arvn-def14a_20210608.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934 (Amendment No.     )

 

 

Filed by the Registrant  

 

Filed by a Party other than the Registrant  

 

 

Check the appropriate box:

 

Preliminary Proxy Statement

 

 

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

 

Definitive Proxy Statement

 

 

Definitive Additional Materials

 

 

Soliciting Material under §240.14a-12

 

ARVINAS, INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

 

No fee required.

 

 

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

 

 

 

(1)

Title of each class of securities to which transaction applies:

     

 

 

 

 

 

(2)

Aggregate number of securities to which transaction applies:

     

 

 

 

 

 

(3)

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

     

 

 

 

 

 

(4)

Proposed maximum aggregate value of transaction:

     

 

 

 

 

 

(5)

Total fee paid:

     

 

 

 

Fee paid previously with preliminary materials.

 

 

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

 

 

 

(1)

Amount Previously Paid:

     

 

 

 

 

 

(2)

Form, Schedule or Registration Statement No.:

     

 

 

 

 

 

(3)

Filing Party:

     

 

 

 

 

 

(4)

Date Filed:

     

 

 

 

 

 


 

 

ARVINAS, INC.

5 Science Park

395 Winchester Ave.

New Haven, CT 06511

NOTICE OF 2021 ANNUAL MEETING OF STOCKHOLDERS

To be held June 8, 2021

You are cordially invited to attend the 2021 Annual Meeting of Stockholders (the “Annual Meeting”) of Arvinas, Inc., which is scheduled to be held on Tuesday, June 8, 2021 at 8:30 a.m. Eastern time. In response to the continued public health precautions regarding in-person gatherings given the COVID-19 pandemic and out of concern for the health and safety of our shareholders and employees, the Annual Meeting will be held as a virtual meeting only, via live audio webcast. You will not be able to attend the Annual Meeting in person.

Only stockholders who owned common stock at the close of business on April 12, 2021 can vote at the Annual Meeting or any adjournment that may take place. At the Annual Meeting, the stockholders will consider and vote on the following matters:

 

1.

Election of four Class III directors to our board of directors, each to serve until the 2024 annual meeting of stockholders;

 

2.

Hold an advisory vote on executive compensation;

 

3.

Hold an advisory vote on the frequency of the advisory vote on executive compensation;

 

4.

Ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021; and

 

5.

Transaction of any other business properly brought before the Annual Meeting or any adjournment or postponement of the Annual Meeting.

You can find more information, including the nominees for directors, in the attached Proxy Statement. The board of directors recommends that you vote “FOR” each of the Class III director nominees (Proposal 1), “FOR” each of Proposals 2, 3, and 5, and “1 year” for the frequency of the advisory vote on executive compensation (Proposal 4).

Instead of mailing a printed copy of our proxy materials to all of our stockholders, we provide access to these materials via the Internet. This reduces the amount of paper necessary to produce these materials as well as the costs associated with mailing these materials to all stockholders. Accordingly, on or about April 26, 2021, we will begin mailing a Notice of Internet Availability of Proxy Materials, or Notice, to all stockholders of record on our books at the close of business on April 12, 2021, the record date for the Annual Meeting, and we will post our proxy materials on the website referenced in the Notice. As more fully described in the Notice, stockholders may choose to access our proxy materials on the website referred to in the Notice or may request to receive a printed set of our proxy materials. In addition, the Notice and website provide information regarding how you may request to receive proxy materials in printed form by mail, or electronically by email, on an ongoing basis.

If you are a stockholder of record, you may vote in one of the following ways:

 

Vote over the Internet, by going to www.proxyvote.com (have your Notice or proxy card in hand when you access the website);

 

Vote by Telephone, by calling the toll-free number 1-800-690-6903 (have your Notice or proxy card in hand when you call);

 

Vote by Mail, if you received (or requested and received) a printed copy of the proxy materials, by completing, signing and dating the proxy card provided to you and returning it in the prepaid envelope provided to you; or

 

Vote at the Annual Meeting.

If your shares are held in “street name,” that is, held for your account by a bank, broker or other nominee, you will receive instructions from the holder of record that you must follow for your shares to be voted.

Whether or not you plan to attend the Annual Meeting in person, we urge you to take the time to vote your shares.

