Change in Control
In the event of a change in control (as defined in the 2023 Plan), the Compensation Committee may, on a participant-by-participant basis: (i) cause any or all outstanding awards to become vested and immediately exercisable (as applicable), in whole or in part; (ii) cancel any award in exchange for a substitute award; (iii) cause any outstanding option or stock appreciation right to become exercisable for a reasonable period in advance of the change in control and, to the extent not exercised prior to that change in control, cancel that option or stock appreciation right upon closing of the change in control; (iv) redeem any restricted stock or restricted stock unit for cash and/or other substitute consideration with value equal to the fair market value of an unrestricted share on the date of the change in control; (v) cancel any outstanding option or stock appreciation right with respect to all common stock for which the award remains unexercised in exchange for a cash payment equal to the excess (if any) of the fair market value of the common stock subject to the option or stock appreciation right over the exercise price of the option or stock appreciation right; (vi) take such other action as the Compensation Committee determines to be appropriate under the circumstances; and/or (vii) in the case of any award subject to Section 409A of the Internal Revenue Code of 1986, as amended (the "Code"), the Compensation Committee shall only be permitted to use discretion to the extent that such discretion would be consistent with the intended treatment of such award under Section 409A of the Code.
Repricing Prohibited
Neither the Board nor the Compensation Committee may, without obtaining prior approval of our shareholders: (i) implement any cancellation/re-grant program pursuant to which outstanding options or stock appreciation rights under the 2023 Plan are cancelled and new options or stock appreciation rights are granted in replacement with a lower exercise per share; (ii) cancel outstanding options or stock appreciation rights under the 2023 Plan with an exercise price per share in excess of the then current fair market value per share for consideration payable in our equity securities; or (iii) otherwise directly reduce the exercise price in effect for outstanding options or stock appreciation rights under the 2023 Plan.
Clawback
Awards under the 2023 Plan (and any shares subject to the awards) will be subject to rescission, cancellation or recoupment, in whole or in part, or other similar action in accordance with the terms of any company clawback or similar policy or any applicable law related to such actions, as may be in effect from time-to-time.
Non-Employee Director Compensation Limits
Under the 2023 Plan, the aggregate amount of equity and cash compensation payable to a non-employee director with respect to a fiscal year, whether under the 2023 Plan or otherwise, for services as a non-employee director, shall not exceed $750,000, provided that such amount shall be $1,000,000 for the fiscal year in which the applicable non-employee director is initially elected or appointed to the Board. Such non-employee director limit shall not apply to (i) compensation earned with respect to services a non-employee director provides in a capacity other than as a non-employee director, such as an advisor or consultant, and (ii) compensation awarded by the Board to a non-employee director in extraordinary circumstances, in each case provided that the non-employee director receiving such additional compensation does not participate in the decision to award such compensation.
Miscellaneous
Generally, awards granted under the 2023 Plan may not be transferred, except by will or intestate succession. However, the Compensation Committee may in its discretion authorize the gratuitous transfer of awards (other than incentive stock options) to family members of the grantee, partnerships owned by such family members, trusts for the benefit of such family members or other similar estate planning vehicles. Awards under the 2023 Plan will be subject to withholding for applicable taxes, to the extent required by law, and the Compensation Committee may authorize the withholding of shares subject to an award to satisfy required tax withholding. Awards under the 2023 Plan are intended to be exempt from or comply with the requirements of Section 409A of the Code and will be interpreted accordingly. Unless the 2023 Plan is extended with the approval of our stockholders, the 2023 Plan will expire on April 27, 2033 (ten years after the Board adopted the 2023 Plan).
Certain U.S. Federal Tax Consequences
The federal income tax consequences of the issuance, exercise and/or settlement of awards under the 2023 Plan are described below. The following information is only a summary and does not address all aspects of taxation that may be relevant to a particular participant in light of his or her personal circumstances. Participants
34
PROPOSAL 4. APPROVAL OF AN AMENDMENT TO THE TREVENA, INC. 2023 EQUITY INCENTIVE PLAN (CONTINUED)
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should consult with their own tax advisors with respect to the tax consequences inherent in the ownership and exercise of the awards and the ownership and disposition of any underlying securities. The summary does not address the effects of other federal taxes (including possible "golden parachute" excise taxes) or taxes imposed under state, local or foreign tax laws. Tax laws are subject to change. Generally, all amounts taxable as ordinary income to participants under the 2023 Plan in respect of awards are expected to be deductible by the Company as compensation at the same time the participant recognizes the ordinary income, subject to the limitations of Section 162(m) of the Code. Under Section 162(m), the Company cannot deduct compensation paid to certain covered employees in excess of $1 million per year.
Nonqualified Stock Options
A participant recognizes no taxable income when a non-qualified stock option is granted. Upon exercise of a non-qualified stock option, a participant will recognize ordinary income equal to the excess of the fair market value of the shares received over the exercise price of the non-qualified stock option. A participant's tax basis in shares of common stock received upon exercise of a non-qualified stock option will generally be equal to the fair market value of those shares on the exercise date, and the participant's holding period for such shares will begin at that time. Upon sale of shares of common stock received upon exercise of a non-qualified stock option, the participant will realize short-term or long-term capital gain or loss, depending on the period the shares are held. The amount of such gain or loss will be equal to the difference between the amount realized in connection with the sale of the shares and the participant's tax basis in such shares.
Incentive Stock Options
A participant recognizes no taxable income when an incentive stock option is granted or exercised. So long as the participant meets the applicable holding period requirements for shares received upon exercise of an incentive stock option (two years from the date of grant and one year from the date of exercise), gain or loss realized by a participant upon sale of the shares received upon exercise will be long-term capital gain or loss, and the Company will not be entitled to a deduction. If, however, the participant disposes of the shares before meeting the applicable holding period requirements (a "disqualifying disposition"), the participant will then recognize ordinary income. The amount of ordinary income recognized by the participant is limited to the lesser of the gain on such sale and the difference between the fair market value of the shares of common stock on the date of exercise and the option exercise price. Any gain realized in excess of this amount will be treated as short- or long-term capital gain (depending on how long the shares are held). If the option price exceeds the amount realized upon such a disposition, the difference will be short- or long-term capital loss (depending on how long the shares are held). Notwithstanding the above, individuals subject to Alternative Minimum Tax may recognize ordinary income upon exercise of an incentive stock option.
Stock Appreciation Rights
A participant recognizes no taxable income when a stock appreciate right is granted or vests as long as the grant price is at least equal to the fair market value of our common stock on the date of grant and the stock appreciation right has no additional deferral feature. Upon the exercise of a stock appreciate right, a participant will recognize ordinary income equal to the excess of the fair market value of the shares of common stock underlying the stock appreciate right over the grant price of the stock appreciate right. A participant's tax basis in shares of common stock received upon exercise of a stock appreciate right will generally be equal to the fair market value of those shares on the exercise date, and the participant's holding period for such shares will begin at that time. Upon sale of shares of common stock received upon exercise of a stock appreciate right, the participant will realize short-term or long-term capital gain or loss, depending on the period the shares are held. The amount of such gain or loss will be equal to the difference between the amount realized in connection with the sale of the shares and the participant's tax basis in such shares.
35
PROPOSAL 4. APPROVAL OF AN AMENDMENT TO THE TREVENA, INC. 2023 EQUITY INCENTIVE PLAN (CONTINUED)
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Restricted Stock
If a participant receives shares of restricted stock under the 2023 Plan and does not make the election described in the next paragraph, the participant will recognize no taxable income upon the receipt of the shares. When the forfeiture conditions with respect to the restricted stock lapse, the participant will recognize ordinary income equal to the fair market value of the shares at that time, less any amount paid for the shares. A participant's tax basis in shares of restricted stock will generally be equal to the income recognized when the forfeiture conditions lapse, and the participant's holding period for the shares will begin at that time. Upon sale of the shares, the participant will realize short- or long-term gain or loss, depending on how long the shares are held after the forfeiture conditions lapse. Such gain or loss will be equal to the difference between the amount realized upon the sale of the shares and the participant's tax basis in the shares.
Participants receiving shares of restricted stock may make an election under Section 83(b) of the Code. By making a Section 83(b) election, the participant elects to recognize compensation income when the shares are received rather than at the time the forfeiture conditions lapse. The amount of such compensation income will be equal to the fair market value of the shares upon receipt (valued without regard to the forfeiture conditions and transfer restrictions applicable to the shares), less any amount paid for the shares. By making a Section 83(b) election, the participant will recognize no additional compensation income when the forfeiture conditions lapse. The participant's tax basis in shares with respect to which a Section 83(b) election is made will generally be equal to the income recognized at grant, and the participant's holding period for such shares will begin at that time. Upon sale of the shares, the participant will realize short- or long-term capital gain or loss, depending on the period the shares were held. However, if the shares are forfeited, the participant will not be entitled to claim a deduction with respect to any income tax paid upon making the Section 83(b) election. To make a Section 83(b) election, a participant must file an appropriate form of election with the Internal Revenue Service and with his or her employer, each within 30 days after the shares of restricted stock are issued.
Restricted Stock Units
When shares of common stock or cash with respect to RSU awards are delivered to the participant, the value of the shares or cash is then taxable to the participant as ordinary income.
Other Stock-Based Awards
The taxation of other stock-based awards will depend upon the design of such awards.
New Plan Benefits
The future awards that participants may receive under the Plan are discretionary, and therefore, not determinable at this time. Awards granted in fiscal year 2022 under the 2013 Plan would not have changed if the 2023 Plan had been in effect instead of the 2013 Plan. The following table sets forth information with respect to the grant of awards under the 2013 Plan to our NEOs, to all current executive officers as a group, to all non-employee directors as a group, to several other classes of individuals, and to all other employees, including all current officers who are not executive officers, as a group, during our last fiscal year:
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Shares Granted in 2022
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Dollar Value of Shares Granted
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Executive Officers
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0 shares
|
$0
|
Non-Employee Directors
|
28,000 shares
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$301,000
|
All Other Employees, including non-Executive Officers
|
245,985 shares
|
$586,015
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36
PROPOSAL 4. APPROVAL OF AN AMENDMENT TO THE TREVENA, INC. 2023 EQUITY INCENTIVE PLAN (CONTINUED)
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Required Vote
Approval of this Proposal 4 requires "FOR" votes from the holders of a majority of shares present or represented by proxy and entitled to vote at the Annual Meeting. If you "ABSTAIN" from voting, it will count as a vote AGAINST Proposal 4.
The Board unanimously recommends that stockholders vote "FOR" the approval of an amendment to the 2023 Plan to increase the number of shares of common stock available for issuance under the 2023 Plan as set forth in this Proposal 4.
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37
PROPOSAL 5: APPROVAL OF AN AMENDMENT TO OUR AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO EFFECT A REVERSE STOCK SPLIT OF OUR OUTSTANDING SHARES OF COMMON STOCK BY A RATIO OF ANY WHOLE NUMBER BETWEEN 1-FOR-2 AND 1-FOR-25, AT ANY TIME PRIOR AUGUST 28, 2024, WITH THE EXACT RATIO TO BE SET WITHIN THAT RANGE AT THE DISCRETION OF OUR BOARD, WITHOUT FURTHER APPROVAL OR AUTHORIZATION OF OUR STOCKHOLDERS.
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Our amended and restated certificate of incorporation, as amended, currently authorizes the Company to issue a total of 205,000,000 shares of capital stock, consisting of 200,000,000 shares of Common Stock, and 5,000,000 shares of Preferred Stock. On April 17, 2024, subject to stockholder approval, our Board approved an amendment to our Restated Certificate to, at the discretion of the Board, effect the reverse stock split of our common stock at a ratio of 1-for-2 to 1-for-25, including any shares held by the Company as treasury shares, at any time prior to August 28, 2024, with the exact ratio within such range to be determined by our Board at its discretion without further approval or authorization of our stockholders. The full text of the proposed amendment is attached to this Proxy Statement as Appendix C. The primary goal of the Reverse Stock Split is to increase the per share market price of our common stock to meet the minimum per share bid price requirements for continued listing on The Nasdaq Capital Market. We believe that a range of Reverse Stock Split ratios provides us with the most flexibility to achieve the desired results of the Reverse Stock Split. The Reverse Stock Split is not intended as, and will not have the effect of, a "going private transaction" covered by Rule 13e-3 promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Reverse Stock Split is not intended to modify the rights of existing stockholders in any material respect.
The exact timing of the filing of the certificate of amendment (the "Certificate of Amendment") and implementation of the Reverse Stock Split will be determined by the Board based on its evaluation as to when such action will be the most advantageous to our Company and our stockholders, but must be implemented before August 28, 2024. In addition, the Board reserves the right, notwithstanding stockholder approval and without further action by the stockholders, to abandon the Reverse Stock Split if, at any time prior to the effectiveness of the filing of the amendment with the Secretary of State of the State of Delaware, the Board, in its sole discretion, determines that it is no longer in the Company's best interest and the best interests of our stockholders to proceed in light of, among other things, our ability to increase the trading price of our common stock to meet the minimum stock price standards of The Nasdaq Capital Market without effecting the Reverse Stock Split, the per share price of the common stock immediately prior to the Reverse Stock Split and the expected stability of the per share price of the common stock following the Reverse Stock Split. If the Board determines that it is in the best interests of the Company and its stockholders to effect the Reverse Stock Split, it will hold a Board meeting to determine the ratio of the Reverse Stock Split. For additional information concerning the factors the will consider in deciding whether to effect the Reverse Stock Split, see "Determination of the Reverse Stock Split Ratio" and "Board Discretion to Effect the Reverse Stock Split" below.
The Reverse Stock Split will be realized simultaneously for all outstanding common stock. The Reverse Stock Split will affect all holders of common stock uniformly and each stockholder will hold the same percentage of common stock outstanding immediately following the Reverse Stock Split as that stockholder held immediately prior to the Reverse Stock Split, except for immaterial adjustments that may result from the treatment of fractional shares as described below. The Reverse Stock Split will not change the par value or the number of authorized shares of our common stock or Preferred Stock, but it will reduce the number of outstanding shares of common stock and Preferred Stock. The Reverse Stock Split will also affect outstanding equity awards and warrants, as described in "Principal Effects of the Reverse Stock Split" below.
38
PROPOSAL 5. APPROVAL OF A REVERSE STOCK SPLIT (CONTINUED)
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Approval of this Proposal 5 requires "FOR" votes, cast either in person or by proxy, of a majority of shares present in person or represented by proxy and entitled to vote on the proposal. Abstentions will have the same effect as a vote "AGAINST" this proposal. As noted above, we believe this proposal will be considered a "routine" matter and, as a result, we do not expect there to be any broker non-votes on this proposal. If, however, a broker non-vote occurs (or if your shares are not affirmatively voted in favor of this proposal for any other reason), it will have the same effect as a vote "AGAINST" this proposal.
Reasons for the Reverse Stock Split
Our Board has approved and is soliciting stockholder approval of the Reverse Stock Split primarily in order to increase the trading price of our common stock to meet the minimum per share bid price requirement for continued listing on The Nasdaq Capital Market. We also believe effecting the Reverse Stock Split (i) will align our outstanding shares and share price more closely with companies of our size and scope, (ii) may have the effect of making our shares more attractive to institutional and individual investors by increasing the market price of our common stock; (iii) will result in a greater number of shares of common stock available for issuance by us; and (iv) will help us leverage strategic opportunities that will benefit the Company and our stockholders.
Meeting the Minimum Per Share Bid Price Requirement for Continued Listing on The Nasdaq Capital Market
We believe that the Reverse Stock Split, if necessary, is our best option to meet the criteria to satisfy the minimum per share bid price requirement for continued listing on The Nasdaq Capital Market. The Nasdaq Capital Market requires, among other criteria, that the Company maintain of a continued price of at least $1.00 per share. On the record date, the last reported sale price of our common stock on The Nasdaq Capital Market was $.352 per share. On September 1, 2023, Trevena, Inc. (the "Company") received a letter (the "Notice") from the Listing Qualifications Department (the "Staff" or "Nasdaq") of The Nasdaq Stock Market indicating that, for the last 30 consecutive business days, the bid price for the Company's common stock had closed below the minimum $1.00 per share required for continued inclusion on The Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2) (the "Minimum Bid Price Requirement"). The Company was thereafter provided until February 28, 2024, to demonstrate compliance with the Minimum Bid Price Requirement.
On March 1, 2024, the Company received a letter from the Staff stating that the Company had not regained compliance with the Minimum Bid Price Requirement and was not currently eligible for a second 180-day extension period because the Company was not in compliance with the $5,000,000 minimum stockholders' equity initial listing requirement for The Nasdaq Capital Market. The Staff letter noted that unless the Company timely requests an appeal of this determination to the Nasdaq Hearings Panel (the "Panel"), the Company's common stock will be scheduled for delisting from The Nasdaq Capital Market. On March 5, 2024, the Company submitted a request for a hearing to appeal the Staff's delisting determination. In response to the Company's request for a hearing, on March 5, 2024, the Company received a letter from Nasdaq granting the Company's request for a hearing on appeal and staying the delisting action noted in the Staff's letter pending a final decision by the Panel and the expiration of any additional extension period granted by the Panel following the hearing. The Panel hearing is scheduled for May 2, 2024, at 10:00 a.m. via video conference.
