did they have any
relationships requiring disclosure by the Company under Item 404 of
Regulation S-K. None of the Company’s executive officers
served as a director or a member of a compensation committee (or
other committee serving an equivalent function) of any other
entity, an executive officer of any other entity, an executive
officer of which served as a director of the Company or member of
the Compensation Committee during 2019.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The
following table lists ownership of our common stock as of April 27,
2020, unless indicated otherwise. The information includes
beneficial ownership by (i) holders of more than 5% of parent
Common Stock, (ii) each of our directors and named executive
officers and (iii) all of our directors and executive officers as a
group. Except as noted below, to our knowledge, each person named
in the table has sole voting and investment power with respect to
all shares of the Company’s Common Stock beneficially owned
by them. Except as otherwise indicated below, the address for each
listed beneficial owner is c/o Cellular Biomedicine Group, Inc.,
1345 Avenue of the Americas, 15th Floor, New York, New York,
10105.
Name and Address of Beneficial Owner
|
|
|
|
|
|
|
|
|
Named Executive Officers and Directors
|
|
|
|
|
|
Wen
Tao (Steve) Liu (1)
|
365,220
|
1.8%
|
Director
|
|
|
|
|
|
Bizuo
(Tony) Liu (2)
|
818,617
|
4%
|
Director,
Chief Executive Officer and Chief Financial Officer
|
|
|
|
|
|
Andrew
Chan (3)
|
305,388
|
1.5%
|
Chief
Legal Officer (General Counsel), Corporate Development and
Secretary
|
|
|
|
|
|
Yihong
Yao
|
105,005
|
*
|
Chief
Scientific Officer (4)
|
|
|
|
|
|
Darren
O'Brien (5)
|
0
|
*
|
Independent
Director
|
|
|
|
|
|
Terry
A. Belmont (6)
|
58,013
|
*
|
Independent
Director, Chairman of the Board
|
|
|
|
|
|
Edward
Schafer (7)
|
5,044
|
*
|
Independent
Director
|
|
|
|
|
|
Chun
Kwok Alan Au (8)
|
43,802
|
*
|
Independent
Director
|
|
|
|
|
|
Hansheng
Zhou (9)
|
30,588
|
*
|
Independent
Director
|
|
|
|
|
|
Jacky
(Gang) Ji (10)
|
14,626
|
*
|
Independent
Director
|
|
|
|
|
|
|
|
|
All Officers and Directors as a Group
|
1,746,303
|
8.5%
|
|
|
|
5% or more Stockholders
|
|
|
|
|
|
Dangdai
International Group Co Ltd. (11)
|
2,270,000
|
11.1%
|
|
|
|
Sailing
Capital Overseas Investments Ltd. (12)
|
1,712,920
|
8.4%
|
|
|
|
Novartis
Pharma AG (13)
|
1,458,257
|
7.1%
|
|
|
|
Mission
Right Limited (14)
|
1,036,040
|
5.1%
|
* Less
than 1%
(1)
Total shares owned by Steve (Wentao) Liu includes
(i) 213,076 shares of common stock; (ii) 146,667 options issued
under 2011 Plan vested as of April 27, 2020; (iii) 5,477 options issued under 2014 Plan vested
as of April 27, 2020.
(2)
Total
shares owned by Tony (Bizuo) Liu includes (i) 222,517 shares of
common stock; (ii) 35,300 options issued under 2011 Plan vested as
of April 27, 2020; (iii) 255,000 options issued under 2013 Plan
vested as of April 27, 2020; (iv) 303,300 options issued under 2014
Plan vested/to be vested within 60 days as of April 27, 2020; (v)
2,500 shares of common stock to be vested within 60 days as of
April 27, 2020.
(3)
Total
shares owned by Andrew Chan includes (i) 178,611 shares of common
stock; (ii) 53,880 options issued under 2011 Plan vested as of
April 27, 2020; (iii) 37,904 options issued under 2013 Plan vested
as of April 27, 2020; (iv) 33,681 options issued under 2014 Plan
vested/to be vested within 60 days as of April 27, 2020; (v) 1,312
shares of common stock to be vested within 60 days as of April 27,
2020.
(4)
Total
shares owned by Yihong Yao includes (i) 47,925 shares of common
stock; (ii) 56,528 options issued under 2014 Plan vested/to be
vested within 60 days as of April 27, 2020; (iii) 552 shares of
common stock to be vested within 60 days as of April 27,
2020.