 

 

By order of the Board of Directors,

 

/s/ John G. Houston, Ph.D.

John G. Houston, Ph.D.

President and Chief Executive Officer

New Haven, Connecticut

April 26, 2021

 

 


 

 

Arvinas, Inc.

Proxy Statement

 

 

Page

 

 

PROXY STATEMENT

1

 

 

IMPORTANT INFORMATION ABOUT THE ANNUAL MEETING AND VOTING

2

 

 

PROPOSAL NO. 1—ELECTION OF FOUR CLASS III DIRECTORS

5

 

 

CORPORATE GOVERNANCE

10

 

 

PROPOSAL NO. 2—ADVISORY VOTE ON EXECUTIVE COMPENSATION

16

 

 

PROPOSAL NO. 3—ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION

17

 

 

EXECUTIVE AND DIRECTOR COMPENSATION

18

 

 

PROPOSAL NO. 4—RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2021

42

 

 

REPORT OF THE AUDIT COMMITTEE

43

 

 

PRINCIPAL STOCKHOLDERS

44

 

 

TRANSACTIONS WITH RELATED PERSONS

46

 

 

STOCKHOLDER PROPOSALS

48

 

 

HOUSEHOLDING

49

 

 

OTHER MATTERS

50

 

 

 

 


 

 

ARVINAS, INC.

5 Science Park

395 Winchester Ave.

New Haven, CT 06511

203-535-1456

PROXY STATEMENT

FOR THE 2021 ANNUAL MEETING OF STOCKHOLDERS

to be held June 8, 2021

This proxy statement and the enclosed proxy card contain information about the Annual Meeting of Stockholders of Arvinas, Inc., or the Annual Meeting, to be held on Tuesday, June 8, 2021 at 8:30 a.m. Eastern time. In response to the continued public health precautions regarding in-person gatherings given the COVID-19 pandemic and out of concern for the health and safety of our shareholders and employees, the Annual Meeting will be held as a virtual meeting only, via live audio webcast. You will not be able to attend the Annual Meeting in person. The board of directors of Arvinas is using this proxy statement to solicit proxies for use at the Annual Meeting. In this proxy statement, unless expressly stated otherwise or the context otherwise requires, the use of “Arvinas,” “our,” “we” or “us” refers to Arvinas, Inc. and its wholly owned subsidiaries.

Important Notice Regarding the Availability of Proxy Materials for

the Annual Meeting of Stockholders to be Held on June 8, 2021:

This proxy statement and our 2020 Annual Report to Stockholders are

available for viewing, printing and downloading at http://www.proxyvote.com.

A copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, or 2020 Annual Report, as filed with the Securities and Exchange Commission, or SEC, except for exhibits, will be furnished without charge to any stockholder upon written request to Arvinas, Inc., 5 Science Park, 395 Winchester Ave., New Haven, CT 06511. This proxy statement and our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 are also available on the SEC’s website at http://www.sec.gov.

On or about April 26, 2021, we will mail a Notice of Internet Availability of Proxy Materials, or Notice, to our stockholders (other than those who previously requested electronic or paper delivery of proxy materials), directing stockholders to a website where they can access our proxy materials, including this proxy statement and our 2020 Annual Report, and view instructions on how to vote online or by telephone. If you would prefer to receive a paper copy of our proxy materials, please follow the instructions included in the Notice. If you have previously elected to receive our proxy materials electronically, you will continue to receive access to those materials via e-mail unless you elect otherwise.

 

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IMPORTANT INFORMATION ABOUT THE ANNUAL MEETING AND VOTING

Purpose of the Annual Meeting

At the Annual Meeting, our stockholders will consider and vote on the following matters:

 

1.

Election of four Class III directors to our board of directors, each to serve until the 2024 annual meeting of stockholders;

 

2.

Hold an advisory vote on executive compensation;

 

3.

Hold an advisory vote on the frequency of the advisory vote on executive compensation;

 

4.

Ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021; and

 

5.

Transaction of any other business properly brought before the Annual Meeting or any adjournment or postponement thereof.

As of the date of this proxy statement, we are not aware of any business to come before the Annual Meeting other than the first four items noted above.