The Company intends to submit a plan to the Panel to regain compliance with the continued listing requirements as part of the hearing process, which includes, among other things, a copy of this Proposal 5 as disclosed in this Proxy Statement. However, there can be no assurance that the Panel will grant the Company's request for continued listing or that the Company will be able to demonstrate compliance within any extension period that may be granted by the Panel. As of the date of this Proxy Statement, we were not in compliance with the Minimum Bid Price Requirement. If we do not regain compliance with the Minimum Bid Price Requirement by any date that may be set by the Panel and are not eligible for an additional compliance period at that time, the Nasdaq staff will provide written notification to us that our common stock will be subject to delisting.
A decrease in the number of outstanding shares of our common stock resulting from the Reverse Stock Split should, absent other factors, assist in ensuring that the per share market price of our common stock remains above the requisite price for continued listing. However, we cannot provide any assurance that we will satisfy the Minimum Bid Price Requirement following the Reverse Stock Split.
39
PROPOSAL 5. APPROVAL OF A REVERSE STOCK SPLIT (CONTINUED)
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Impact on Number of Shares Available for Issuance
The Reverse Stock Split will have no effect on our authorized capital stock, and the total number of authorized shares will remain at 205,000,000 shares, consisting of 200,000,000 shares of common stock and 5,000,000 shares of preferred stock.
Principal Effects of the Reverse Stock Split
If the Reverse Stock Split is effected, it will reduce the total number of issued and outstanding shares of common stock, including any shares held by the Company as treasury shares, by a Reverse Stock Split ratio of 1-for-2 to 1-for-25. Accordingly, each of our stockholders will own fewer shares of common stock as a result of the Reverse Stock Split. However, as explained above, the Reverse Stock Split will be effected simultaneously for all issued and outstanding shares of common stock and the reverse split ratio will be the same for all issued and outstanding shares of common stock. The Reverse Stock Split will affect all of our stockholders uniformly and will not affect any stockholder's percentage ownership interest in the Company, except to the extent that the Reverse Stock Split results in any of our stockholders receiving a cash payment in lieu of owning a fractional share, as described in the section titled "Fractional Shares" below. Common stock issued pursuant to the Reverse Stock Split will remain fully paid and non-assessable. The Reverse Stock Split will not affect the Company's continuing obligations under the periodic reporting requirements of the Exchange Act. Following the Reverse Stock Split, our common stock will continue to be listed on The Nasdaq Capital Market, under the symbol "TRVN," although it would receive a new CUSIP number.
Although the Reverse Stock Split would not have any dilutive effect on our stockholders, the Reverse Stock Split, without a reduction in the number of shares authorized for issuance, would reduce the proportion of shares owned by our stockholders relative to the number of shares authorized for issuance, giving the Board an effective increase in the authorized shares available for issuance, in its discretion. The shares that are authorized but unissued after the Reverse Stock Split will be available for issuance, and, if we issue these shares, the ownership interest of holders of our common stock may be diluted. We may issue such shares to raise capital and/or as consideration in acquiring other businesses or establishing strategic relationships with other companies. Such acquisitions or strategic relationships may be effected using shares of common stock or other securities convertible into common stock and/or by using capital that may need to be raised by selling such securities. We do not have any agreement, arrangement or understanding at this time with respect to any specific transaction or acquisition for which the newly unissued authorized shares would be issued.
With respect to our outstanding options, restricted stock units and warrants, when the Reverse Stock Split becomes effective, the number of shares of common stock covered by such rights will be reduced based on the reverse split ratio, and, if applicable, the exercise or conversion price per share will be proportionately increased based on the reverse split ratio, resulting in the same aggregate price being required to be paid therefor upon exercise or conversion thereof as was required immediately preceding the Reverse Stock Split. The number of shares of common stock issuable upon exercise or conversion of outstanding stock options, warrants and restricted stock awards will be rounded down to the nearest whole share and the exercise prices will be rounded up to the nearest cent, and no cash payment will be made in respect of such rounding. In addition, the number of shares of common stock reserved under the Company's equity incentive plan and employee stock purchase plan will automatically be proportionately adjusted for the reverse stock split ratio, such that fewer shares will be subject to such plans.
The following table contains approximate information, based on share information as of April 19, 2024 relating to our outstanding common stock based on the minimum and maximum reverse split ratio of 1-for-2 and 1-for-25, respectively, which is the ratio range that our stockholders are being asked to approve. The table sets forth (i) the number of shares of our common stock that would be issued and outstanding, (ii) the number of shares of our common stock that would be reserved for issuance pursuant to outstanding options, restricted stock units and warrants and (iii) the weighted-average exercise price of outstanding options and warrants, each giving effect to the Reverse Stock Split and based on securities outstanding as of April 19, 2024.
40
PROPOSAL 5. APPROVAL OF A REVERSE STOCK SPLIT (CONTINUED)
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|
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After Reverse Stock Split (1)
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|
Before
Reverse
Stock Split
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If Minimum 1:2
Ratio is
Selected
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If Maximum
1:25 Ratio is Selected
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Authorized Common Stock
|
200,000,000
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200,000,000
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200,000,000
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Common Stock Issued and Outstanding, as of the Record Date
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18,321,010
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9,160,505
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732,840
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Common Stock Reserved for Issuance (2)
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12,417,444
|
6,208,722
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496,698
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Common Stock available for Issuance
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169,261,546
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184,630,773
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198,770,462
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Weighted-Average Exercise Price of Options
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$35.41
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$70.83
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$885.33
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Weighted-Average Exercise Price of Warrants
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$1.02
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$2.03
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$25.43
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(1) Does not take into account that fractional shares resulting from the Reverse Split will not be issued and instead, stockholders will receive an amount equal to the fair market value of such fractional shares at the time of the Reverse Stock Split.
(2) Includes shares of common stock reserved for issuance (i) upon the exercise of currently exercisable warrants and options; and (ii) pursuant to awards granted under the 2023 Plan, the Trevena, Inc. 2013 Equity Incentive Plan, as amended, and the Trevena, Inc. Inducement Plan (the "Inducement Plan").
Risks Associated with the Reverse Stock Split
We cannot predict whether the Reverse Stock Split will increase the market price for our common stock. Additionally, the market price of our common stock will also be based on our performance and other factors, some of which are unrelated to the number of shares outstanding. Further, there are a number of risks associated with the Reverse Stock Split, including:
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●
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As noted above, the principal purpose of the Reverse Stock Split is to increase the trading price of our common stock to meet the Minimum Bid Price Requirement of The Nasdaq Capital Market. However, the Reverse Stock Split could be viewed negatively by the market and other factors, such as those described above, may adversely affect the market price of the shares of our common stock. Consequently, the market price per post-Reverse Stock Split share ofour common stock may not increase in proportion to the reduction of the number of shares of our common stock outstanding before the implementation of the Reverse Stock Split. Accordingly, the total market capitalization of our shares of common stock after the Reverse Stock Split may be lower than the total market capitalization before the Reverse Stock Split. Any reduction in total market capitalization as the result of the Reverse Stock Split may make it more difficult for us to meet the Nasdaq Listing Rule regarding minimum value of listed securities, which could result in our shares of common stock being delisted from The Nasdaq Capital Market.
|
|
●
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Although the Board believes that a higher stock price may help generate the interest of new investors, the Reverse Stock Split may not result in a per-share price that will successfully attract certain types of investors and such resulting share price may not satisfy the investing guidelines of institutional investors or investment funds. Further, other factors, such as our financial results, market conditions and the market perception of our business, may adversely affect the interest of new investors in the shares of our common stock. As a result, the trading liquidity of the shares of our common stock may not improve as a result of the Reverse Stock Split and there can be no assurance that the Reverse Stock Split, if completed, will result in the intended benefits described above.
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|
●
|
A Reverse Stock Split may result in some stockholder owning "odd lots" of less than 100 shares of common stock on a post-split basis. These odd lots may be more difficult to sell, or require greater transaction costs per share to sell, than shares in "round lots" of even multiples of 100 shares.
|
|
●
|
There can be no assurance that the market price of our common stock will not decrease in the future.
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41
PROPOSAL 5. APPROVAL OF A REVERSE STOCK SPLIT (CONTINUED)
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Determination of the Reverse Stock Split Ratio
The Board believes that stockholder approval of a range of potential Reverse Stock Split ratios is in the best interests of our Company and stockholders because it is not possible to predict market conditions at the time the Reverse Stock Split would be implemented. We believe that a range of Reverse Stock Split ratios provides us with the most flexibility to achieve the desired results of the Reverse Stock Split. The Reverse Stock Split ratio to be selected by our Board will be not more than 1-for-25.
The selection of the specific Reverse Stock Split ratio will be based on several factors, including, among other things:
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●
|
our ability to maintain the listing of our common stock on The Nasdaq Capital Market;
|
|
●
|
the per share price of our common stock immediately prior to the Reverse Stock Split;
|
|
●
|
the expected stability of the per share price of our common stock following the Reverse Stock Split;
|
|
●
|
the likelihood that the Reverse Stock Split will result in increased marketability and liquidity of our common stock;
|
|
●
|
prevailing market conditions;
|
|
●
|
general economic conditions in our industry; and
|
|
●
|
our market capitalization before and after the Reverse Stock Split.
|
Board Discretion to Effect the Reverse Stock Split
If the Reverse Stock Split Proposal is approved by our stockholders, the Reverse Stock Split will only be effected upon a determination by the Board, in its sole discretion, that filing the Certificate of Amendment to effect the Reverse Stock Split is in the best interests of our Company and stockholders. This determination by the Board will be based upon a variety of factors, including those discussed under "- Determination of the Reverse Stock Split Ratio" above. We expect the primary focus of the Board in determining whether or not to file the Certificate of Amendment will be whether we will be able to obtain and maintain of a continued price of at least $1.00 per share of our common stock on The Nasdaq Capital Market without effecting the Reverse Stock Split.
Procedure for Effecting Reverse Stock Split and Exchange of Stock Certificates
If the Reverse Stock Split is approved by the Company's stockholders, the Reverse Stock Split will become effective upon the filing of a Certificate of Amendment with the office of the Secretary of State of the State of Delaware or at the effective time set forth in the Reverse Stock Split Certificate of Amendment. The Board will determine the exact timing of the filing of the Certificate of Amendment based on its evaluation as to when the filing would be the most advantageous to the Company and its stockholders. However, notwithstanding approval of the Reverse Stock Split Proposal by our stockholders, the Board will have the sole authority to elect whether or not and when to file the Certificate of Amendment to effect the Reverse Stock Split; provided, however, the implementation of such amendment shall be before August 28, 2024.
Except as described below under the section titled "Fractional Shares," if the Reverse Stock Split is approved and effected, beginning on the effective date of the Reverse Stock Split, each certificate which, immediately prior to the time of effectiveness represented pre-Reverse Stock Split shares, will be deemed for all corporate purposes to evidence ownership of post-Reverse Stock Split shares.
Fractional Shares
No fractional shares will be issued in connection with the Reverse Stock Split. Stockholders of record at the time of effectiveness of the Reverse Stock Split who otherwise would be entitled to receive fractional shares because they hold a number of pre-Reverse Stock Split shares not evenly divisible by the number of pre-Reverse Stock Split shares for which each post-Reverse Stock Split share is to be exchanged, will, in lieu of a fractional share, be entitled to a cash payment in lieu thereof. The cash payment will equal the fraction to which the stockholder would otherwise be entitled multiplied by the closing sales price of the common stock as reported on The Nasdaq Capital Market on the effective date of the Certificate of Amendment.
42
PROPOSAL 5: APPROVAL OF A REVERSE STOCK SPLIT (CONTINUED)
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Stockholders should be aware that, under the escheat laws of the various jurisdictions where stockholders reside, sums due for fractional interests that are not timely claimed after the effective time may be required to be paid to the designated agent for each such jurisdiction. Thereafter, stockholders otherwise entitled to receive such funds may have to seek to obtain them directly from the state to which they were paid.
Book-Entry Shares
Upon completion of the Reverse Stock Split, stockholders who hold uncertificated shares (i.e., shares held in book-entry form and not represented by a physical stock certificate), either as direct or beneficial owners, will have their holdings electronically adjusted automatically by our transfer agent (and, for beneficial owners, by their brokers or banks that hold in "street name" for their benefit, as the case may be) to give effect to the Reverse Stock Split. Stockholders who hold uncertificated shares as direct owners will be sent a statement of holding from our transfer agent that indicates the number of post-Reverse Stock Split shares of our common stock owned in book-entry form.
Certificated Shares
As soon as practicable after the implementation of the Reverse Stock Split, stockholders will be notified that the Reverse Stock Split has been effectuated. We expect that our transfer agent will act as exchange agent for purposes of implementing the exchange of stock certificates. Holders of pre-Reverse Stock Split shares will be asked to surrender to the exchange agent certificates representing pre-Reverse Stock Split shares in exchange for certificates representing post-Reverse Stock Split shares in accordance with the procedures to be set forth in a letter of transmittal to be sent by us or our exchange agent. No new certificates will be issued to a stockholder until such stockholder has surrendered such stockholder's outstanding certificate(s) together with the properly completed and executed letter of transmittal to the exchange agent. Any pre-Reverse Stock Split shares submitted for transfer, whether pursuant to a sale or other disposition, or otherwise, will automatically be exchanged for post-Reverse Stock Split shares.
STOCKHOLDERS SHOULD NOT DESTROY ANY STOCK CERTIFICATE(S) AND SHOULD NOT SUBMIT ANY CERTIFICATE(S) UNTIL REQUESTED TO DO SO.
Accounting Matters
The Reverse Stock Split will not affect the common stock capital account on our balance sheet. However, because the par value of our common stock will remain unchanged at the effective time of the split, the components that make up the common stock capital account will change by offsetting amounts. The stated capital component will be reduced proportionately based upon the Reverse Stock Split and the additional paid-in capital component will be increased with the amount by which the stated capital is reduced. Immediately after the Reverse Stock Split, the per share net income or loss and net book value of our common stock will be increased because there will be fewer shares of common stock outstanding. All historic share and per share amounts in our financial statements and related footnotes will be adjusted accordingly for the Reverse Stock Split.
Effect on Preferred Stock
The proposed amendment to our Restated Certificate to effect the Reverse Stock Split would not impact the total authorized number of shares of preferred stock or the par value thereof.
Effect on Par Value
The proposed amendment to our Amended and Restated Certificate of Incorporation will not affect the par value of our common stock, which will remain at $0.001 per share.
No Going Private Transaction
Notwithstanding the decrease in the number of outstanding shares following the proposed Reverse Stock Split, our Board does not intend for this transaction to be the first step in a "going private transaction" within the meaning of Rule 13e-3 of the Exchange Act.
43
PROPOSAL 5: APPROVAL OF A REVERSE STOCK SPLIT (CONTINUED)
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Potential Anti-Takeover Effect
Although the increased proportion of unissued authorized shares to issued shares could, under certain circumstances, have an anti-takeover effect, the Reverse Stock Split proposal is not being proposed in response to any effort of which we are aware to accumulate shares of our common stock or obtain control of the Company, nor is it part of a plan by management to recommend a series of similar amendments to the Board and stockholders. Other than the Reverse Stock Split proposal, the Board does not currently contemplate recommending the adoption of any other actions that could be construed to affect the ability of third parties to take over or change control of the Company.
No Dissenters' Appraisal Rights
Under the Delaware General Corporation Law, our stockholders are not entitled to dissenters' appraisal rights with respect to the Reverse Stock Split, and the Company will not independently provide stockholders with any such right.
Certain Material United States Federal Income Tax Consequences of the Reverse Stock Split to U.S. Holders
The following discussion is a general summary of certain U.S. federal income tax consequences of the Reverse Stock Split that may be relevant to holders of our common stock that hold such stock as a capital asset for U.S. federal income tax purposes. This summary is based upon the provisions of the Internal Revenue Code of 1986, as amended (the "Code"), Treasury regulations promulgated thereunder, administrative rulings and judicial decisions as of the date hereof, all of which may change, possibly with retroactive effect, resulting in U.S. federal income tax consequences that may differ from those discussed below.