(5)
Darren
O'Brien does not directly own any shares of CBMG common stock;
however, he is affiliated with Sailing Capital Overseas Investments
Management Ltd but does not have voting or dispositive power over
the CBMG securities owned by Sailing.
(6)
Total
shares owned by Terry Belmont includes (i) 7,000 options issued
under 2013 Plan vested as of April 27, 2020; (ii) 51,013 options
issued under 2014 Plan vested as of April 27, 2020.
(7)
Total
shares owned by Edward Schafer includes 5,044 options issued under
2014 Plan vested as of April 27, 2020.
(8)
Total
shares owned by Chun Kwok Alan Au includes (i) 4,000 options issued
under 2013 Plan vested as of April 27, 2020; (ii) 39,802 options
issued under 2014 Plan vested as of April 27, 2020.
(9)
Total
shares owned by Hansheng Zhou includes 30,588 options issued under
2014 Plan vested as of April 27, 2020.
(10)
Total
shares owned by Jacky (Gang) Ji includes 14,626 options
issued under 2014 Plan vested as of April 27, 2020.
(11)
Represents 2,270,000 shares held by Dangdai
International Group Co., Limited, a Hong Kong limited
liability company with CR# 2273242, with its principal
place of business at Suite 1501, Grand Millennium Plaza (Lower
Block), 181 Queen's Road Central, Sheung Wan, Hong Kong, PRC
SAR. Wuhan Dangdai Technology
& Industries Group Inc. has voting and dispositive power over
the shares of Dangdai International Group Co., Limited in Hong
Kong. Wuhan Dangdai Technology & Industries Group Inc. is
controlled by Hansheng Zhou, Xiaodong Zhang, Xiaodong Zhang (of the
same surname and given name in English), Luming Ai, Xuehai Wang,
Lei Yu, Xiaoling Du and Haichun Chen. Such individuals share voting
and dispositive power over the shares held by Dangdai International
Group Co., Limited.
(12)
Total
shares owned by Sailing Capital Overseas Investments Management Ltd
(with address at 190 Elgin Avenue, George Town, Grand Cayman
KY1-9005, Cayman Islands.) include 1,404,494 shares owned by Wealth
Map Holdings Limited (a BVI company with address at Address: c/o
Unit 2006-08, 20/F Harbour Centre, 25 Harbour Road, Wan Chai, Hong
Kong) and 308,426 shares owned by Earls Mill Limited (a BVI
company, with address at c/o Unit 2006-08, 20/F Harbour Centre, 25
Harbour Road, Wan Chai, Hong Kong). Sailing Capital Overseas
Investments Fund, L.P. is the sole shareholder of Wealth Map. James
Xiao Dong Liu is the sole director of Earls Mill and the Chairman
of Sailing Capital. The investment committee of Sailing Capital
Overseas Investments Fund, L.P. has decision making power over
voting and disposition of the CBMG securities owned by Wealth Map
Holdings Limited. James Xiao Dong Liu, as the sole director of
Earls Mill Limited, has voting and dispositive power over the CBMG
securities owned by Earls Mill Limited.
(13)
Represents 1,458,257 shares held by Novartis
Pharma AG, a company (Aktiengesellschaft)
organized and existing under the laws of Switzerland, with its
principal place of business at Lichtstrasse 35, 4056 Basel,
Switzerland.
(14)
Based
on information available as of January 18, 2020, 1,036,040 shares
are held by Mission Right Limited (Palm Grove House, P.O. Box 438,
Road Town, Tortola, British Virgin Islands.) Mission Right Limited
is 50% owned by Yusen Holdings Limited and 50% by Zeacome
Investment Limited. Chan Boon Ho Peter controls Yusen Holdings.
Zeacome Investment Limited is owned by Perfect Touch Technology
Inc., which is owned by CST Mining Group Limited. CST Mining Group
Limited is a public company listed on the Hong Kong Stock Exchange
under the ticker code “985.” Accordingly, Chan Boon Ho
Peter and CST Mining Group Limited beneficially own the shares held
by Mission Right Limited.
Change of Control
The
Company knows of no arrangements resulting in a change in control
of the Company. No officer, director, promoter, or affiliate of the
Company has, or proposes to have, any direct or indirect material
interest in any asset proposed to be acquired by the Company
through security holdings, contracts, options, or
otherwise.
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
Except
as disclosed herein, there have been no transactions or proposed
transactions in which the amount involved exceeds $120,000 since
January 1, 2018 or are currently being proposed in which any of our
directors, executive officers or beneficial holders of more than 5%
of the outstanding shares of common stock, or any of their
respective relatives, spouses, associates or affiliates, has had or
will have any direct or material indirect
interest.