Board of Directors Recommendation

Our board of directors unanimously recommends that you vote:

FOR the election of the three nominees to serve as Class III directors on our board of directors for a three-year term;

On an advisory basis, FOR the approval of the compensation paid to our named executive officers;

On an advisory basis, FOR the recommendation to hold future advisory votes on executive compensation every ONE YEAR; and

FOR the ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021.

Why is the Company Holding a Virtual Annual Meeting?

Due to continued public health precautions regarding in-person gatherings given the COVID-19 pandemic and out of concern for the health and safety of our shareholders and employees, we are relying on the latest technology to host a virtual meeting. We have designed our virtual format to enhance, rather than constrain, stockholder access, participation and communication. Stockholders will be able to attend the meeting online and submit questions by visiting www.virtualshareholdermeeting.com/ARVN2021. Stockholders will also be able to vote their shares electronically during the meeting.

What Happens if There Are Technical Difficulties during the Annual Meeting?

Beginning 15 minutes prior to, and during, the Annual Meeting, we will have support available to assist stockholders with any technical difficulties they may have accessing or hearing the virtual meeting. If you encounter any difficulties accessing the virtual Annual Meeting during the check-in or meeting time, please call the technical support number that will be posted on the virtual Annual Meeting log-in page.

Availability of Proxy Materials

The Notice regarding our proxy materials, including this proxy statement and our 2020 Annual Report, is being mailed to stockholders on or about April 26, 2021. Our proxy materials are also available for viewing, printing and downloading on the Internet at http://www.proxyvote.com.

Who Can Vote at the Annual Meeting

Only stockholders of record at the close of business on the record date of April 12, 2021 are entitled to receive notice of the Annual Meeting and to vote the shares of our common stock that they held on that date. As of April 12, 2021, there were 48,982,783 shares of common stock issued and outstanding. Each share of common stock is entitled to one vote on each matter properly brought before the Annual Meeting.

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Difference between a “stockholder of record” and a beneficial owner of shares held in “street name”

Stockholder of Record. If your shares are registered directly in your name with our transfer agent, Computershare, then you are considered a “stockholder of record” of those shares. In this case, your Notice has been sent to you directly by us. You may vote your shares by proxy prior to the Annual Meeting by following the instructions contained on such Notice.

Beneficial Owners of Shares Held in Street Name. If your shares are held by a bank, broker or other nominee, then you are considered the beneficial owner of those shares, which are held in “street name.” In this case, your Notice has been forwarded to you by that organization. The organization holding your account is considered the stockholder of record for purposes of voting at the Annual Meeting. As the beneficial owner, you have the right to instruct that organization as to how to vote the shares held in your account by following the instructions contained on the voting instruction card provided to you by that organization.

How to Vote

If you are a stockholder of record, you can vote your shares in one of two ways: either by proxy or in person at the Annual Meeting. If you choose to vote by proxy, you may do so by telephone, via the Internet or by mail. Each of these methods is explained below. If you hold your shares of our common stock in multiple accounts, you should vote your shares as described in each set of proxy materials you receive.

 

By Telephone. You may transmit your proxy voting instructions by calling 1-800-690-6903. You will need to have your Notice or proxy card in hand when you call.

 

Via the Internet. You may transmit your proxy voting instructions via the Internet by accessing the website specified on the enclosed proxy card. You will need to have your Notice or proxy card in hand when you access the website.

 

By Mail. If you received (or requested and received) a printed copy of the proxy materials, you may vote by proxy by completing, signing and dating the proxy card provided to you and returning it in the prepaid envelope provided to you.

 

At the Virtual Annual Meeting. The meeting will be held entirely online. To participate in the meeting, you will need the 16-digit control number included in your Notice of Proxy Materials or on the instructions that accompanied your proxy materials. The meeting webcast will begin promptly at 8:30 a.m. Eastern Time. We encourage you to access the meeting prior to the start time. Online check-in will begin at 8:15 a.m. Eastern Time, and you should allow ample time to test your computer and for the check-in procedures.

Telephone and Internet voting for stockholders of record will be available up until 11:59 p.m. Eastern time on June 7, 2021, and mailed proxy cards must be received by June 7, 2021 in order to be counted at the Annual Meeting. If the Annual Meeting is adjourned or postponed, these deadlines may be extended. The voting deadlines and availability of telephone and Internet voting for beneficial owners of shares held in “street name” will depend on the voting processes of the organization that holds your shares. Therefore, we urge you to carefully review and follow the voting instruction card and any other materials that you receive from that organization.