This discussion applies only to holders that are U.S. Holders (as defined below) and does not address all aspects of federal income taxation that may be relevant to such holders in light of their particular circumstances or to holders that may be subject to special tax rules, including: (i) holders subject to the alternative minimum tax; (ii) banks, insurance companies, or other financial institutions; (iii) tax-exempt organizations; (iv) dealers in securities or commodities; (v) regulated investment companies or real estate investment trusts; (vi) partnerships (or other flow-through entities for U.S. federal income tax purposes and their partners or members); (vii) traders in securities that elect to use a mark-to-market method of accounting for their securities holdings; (viii) U.S. Holders whose "functional currency" is not the U.S. dollar; (ix) persons holding our common stock as a position in a hedging transaction, "straddle," "conversion transaction" or other risk reduction transaction; (x) persons who acquire shares of our common stock in connection with employment or other performance of services; or (xi) U.S. expatriates. This summary does not address backup withholding and information reporting and does not address U.S. holders who beneficially own common stock through a "foreign financial institution" (as defined in Code Section 1471(d)(4)) or certain other non-U.S. entities specified in Code Section 1472. The following summary does not address any U.S. state or local or any foreign tax consequences, any estate, gift or other non-U.S. federal income tax consequences, or the Medicare tax on net investment income. If a partnership (including any entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds shares of our common stock, the tax treatment of a holder that is a partner in the partnership generally will depend upon the status of the partner and the activities of the partnership.
We have not sought, and will not seek, an opinion of counsel or a ruling from the Internal Revenue Service ("IRS") regarding the U.S. federal income tax consequences of the Reverse Stock Split and there can be no assurance that the IRS will not challenge the statements and conclusions set forth below or a court would not sustain any such challenge.
EACH HOLDER OF COMMON STOCK SHOULD CONSULT SUCH HOLDER'S TAX ADVISOR WITH RESPECT TO THE PARTICULAR TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT TO SUCH HOLDER.
44
PROPOSAL 5: APPROVAL OF A REVERSE STOCK SPLIT (CONTINUED)
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For purposes of the discussion below, a "U.S. Holder" is a beneficial owner of shares of our common stock that for U.S. federal income tax purposes is: (1) an individual citizen or resident of the United States; (2) a corporation (including any entity taxable as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state or political subdivision thereof; (3) an estate the income of which is subject to U.S. federal income taxation regardless of its source; or (4) a trust, if (i) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or (ii) the trust has a valid election in effect to be treated as a U.S. person.
The Reverse Stock Split is intended to qualify as a "reorganization" under Section 368 of the Code and is intended to be treated as a "recapitalization" for U.S. federal income tax purposes. Assuming the Reverse Stock Split qualifies as a reorganization, a U.S. Holder generally should not recognize gain or loss upon the Reverse Stock Split, except with respect to cash received in lieu of a fractional share of our common stock, as discussed below. A U.S. Holder's aggregate tax basis in the shares of our common stock received pursuant to the Reverse Stock Split should equal the aggregate tax basis of the shares of our common stock surrendered (excluding any portion of such basis that is allocated to any fractional share of our common stock), and such U.S. Holder's holding period in the shares of our common stock received should include the holding period in the shares of our common stock surrendered. Treasury regulations promulgated under the Code provide detailed rules for allocating the tax basis and holding period of the shares of our common stock surrendered to the shares of our common stock received pursuant to the Reverse Stock Split. Holders of shares of our common stock acquired on different dates and at different prices should consult their tax advisors regarding the allocation of the tax basis and holding period of such shares.
A U.S. Holder that receives cash in lieu of a fractional share of our common stock pursuant to the Reverse Stock Split should recognize capital gain or loss in an amount equal to the difference between the amount of cash received and the U.S. Holder's tax basis in the shares of our common stock surrendered that is allocated to such fractional share. Such capital gain or loss should be long term capital gain or loss if the U.S. Holder's holding period for our common stock surrendered exceeded one year at the time of effectiveness of the Reverse Stock Split.
Interests of Directors and Executive Officers
Our directors and executive officers have no substantial interests, directly or indirectly, in the matters set forth in this proposal except to the extent of their ownership of shares of our common stock.
Reservation of Right to Abandon Reverse Stock Split
We reserve the right to not file the Certificate of Amendment and to abandon any Reverse Stock Split without further action by our stockholders at any time before the effectiveness of the filing with the Secretary of the State of Delaware of the Certificate of Amendment, even if the authority to effect these amendments is approved by our stockholders at the Special Meeting. By voting in favor of the Reverse Stock Split, you are expressly also authorizing the Board to delay, not proceed with, and abandon, the Reverse Stock Split and the Certificate of Amendment if it should so decide, in its sole discretion, that such actions are in the best interests of our stockholders.
Vote Required
The affirmative vote of the holders of a majority of the outstanding shares of our common stock entitled to vote on the proposal, either in person or by proxy, is required to approve the Reverse Stock Split Proposal. Abstentions and broker non-votes, if any, will count as votes "AGAINST" the Reverse Stock Split.
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The Board unanimously recommends that stockholders vote "FOR" the approval of an amendment to our Amended and Restated Certificate of Incorporation to effect a reverse stock split of our outstanding shares of common stock by a ratio of any whole number between 1-for-2 and 1-for-25, at any time prior to August 28, 2024, with the exact ratio to be set within that range at the discretion of our Board, without further approval or authorization of our stockholders.
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45
PROPOSAL 6: APPROVAL OF THE ADJOURNMENT OF THE ANNUAL MEETING (IF NECESSARY OR APPROPRIATE)
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If at the Annual Meeting, we do not receive sufficient votes to approve Proposal 4 or Proposal 5 , our management may move to adjourn the Annual Meeting in order to enable our Board of Directors to continue to solicit additional proxies in favor of Proposal 4 and/or Proposal 5.
In this proposal, we are asking our stockholders to authorize the holder of any proxy solicited by our Board of Directors to vote in favor of adjourning, postponing or continuing the Annual Meeting and any later adjournments. If our stockholders approve the adjournment, postponement or continuation proposal, we could adjourn, postpone or continue the Annual Meeting, and any adjourned session of the Annual Meeting, to use the additional time to solicit additional proxies in favor of Proposal 4 and/or Proposal 5, including the solicitation of proxies from stockholders that have previously voted against the proposal(s). Among other things, approval of the adjournment, poistponement or continuation proposal could mean that, even if proxies representing a sufficient number of votes against Proposal 4 and/or Proposal 5 have been received, we could adjourn, postpone or continue the Annual Meeting without a vote on Proposal 4 and/or 5 and seek to convince the holders of those shares to change their votes to votes in favor of the approval of Proposal 4 and/or Proposal 5.
Vote Required
The affirmative vote of the majority of votes represented by shares present in person or represented by proxy and entitled to vote thereon at the Annual Meeting is required to approve the adjournment of the Annual Meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt Proposal 4 and/or Proposal 5. Abstentions will be the equivalent of votes "AGAINST" this proposal and broker non-votes will not have an effect on the outcome of this proposal
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The Board unanimously recommends that stockholders vote "FOR" the approval of
the adjournment of the Annual Meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt Proposal 4 and/or Proposal 5.
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46
OVERVIEW
Compensation Objectives and Practices
Trevena's pay-for-performance compensation philosophy has the following key objectives:
✔ Align the interests of the Company's executives with those of its stockholders and reward the creation of long-term value for Trevena stockholders.
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✔ Emphasize performance-based short-term and long-term compensation over fixed compensation.
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✔ Motivate superior enterprise results with appropriate consideration of risk and while maintaining commitment to the Company's ethics and values.
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✔ Reward the achievement of favorable long-term results more heavily than the achievement of short-term results.
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✔ Provide market competitive compensation opportunities designed to attract, retain and motivate highly qualified executives.
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To achieve these key objectives, the Compensation Committee uses the following compensation practices, processes and instruments:
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•
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Annual pay-for-performance assessment by the Compensation Committee of the achievement of the Company's corporate goals and the performance of each NEO.
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•
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A regular analysis of relevant market compensation data and benchmarks for each NEO.
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•
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Equity-based incentive plans (the 2023 Plan and the Inducement Plan) focused on longer-term stockholder value creation.
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•
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A cash-based incentive plan (the Trevena, Inc. Incentive Compensation Plan, or ICP) designed to motivate NEOs to achieve the Company's annual goals.
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•
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The retention by the Compensation Committee of an independent compensation consultant to assist in the Compensation Committee's analysis, design and implementation of the Company's executive compensation programs.
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In general, the Compensation Committee seeks to position the Company's compensation, target total cash compensation and long-term equity incentive compensation at the market 50th percentile. However, with respect to each component, the Company may choose to target compensation below or above (e.g., up to the market 75th percentile) based on an assessment of individual experience, scope of position, performance, potential and retention concerns, as applicable.
While the Board has the ultimate responsibility for risk oversight, the Compensation Committee oversees compensation-related risks, including with respect to the Company's corporate objectives and overall compensation design and awards. The Compensation Committee further seeks to ensure that Trevena's compensation programs and policies do not encourage unnecessary or excessive risk-taking behavior by executives and do not create unreasonable risks.
47
EXECUTIVE COMPENSATION (CONTINUED)
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Compensation Governance and Controls
In implementing the compensation philosophy described above, the Compensation Committee regularly reviews market data, the composition of Trevena's peer group, as well as other items, in determining which pay elements to offer, the target pay mix, the design of our short- and long-term incentive plans and each NEO's target total direct compensation.
The Compensation Committee also regularly reviews executive compensation governance market trends and strives to reflect the views of stockholders when considering the adoption of new practices or changes to existing programs or policies. Our governance practices and controls include:
☐
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"Double trigger" requirement for change of control benefits.
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☐
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No tax gross-up of parachute payments upon a change of control.
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☐
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Prohibition of hedging of Trevena stock by all directors and employees, including the NEOs.
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☐
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Prudent management of annual share usage (or burn rate) and total dilution under the 2023 Plan.
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☐
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No executive officer perquisites.
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☐
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The Compensation Committee's ongoing review of the general long-term compensation strategy for the Company and assessments of NEOs and key senior management in connection with compensation decisions, and assistance to the Board in CEO and executive officer succession plans.
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☐
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The Compensation Committee's oversight of risk related to compensation programs and policies, including plan design features that mitigate the risk of incentive compensation having an unintended negative financial impact.
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48
EXECUTIVE COMPENSATION (CONTINUED)
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Process for Executive Compensation Decisions
The following table represents the peer group approved by the Compensation Committee, with the assistance of its independent compensation consultant discussed below, in October 2023 (the "Peer Group"). The Peer Group includes similarly situated biopharmaceutical companies based on market capitalization, stage of development and number of employees, among other things.
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AcelRx Pharmaceuticals, Inc.
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Palatin Technologies, Inc.
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Aquestive Therapeutics, Inc.
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Paratek Pharmaceuticals, Inc.
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Cidera Therapeutics, Inc.
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Palatin Technologies, Inc.
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Corbus Pharmaceuticals Holdings, Inc.
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Regulus Therapeutics Inc.
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Heron Therapeutics, Inc.
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SCYNEXIS, Inc.
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KALA BIO, Inc.
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Tempest Therapeutics, Inc.
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Larimar Biotech, Inc.
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Unicycive Therapeutics, Inc.
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Minerva Neurosciences, Inc.
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Werewolf Therapeutics, Inc.
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Moleculin Biotech, Inc.
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Zynerba Pharmaceuticals, Inc.
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NexImmune, Inc.
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|
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For the 2023 year-end compensation decisions, the Compensation Committee established the Company's compensation for the executive officers based on a variety of factors, including a mix of (i) publicly available data from the Peer Group and (ii) published survey data for the life sciences industry.
Chief Executive Officer Compensation
The Compensation Committee annually evaluates the CEO's performance and Trevena's performance against its pre-established goals and makes recommendations to the independent members of the Board about the CEO's performance and compensation. The Board then considers the Compensation Committee's recommendations as part of its review and approval of the CEO's compensation.
The CEO is not present when the Compensation Committee and the Board are making decisions about the CEO's compensation. The Company's General Counsel and Chief Compliance Officer, Chief Business Officer, head of human resources, and/or the independent compensation consultant attend meetings concerning the CEO's compensation evaluation at the request of the Compensation Committee and/or the Board.
49
EXECUTIVE COMPENSATION (CONTINUED)
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Other Named Executive Officer Compensation
Generally, the CEO presents recommendations for the other NEO's compensation targets for the Compensation Committee's consideration and approval. For compensation decisions involving actual payouts to the NEOs, the CEO presents her recommendations to the Compensation Committee for its consideration. The CEO discusses Trevena's performance and the individual NEO's performance.
Compensation Consultant Role in Executive Compensation
The Compensation Committee engaged Pearl Meyer & Partners ("Pearl Meyer") as its independent compensation consultant for 2023 and continues to consult with Pearl Meyer today.
The Compensation Committee utilized Pearl Meyer to provide independent, objective analysis, advice and information and to generally assist the Compensation Committee in the performance of its duties. The Compensation Committee will typically request information and recommendations directly from the compensation consultant as it deems appropriate to structure and evaluate Trevena's compensation programs, practices and plans. As part of its engagement, at the direction of the Compensation Committee, the compensation consultant will work, and exchange information, with the Company's management team in their work on the Compensation Committee's behalf.
At the direction of the Compensation Committee, Pearl Meyer provided services to the Compensation Committee, including the following items:
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•
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conducted an annual review of the peer group companies for continued appropriateness;
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•
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presented an overview of marketplace trends and developments;
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•
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presented a comparison of competitive market data to the current compensation of each NEO to assist in setting compensation targets for 2023;
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•
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evaluated the Company's overall use of equity, including share usage rates and dilution and shares underlying the 2023 Plan;
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•
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reviewed the compensation program for the Company's non-employee directors; and
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•
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reviewed the Executive Compensation section of the 2023 proxy statement.
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Independence of the Compensation Consultant
The Compensation Committee assesses the compensation consultant's independence each year. In assessing independence, the Compensation Committee considers:
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•
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the provision of other services to the Company by the consultant;
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•
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the amount of fees paid to the consultant by the Company as a percentage of consultant's total revenue;
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•
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the consultant's policies and procedures that are designed to prevent conflicts of interests;
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•
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any business or personal relationship between the consultant and a member of the Compensation Committee;
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•
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any Company stock owned by the consultant;
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•
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any business or personal relationship of the consultant and an executive officer of the Company; and
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•
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any other factor deemed relevant to the consultant's independence from management.
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50
EXECUTIVE COMPENSATION (CONTINUED)
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In addition, each year the Compensation Committee receives a letter from its compensation consultant providing appropriate assurances and confirmation of independence. The Compensation Committee determined that Pearl Meyer was independent under applicable Nasdaq rules.
At the request of the Compensation Committee, a representative of Pearl Meyer attended all of the Compensation Committee's regularly scheduled meetings in 2023. The Compensation Committee annually reviews and evaluates its compensation consultant's engagement and performance.
2023 Executive Compensation Program
Trevena's 2023 executive compensation program consists of the following elements:
Element
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Description
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Base Salary
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Represents the fixed portion of each NEO's total compensation package.
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Annual Cash Incentive
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At-risk compensation based on performance. Annual incentive awards under the ICP are based on the achievement of corporate results relative to pre-established goals, as adjusted for individual performance, accomplishments and contributions.
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Long-Term Incentives
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At-risk compensation based on individual performance. Trevena's long-term equity incentive program also is considered performance-based compensation. In accordance with Trevena's compensation strategy, the predominant portion of an NEO's compensation opportunity is tied to the long-term success of the Company.
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Retirement
Compensation
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Trevena provides a market-competitive 401(k) plan for all full-time employees that provides for employee contributions as well as Company matching contributions of up to 4.0% of eligible pay.
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No Perquisites; Other
Benefits
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Our NEOs do not receive any perquisites. However, they are eligible for all benefits offered to Trevena employees generally, including medical benefits, other health and welfare benefits, and other voluntary benefits.
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2023 SUMMARY COMPENSATION TABLE
Name and Principal
Position in 2023
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Year
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Salary
($)
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Stock
Awards
($)
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Option
Awards
($)
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Non-Equity
Incentive Plan
Compensation
($)
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All Other
Compensation
($)
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Total
($)
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Carrie Bourdow
President and Chief Executive Officer
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2023
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681,500
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581,700
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0
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388,455
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13,200
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1,664,855
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2022
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655,500
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0
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0
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334,305
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12,200
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1,002,005
|
|
|
|
|
|
|
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Mark A. Demitrack, M.D.
SVP and Chief Medical Officer
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2023
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510,120
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290,850
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0
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218,025
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13,200
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1,032,195
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2022
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490,500
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0
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0
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187,616
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12,200
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690,316
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|
|
|
|
|
|
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Barry Shin
SVP, Chief Financial Officer
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2023
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497,120
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290,850
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0
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212,468
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13,200
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1,013,638
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2022
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478,000
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0
|
0
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182,835
|
9,190
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670,025
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|
|
|
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This table includes information regarding 2022 and 2023 compensation for each of our CEO and our two other most highly compensated executive officers in 2023, which are referred to as the named executive officers, or NEOs. Other tables in this proxy statement provide more detail about specific types of compensation with respect to 2023.