As
previously disclosed in the Company’s Current Reports on Form
8-K on January 31 and February 5, 2018, Sailing Capital Overseas
Investment Ltd. and its affiliates (collectively
“Sailing”),
invested $30.6 million in the Company (the “Sailing Financing”).
Sailing has been a major stockholder of
the Company since February 2018 in connection with the closing of
the Sailing Financing. On May 15, 2019, pursuant to the Securities
Purchase Agreement by and among the Company and Sailing, Darren
O’Brien was elected to fill the vacancy created by Bosun
Hau’s resignation as a Class III director of the Company
.
As
previously disclosed in the Company’s Current Reports on Form
8-K on November 12, 2019, the Company announced on November 11,
2019 that its Board received a preliminary non-binding proposal
letter (the “November Letter”), dated the same day,
from a consortium led by Mr. Tony (Bizuo) Liu, the Chief Executive
Officer of the Company, certain other senior management members of
the Company, Hillhouse Bio Holdings, L.P., TF Capital Ranok Ltd.,
Dangdai International Group Co., Limited and Mission Right Limited
(the “November Consortium Members”), to acquire all
outstanding shares of common stock (collectively, the
“Shares”; each, a “Share”) of the Company
(other than those Shares held by the November Consortium Members
that may be rolled over in connection with the transaction proposed
in the November Letter) for US$19.50 per Share in cash in a going
private transaction. Upon receipt of the November Letter, the Board
formed a special committee comprised of independent, disinterested
directors to evaluate strategic alternatives (the “Special
Committee”). The Special Committee, with the assistance of
its advisors, considered the November Letter in connection with its
ongoing review of strategic alternatives.
As
previously disclosed in the Company’s Current Reports on Form
8-K on December 30, 2019, the Company issued a press release, on
the same date, announcing that the Special Committee, composed of
Alan Au, Edward Schafer, Terry Belmont and Steve (Wentao) Liu, PhD,
had retained Jefferies Group LLC as its independent financial
advisor and White & Case LLP as its independent legal
advisor.
As
previously disclosed in the Company’s Current Reports on Form
8-K on February 24, 2020, the Special Committee of the Company
received a new preliminary non-binding proposal letter on February
21, 2020, (the “February Letter”), dated the same day,
from a consortium led by Mr. Tony (Bizuo) Liu, the Chief Executive
Officer of the Company, certain other senior management members of
the Company, Hillhouse Bio Holdings, L.P., TF Capital Ranok Ltd.,
Dangdai International Group Co., Limited and Mission Right Limited,
Maplebrook Limited, Viktor Pan, Zheng Zhou, OPEA SRL, Wealth Map
Holdings Limited, Earls Mill Limited (the “February
Consortium Members”), to acquire all outstanding shares of
common stock (collectively, the “Shares”; each, a
“Share”) of the Company (other than those Shares held
by the February Consortium Members that may be rolled over in
connection with the transaction proposed in the February Letter)
for US$19.50 per Share in cash in a going private transaction. The
Special Committee, with the assistance of its advisors, will
consider the February Letter and any response thereto in connection
with its ongoing review of strategic alternatives.
Review, Approval or Ratification of Transactions with Related
Persons
Pursuant to the Company’s Code of Conducts & Ethics the
Company’s Board reviews issues involving potential conflicts
of interest, and reviews and approves all related party
transactions, including those required to be disclosed as a
“related party” transaction under applicable federal
securities laws. The Board has not adopted any specific procedures
for conducting reviews of potential conflicts of interest and
considers each transaction in light of the specific facts and
circumstances presented. However, to the extent a potential related
party transaction is presented to the Board, the Company expects
that the Board would become fully informed regarding the potential
transaction and the interests of the related party, and would have
the opportunity to deliberate outside of the presence of the
related party. The Company expects that the Board would only
approve a related party transaction that was in the best interests
of, and fair to, the Company, and further would seek to ensure that
any completed related party transaction was on terms no less
favorable to the Company than could be obtained in a transaction
with an unaffiliated third party.
REQUIREMENTS FOR ADVANCE NOTIFICATION OF NOMINATIONS
AND STOCKHOLDER PROPOSALS
Rule 14a-8 Stockholder Proposals. Stockholder proposals to
be presented at the 2021 Annual Meeting, pursuant to Rule 14a-8
under the Exchange Act, must be received by the Company no later
than December 30, 2020, in order to be considered for inclusion in
the Company’s proxy materials for that meeting. Such
proposals must be submitted in writing to our corporate Secretary
at 1345 Avenue of the Americas, 15th Floor, New York, New York,
10105.