Ballot Measures Considered “Discretionary” and “Non-Discretionary”

If your shares are held in “street name,” your bank, broker or other nominee may under certain circumstances vote your shares even if you do not return voting instructions. Banks, brokers or other nominees are permitted to vote customers’ shares for which they have received no voting instructions on specified routine, or “discretionary,” matters, but they are not permitted to vote these shares on other non-routine, or “non-discretionary,” matters.

The election of directors (Proposal No. 1), the advisory vote on executive compensation (Proposal No. 2) and the advisory vote on the frequency of the advisory vote on executive compensation (Proposal No. 3) are considered non-discretionary matters under applicable rules. Therefore, if your shares are held in “street name,” your bank, broker or other nominee cannot vote on this matter without voting instructions from you. The ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for 2021 (Proposal No. 4) is considered a discretionary matter under applicable rules. Therefore, if your shares are held in “street name,” your bank, broker or other nominee may exercise discretionary authority to vote on this matter in the absence of voting instructions from you.

If you do not instruct your bank, broker or other nominee how to vote with respect to the election of directors (Proposal No. 1), the advisory vote on executive compensation (Proposal No. 2) and the advisory vote on the frequency of the advisory vote on executive compensation (Proposal No. 3), your bank, broker or other nominee may not vote with respect to this proposal and your shares will be counted as “broker non-votes.” Broker non-votes are shares that are held in “street name” by a bank, broker or other nominee that indicates on its proxy that it does not have or did not exercise discretionary authority to vote on a particular matter.

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Quorum

A quorum of stockholders is necessary to hold a valid meeting. Our amended and restated by-laws provide that a quorum will exist if stockholders holding a majority of the shares of stock issued and outstanding and entitled to vote are present at the meeting in person or by proxy. If a quorum is not present, the meeting may be adjourned until a quorum is obtained.

For purposes of determining whether a quorum exists, we will count as present any shares that are voted over the Internet, by telephone, by completing and submitting a proxy by mail or that are represented virtually during the Annual Meeting. Further, for purposes of establishing a quorum, we will count as present shares that a stockholder holds even if the stockholder votes to abstain or only votes on one of the proposals. In addition, we will count as present shares that are “broker non-votes.”

Votes Required

To be elected, a director must receive a plurality of the votes cast by stockholders entitled to vote at the meeting (Proposal No. 1). For each of Proposal No. 2 (to approve, on an advisory basis, the compensation of our named executive officers), Proposal No. 3 (to approve, on an advisory basis, one of three options for the frequency of holding future executive compensation advisory votes), and Proposal No. 4 (to ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the year ending December 31, 2021), the affirmative vote of the holders of a majority of the shares of common stock present or represented by proxy and voting on such matter at the Annual Meeting is required for approval (meaning, the number of votes cast “for” each proposal must exceed the number of votes cast “against” each proposal).  With respect to Proposal No. 3, if none of the three frequency options receives the vote of the holders of a majority of the shares of common stock present or represented by proxy and voting on such matter, we will consider the frequency option (1 year, 2 years or 3 years) receiving the highest number of votes cast by stockholders to be the frequency that has been recommended by stockholders.

Abstentions and broker non-votes will not be counted as votes cast or votes on any of the proposals. Accordingly, abstentions and broker non-votes will have no effect on the voting on any of the proposals.

Method of Counting Votes

Each holder of common stock is entitled to one vote at the Annual Meeting on each matter to come before the Annual Meeting, including the election of directors, for each share held by such stockholder as of the record date. Votes cast online at the Annual Meeting or by proxy by mail, via the Internet or by telephone will be tabulated by the inspector of election appointed for the Annual Meeting, who will also determine whether a quorum is present.

Revoking a Proxy; Changing Your Vote

If you are a stockholder of record, you may revoke your proxy before the vote is taken at the meeting:

 

by submitting a new proxy with a later date before the applicable deadline either signed and returned by mail or transmitted using the telephone or Internet voting procedures described in the “How to Vote” section above;

 

by voting online at the meeting, as described in the “How to Vote” section above; or

 

by filing a written revocation with our corporate Secretary.