51
EXECUTIVE COMPENSATION (CONTINUED)
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Stock Awards
The amounts in this column represent the full grant date fair value as of December 31, 2023 of restricted stock unit awards made under the 2023 Plan, computed in accordance with ASC Topic 718 applying the same model and assumptions as Trevena applies for financial statement reporting purposes, as described in Note 7 to Trevena's financial statements contained in its Annual Report on Form 10-K for the year ended December 31, 2023 (disregarding any estimates for forfeitures).
Option Awards
The amounts in this column represent the full grant date fair value of option awards made under the 2023 Plan for 2023 and 2022, computed in accordance with ASC Topic 718 applying the same model and assumptions as Trevena applies for financial statement reporting purposes, as described in Note 7 to Trevena's consolidated financial statements contained in its Annual Report on Form 10-K for the year ended December 31, 2023 (disregarding any estimates for forfeitures). The value of Trevena stock option awards are determined using a Black-Scholes pricing methodology that assumes that all stock options are held to full-term (ten years). These amounts do not reflect the actual economic value that will be realized by the NEO upon the vesting of the stock options, the exercise of the stock options or the sale of the common stock underlying such stock options.
Non-Equity Incentive Plan Compensation
Amounts in this column reflect awards earned and paid under the ICP for the 2023 and 2022 fiscal years, as discussed further under "Annual Cash Incentive" below.
All Other Compensation
This column includes Trevena's matching contributions to the NEOs' accounts under its 401(k) plan up to a maximum amount of $13,200 for each of Ms. Bourdow, Dr. Demitrack and Mr. Shin.
NARRATIVE TO 2023 SUMMARY COMPENSATION TABLE
Annual Base Salary
Key Features
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•
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Base salary levels are set with reference to both:
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- Competitive market data; and
- Individual performance.
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•
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Base salary levels are reviewed annually during the performance review process and may be adjusted as a result of updated market data and an assessment of an NEO's skills, role and performance contributions, including the demonstration of leadership behaviors and our core values. The overall salary budget also is a factor in determining the extent of base salary adjustments.
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52
EXECUTIVE COMPENSATION (CONTINUED)
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Base Salary
The table below presents the annual base salaries for each of our NEOs employed by the Company as of December 31, 2023. Ms. Bourdow's salary was increased to $681,500, effective as of March 1, 2023. Dr. Demitrack's salary was increased to $510,120, effective as of March 1, 2023. Mr. Shin's salary was increased to $497,120 on March 1, 2023. For 2023, the base salary for each of the NEOs was considered to be within the competitive range of market data provided to the Compensation Committee by Pearl Meyer.
Name
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2023
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2022
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Carrie L. Bourdow
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$681,500
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$655,500
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Mark A. Demitrack, M.D.
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$510,120
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$490,500
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Barry Shin
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$497,120
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$478,000
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Our ICP is designed to provide participants in the plan, including the Company's NEOs, with an incentive in the form of an annual cash incentive (an Award) to achieve specified corporate and individual objectives selected by the Board to which the Award relates.
Key Features of the ICP
Our ICP motivates and rewards our NEOs for achievements relative to both corporate and individual goals for each fiscal year. The ICP includes the following key features:
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•
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The Compensation Committee (or, as applicable, the Board) annually approves:
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- Corporate performance measures and goals;
- Target bonus opportunity for each NEO, defined as a percentage of his or her annual salary;
- Funding levels for actual ICP Awards; and
- Individual Awards for the NEOs, except for the CEO's Award, which is approved by the Board.
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•
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Annual Awards for each of the NEOs are generally targeted at the 50th percentile of the market reference.
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•
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Subject to certain limits described below, the actual Award for an NEO will generally range from 0% to 150% of the individual's target bonus opportunity and, if earned, is paid in the first quarter following the end of the performance year.
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Target Incentive Award Levels
The Compensation Committee establishes the target cash incentive opportunity for each NEO other than the CEO, and the Board establishes the target cash incentive opportunity for the CEO assuming full achievement against the Corporate Objectives (as defined below) and any individual objectives, and taking into account target levels specified in each NEO's employment agreement. For 2023, the target cash incentive opportunity for each of the NEOs was considered to be within the competitive range of market data provided to the Compensation Committee by Pearl Meyer. The following table shows the amount of the target incentive for each NEO for the past two years as a percentage of salary:
Name
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2023
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2022
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Carrie L. Bourdow
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60%
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60%
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Mark A. Demitrack, M.D.
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45%
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45%
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Barry Shin
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45%
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45%
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53
EXECUTIVE COMPENSATION (CONTINUED)
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ICP Corporate Goals, Weightings and Funding
Each year, the Board, upon the recommendation of the Compensation Committee, establishes major corporate objectives for the coming fiscal year (and the relative weighting of such objectives) (the "Corporate Objectives"). The Board believes the Corporate Objectives will contribute to the long-term success of the Company by aligning with and driving the execution of the Company's business strategy. A minimum of 60% achievement against the Corporate Objectives is necessary for any Award payout under the ICP, and the maximum Award to any participant is 150% of the applicable target Award.
At the end of the fiscal year, the Board, upon the recommendation of the Compensation Committee, reviews and approves the level of the Company's achievement against the Corporate Objectives. In addition to its assessment of achievement against each Corporate Objective, the Board may consider Trevena's performance as a whole during the fiscal year, including matters not included in the Corporate Objectives. Following the determination of the corporate achievement, the Compensation Committee will consider the individual achievement of each executive officer and other ICP participants in arriving at the individual Awards, if any, to be made.
The Compensation Committee approves the pool of Award dollars available for payment to all participants, as well as the specific individual Awards to be made to the Company's executive officers (other than the President and CEO). The Board approves the individual Award to be made to the President and CEO, upon the recommendation of the Compensation Committee.
The Board's determination of the Company's level of achievement against the Corporate Objectives is the basis for establishing the funding available for Awards under the ICP. An Award is then determined for each participant based upon management's determination of such participant's performance against his or her pre-approved individual goals. Notwithstanding these determinations, the Compensation Committee and the Board each retain the discretion to make individual Awards that are above or below the level of corporate achievement. The Compensation Committee believes this flexibility is an important tool to aid in the retention of key talent, reward significant achievement by individual employees, motivate employees and recognize management decision-making focused on generating long-term value for stockholders over short-term achievement of the Corporate Objectives. The Compensation Committee did not exercise this discretion in 2023.
In March 2023, the Board established the corporate goals and weightings for 2023, that would be used to determine the range of potential aggregate funding for awards under the ICP. In early 2024, the Board, upon the recommendation of the Compensation Committee, assessed the Company's actual performance against these previously established goals and approved the Company's corporate achievement for 2023 at a level of 95% of target.
In determining the amount of each NEO's ICP Award, the Compensation Committee and the Board also considered each NEO's performance against individual goals and the CEO's input with respect to the performance of the Company and the other executive officers. Based on these considerations, for 2023, the Board approved an ICP Award of $388,455 for Ms. Bourdow and the Compensation Committee approved, and the Board ratified, ICP Awards of $218,025 for Dr. Demitrack and $212,468 for Mr. Shin.
54
EXECUTIVE COMPENSATION (CONTINUED)
|
Long-Term Incentives
Key Features
|
•
|
Long-term incentives (LTI) are administered under the 2023 Plan.
|
|
•
|
Total annual LTI awards are generally positioned at the 50th percentile of the market reference for each NEO.
|
|
•
|
LTI awards are delivered through stock options and/or restricted stock units (RSUs).
|
- The actual realized value of stock options depends upon stock price appreciation (if any) until the option is exercised.
- The actual realized value of RSUs depends on our stock price upon vesting and settlement of the RSU award.
Our 2023 Plan authorizes us to make grants to eligible recipients of non-qualified stock options, incentive stock options, restricted stock awards, RSUs and stock appreciation rights.
We typically grant equity incentive awards at the start of employment to each NEO and our other employees. Beginning in 2014, we began our current practice of granting additional equity on an annual basis. We also have discretion to provide additional targeted grants in certain circumstances or in association with promotions.
We award our equity grants on the date the Board or the Compensation Committee approves the grant. We set the option exercise price and grant date fair value based on our closing sale price on the date of grant. Option grants to our executives typically vest quarterly over four years, subject to continuous service through each applicable vesting date. For grants in connection with initial employment, vesting begins on the initial date of employment. Options have a term of ten years from the grant date. Restricted stock unit grants typically vest annually over four years, subject to continuous service through each applicable vesting date, and shares are delivered in respect of vested RSUs shortly after each vesting date.
In January 2023, the Board ratified and approved, at the recommendation of the Compensation Committee, annual equity grants in an equal mix of time-based RSUs and performance-vesting RSUs ("PSUs"), which the Compensation Committee believes further strengthens the alignment of the interests of our NEOs with our stockholders. On December 14, 2023 the Compensation Committee certified that the prerequisite conditions for the PSU's to be deemed earned and commence vesting as RSU's. The RSU awards shall vest in four equal annual installments on each of December 2, 2023, December 2, 2024, December 2, 2025, and December 2, 2026, subject to the NEO's continuous service through each applicable vesting date.
55
EXECUTIVE COMPENSATION (CONTINUED)
|
The awards to our NEOs in 2023 were as follows:
Name
|
Grant Date
|
#RSUs
|
RSU Grant
Date Fair
Value
|
# PSUs
|
PSU Grant
Date Fair Value
|
Total Grant
Date Fair Value
|
Carrie L. Bourdow
|
1/6/2023
|
100,000
|
1.78
|
|
|
178,000
|
|
12/14/2023
|
370,000
|
0.61
|
|
|
225,700
|
|
12/14/2023
|
|
|
100,000
|
0.61
|
61,000
|
Mark A. Demitrack, M.D.
|
1/6/2023
|
50,000
|
1.78
|
|
|
89,000
|
|
12/14/2023
|
185,000
|
0.61
|
|
|
112,850
|
|
12/14/2023
|
|
|
50,000
|
0.61
|
30,500
|
Barry Shin
|
1/6/2023
|
50,000
|
1.78
|
|
|
89,000
|
|
12/14/2023
|
185,000
|
0.61
|
|
|
112,850
|
|
12/14/2023
|
|
|
50,000
|
0.61
|
30,500
|
Grant Date Fair Market Value of RSU and PSU Awards
These amounts represent the grant date fair value of equity awards computed in accordance with ASC Topic 718, applying the same model and assumptions Trevena uses for financial statement reporting purposes. The award values represented in the table and may not correspond to the actual value that will be recognized by the NEO.
56
EXECUTIVE COMPENSATION (CONTINUED)
|
OUTSTANDING EQUITY AWARDS AT YEAR-END 2023
This table provides information about unexercised stock options and RSUs held as of December 31, 2023 by each of the NEOs.
Stock Awards
|
Number of Securities Underlying
Unexercised Options
|
Name
|
Grant Date
|
Exercisable (#)
|
|
Unexercisable (#)(1)
|
Option
Exercise
Price ($)
|
Option
Expiration
Date
|
Number of
Units of Stock
That Have Not
Vested (#) (2)
|
Market Value of
Units of Stock
That Have Not
Vested ($)
|
Carrie L. Bourdow
|
12/17/2020
|
21,199
|
|
7,067
|
56.25
|
12/17/2030
|
|
1,243,525
|
|
12/17/2020
|
|
|
|
|
|
4,711
|
264,994
|
|
12/2/2021
|
|
|
|
|
|
25,000
|
428,000
|
|
1/6/2023
|
|
|
|
|
|
75,000
|
133,500
|
|
12/14/2023
|
|
|
|
|
|
75,000
|
133,500
|
|
12/14/2023
|
|
|
|
|
|
370,000
|
225,700
|
Total
|
|
21,199
|
|
7,067
|
|
|
549,711
|
2,429,219
|
|
|
|
|
|
|
|
|
|
Mark A. Demitrack, M.D.
|
12/17/2020
|
7,773
|
|
2,591
|
56.25
|
12/17/2030
|
|
455,950
|
|
12/17/2020
|
|
|
|
|
|
1,727
|
97,144
|
|
12/2/2021
|
|
|
|
|
|
7,800
|
133,536
|
|
1/6/2023
|
|
|
|
|
|
37,500
|
66,750
|
|
12/14/2023
|
|
|
|
|
|
37,500
|
66,750
|
|
12/14/2023
|
|
|
|
|
|
185,000
|
112,850
|
Total
|
|
7,773
|
|
2,591
|
|
|
269,527
|
932,980
|
|
|
|
|
|
|
|
|
|
Barry Shin
|
12/17/2020
|
7,066
|
|
2,356
|
56.25
|
12/17/2030
|
|
414,508
|
|
12/17/2020
|
|
|
|
|
|
1,570
|
88,313
|
|
9/14/2021
|
928
|
|
722
|
30.00
|
9/14/2031
|
|
38,966
|
|
9/14/2021
|
|
|
|
|
|
550
|
16,500
|
|
12/2/2021
|
|
|
|
|
|
7,800
|
133,536
|
|
1/6/2023
|
|
|
|
|
|
37,500
|
66,750
|
|
12/14/2023
|
|
|
|
|
|
37,500
|
66,750
|
|
12/14/2023
|
|
|
|
|
|
185,000
|
112,850
|
Total
|
|
7,994
|
|
3,078
|
|
|
269,920
|
938,173
|
57
EXECUTIVE COMPENSATION (CONTINUED)
|
(1) The following table details the vesting schedule of stock options that have not vested as of December 31, 2023 for the NEOs, subject in each case to the NEO's continuous service through each applicable vesting date. The unvested shares subject to these options may be subject to accelerated vesting upon a qualifying termination of employment or change in control. See "Potential Payments Upon Termination of Employment or in Connection with Change in Control" below.
|
Grant Date
|
Number of
Stock
Options That
Have Not
Vested
|
Next Vesting
Date from 12/31/2023
|
Next Vesting
Amount
|
|
Remaining Vesting Terms
|
Carrie L. Bourdow
|
12/17/2020
|
24,732
|
3/17/2024
|
1,767
|
|
1/16th of total grant every quarter
|
|
|
|
|
|
|
|
Mark A. Demitrack, M.D.
|
12/17/2020
|
9,068
|
3/17/2024
|
648
|
|
1/16th of total grant every quarter
|
|
|
|
|
|
|
|
Barry Shin
|
12/17/2020
|
1,178
|
3/17/2024
|
589
|
|
1/16th of total grant every quarter
|
|
9/14/2021
|
516
|
3/14/2024
|
103
|
|
1/16th of total grant every quarter
|
(2) The following table details the vesting schedule of the RSUs that have not vested as of December 31, 2023 for the NEOs, subject in each case to the NEO's continuous service through each applicable vesting date. The unvested shares subject to these RSUs may be subject to accelerated vesting upon a qualifying termination of employment. See "Potential Payments Upon Termination of Employment or in Connection with Change in Control" below.
|
Grant Date
|
Number of
RSUs That
Have Not
Vested
|
Next Vesting
Date from 12/31/2022
|
Next Vesting
Amount
|
|
Remaining Vesting Terms
|
Carrie L. Bourdow
|
12/17/2020
|
4,711
|
12/2/2024
|
4,711
|
|
1/4th of total grant vests annually
|
|
12/2/2021
|
25,000
|
12/2/2024
|
12,500
|
|
1/4th of total grant vests annually
|
|
1/6/2023
|
75,000
|
12/2/2024
|
25,000
|
|
1/4th of total grant vests annually
|
|
12/14/2023
|
75,000
|
12/2/2024
|
25,000
|
|
1/4th of total grant vests annually
|
|
12/14/2023
|
370,000
|
12/2/2024
|
92,500
|
|
1/4th of total grant vests annually
|
Mark A. Demitrack, M.D.
|
12/17/2020
|
1,727
|
12/17/2024
|
1,727
|
|
1/4th of total grant vests annually
|
|
12/2/2021
|
7,800
|
12/2/2024
|
3,900
|
|
1/4th of total grant vests annually
|
|
1/6/2023
|
37,500
|
12/2/2024
|
12,500
|
|
1/4th of total grant vests annually
|
|
12/14/2023
|
37,500
|
12/2/2024
|
12,500
|
|
1/4th of total grant vests annually
|
|
12/14/2023
|
185,000
|
12/2/2024
|
46,250
|
|
1/4th of total grant vests annually
|
Barry Shin
|
12/17/2020
|
1,570
|
12/17/2024
|
1,570
|
|
1/4th of total grant vests annually
|
|
9/14/2021
|
275
|
9/14/2024
|
275
|
|
1/4th of total grant vests annually
|
|
12/2/2021
|
7,800
|
12/2/2024
|
3,900
|
|
1/4th of total grant vests annually
|
|
1/6/2023
|
37,500
|
12/2/2024
|
12,500
|
|
1/4th of total grant vests annually
|
|
12/14/2023
|
37,500
|
12/2/2024
|
12,500
|
|
1/4th of total grant vests annually
|
|
12/14/2023
|
185,000
|
12/2/2024
|
46,250
|
|
1/4th of total grant vests annually
|
58
EXECUTIVE COMPENSATION (CONTINUED)
|
NAMED EXECUTIVE OFFICER AGREEMENTS
Agreements with our Named Executive Officers
Below are summaries of our employment agreements with our NEOs who are employed by the Company as of December 31, 2023. All change of control benefits are "double-trigger," which means that they are payable only upon a change of control followed by a qualifying termination of employment.