Advance Notice Nominations and Proposals. The
Company’s Amended and Bylaws require that the Company be
given advance written notice of stockholder nominations for
election to the Company’s Board and of other matters which
stockholders wish to present for action at an annual meeting of
stockholders (other than matters included in the Company’s
proxy materials in accordance with Rule 14a-8 under the Exchange
Act, as discussed above). Stockholder nominations to be considered
at the 2021 Annual Meeting must be received by the Secretary no
less than 120 days prior to the date of such meeting. Stockholder
proposals to be considered for inclusion in the Company’s
proxy materials for the 2021 Annual Meeting submitted pursuant to
the Amended and Restated Bylaws must be received by the Secretary
not less than 90 days nor more than 120 days prior to the
anniversary of the date on which the Company first mailed its proxy
materials for the 2020 Annual Meeting.
A
stockholder’s notice to the Secretary must comply with the
Bylaws.
OTHER MATTERS
The
Board does not intend to bring any other matters before the Annual
Meeting and has no reason to believe any other matters will be
presented. If other matters properly do come before the Annual
Meeting, however, it is the intention of the persons named as proxy
agents in the enclosed proxy card to vote on such matters as
recommended by the Board, of if no recommendation is given, in
their own discretion.
The
Company will send instructions to stockholders entitled to notice
of the Annual Meeting regarding how to access this Proxy Statement
and the Company’s Annual Report on Form 10-K for the year
ended December 31, 2019. The Annual Report includes the financial
statements and management’s discussion and analysis of
financial condition and results of operations. The costs of
preparing, assembling, mailing and soliciting the proxies will be
borne by us. Proxies may be solicited, without extra compensation,
by our officers and employees by mail, telephone, facsimile,
personal interviews and other methods of
communication.
If you
and other residents at your mailing address own shares in street
name, your broker or bank may have sent you a notice that your
household will receive only one copy of proxy materials for each
company in which you hold shares through that broker or bank. This
practice of sending only one copy of proxy materials is known as
householding. If you did not respond that you did not want to
participate in householding, you were deemed to have consented to
the process. If the foregoing procedures apply to you, your broker
has sent one copy of our Proxy Statement to your address. If you
want to receive separate copies of the proxy materials in the
future, or you are receiving multiple copies and would like to
receive only one copy per household, you should contact your
stockbroker, bank or other nominee record holder, or you may
contact us at the address or telephone number below. We will promptly deliver, without charge, a
separate copy of the Proxy Statement or the Company’s Annual
Report on Form 10-K, if you address your written request to, or
call, Tony (Bizuo) Liu, Chief Executive Officer and Chief Financial
Officer of Cellular Biomedicine Group, Inc., 1345 Avenue of the
Americas, 15th Floor, New York, New York, 10105, telephone number
(347) 905 - 5663.
Copies
of the documents referred to above that appear on our website are
also available upon request by any stockholder addressed to our
corporate Secretary, Cellular Biomedicine Group, Inc., 1345 Avenue
of the Americas, 15th Floor, New York, New York,
10105.
On a
separate note, this year we
are facing an extraordinary situation of the coronavirus (COVID-19)
outbreak, which has spread globally, including to every state in
the United States, and has resulted in the declaration of the
COVID-19 outbreak as a pandemic by the World Health Organization.
While still evolving, the COVID-19 pandemic has caused significant
economic and financial turmoil both in the United States and around
the world, and has fueled concerns that it will lead to a global
recession. We are closely monitoring the public health and travel
safety concerns relating to the coronavirus (COVID-19) outbreak,
including government directives, and will comply with all COVID-19
health and safety rules. In the event it is not possible or
advisable to hold the Annual Meeting as currently planned, we will
announce any additional or alternative arrangements for the
meeting, which may include a change in venue or holding the meeting
solely by means of remote communication. We will provide
updates regarding the Annual Meeting by press release and filing
with the Securities and Exchange Commission as well as on our
website at https://www.cellbiomedgroup.com/.