If your shares are held in “street name,” you may submit new voting instructions by contacting your bank, broker or other nominee holding your account. You may also vote in person at the Annual Meeting, which will have the effect of revoking any previously submitted voting instructions, if you obtain a legal proxy from the organization that holds your shares as described in the “How to Vote” section above.

Your virtual attendance at the Annual Meeting will not automatically revoke your proxy, unless you vote online during the Annual Meeting.

Costs of Proxy Solicitation

We will bear the costs of soliciting proxies. In addition to solicitations by mail, our directors, officers and regular employees, without additional remuneration, may solicit proxies by telephone, facsimile, email, personal interviews and other means.

Voting Results

We plan to announce preliminary voting results at the Annual Meeting and will publish final results in a Current Report on Form 8-K to be filed with the SEC within four business days following the Annual Meeting.

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PROPOSAL NO. 1—ELECTION OF FOUR CLASS III DIRECTORS

Our board of directors currently consists of ten members. In accordance with the terms of our restated certificate of incorporation and our amended and restated by-laws, our board of directors is divided into three classes (Class I, Class II and Class III), with members of each class serving staggered three-year terms. The members of the classes are divided as follows:

 

the Class I directors are Linda Bain, John Houston, Ph.D., and Laurie Smaldone Alsup, M.D., and their term expires at the annual meeting of stockholders to be held in 2022;

 

the Class II directors are Leslie V. Norwalk, Liam Ratcliffe, M.D., Ph.D., and Timothy Shannon, M.D., and their term expires at the annual meeting of stockholders to be held in 2023; and

 

the Class III directors are Wendy Dixon, Ph.D., Edward Kennedy, Jr., Bradley Margus, and Briggs Morrison, M.D., and their term expires at the Annual Meeting.

Upon the expiration of the term of a class of directors, directors in that class will be eligible to be elected for a new three-year term at the annual meeting of stockholders in the year in which their term expires.

Our restated certificate of incorporation and our amended and restated by-laws provide that the authorized number of directors may be changed only by resolution of our board of directors. Our restated certificate of incorporation and amended and restated by-laws also provide that our directors may be removed only for cause by the affirmative vote of the holders of at least 75% of the votes that all our stockholders would be entitled to cast in an annual election of directors, and that any vacancy on our board of directors, including a vacancy resulting from an enlargement of our board of directors, may be filled only by vote of a majority of our directors then in office.

Our board of directors has nominated Wendy Dixon, Edward Kennedy, Jr., Bradley Margus, and Briggs Morrison for election as Class III directors at the Annual Meeting. Each of the nominees is presently a director, and each has indicated a willingness to continue to serve as director, if elected. If a nominee becomes unable or unwilling to serve, however, the proxies may be voted for substitute nominees selected by our board of directors.

We have no formal policy regarding board diversity, but our corporate governance guidelines provide that the background and qualifications of the members of our board of directors considered as a group should provide a significant breadth of experience, knowledge, and ability to assist our board of directors in fulfilling its responsibilities. Our priority in selection of board members is identification of members who will further the interests of our stockholders through their established records of professional accomplishment, the ability to contribute positively to the collaborative culture among our board members, knowledge of our business, understanding of the competitive landscape in which we operate and adherence to high ethical standards. Certain individual qualifications and skills of our directors that contribute to our board of directors’ effectiveness as a whole are described in the following paragraphs.

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Nominees for Election as Class III Directors

Biographical information, including principal occupation and business experience during the last five years, for our nominees for election as Class III directors at our Annual Meeting is set forth below.

 

 

Age

 

 

 

 