Agreement with Ms. Bourdow
We have entered into an employment agreement with Ms. Bourdow, most recently amended and restated effective as of May 1, 2020, and further amended on March 8, 2024. Pursuant to this agreement, Ms. Bourdow is entitled to an annual base salary, which is subject to review and adjustment, and is eligible to receive an annual target bonus of 60% of her current base salary, as determined by our Board. Ms. Bourdow is entitled to severance benefits pursuant to her agreement, the terms of which are described below under "Potential Payments Upon Termination of Employment or in Connection with Change of Control." In addition, the agreement provides that if Ms. Bourdow is terminated due to death or disability, all outstanding equity awards shall automatically vest and remain exercisable for the full term of such equity awards.
Agreement with Dr. Demitrack
We have entered into an employment agreement with Dr. Demitrack, most recently amended and restated effective as of May 1, 2020, and further amended on March 8, 2024. Pursuant to the agreement, Dr. Demitrack is entitled to an annual base salary, which is subject to review and adjustment, and is eligible to receive an annual target bonus of 45% of his current base salary, as determined by our Board. Dr. Demitrack is entitled to severance benefits pursuant to his agreement, the terms of which are described below under "Potential Payments Upon Termination of Employment or in Connection with Change of Control." In addition, the agreement provides that if Dr. Demitrack is terminated due to death or disability, all outstanding equity awards shall automatically vest and remain exercisable for the full term of such equity awards.
Agreement with Mr. Shin
We have entered into an employment agreement with Mr. Shin, most recently amended and restated effective as of May 1, 2020, and further amended on February 1, 2024(1). Pursuant to the agreement, Mr. Shin is entitled to an annual base salary, which is subject to review and adjustment, and is eligible to receive an annual target bonus of 45% of his current base salary, as determined by our Board. Mr. Shin is entitled to severance benefits pursuant to his agreement, the terms of which are described below under "Potential Payments Upon Termination of Employment or in Connection with Change of Control." In addition, the agreement provides that if Mr. Shin is terminated due to death or disability, all outstanding equity awards shall automatically vest and remain exercisable for the full term of such equity awards.
Potential Payments Upon Termination of Employment or in Connection with Change in Control
Trevena does not provide NEOs with any "single-trigger" payments (triggered solely by a change of control), golden parachute excise tax gross-ups or other excise tax reimbursements upon a change of control.
|
We believe that reasonable severance benefits for our NEOs are important because it may be difficult for them to find comparable employment within a short period of time. We also believe that it is important to protect our NEOs in the event of a change of control transaction involving our company, as a result of which such officers might have their employment terminated. In addition, we believe that the interests of management should be aligned with those of our stockholders as much as possible, and we believe that providing protection upon a change of control is an appropriate counter to any disincentive our NEOs might otherwise perceive in regard to transactions that may be in the best interest of our stockholders.
1Mr. Shin was promoted to Executive Vice President, Chief Operating Officer and Chief Financial Officer on February 1, 2024.
59
EXECUTIVE COMPENSATION (CONTINUED)
|
As a result of these considerations, we have entered into employment agreements with Ms. Bourdow, Dr. Demitrack, and Mr. Shin that provide for specified benefits to be paid if the NEOs are terminated under specified conditions or in connection with a change in control of our company.
Under the employment agreements between us and Ms. Bourdow, Dr. Demitrack, and Mr. Shin, if the NEO is terminated by us other than for cause or resigns for good reason, in each case as defined in the agreement, he or she will receive:
|
•
|
continuing payments of salary as severance pay in the amount of fifteen (15) months of her then-current base salary for Ms. Bourdow, and twelve (12) months of the then-current base salary for each of Dr. Demitrack and Mr. Shin, in each case paid in equal installments following termination on our regularly scheduled payroll dates;
|
|
•
|
an incentive compensation award for the fiscal year immediately preceding the date of termination, to the extent not already paid, in an amount determined by the Board or Compensation Committee in their sole discretion;
|
|
•
|
his or her target annual incentive compensation for the year of termination, pro-rated for the period between the beginning of the calendar year and the date of termination, paid within sixty days following termination;
|
|
•
|
for Ms. Bourdow only, an additional amount equal to fifteen (15) months of her target incentive award in effect at the time of termination, payable in equal installments on our regularly scheduled payroll dates over the period that the severance pay is paid,
|
|
•
|
health insurance premiums under our group health insurance plans as provided under the Consolidated Omnibus Budget Reconciliation Act, or COBRA, until the earlier of (i) fifteen (15) months after termination of employment for Ms. Bourdow, and twelve (12) months after termination of employment for Dr. Demitrack and Mr. Shin, (ii) such time as the executive is eligible for substantially equivalent health insurance coverage with a subsequent employer and (iii) such time as the NEO is no longer eligible for COBRA coverage; and
|
|
•
|
accelerated vesting as to that number of unvested shares subject to any outstanding equity awards held by the NEO at the time of termination that would have otherwise vested if the NEO had remained employed by us for twelve (12) months following the date of termination for Ms. Bourdow, and nine (9) months following the date of termination for Dr. Demitrack and Mr. Shin.
|
In addition, under the employment agreements if the NEO is terminated by us other than for cause within thirty (30) days prior to a change of control, within the period between our execution of a letter of intent for a change of control and that change of control is later consummated, or within twelve months following a change of control, or if the NEO resigns for good reason within twelve (12) months after a change of control, in each case as defined in the agreement, he or she will receive the following payments in lieu of the severance payments listed above:
|
•
|
continuing payments of his or her salary as severance pay in the amount of twenty-one (21) months of her then-current base salary for Ms. Bourdow, and fifteen (15) months of the then-current base salary for Dr. Demitrack and Mr. Shin, in each case paid in equal installments following termination on our regularly scheduled payroll dates;
|
|
•
|
an incentive compensation award for the fiscal year immediately preceding the date of termination, to the extent not already paid, in an amount determined by the Board or Compensation Committee in their sole discretion;
|
|
•
|
his or her target annual incentive compensation for the year of termination, pro-rated for the period between the beginning of the calendar year and the date of termination, paid within sixty days following termination;
|
|
•
|
for Ms. Bourdow, an additional amount equal to twenty-one (21) months of her target bonus in effect at the time of termination, and for Dr. Demitrack and Mr. Shin, an additional amount equal to fifteen (15) months of their respective target bonus in effect at the time of termination, in each case payable in equal installments on our regularly scheduled payroll dates over the period that the severance pay is paid;
|
|
•
|
health insurance premiums under our group health insurance plans as provided under the COBRA until the earlier of (i) twenty-one (21) months after termination of employment for Ms. Bourdow, and fifteen (15) months after termination of employment for Dr. Demitrack and Mr. Shin, (ii) such time as the NEO is eligible for substantially equivalent health insurance coverage with a subsequent employer and (iii) such time as the NEO is no longer eligible for COBRA coverage; and
|
60
EXECUTIVE COMPENSATION (CONTINUED)
|
|
•
|
accelerated vesting of all unvested shares subject to any outstanding equity awards held by the NEO at the time of termination.
|
Receipt of the benefits described above upon the NEO's termination of employment is contingent upon his or her signing of a release of claims against us.
Under the employment agreements with our NEOs, a mere change of control itself (i.e., a "single trigger") does not trigger benefits. The intent of the plan is to encourage our NEOs to continue to act in our stockholders' best interests in evaluating potential transactions and ensure management talent will be available to assist with the transaction and business integration.
401(K) Plan
Our NEOs are eligible to participate in a defined contribution retirement plan that provides eligible U.S. employees with an opportunity to save for retirement on a tax advantaged basis. Eligible employees may defer eligible compensation on a pre-tax or after-tax (Roth) basis, up to the statutorily prescribed annual limits on contributions under the Internal Revenue Code of 1986, as amended (the "Code"). Contributions are allocated to each participant's individual account and are then invested in selected investment alternatives according to the participants' directions. Employees are immediately and fully vested in their contributions. The 401(k) plan is intended to be qualified under Section 401(a) of the Code with the 401(k) plan's related trust intended to be tax exempt under Section 501(a) of the Code. As a tax-qualified retirement plan, contributions to the 401(k) plan (except for Roth contributions) and earnings on those contributions are not taxable to the employees until distributed from the 401(k) plan. During 2023, we made matching contributions on up to 4% of an employee's eligible deferred compensation, with the first 3% matched 100% and the balance matched at 50%, subject to established limits.
Pay Versus Performance
As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between "compensation actually paid" to our CEO and to our other NEOs and certain financial performance of the Company. Compensation actually paid, as determined under SEC requirements, does not reflect the actual amount of compensation earned by or paid to our NEOs during a covered year. For further information concerning the Company's pay-for-performance philosophy and how we align executive compensation with the Company's performance, refer to the preceding compensation discussion.
Pay Versus Performance Table
The following table provides the information required for our NEOs for each of the fiscal years ended December 31, 2023, December 31, 2022, and December 31, 2021, along with the required financial information required for each fiscal year:
61
EXECUTIVE COMPENSATION (CONTINUED)
|
Narrative Disclosure: Pay Versus Performance Table
The graphs below provide a description of CAP (as calculated in accordance with the SEC rules) and the following measures:
|
•
|
Trevena's cumulative TSR; and
|
62
EXECUTIVE COMPENSATION (CONTINUED)
|
63
OWNERSHIP OF TREVENA COMMON STOCK
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS AND EXECUTIVE OFFICERS
The following table provides information as of April 29, 2024 about the amount of Trevena common stock beneficially owned by (1) all those known by us to be beneficial owners of more than five percent of our common stock; (2) each director and nominee for director; (3) each NEO named in the 2023 Summary Compensation Table who remains an employee of the Company as of April 29, 2024; and (4) all of the directors, nominees and executive officers of the Company as of April 29, 2024, as a group. This table is based upon information supplied by our NEOs and directors as of April 29, 2024.
"Beneficial ownership" includes those shares a director, nominee or NEO has or shares the power to vote or transfer (even if another person is the record owner), and stock options that are exercisable as of April 29, 2024 or that become exercisable within 60 days of April 29, 2024. Shares of common stock subject to such options are deemed outstanding for calculating the Percent of Class of the person holding these options but are not deemed outstanding for any other person. The Percent of Class shown below is based on 18,321,010 shares outstanding on April 19, 2024.
Unless otherwise noted, the address for each director and NEO is c/o Trevena, Inc., 955 Chesterbrook Boulevard, Suite 110, Chesterbrook, PA 19087.
|
Amount of
Beneficial
Ownership
|
Percent of
Class
|
Principal Stockholders:
|
|
|
Armistice Capital, LLC (1)
|
1,827,615
|
9.99%
|
Non-employee Directors and Nominees(2)
|
|
|
|
|
*
|
Scott Braunstein, M.D.
|
26,607
|
*
|
Mark Corrigan, M.D.
|
6,421
|
*
|
Marvin H. Johnson, Jr.
|
22,455
|
*
|
Jake R. Nunn(3)
|
27,486
|
*
|
Anne M. Phillips, M.D.
|
27,670
|
*
|
Barbara Yanni
|
27,720
|
*
|
Named Executive Officers(4)
|
|
|
Carrie L. Bourdow
|
178,086
|
*
|
Mark A. Demitrack, M.D.
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60,768
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*
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Barry Shin
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59,285
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*
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All Directors, Nominees and Executive Officers as a group, including those named above (11 Persons)(5)
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497,579
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2.7%
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* Represents beneficial ownership of less than 1%.
(1)
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The information reported is based on a Schedule 13G/A filed with the SEC on February 14, 2024 reporting, as of December 31, 2023, sole power of Armistice Capital, LLC to vote or direct the vote of 1,827,615 shares and sole power to dispose or direct the disposition of 1,827,615 shares. The business address of Armistice Capital, LLC is 10 Madison Avenue, 7th Floor, New York, NY 10022.
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(2)
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Includes shares of common stock issuable upon the exercise of options exercisable within 60 days after April 19, 2024 in the amount of 26,607 for Dr. Braunstein; 6,421 for Dr. Corrigan; 22,455 for Mr. Johnson; 27,315 for Mr. Nunn; 27,670 for Dr. Phillips; and 27,670 for Ms. Yanni.
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(3)
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Includes 171 shares of common stock held by the Jake & Dana Nunn Living Trust dated July 7, 2006, for which Mr. Nunn is a trustee.
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(4)
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Includes shares of common stock issuable upon the exercise of options exercisable within 60 days after April 19, 2024 in the amount of 84,872 for Ms. Bourdow, 24,068 for Dr. Demitrack and 20,378 for Mr. Shin.
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(5)
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Includes shares of common stock issuable upon the exercise of options exercisable within 60 days after April 19, 2024 in the amount of 292,591 for all of the directors, nominees for director and executive officers, as a group.
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64
2025 ANNUAL MEETING AND RELATED MATTERS
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When do you expect to hold the 2025 Annual Meeting of Stockholders?
We currently expect to hold the 2025 Annual Meeting of Stockholders in June 2025, at a time and location to be announced later.
How does a stockholder submit a proposal or nomination of a director candidate for the 2025 Annual Meeting of Stockholders?
The following summarizes the requirements for stockholder proposals to be considered for inclusion in next year's proxy materials.
If you intend to submit a proposal to be included in next year's proxy materials relating to the 2025 Annual Meeting of Stockholders (the "2025 Annual Meeting"), such proposal must comply with the requirements of Rule 14a-8 under the Exchange Act and the Corporate Secretary must receive your proposal on or before December 30, 2024. However, if the date of the 2025 Annual Meeting is changed by more than 30 days from the first anniversary of the date of the Annual Meeting, the deadline will instead be a reasonable time before Trevena begins to print and send its proxy materials in connection with the 2025 Annual Meeting. Submitting a stockholder proposal does not guarantee that Trevena will include the proposal in the proxy statement if the proposal does not satisfy the SEC's rules.
If you want to present your proposal at the 2025 Annual Meeting but are not proposing it pursuant to SEC Rule 14a-8 for inclusion in next year's proxy materials for that meeting, you must be eligible and provide advance written notice that sets forth the information required by Article III, Section 5 of our Amended and Restated Bylaws, as amended (the "Bylaws") and Rule 14a-19 under the Exchange Act (Rule 14a-19). Assuming the date of the 2025 Annual Meeting is not advanced or delayed in the manner described above, the Corporate Secretary must receive the required notice between February 13, 2025 and March 15, 2025.
If you would like to nominate a candidate for director at the 2025 Annual Meeting, but not to have the nomination considered for inclusion in the proxy materials for that meeting, you must be eligible and provide advance written notice that sets forth the information required by our Bylaws and Rule 14a-19. Assuming the date of the 2025 Annual Meeting is not advanced or delayed in the manner described above, the Corporate Secretary must receive the required notice between February 13, 2025 and March 15, 2025. The notice must include certain information specified in our Bylaws, including (i) your name and address, (ii) the class and number of shares of our stock which you beneficially own, (iii) the name, age, business address and residence address of the person, (iv) the principal occupation or employment of the person, (v) the class and number of shares of our stock which are owned of record and beneficially owned by the person, (vi) the date or dates on which such shares were acquired and the investment intent of such acquisition and (vii) any other information concerning the person as would be required to be disclosed in a proxy statement soliciting proxies for the election of that person as a director in an election contest (even if an election contest is not involved), or that is otherwise required to be disclosed pursuant to Section 14A under the Exchange Act including, without limitation, the requirements of Rule 14a-19 (as such rule and regulations may be amended form time to time by the SEC including any SEC Staff interpretations relating thereto), including the person's written consent to being named as a nominee and to serving as a director if elected. We may require any proposed nominee to furnish such other information as we may reasonably require to determine the eligibility of such proposed nominee to serve as an independent director of the Company or that could be material to a reasonable stockholder's understanding of the independence, or lack thereof, of such proposed nominee.
Correspondence to the Corporate Secretary may be addressed to: Corporate Secretary, Trevena, Inc., 955 Chesterbrook Boulevard, Suite 110, Chesterbrook, PA 19087. For more information, and for more detailed requirements, please refer to our Amended and Restated Bylaws, filed as Exhibit 3.2 to our Current Report on Form 8-K, filed with the SEC on February 5, 2014, as amended by that certain Amendment No 1. to Amended and Restated Bylaws of the Registrant, filed as Exhibit 3.3 to our Current Report on Form 8-K, filed with the SEC on August 1, 2022.