CELLULAR BIOMEDICINE GROUP, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS – JUNE 26, 2020 AT 9:00 AM
EST
|
|
|
CONTROL
ID:
|
|
|
|
|
|
REQUEST
ID:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The undersigned hereby appoint(s) Tony (Bizuo) Liu and Andrew Chan,
or either one of them, with the power of substitution and
resubstitution to vote any and all shares of capital stock of
Cellular Biomedicine Group, Inc. (the “Company”) which
the undersigned would be entitled to vote as fully as the
undersigned could do if personally present at the Annual Meeting of
the Company, to be held on June 26, 2020, at 9:00 A.M. Eastern
Standard Time, and at any adjournments thereof, hereby revoking any
prior proxies to vote said stock, upon the following items more
fully described in the notice of any proxy statement for the Annual
Meeting (receipt of which is hereby acknowledged):
This proxy, when properly executed, will be voted in the manner
directed herein. If no such direction is made, this proxy will
be voted in accordance with the Board of Directors
recommendations.
|
|
|
(CONTINUED
AND TO BE SIGNED ON REVERSE SIDE.)
|
|
|
|
|
|
|
|
|
|
VOTING
INSTRUCTIONS
|
|
|
|
If
you vote by phone, fax or internet, please DO NOT mail your proxy
card.
|
|
|
|
|
|
|
|
|
|
|
|
MAIL:
|
Please mark, sign,
date, and return this Proxy Card promptly using the enclosed
envelope.
|
|
|
FAX:
|
Complete the
reverse portion of this Proxy Card and Fax to 202-521-3464.
|
|
|
INTERNET:
|
https://www.iproxydirect.com/CBMG
|
|
|
PHONE:
|
1-866-752-VOTE(8683)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ANNUAL MEETING OF THE STOCKHOLDERS OF
CELLULAR
BIOMEDICINE GROUP, INC.
|
PLEASE
COMPLETE, DATE, SIGN AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
PLEASE
MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE:
☒
|
|
|
PROXY SOLICITED ON
BEHALF OF THE BOARD OF DIRECTORS
|
|
|
|
|
|
Proposal
1
|
|
FOR
ALL
|
|
AGAINST
ALL
|
|
FOR
ALL
EXCEPT
|
|
|
|
|
Election of
Directors
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terry
Belmont
|
|
|
|
|
|
☐
|
|
CONTROL
ID:
|
|
|
Hansheng
Zhou
|
|
|
|
|
|
☐
|
|
REQUEST
ID:
|
|
|
Tony
(Bizuo) Liu
|
|
|
|
|
|
☐
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proposal
2
|
|
FOR
|
|
AGAINST
|
|
ABSTAIN
|
|
|
|
|
To
ratify the appointment of BDO China Shu Lun Pan Certified Public
Accountants LLP as the Company’s independent registered
public accounting firm for the fiscal year ending December 31,
2020.
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proposal
3
|
|
FOR
|
|
AGAINST
|
|
ABSTAIN
|
|
|
|
|
To approve, by a
non-binding vote, the compensation of the Company’s named
executive officers.
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proposal
4
|
|
3
YEARS
|
|
2
YEARS
|
|
1
YEAR
|
|
ABSTAIN
|
|
|
To approve, by a
non-binding vote, the frequency of future stockholder advisory
votes on the compensation of the Company’s named executive
officers.
|
|
☐
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MARK
“X” HERE IF YOU PLAN TO ATTEND THE MEETING:
◻
|
THIS PROXY WILL BE VOTED AS SPECIFIED ABOVE; UNLESS OTHERWISE
INDICATED, THIS PROXY WILL BE VOTED FOR EACH OF THE NOMINEES ON
PROPOSAL NUMBER 1, FOR APPROVAL ON PROPOSALS NUMBER 2 AND 3, AND
FOR THREE YEARS ON PROPOSAL NUMBER 4.
In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the
meeting.
Please mark, sign, date and return this Proxy promptly using the
accompanying postage pre-paid envelope. THIS PROXY IS SOLICITED ON
BEHALF OF THE BOARD OF DIRECTORS OF CELLULAR BIOMEDICINE GROUP,
INC.
|
|
MARK HERE FOR
ADDRESS CHANGE ◻ New Address (if
applicable):
____________________________
____________________________
____________________________
IMPORTANT: Please sign exactly as your
name or names appear on this Proxy. When shares are held jointly,
each holder should sign. When signing as executor, administrator,
attorney, trustee or guardian, please give full title as such. If
the signer is a corporation, please sign full corporate name by
duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized
person.
Dated:
________________________, 2020
|
|
|
|
(Print Name of
Stockholder and/or Joint Tenant)
|
|
(Signature of
Stockholder)
|
|
(Second Signature
if held jointly)
|
Cellular Biomedicine (NASDAQ:CBMG)
Historical Stock Chart
From Apr 2024 to May 2024
Cellular Biomedicine (NASDAQ:CBMG)
Historical Stock Chart
From May 2023 to May 2024