Wendy Dixon, Ph.D. has served as a member of our board since June 2020. Dr. Dixon has been the principal of Great Meadow Consultancy, a life sciences consultancy firm, since July 2009. Dr. Dixon has also been a member of the Industry Advisory Board of Longitude Capital, a venture capital firm, since March 2015. From November 2010 to January 2012, she was a senior advisor to The Monitor Group, now Monitor Deloitte, the global strategy consulting practice of Deloitte Consulting LLP. Dr. Dixon was Chief Marketing Officer and President, Global Marketing for Bristol Myers Squibb, a biopharmaceutical company, and served on its Executive Committee from 2001 to 2009. She was Senior Vice President, Marketing at Merck & Co., a pharmaceutical company, from 1996 to 2001 and, prior to that, held executive management positions at West Pharmaceuticals, Osteotech and Centocor and various positions in marketing, regulatory affairs, project management and as a biochemist at SmithKline and French Pharmaceuticals Co.(now GlaxoSmithKline). Dr. Dixon currently serves on the board of directors of the publicly-traded companies Alkermes plc, bluebird bio, Inc. and Incyte Corporation, and previously served as a member of the board of directors of the publicly-traded companies Ardea Biosciences, Inc., Dentsply International, Inc., Furiex Pharmaceuticals, Inc., Orexigen Therapeutics, Inc., Sesen Bio, Inc. and Voyager Therapeutics, Inc. Dr. Dixon received her B.Sc., M.Sc. and Ph.D. from the University of Cambridge, UK. We believe that Dr. Dixon is qualified to serve on our board due to her extensive experience in the pharmaceutical and biotechnology industries, combining a technical background with experience in drug development, regulatory affairs and marketing. Dr. Dixon’s service on other company boards of directors provides experience relevant to good corporate governance practices.

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Edward Kennedy, Jr. has served as a member of our board of directors since July 2018. Mr. Kennedy has been a Partner and Member of the Health Care and Life Sciences practice of Epstein Becker & Green, P.C., a law firm with a focus on healthcare and life science, since January 2014. He counsels healthcare companies on the legal, reimbursement, coding and coverage issues facing providers, payers and the life sciences industry. Previously, Mr. Kennedy served as the Co-Founder and President of Marwood Group, a healthcare focused strategic advisory and financial services firm, from January 2001 to December 2013. Mr. Kennedy serves as Board Chair of the American Association of People with Disabilities. He also served as a State Senator in the Connecticut General Assembly from January 2015 to January 2019. Mr. Kennedy currently serves on the board of directors of the publicly-traded company InnovAge Holding Corp. Mr. Kennedy holds a J.D. from the University of Connecticut School of Law, an M.E.S. from the Yale School of Forestry and Environmental Studies and a B.A. from Wesleyan University. We believe Mr. Kennedy is qualified to serve on our board due to his extensive experience as a policymaker, legislator and healthcare attorney, as well as his service on boards of private companies in the healthcare space.

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Bradley Margus has served as a member of our board of directors since November 2013. Mr. Margus co-founded Cerevance, Inc., a clinical-stage drug development company, and has served as its Chief Executive Officer since October 2016. Mr. Margus also served as the Chief Executive Officer of Genome Bridge, a non-profit subsidiary of the Broad Institute of Massachusetts Institute of Technology and Harvard University, from January 2013 to June 2015 and as a co-founder and the Chief Executive Officer of Envoy Therapeutics from October 2009 to November 2012, when it was acquired by Takeda Pharmaceuticals. Mr. Margus holds an M.B.A. from Harvard University and a B.A. in government and business from George Washington University. We believe Mr. Margus is qualified to serve on our board due to his extensive executive leadership experience and his knowledge of the life sciences industry.

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Briggs Morrison, M.D. has served as a member of our board of directors since June 2018. Prior to joining our board of directors, Dr. Morrison was a member of our Scientific Advisory Board from August 2016 to June 2018. Dr. Morrison has served as Chief Executive Officer and a member of the board of directors of Syndax Pharmaceuticals Inc., a publicly-traded biopharmaceutical company, since June 2015. Dr. Morrison has also served as Executive Partner at MPM Capital, Inc. since June 2015. Previously, Dr. Morrison was the Chief Medical Officer and Head of Global Medicines Development at AstraZeneca, a biopharmaceutical company, from January 2012 to June 2015. Dr. Morrison currently serves on the board of directors of the publicly-traded company Repare Therapeutics, and previously served on the board of directors of the publicly-traded companies Codiak Biosciences, Inc., NextCure, Inc., and Oncorus, Inc. Dr. Morrison holds an M.D. from the University of Connecticut Medical School and a B.S. in biology from Georgetown University. He completed residency training in Internal Medicine at the Massachusetts General Hospital and a fellowship in Medical Oncology at the Dana-Farber Cancer Institute. We believe Dr. Morrison is qualified to serve on our board due to his extensive executive leadership experience, his medical background and training, and his service on the boards of other public and private biopharmaceutical and biotechnology companies.