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2025 ANNUAL MEETING AND RELATED MATTERS (CONTINUED)
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How can I communicate with the Board of Directors?
Stockholders and interested parties may contact the Board, the Chair, the independent directors, or specific individual directors by sending written correspondence to the Board, Attention: Corporate Secretary, Trevena, Inc., 955 Chesterbrook Boulevard, Suite 110, Chesterbrook, PA 19087.
The Corporate Secretary will compile all communications other than routine commercial solicitations and opinion surveys sent to Board members and periodically submit them to the Board. Communications addressed to individual directors at the director address will be promptly submitted to such individual directors. The Corporate Secretary also will promptly advise the appropriate member of management of any concerns relating to Trevena's products or services, and the Corporate Secretary will notify the Board of the resolution of those concerns.
How do I obtain copies of Trevena's corporate governance and other company documents?
The Corporate Governance Guidelines, committee charters and Trevena's Code of Ethics are posted at www.trevena.com/investors/corporate-governance. In addition, these documents are available in print to any stockholder who submits a written request to the Corporate Secretary at the address listed above.
The Company's filings with the SEC, including its annual report on Form 10-K, are available through www.trevena.com/investors/financial-information/all-sec-filings.
If you are a stockholder and did not receive an individual copy of this year's proxy statement or annual report, we will promptly send a copy to you if you address a written request to Investor Relations, Trevena, Inc., 955 Chesterbrook Boulevard, Suite 110, Chesterbrook, PA 19087.
What is householding and how does it affect me?
If you and other residents at your mailing address own shares of Trevena stock in "street name," your broker or bank should have notified you that your household will receive only one proxy statement and annual report or notice of Internet availability of proxy materials, but each stockholder who resides at your address will receive a separate proxy card or voting instruction form. This practice is known as "householding." Unless you responded that you did not want to participate in householding, you were deemed to have consented to the process. Householding benefits both you and Trevena because it reduces the volume of duplicate information received at your household and helps Trevena reduce expenses and conserve natural resources.
If you would like to receive your own set of Trevena's proxy statement and annual report or, if applicable, your own notice of Internet availability of proxy materials now or in the future, or if you share an address with another Trevena stockholder and together both of you would like to receive only a single set of Trevena's proxy materials, please contact Broadridge, Householding Department, 51 Mercedes Way, Edgewood, NY 11717 or (800) 542-1061. The request must be made by each person in the household. Be sure to indicate your name, the name of your brokerage firm or bank, and your account number. The revocation of your consent to householding will be effective 30 days following its receipt.
66
APPENDIX A: 2023 EQUITY INCENTIVE PLAN
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TREVENA, INC.
2023 EQUITY INCENTIVE PLAN
Section 1. Purpose; Definitions. The purposes of the Trevena, Inc. 2023 Equity Incentive Plan (as amended from time to time, the "Plan") are to: (a) enable Trevena, Inc. (the "Company") and its affiliated companies to recruit and retain highly qualified employees, directors and consultants; (b) provide those employees, directors and consultants with an incentive for productivity; and (c) provide those employees, directors and consultants with an opportunity to share in the growth and value of the Company. Upon the Effective Date, no further awards shall be made under the Prior Plan (as defined below).
For purposes of the Plan, the following terms will have the meanings defined below, unless the context clearly requires a different meaning:
(a) "Affiliate" means, with respect to a Person, a Person that directly or indirectly controls, is controlled by, or is under common control with such Person.
(b) "Applicable Law" means the legal requirements relating to the administration of and issuance of securities under stock incentive plans, including, without limitation, the requirements of state corporations law, federal, state and foreign securities law, federal, state and foreign tax law, and the requirements of any stock exchange or quotation system upon which the Shares may then be listed or quoted.
(c) "Award" means an award of Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units or Cash or Other Stock Based Awards made under this Plan.
(d) "Award Agreement" means, with respect to any particular Award, the written document that sets forth the terms of that particular Award.
(e) "Board" means the Board of Directors of the Company, as constituted from time to time.
(f) "Cash or Other Stock Based Award" means an award that is granted under Section 10.
(g) "Cause" has the meaning ascribed to such term in any written agreement between the Participant and the Company defining such term and, in the absence of such agreement, such term means, with respect to a Participant, the occurrence of any of the following events: (i) such Participant's commission of any felony or any crime involving fraud, dishonesty or moral turpitude under the laws of the United States or any state thereof; (ii) such Participant's attempted commission of, or participation in, a fraud or act of dishonesty against the Company; (iii) such Participant's intentional, material violation of any contract or agreement between the Participant and the Company or of any statutory duty owed to the Company; (iv) such Participant's unauthorized use or disclosure of the Company's confidential information or trade secrets; or (v) such Participant's gross misconduct. The determination that a termination of the Participant's service is either for Cause or without Cause will be made by the Board or Committee, as applicable, in its sole and exclusive judgment and discretion. Any determination by the Company that the service of a Participant was terminated with or without Cause for the purposes of outstanding Awards held by such Participant will have no effect upon any determination of the rights or obligations of the Company or such Participant for any other purpose.
(h) "Change in Control" means the occurrence of any of the following events: (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes a "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the total power to vote for the election of directors of the Company; (ii) during any twelve month period, individuals who at the beginning of such period constitute the Board and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in Section 1(h)(i), Section 1(h)(iii), Section 1(h)(iv) or Section 1(h)(v) hereof) whose election by the Board or nomination for election by the Company's stockholders was approved by a vote of at least a majority of the directors then still in office who either were directors at the beginning of the period of whose election or nomination for election was previously approved, cease for any reason to constitute a majority thereof; (iii) the merger or consolidation of the Company with another corporation where the stockholders of the Company, immediately prior to the merger or consolidation, will not beneficially own, immediately after the merger or consolidation, shares entitling such stockholders to 50% or more of all votes to which all stockholders of the surviving corporation would be entitled in the election of directors (without consideration of the rights of any class of stock to elect directors by a separate class vote); (iv) the sale or other disposition of all or substantially all of the assets of the Company; (v) a liquidation or dissolution of the Company; or (vi) such other event deemed to constitute a "Change in Control" by the Board.
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APPENDIX A: 2023 EQUITY INCENTIVE PLAN (CONTINUED)
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Notwithstanding anything in the Plan or an Award Agreement to the contrary, to the extent necessary to comply with Section 409A of the Code, no event that, but for the application of this paragraph, would be a Change in Control as defined in the Plan or the Award Agreement, as applicable, shall be a Change in Control unless such event is also a "change in control event" as defined in Section 409A of the Code.
(i) "Code" means the Internal Revenue Code of 1986, as amended from time to time, and any successor thereto.
(j) "Committee" means the committee authorized to administer the Plan under Section 2. To the extent required under Applicable Law, the Committee shall have at least two members and each member of the Committee shall be a Non-Employee Director. Unless otherwise determined by the Board, the Compensation Committee of the Board will serve as the Committee.
(k) "Company" is defined above in this Section 1.
(l) "Compensation" is defined in Section 3(h) hereto.
(m) "Director" means a member of the Board.
(n) "Director Limit" is defined in Section 3(h) hereto.
(o) "Disability" means a condition rendering a Participant Disabled.
(p) "Disabled" has the same meaning as set forth in Section 22(e)(3) of the Code. Notwithstanding anything in the Plan or an Award Agreement to the contrary, to the extent necessary to comply with Section 409A of the Code, a Participant will not be deemed "Disabled" unless the Participant is considered Disabled within the meaning of Section 409A of the Code.
(q) "Effective Date" is defined in Section 19 hereto.
(r) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(s) "Fair Market Value" means, as of any date, the value of a Share determined as follows: (i) if the Shares are listed on any established stock exchange or a national market system (including, without limitation, the Nasdaq Global Market), the Fair Market Value of a Share will be the closing sales price for such stock as quoted on that exchange or system at the close of regular hours trading on the day of determination; (ii) if the Shares are regularly quoted by recognized securities dealers but selling prices are not reported, the Fair Market Value of a Share will be the mean between the high bid and low asked prices for Shares at the close of regular hours trading on the day of determination; or (iii) if Shares are not traded as set forth above, the Fair Market Value will be determined in good faith by the Committee taking into consideration such factors as the Committee considers appropriate, such determination by the Committee to be final, conclusive and binding.
(t) "Incentive Stock Option" means any Option intended to be an "Incentive Stock Option" within the meaning of Section 422 of the Code.
(u) "Non-Employee Director" has the meaning set forth in Rule 16b-3(b)(3)(i) promulgated by the Securities and Exchange Commission under the Exchange Act, or any successor definition adopted by the Securities and Exchange Commission.
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APPENDIX A: 2023 EQUITY INCENTIVE PLAN (CONTINUED)
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(v) "Non-Qualified Stock Option" means any Option that is not an Incentive Stock Option.
(w) "Option" means any option to purchase Shares (including an option to purchase Restricted Stock, if the Committee so determines) granted pursuant to Section 5 hereof.
(x) "Parent" means, in respect of the Company, a "parent corporation" as defined in Section 424(e) of the Code.
(y) "Participant" means an employee, consultant, Director, or other service provider of or to the Company or any of its Affiliates to whom an Award is granted.
(z) "Person" means an individual, partnership, corporation, limited liability company, trust, joint venture, unincorporated association, or other entity or association.
(aa) "Plan" is defined above in this Section 1.
(bb) "Prior Plan" means the Trevena, Inc. 2013 Equity Incentive Plan, as amended.
(cc) "Prior Plan Awards" mean awards granted under the Prior Plan.
(dd) "Restriction Period" is defined in Section 8(b)(i) hereof.
(ee) "Restricted Stock" means Shares that are subject to restrictions pursuant to Section 8 hereof.
(ff) "Restricted Stock Unit" means a right granted under and subject to restrictions pursuant to Section 9 hereof.
(gg) "Section 409A" is defined in Section 18 hereof.
(hh) "Securities Act" means the Securities Act of 1933, as amended.
(ii) "Shares" means shares of the Company's common stock, par value $0.001, subject to substitution or adjustment as provided in Section 3(e) hereof.
(jj) "Stock Appreciation Right" means a right granted under and subject to Section 6 hereof.
(kk) "Subsidiary" means, in respect of the Company, a subsidiary company as defined in Sections 424(f) and (g) of the Code.
(ll) "Vesting Conditions" is defined in Section 5(c) hereof.
Section 2. Administration. The Plan shall be administered by the Committee; provided, that, notwithstanding anything to the contrary herein, in its sole discretion, the Board may at any time and from time to time exercise any and all rights and duties of the Committee under the Plan except with respect to matters which under Applicable Law are required to be determined in the sole discretion of the Committee. Any action of the Committee in administering the Plan shall be final, conclusive and binding on all persons, including the Company, its Subsidiaries, Affiliates, their respective employees, the Participants, persons claiming rights from or through Participants and stockholders of the Company.
The Committee will have full authority to grant Awards under this Plan and determine the terms of such Awards. Such authority will include the right to:
(a) select the individuals to whom Awards are granted (consistent with the eligibility conditions set forth in Section 4);
(b) determine the type of Award to be granted;
(c) determine the number of Shares, if any, to be covered by each Award;
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APPENDIX A: 2023 EQUITY INCENTIVE PLAN (CONTINUED)
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(d) establish the terms and conditions of each Award;
(e) accelerate the vesting or exercisability of an Award;
(f) extend the period of time during which an Award may be exercised (but in no event beyond the expiration of the original Award term); and
(g) modify or amend each Award, subject to the Participant's consent if such modification or amendment would materially impair such Participant's rights.
The Committee will have the authority to adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan as it, from time to time, deems advisable; to interpret the terms and provisions of the Plan and any Award issued under the Plan (and any Award Agreement); and to otherwise take any action that may be necessary or desirable to facilitate the administration of the Plan. The Committee may correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any Award Agreement in the manner and to the extent it deems necessary to carry out the intent of the Plan.
To the extent permitted by Applicable Law and the Company's governing documents, the Committee may delegate its authority as identified herein to any individual or committee of individuals (who may, but need not be, one or more Directors or Non-Employee Directors), including without limitation the authority to grant Awards hereunder. To the extent that the Committee delegates its authority to make Awards hereunder, applicable references in the Plan to the Committee's authority to make Awards and determinations with respect thereto shall be deemed to include the Committee's delegate, but the authority to administer the Plan will otherwise remain with the Committee. The Committee may revoke any such delegation at any time for any reason with or without prior notice.
No Director will be liable for any good faith determination, act or omission in connection with the Plan or any Award.
Section 3. Shares Subject to the Plan.
(a) Shares Subject to the Plan. Subject to adjustment as provided in Section 3(e), the maximum number of Shares that may be issued in respect of Awards under the Plan is the sum of: (i) 978,595 Shares, plus (ii) up to 884,043 additional Shares subject to Prior Plan Awards pursuant to Section 3(c) hereof. Any Shares issued hereunder may consist, in whole or in part, of authorized and unissued Shares or treasury shares.
(b) Substitute Awards. Notwithstanding the foregoing, any Shares issued in respect of Awards granted in substitution for equity-based awards of an entity acquired by the Company or a Subsidiary, or with which the Company or a Subsidiary combines, will not be counted against the number of Shares available for issuance hereunder.
(c) Share Recycling. If and to the extent that an Award or a Prior Plan Award terminates, expires, is canceled or is forfeited for any reason on or after the Effective Date, the Shares associated with that Award or Prior Plan Award will become available (or again be available) for grant under the Plan. Shares withheld on or after the Effective Date in settlement of a tax withholding obligation associated with an Award or a Prior Plan Award, or in satisfaction of the exercise price payable upon exercise of an Award or Prior Plan Award, will again be available for grant under the Plan.
(d) Incentive Stock Option Limit. Subject to adjustment as provided in Section 3(e) of the Plan, the maximum aggregate number of Shares that may be issued under the Plan in respect of Incentive Stock Options is 1,862,638.
(e) Other Adjustment. In the event of any corporate event or transaction such as a merger, consolidation, reorganization, recapitalization, stock split, reverse stock split, split up, spin-off, combination of shares, exchange of shares, stock dividend, dividend in kind, or other like change in capital structure (other than ordinary cash dividends), or other similar corporate event or transaction affecting the Shares, the Committee, to prevent dilution or enlargement of Participants' rights under the Plan, shall, in such manner as it deems equitable, substitute or adjust, in its sole discretion, the number and kind of shares that may be issued under the Plan or under any outstanding Awards, the number and kind of shares subject to outstanding Awards, the exercise price, grant price or purchase price applicable to outstanding Awards, and/or any other affected terms and conditions of this Plan or outstanding Awards.
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APPENDIX A: 2023 EQUITY INCENTIVE PLAN (CONTINUED)
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(f) Change in Control. Notwithstanding anything to the contrary set forth in the Plan, upon or in anticipation of any Change in Control, the Committee may, in its sole and absolute discretion and without the need for the consent of any Participant, take one or more of the following actions contingent upon the occurrence of that Change in Control:
(i) cause any or all outstanding Awards to become vested and immediately exercisable (as applicable), in whole or in part;
(ii) cancel any Award in exchange for a substitute award;
(iii) cause any outstanding Option or Stock Appreciation Right to become exercisable for a reasonable period in advance of the Change in Control and, to the extent not exercised prior to that Change in Control, cancel that Option or Stock Appreciation Right upon closing of the Change in Control;
(iv) redeem any Restricted Stock or Restricted Stock Unit for cash and/or other substitute consideration with value equal to the Fair Market Value of an unrestricted Share on the date of the Change in Control;
(v) cancel any Option or Stock Appreciation Right in exchange for cash and/or other substitute consideration with a value equal to: (A) the number of Shares subject to that Option or Stock Appreciation Right, multiplied by (B) the difference, if any, between the Fair Market Value on the date of the Change in Control and the exercise price of that Option or the base price of the Stock Appreciation Right; provided, that if the Fair Market Value on the date of the Change in Control does not exceed the exercise price of any such Option or the base price of any such Stock Appreciation Right, the Committee may cancel that Option or Stock Appreciation Right without any payment of consideration therefor; and/or
(vi) take such other action as the Committee determines to be appropriate under the circumstances.
In the discretion of the Committee, any cash or substitute consideration payable upon cancellation of an Award may be subjected to (i) vesting terms substantially identical to those that applied to the cancelled Award immediately prior to the Change in Control, or (ii) earn-out, escrow, holdback or similar arrangements, to the extent such arrangements are applicable to any consideration paid to stockholders in connection with the Change in Control.
Notwithstanding any provision of this Section 3(f), in the case of any Award subject to Section 409A of the Code, the Committee shall only be permitted to take actions under this Section 3(f) to the extent that such actions would be consistent with the intended treatment of such Award under Section 409A of the Code.
(g) Foreign Holders. Notwithstanding any provision of the Plan to the contrary, in order to comply with the laws in countries other than the United States in which the Company and its Affiliates operate or have employees, directors and consultants, or in order to comply with the requirements of any foreign securities exchange or other Applicable Law, the Committee, in its discretion, shall have the power and authority to: (i) modify the terms and conditions of any Award granted to employees, directors and consultants outside the United States to comply with Applicable Law (including, without limitation, applicable foreign laws or listing requirements of any foreign securities exchange); (ii) establish subplans and modify exercise procedures and other terms and procedures, to the extent such actions may be necessary or advisable; provided, however, that no such subplans and/or modifications shall increase the share limitations contained in Section 3; and (iii) take any action, before or after an Award is made, that it deems advisable to obtain approval or comply with any necessary local governmental regulatory exemptions or approvals or listing requirements of any foreign securities exchange.
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APPENDIX A: 2023 EQUITY INCENTIVE PLAN (CONTINUED)
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(h) Annual Compensation Limitations for Non-Employee Directors. Beginning with the first fiscal year following the fiscal year in which the Effective Date occurs, the aggregate amount of equity and cash compensation (collectively "Compensation") payable to a Non-Employee Director with respect to a fiscal year, whether under the Plan or otherwise, for services as a Non-Employee Director, shall not exceed $750,000; provided, however, that such amount shall be $1,000,000 for the fiscal year in which the applicable Non-Employee Director is initially elected or appointed to the Board (collectively, the "Director Limit"). Equity incentive awards shall be counted towards the Director Limit in the fiscal year in which they are granted, based on the grant date fair value of such awards for financial reporting purposes (but excluding the impact of estimated forfeitures related to service-based vesting provisions). Cash fees shall be counted towards the Director Limit in the fiscal year for which they are reported as compensation in the Company's director compensation disclosures pursuant to Item 402 of Regulation S-K under the Securities Act, or a successor provision. The Director Limit shall not apply to (i) Compensation earned with respect to services a Non-Employee Director provides in a capacity other than as a Non-Employee Director, such as an advisor or consultant to the Company; and (ii) Compensation awarded by the Board to a Non-Employee Director in extraordinary circumstances, as determined by the Board in its discretion, in each case provided that the Non-Employee Director receiving such additional Compensation does not participate in the decision to award such Compensation.
Section 4. Eligibility. Employees, Directors, consultants and other persons who provide services to the Company or its Affiliates are eligible to be granted Awards under the Plan; provided that such persons are eligible to be issued securities of the Company registered on Form S-8 or exempt from registration pursuant to Rule 701 under the Securities Act, as applicable (or any successor provision). However, only employees of the Company, any Parent or a Subsidiary are eligible to be granted Incentive Stock Options.
Section 5. Options. Options granted under the Plan may be of two types: (i) Incentive Stock Options or (ii) Non-Qualified Stock Options. The Award Agreement shall state whether such grant is an Incentive Stock Option or a Non-Qualified Stock Option.
The Award Agreement evidencing any Option will incorporate the following terms and conditions and will contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Committee deems appropriate in its discretion:
(a) Option Price. The exercise price per Share under an Option will be determined by the Committee, and in the case of an Incentive Stock Option, will not be less than 100% of the Fair Market Value on the date of the grant. However, any Incentive Stock Option granted to any Participant who, at the time the Option is granted, owns, either directly and/or within the meaning of the attribution rules contained in Section 424(d) of the Code, stock possessing more than 10% of the total combined voting power of all classes of stock of the Company, will have an exercise price per Share of not less than 110% of Fair Market Value on the date of the grant.
(b) Option Term. The term of each Option will be fixed by the Committee, but no Option will be exercisable more than 10 years after the date the Option is granted. However, any Incentive Stock Option granted to any Participant who, at the time such Option is granted, owns, either directly and/or within the meaning of the attribution rules contained in Section 424(d) of the Code, stock possessing more than 10% of the total combined voting power of all classes of stock of the Company, may not have a term of more than 5 years. No Option may be exercised by any Person after the expiration of the term of the Option.
(c) Exercisability. Options will vest and be exercisable at such time or times and subject to such terms and conditions as determined by the Committee. Such terms and conditions may include the continued employment or service of the Participant, the attainment of specified individual or corporate goals, or such other factors as the Committee may determine in its discretion (the "Vesting Conditions"). The Committee may provide in the terms of an Award Agreement that the Participant may exercise the unvested portion of an Option in whole or in part in exchange for shares of Restricted Stock subject to the same vesting terms as the portion of the Option so exercised. Restricted Stock acquired upon the exercise of an unvested Option shall be subject to such additional terms and conditions as determined by the Committee.
(d) Method of Exercise. Subject to the terms of the applicable Award Agreement, the exercisability provisions of Section 5(c) and the termination provisions of Section 7 Options may be exercised in whole or in part from time to time during their term by the delivery of written notice to the Company specifying the number of Shares to be purchased. Such notice will be accompanied by payment in full of the purchase price and any taxes required to be withheld in connection with such exercise, either by certified or bank check, or such other means as the Committee may accept. The Committee may, in its discretion, permit payment of the exercise price of an Option in the form of previously acquired Shares based on the fair market value of the Shares on the date the Option is exercised or through means of a "net settlement," whereby the Option exercise price will not be due in cash and where the number of Shares issued upon such exercise will be equal to: (A) the product of (i) the number of Shares as to which the Option is then being exercised, and (ii) the excess, if any, of (a) the then current fair market value over (b) the Option exercise price, divided by (B) the then current fair market value.
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APPENDIX A: 2023 EQUITY INCENTIVE PLAN (CONTINUED)
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An Option will not confer upon the Participant any of the rights or privileges of a stockholder in the Company unless and until the Participant exercises the Option in accordance with the paragraph above and is issued Shares pursuant to such exercise. For avoidance of doubt, dividends, dividend equivalents and other distributions shall not accrue on any Shares subject to an Option.
(e) Incentive Stock Option Limitations. In the case of an Incentive Stock Option, the aggregate Fair Market Value (determined as of the time of grant) of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Participant during any calendar year under the Plan and/or any other plan of the Company, its Parent or any Subsidiary will not exceed $100,000. For purposes of applying the foregoing limitation, Incentive Stock Options will be taken into account in the order granted.
To the extent any Option does not meet such limitation, that Option will be treated for all purposes as a Non-Qualified Stock Option.
(f) Termination of Service. Unless otherwise specified in the applicable Award Agreement or as otherwise provided by the Committee at or after the time of grant, Options will be subject to the terms of Section 7 with respect to exercise upon or following termination of employment or other service.
Section 6. Stock Appreciation Right. Subject to the other terms of the Plan, the Committee may grant Stock Appreciation Rights to eligible individuals. Each Stock Appreciation Right shall represent the right to receive, upon exercise, an amount equal to the number of Shares subject to the Award that is being exercised multiplied by the excess of (i) the Fair Market Value on the date the Award is exercised, over (ii) the base price specified in the applicable Award Agreement. Distributions may be made in cash, Shares, or a combination of both, at the discretion of the Committee. The Award Agreement evidencing each Stock Appreciation Right shall indicate the base price, the term and the Vesting Conditions for such Award. A Stock Appreciation Right base price may never be less than 100% of the Fair Market Value on the date of grant. The term of each Stock Appreciation Right will be fixed by the Committee, but no Stock Appreciation Right will be exercisable more than 10 years after the date the Stock Appreciation Right is granted. Subject to the terms and conditions of the applicable Award Agreement, Stock Appreciation Rights may be exercised in whole or in part from time to time during their term by the delivery of written notice to the Company specifying the portion of the Award to be exercised. Unless otherwise specified in the applicable Award Agreement or as otherwise provided by the Committee at or after the time of grant, Stock Appreciation Rights will be subject to the terms of Section 7 with respect to exercise upon or following termination of employment or other service.
Section 7. Termination of Service. Unless otherwise specified with respect to a particular Option or Stock Appreciation Right in the applicable Award Agreement or otherwise determined by the Committee, any portion of an Option or Stock Appreciation Right that is not exercisable upon termination of service will expire immediately and automatically upon such termination and any portion of an Option or Stock Appreciation Right that is exercisable upon termination of service will expire on the date it ceases to be exercisable in accordance with this Section 7.
(a) Termination by Reason of Death. If a Participant's service with the Company or any Affiliate terminates by reason of death, any Option or Stock Appreciation Right held by such Participant may thereafter be exercised, to the extent it was exercisable at the time of his or her death or on such accelerated basis as the Committee may determine at or after grant, by the legal representative of the estate or by the legatee of the Participant, for a period expiring (i) at such time as may be specified by the Committee at or after grant, or (ii) if not specified by the Committee, then 12 months from the date of death, or (iii) if sooner than the applicable period specified under (i) or (ii) above, upon the expiration of the stated term of such Option or Stock Appreciation Right.
(b) Termination by Reason of Disability. If a Participant's service with the Company or any Affiliate terminates by reason of Disability, any Option or Stock Appreciation Right held by such Participant may thereafter be exercised by the Participant or his or her personal representative, to the extent it was exercisable at the time of termination, or on such accelerated basis as the Committee may determine at or after grant, for a period expiring (i) at such time as may be specified by the Committee at or after grant, or (ii) if not specified by the Committee, then 12 months from the date of termination of service, or (iii) if sooner than the applicable period specified under (i) or (ii) above, upon the expiration of the stated term of such Option or Stock Appreciation Right.
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APPENDIX A: 2023 EQUITY INCENTIVE PLAN (CONTINUED)
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(c) Cause. If a Participant's service with the Company or any Affiliate is terminated for Cause or if a Participant resigns at a time that there was a Cause basis for such Participant's termination: (i) any Option or Stock Appreciation Right, or portion thereof, not already exercised will be immediately and automatically forfeited as of the date of such termination, and (ii) any Shares that the Company has not yet delivered will be immediately and automatically forfeited and the Company will refund to the Participant the Option exercise price paid for such Shares, if any.
(d) Other Termination. If a Participant's service with the Company or any Affiliate terminates for any reason other than death, Disability or Cause, any Option or Stock Appreciation Right held by such Participant may thereafter be exercised by the Participant, to the extent it was exercisable at the time of such termination, or on such accelerated basis as the Committee may determine at or after grant, for a period expiring (i) at such time as may be specified by the Committee at or after grant, or (ii) if not specified by the Committee, then 90 days from the date of termination of service, or (iii) if sooner than the applicable period specified under (i) or (ii) above, upon the expiration of the stated term of such Option or Stock Appreciation Right. For avoidance of doubt, dividends, dividend equivalents and other distributions shall not accrue on any Shares subject to a Stock Appreciation Right.
Section 8. Restricted Stock.
(a) Issuance. Restricted Stock may be issued either alone or in conjunction with other Awards. The Committee will determine the time or times within which Restricted Stock may be subject to forfeiture, and all other conditions of such Awards. The purchase price for Restricted Stock may, but need not, be zero.
(b) Restrictions and Conditions. The Award Agreement evidencing the grant of any Restricted Stock will incorporate the following terms and conditions and such additional terms and conditions, not inconsistent with the terms of the Plan, as the Committee deems appropriate in its discretion:
(i) During a period commencing with the date of an Award of Restricted Stock and ending at such time or times as specified by the Committee (the "Restriction Period"), the Participant will not be permitted to sell, transfer, pledge, assign or otherwise encumber Restricted Stock awarded under the Plan. The Committee may condition the lapse of restrictions on Restricted Stock upon one or more Vesting Conditions.
(ii) While any Share of Restricted Stock remains subject to restriction, the Participant will have, with respect to the Restricted Stock, the right to vote the Shares. Unless otherwise determined by the Committee, if any cash distributions or dividends are payable with respect to the Restricted Stock, the cash distributions or dividends will be subjected to the same Restriction Period as is applicable to the Restricted Stock with respect to which such amounts are paid, or, if the Committee so determines, reinvested in additional Restricted Stock, to the extent Shares are available under Section 3 of the Plan. A Participant shall not be entitled to interest with respect to any dividends or distributions subjected to the Restriction Period. Any distributions or dividends paid in the form of securities with respect to Restricted Stock will be subject to the same terms and conditions as the Restricted Stock with respect to which they were paid, including, without limitation, the same Restriction Period.
(iii) Subject to the provisions of the applicable Award Agreement or as otherwise determined by the Committee, if a Participant's service with the Company and its Affiliates terminates prior to the expiration of the applicable Restriction Period, the Participant's Restricted Stock that then remains subject to forfeiture will then be forfeited automatically.
(c) Certificates. Upon the Award of Restricted Stock, the Committee may direct that a certificate or certificates representing the number of Shares subject to such Award be issued to the Participant or placed in a restricted stock account (including an electronic account) with the transfer agent and in either case designating the Participant as the registered owner. The certificate(s), if any, representing such shares shall be physically or electronically legended, as applicable, as to sale, transfer, assignment, pledge or other encumbrances during the Restriction Period. If physical certificates are issued, they will be held in escrow by the Company or its designee during the Restriction Period. As a condition to any Award of Restricted Stock, the Participant may be required to deliver to the Company a share power, endorsed in blank, relating to the Shares covered by such Award.
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APPENDIX A: 2023 EQUITY INCENTIVE PLAN (CONTINUED)
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Section 9. Restricted Stock Units. Subject to the other terms of the Plan, the Committee may grant Restricted Stock Units to eligible individuals and may impose one or more Vesting Conditions on such units. Each Restricted Stock Unit will represent a right to receive from the Company, upon fulfillment of any applicable conditions, an amount equal to the Fair Market Value (at the time of the distribution) of one Share. Distributions may be made in cash, Shares, or a combination of both, at the discretion of the Committee. The Award Agreement evidencing a Restricted Stock Unit shall set forth the Vesting Conditions and time and form of payment with respect to such Award. The Participant shall not have any stockholder rights with respect to the Shares subject to a Restricted Stock Unit Award until that Award vests and the Shares are actually issued thereunder; provided, however, that an Award Agreement may provide for the inclusion of dividend equivalent payments or unit credits with respect to the Award in the discretion of the Committee. Subject to the provisions of the applicable Award Agreement or as otherwise determined by the Committee, if a Participant's service with the Company terminates prior to the Restricted Stock Unit Award vesting in full, any portion of the Participant's Restricted Stock Units that then remain subject to forfeiture will then be forfeited automatically.
Section 10. Cash or Other Stock Based Awards. Subject to the other terms of the Plan, the Committee may grant Cash or Other Stock Based Awards (including Awards to receive unrestricted Shares or immediate cash payments) to eligible individuals. The Award Agreement evidencing a Cash or Other Stock Based Award shall set forth the terms and conditions of such Cash or Other Stock Based Award, including, as applicable, the term, any exercise or purchase price, performance goals, Vesting Conditions and other terms and conditions. Payment in respect of a Cash or Other Stock Based Award may be made in cash, Shares, or a combination of cash and Shares, as determined by the Committee.
Section 11. Amendments and Termination. Subject to any stockholder approval that may be required under Applicable Law, the Plan may be amended or terminated at any time or from time to time by the Board.
Section 12. Repricing. The Committee and the Board may not reprice Options or Stock Appreciation Rights without stockholder approval, whether such repricing is accomplished by (i) means of a cancellation/re-grant program pursuant to which outstanding Options or Stock Appreciation Rights are cancelled and new Options or Stock Appreciation Rights are granted in replacement with a lower exercise or base price per share, (ii) cancellation of outstanding Options or Stock Appreciation Rights with exercise prices or base prices per share in excess of the then current Fair Market Value for consideration payable in equity securities of the Company or cash, (iii) directly or indirectly reducing the exercise price or base price of outstanding Options or Stock Appreciation Rights, or (iv) any other method.
Section 13. Conditions Upon Grant of Awards and Issuance of Shares.
(a) The implementation of the Plan, the grant of any Award and the issuance of Shares in connection with the issuance, exercise or vesting of any Award made under the Plan shall be subject to the Company's procurement of all approvals and permits required by regulatory authorities having jurisdiction over the Plan, the Awards made under the Plan and the Shares issuable pursuant to those Awards.
(b) No Shares or other assets shall be issued or delivered under the Plan unless and until there shall have been compliance with all applicable requirements of Applicable Law.
(c) If the Company cannot, by the exercise of commercially reasonable efforts, obtain authority from any regulatory body having jurisdiction over the issuance or sale of Shares under this Plan, and such authority is deemed by the Company's counsel to be necessary to the lawful issuance of those Shares, the Company will be relieved of any liability for failing to issue or sell those Shares.
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APPENDIX A: 2023 EQUITY INCENTIVE PLAN (CONTINUED)
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Section 14. Limits on Transferability; Beneficiaries. No Award or other right or interest of a Participant under the Plan shall be pledged, encumbered, or hypothecated to, or in favor of, or subject to any lien, obligation, or liability of such Participant to, any party, other than the Company, any Subsidiary or Affiliate, or assigned or transferred by such Participant other than by will or the laws of descent and distribution, and such Awards and rights shall be exercisable during the lifetime of the Participant only by the Participant or his or her guardian or legal representative. Notwithstanding the foregoing, the Committee may, in its discretion, provide that Awards or other rights or interests of a Participant granted pursuant to the Plan (other than an Incentive Stock Option) be transferable, without consideration, to immediate family members (i.e., children, grandchildren or spouse), to trusts for the benefit of such immediate family members, to partnerships in which such family members are the only partners, to other similar estate planning vehicles, or to such other transferees as the Committee permits (taking into account the restrictions or requirements of applicable tax, securities and other laws). The Committee may attach to such transferability feature such terms and conditions as it deems advisable. In addition, a Participant may, in the manner established by the Committee, designate a beneficiary (which may be a person or a trust) to exercise the rights of the Participant, and to receive any distribution, with respect to any Award upon the death of the Participant. A beneficiary, guardian, legal representative or other person claiming any rights under the Plan from or through any Participant shall be subject to all terms and conditions of the Plan and any Award Agreement applicable to such Participant, except as otherwise determined by the Committee, and to any additional restrictions deemed necessary or appropriate by the Committee.
Section 15. Withholding of Taxes. No later than the date as of which an amount first becomes includible in the gross income of the Participant for federal income tax purposes with respect to any Award under the Plan, the Participant will pay to the Company, or make arrangements satisfactory to the Company regarding the payment of, any federal, state or local taxes of any kind required by law to be withheld with respect to such amount. To the extent authorized by the Committee, the required tax withholding may be satisfied by the withholding of Shares subject to the Award based on the fair market value of those Shares, as determined by the Company, but in any case not in excess of the amount determined based on the maximum statutory tax rate in the applicable jurisdiction. The obligations of the Company under the Plan will be conditioned on such payment or arrangements and the Company will have the right to deduct any such taxes from any payment of any kind otherwise due to the Participant.
Section 16. General Provisions.
(a) The Committee may require each Participant to represent to and agree with the Company in writing that the Participant is acquiring securities of the Company for investment purposes and without a view to distribution thereof and as to such other matters as the Committee believes are appropriate.
(b) The Awards, and any Shares associated therewith, shall be subject to the Company's stock ownership, securities trading, anti-hedging and other similar policies, as in effect from time to time.
(c) All certificates for Shares or other securities delivered under the Plan, if any, will be subject to such stop-transfer orders and other restrictions as the Board may deem advisable under the rules, regulations and other requirements of the Securities Act, the Exchange Act, any stock exchange upon which the Shares are then listed, and any other Applicable Law, and the Board may cause Shares or other securities to be legended to reflect those restrictions.
(d) Nothing contained in the Plan will prevent the Company from adopting other or additional compensation arrangements, subject to stockholder approval if such approval is required. Similarly, the grant of any Award will not in any way affect the right or power of the Company to make adjustments, reclassification or changes in its capital or business structure or to merge, consolidate, dissolve, liquidate, sell or transfer all or any part of its business or assets.
(e) Neither the adoption of the Plan nor the execution of any document in connection with the Plan will: (i) confer upon any employee or other service provider of the Company or an Affiliate any right to continued employment or engagement with the Company or such Affiliate, or (ii) interfere in any way with the right of the Company or such Affiliate to terminate the employment or engagement of any of its employees or other service providers at any time.
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APPENDIX A: 2023 EQUITY INCENTIVE PLAN (CONTINUED)
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Section 17. Clawbacks. The Awards (whether vested or unvested) shall be subject to rescission, cancellation or recoupment, in whole or in part, under any current or future "clawback" or similar policy of the Company that is applicable to the Participant. Notwithstanding any other provisions in this Plan, any Award which is subject to recovery under any law, government regulation or stock exchange listing requirement, will be subject to such deductions and clawback as may be required to be made pursuant to such law, government regulation or stock exchange listing requirement.
Section 18. Section 409A. All Awards are intended to be exempt from or comply with the requirements of Section 409A of the Code ("Section 409A") and should be interpreted accordingly. Nonetheless, the Company does not guaranty any particular tax treatment for any Award. For any Award that is non-qualified deferred compensation subject to Section 409A, the Committee may elect to liquidate such Award at any time in a manner intended to comply with Treas. Reg. § 1.409A-3(j)(4)(ix) or any successor provision. Notwithstanding anything to the contrary in the Plan or an Award, if at the time of a Participant's separation from service, such Participant is a "specified employee" (within the meaning of Section 409A), then any amounts payable under the Plan on account of such separation from service that would (but for this provision) be payable within six (6) months following the date of the separation from service shall instead be paid on the next business day following the expiration of such six (6) month period or, if earlier, upon the Participant's death, to the extent compliance with the requirements of Treas. Reg. § 1.409A 3(i)(2) (or any successor provision) is necessary to avoid the application of an additional tax under Section 409A to such amounts. Notwithstanding the foregoing, neither the Company nor the Committee shall have any obligation to take any action to prevent the assessment of any excise tax or penalty on any Participant under Section 409A and neither the Company nor the Committee will have any liability to any Participant for such tax or penalty.
Section 19. Term of Plan. The Plan was adopted by the Board on April 27, 2023 (the "Adoption Date"), subject to approval by the Company's stockholders (the date of such approval, the "Effective Date"). Unless the Plan shall theretofore have been terminated in accordance with Section 11, the Plan shall terminate on April 27, 2033, which is the 10-year anniversary of the Adoption Date, and no Awards shall thereafter be granted under the Plan.
Section 20. Invalid Provisions. In the event that any provision of this Plan is found to be invalid or otherwise unenforceable under any Applicable Law, such invalidity or unenforceability will not be construed as rendering any other provisions contained herein as invalid or unenforceable, and all such other provisions will be given full force and effect to the same extent as though the invalid or unenforceable provision was not contained herein.
Section 21. Governing Law. The Plan and all Awards granted hereunder will be governed by and construed in accordance with the laws and judicial decisions of the State of Delaware, without regard to the application of the principles of conflicts of laws.
Section 22. Notices. Any notice to be given to the Company pursuant to the provisions of this Plan must be given in writing and addressed, if to the Company, to its principal executive office to the attention of its Chief Business Officer (or such other Person as the Company may designate in writing from time to time), and, if to a Participant, to the address contained in the Company's personnel files, or at such other address as that Participant may hereafter designate in writing to the Company. Any such notice will be deemed duly given: if delivered personally or via recognized overnight delivery service, on the date and at the time so delivered; if sent via telecopier or email, on the date and at the time telecopied or emailed with confirmation of delivery; or, if mailed, five (5) days after the date of mailing by registered or certified mail.
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APPENDIX B: AMENDMENT NO. 1 TO 2023 EQUITY INCENTIVE PLAN (CONTINUED)
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Amendment No. 1 to
Trevena, Inc. 2023 Equity Incentive Plan
This Amendment No. 1 to the Trevena, Inc. 2023 Equity Incentive Plan (this "Amendment") is made and entered into as of________________ , 2024 (the "Effective Date") by Trevena, Inc., a Delaware corporation (the "Company").
WHEREAS, the Company previously adopted the Trevena, Inc. 2023 Equity Incentive Plan (the "Plan");
WHEREAS, unless the context clearly requires the contrary, capitalized terms that are used in this Amendment that are not otherwise defined herein shall have the meanings that the Plan ascribes to those terms;
WHEREAS, pursuant to Section 11 of the Plan, the Plan may be amended, altered, suspended and/or terminated at any time by the Company's Board of Directors (the "Board"), subject to the approval of the Company's stockholders for certain Plan amendments;
WHEREAS, Section 3 of the Plan provides that the maximum number of shares of the Company's stock, par value $0.001 per share ("Common Stock"), that may be issued pursuant to Awards granted under the Plan shall not exceed 978,595 Shares (plus up to 884,043 additional Shares subject to Prior Plan Awards pursuant to Section 3(c) thereof); and
WHEREAS, subject to and contingent upon the approval of the Company's stockholders, the Board, upon the recommendation of the Compensation Committee of the Board, has approved an amendment to the Plan to increase the maximum number of shares of Common Stock that may be issued pursuant to Awards granted under the Plan by 2,350,000 shares of Common Stock.
NOW, THEREFORE, in accordance with Section 11 of the Plan and the approval of the Company's stockholders on [●], 2024, the Plan is hereby amended, effective as of the date hereof, as follows:
1.Section 3(a) of the Plan is hereby revised and amended to read as follows:
"(a) Shares Subject to the Plan. Subject to adjustment as provided in Section 3(e), the maximum number of Shares that may be issued in respect of Awards under the Plan is the sum of: (i) 3,328,595 Shares, plus (ii) up to 884,043 additional Shares subject to Prior Plan Awards pursuant to Section 3(c) hereof. Any Shares issued hereunder may consist, in whole or in part, of authorized and unissued Shares or treasury shares.
2. Except as expressly amended by this Amendment, the Plan shall continue in full force and effect in accordance with the provisions thereof.
IN WITNESS WHEREOF, the Company has caused this Amendment to be duly executed as of the date first written above.
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APPENDIX C: CERTIFICATE OF AMENDMENT TO AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
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CERTIFICATE OF AMENDMENT
OF
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
TREVENA, INC.
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Trevena, Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY:
FIRST: The amended and restated Certificate of Incorporation, as amended on November 9, 2022 and as currently in effect, is hereby amended by deleting Article IV. A. and inserting the following in lieu thereof such that Article IV. A. shall read in its entirety as follows:
A. The Company is authorized to issue two classes of stock to be designated, respectively, "Common Stock" and "Preferred Stock." The total number of shares of all classes of capital stock which the Company shall have authority to issue is two hundred five million (205,000,000) shares, of which two hundred million (200,000,000) shares shall be Common Stock (the "Common Stock"), each having a par value of one-tenth of one cent ($0.001), and five million (5,000,000) shares shall be Preferred Stock (the "Preferred Stock"), each having a par value of one-tenth of one cent ($0.001). Effective at 5:01 p.m. Eastern Time, on [●], 2024 (the "Effective Time"), each [●] ([●]) shares of Common Stock issued and outstanding at such time shall, automatically and without any further action on the part of the Company or the holder thereof, be combined into one (1) validly issued, fully paid and non-assessable share of Common Stock, without effecting a change to the par value per share of Common Stock, subject to the treatment of fractional interests as described below (the "Reverse Stock Split"). The par value of the Common Stock following the Reverse Stock Split shall remain $0.001 per share. No fractional shares shall be issued, in connection with the Reverse Stock Split, and, in lieu thereof, the Corporation shall pay each stockholder of record at the time of effectiveness of the Reverse Stock Split who otherwise would be entitled to receive fractional shares because they hold a number of pre-Reverse Stock Split shares not evenly divisible by the number of pre-Reverse Stock Split shares for which each post-Reverse Stock Split share is to be exchanged an amount in cash equal to the fraction to which the stockholder would otherwise be entitled multiplied by the closing sales price of our Common Stock as reported on The Nasdaq Capital Market on the date on which the Effective Time occurs. Each certificate that immediately prior to the Effective Time represented shares of Common Stock (an "Old Certificate") shall thereafter represent that number of shares of Common Stock into which the shares of Common Stock represented by the Old Certificate shall have been combined, subject to the elimination of fractional share interests as described above. The Reverse Split shall also apply to any outstanding securities or rights convertible into, or exchangeable or exercisable for, Common Stock and all references to such Common Stock in agreements, arrangements, documents and plans relating thereto or any option or right to purchase or acquire shares of Common Stock shall be deemed to be references to the Common Stock or options or rights to purchase or acquire shares of Common Stock, as the case may be, after giving effect to the Reverse Split.
SECOND: That said amendment was duly adopted and approved in accordance with the provisions of Sections 141 and 242 of the General Corporation Law of the State of Delaware by the directors and stockholders of the corporation.
IN WITNESS WHEREOF, said Trevena, Inc. has caused this certificate to be signed ______________________, its Corporate Secretary, this [●] day of [●], 2024.
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TREVENA, INC.
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TREVENA, INC. 955 CHESTERBROOK BOULEVARD, SUITE 110 CHESTERBROOK, PA 19087 ATTN: JOEL SOLOMON, CORPORATE SECRETARY SCAN TO VIEW MATERIALS & VOTE VOTE BY INTERNET Before The Meeting - Go to www.proxyvote.com or scan the QR Barcode above Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time the day before meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. During The Meeting - Go to www.virtualshareholdermeeting.com/TRVN2024 You may attend the virtual meeting via the Internet and vote during the meeting. Have your proxy card in hand when you call and then follow the instructions. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the meeting date. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign, and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. The proxy card must be received before 8:30 a.m. Eastern Time on the day of the meeting. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS V49744-TBD KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED TREVENA, INC The Board of Directors recommends you vote FOR all nominees on Proposal 1: 1. To elect the Board of Directors' three (3) nominees for Class II directors named herein to hold office until the 2027 Annual Meeting of Stockholders. Nominees: 01) Jake R. Nunn 02) Marvin Johnson, Jr. 03) Mark Corrigan, M.D For All Withhold All For All Except To withhold authority to vote for any individual nominee(s), mark "For All Except" and write the number(s) of the nominee(s) on the line below. The Board of Directors recommends you vote FOR Proposals 2, 3, 4, 5 and 6 : 2. Ratification of the appointment of Ernst & Young LLP as the Company's independent registered public accounting firm for the fiscal year ending December 31, 2024. 3. Approval, on a non-binding advisory basis, of the compensation of the Company's named executive officers. 4. Approval of an amendment to the Trevena, Inc. 2023 Equity Incentive Plan (the "2023 Plan"), to increase the number of shares of common stock available for issuance under the 2023 Plan. 5. Approval of an amendment to the Company's Amended and Restated Certificate of Incorporation to effect a reverse stock split of our outstanding shares of common stock by a ratio of any whole number between 1-for-2 and 1-for-25, at any time prior to August 28, 2024, with the exact ratio to be set within that range at the discretion of our Board of Directors, without further approval or authorization of our stockholders. 6. Approval of the adjournment of the Annual Meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to approve Proposal 4 or Proposal 5. Note: To conduct any other business properly brought before the meeting. These items of business are more fully described in the Proxy Statement accompanying the Notice. The record date for the Annual Meeting is April 19, 2024. Only stockholders of record at the close of business on that date may vote at the meeting or any adjournments or postponements thereof. 1. To elect the Board of Directors' three (3) nominees for Class II directors named herein to hold office until the 2027 Annual Meeting of Stockholders. The Board of Directors recommends you vote FOR all nominees on Proposal 1: THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL MEETING, PROXY STATEMENT AND ANNUAL REPORT OF TREVENA, INC. The shares represented by this proxy, when properly executed, will be voted as directed by the undersigned. Where no direction is given when a duly executed proxy is returned, such shares will be voted at the meeting "For" all nominees named in Proposal 1, "For" Proposals 2, 3, 4, 5 and 6 and will grant authority to the proxy holder to vote upon such other business as may properly come before the meeting or any postponements or adjournments thereof. THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL MEETING, PROXY STATEMENT AND ANNUAL REPORT OF TREVENA, INC Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. ignature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date For Against Abstain
You are cordially invited to attend the Annual Meeting of Stockholders of Trevena, Inc., a Delaware corporation (the "Company"). The meeting will be held virtually on Thursday, June 13, 2024 at 8:30 a.m. Eastern Time, for the proposals given on the reverse side. Important Notice Regarding the Availability of Proxy Materials for the Stockholders' Annual Meeting to Be Held Virtually on Thursday, June 13, 2024. The Notice and Proxy Statement and Annual Report to stockholders are available at www.proxyvote.com. V49745-TBD TREVENA, INC. Annual Meeting of Stockholders June 13, 2024 at 8:30 a.m. Eastern Time This proxy is solicited by the Board of Directors The undersigned hereby appoint(s) Carrie Bourdow and Joel Solomon, or either one of them acting singly in the absence of the other, with full power of substitution, the proxy or proxies of the undersigned at the Annual Meeting of Stockholders of Trevena, Inc. to be held virtually on June 13, 2024, and any postponements or adjournments thereof, to vote all shares of stock that the undersigned would be entitled to vote if personally present in the manner indicated on the reverse side and on any other matters properly brought before the Annual Meeting of Stockholders to be held virtually on June 13, 2024 at www.virtualshareholdermeeting.com/TRVN2024 or any postponements or adjournments thereof, all as set forth in the Proxy Statement dated April 29, 2024. This proxy/voting instruction card is solicited on behalf of the Board of Directors of Trevena, Inc. pursuant to a separate Notice of Annual Meeting and Proxy Statement dated April 29, 2024 receipt of which is hereby acknowledged. When properly executed, this proxy will be voted as directed, or if no direction is given, will be voted "FOR" all nominees named in Proposal 1, "FOR" Proposals 2, 3, 4, 5 and 6 and will grant authority to the proxy holder to vote upon such other business as may properly come before the Annual Meeting or any postponements or adjournments thereof. Continued and to be signed on reverse side