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The board of directors recommends voting “FOR” the election of Wendy Dixon Ph.D., Edward Kennedy, Jr., Bradley Margus and Briggs Morrison M.D. as Class III directors, for a three-year term ending at the annual meeting of stockholders to be held in 2024.

Any properly submitted proxy will be voted in favor of the nominees unless a contrary specification is made in the proxy. The nominees have consented to serve as directors if elected. However, if any nominee is unable to serve or for good cause will not serve as a director, the persons named in the proxy intend to vote in their discretion for one or more substitutes who will be designated by our board of directors.

Directors Continuing in Office

Biographical information, including principal occupation and business experience during the last five years, for our directors continuing in office after the Annual Meeting is set forth below.

Class I Directors (Term Expires at 2022 Annual Meeting)

 

 

Age

 

 

Linda Bain has served as a member of our board of directors since June 2020. Ms. Bain has been Chief Financial Officer of Codiak BioSciences, Inc., a biopharmaceutical company, since December 2015.  Previously, Ms. Bain served as Chief Financial Officer of Avalanche Biotechnologies, Inc., a gene therapy company, from April 2014 to November 2015, where she led a successful initial public offering, or IPO, and follow-on financing. Additionally, she served as Vice President of Finance, Business Operations at bluebird bio, Inc., a gene therapy biotechnology company, from October 2011 to March 2014, and as the Principal Accounting Officer from June 2013 to March 2014 where she led a successful IPO. Prior to bluebird bio, Ms. Bain held senior roles at Genzyme Corporation, a biotechnology company, and was Vice President of Finance, Global Manufacturing and Operations, and Vice President of Finance, Genzyme Genetics. Earlier in her career she held senior roles at Fidelity Investments, AstraZeneca, and Deloitte & Touche LLP. Ms. Bain currently serves on the board of directors of the publicly traded company Autolus Therapeutics plc. Ms. Bain is a Certified Public Accountant and earned a Bachelor of Science in Accounting and Business Administration and an Honors degree in Accounting and Business Administration from the University of the Free State, Bloemfontein, South Africa. We believe Ms. Bain is qualified to serve on our board due to her extensive executive leadership experience, knowledge of the life sciences industry, and her work with other public and private biopharmaceutical and biotechnology companies.

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John Houston, Ph.D. has served as a member of our board of directors and as our President and Chief Executive Officer since September 2017. Dr. Houston served as our President of Research and Development and Chief Scientific Officer from January 2017 to September 2017 and has functioned as our principal executive officer since February 2017. Prior to joining Arvinas, Dr. Houston served as Senior Vice President of Specialty Discovery and R&D Site Evolution at Bristol Myers Squibb Company, a biopharmaceutical company, from September 2015 to August 2016, and as Senior Vice President Disease Sciences and Biologics from October 2010 to September 2015. Dr. Houston holds a Ph.D. in microbial biochemistry from Heriot-Watt University, Edinburgh and a B.Sc. in medical microbiology from the University of Glasgow. We believe Dr. Houston is qualified to serve on our board due to his scientific and historical experience with us gained from serving as our President and Chief Executive Officer, combined with his previous scientific training and qualifications and the skills and experience he has developed during his extensive career in the life sciences industry.

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Laurie Smaldone Alsup, M.D. has served as a member of our board of directors since November 2019. Dr. Smaldone Alsup has served as Chief Scientific Officer and Chief Medical Officer for NDA Group, a regulatory and drug development consulting firm, since March 2016, when NDA Group merged with PharmApprove, LLC. Dr. Smaldone Alsup served as President and Chief Scientific Officer of PharmApprove, LLC, a regulatory communications consultancy firm and division of Taft and Partner, from August 2011 to March 2016. In addition, she served as Chief Executive Officer of Phytomedics, Inc., an early stage company focused on arthritis and inflammation, from 2008 to 2011. Prior to that, Dr. Smaldone Alsup spent over 20 years at Bristol Myers Squibb, a biopharmaceutical company, in roles of increasing responsibility in clinical development, regulatory strategy, and corporate risk management including Senior Vice President, Global Regulatory Science. Dr. Smaldone Alsup currently serves on the board of directors of the publicly-traded companies Blackberry Ltd., Kinnate Biopharma Inc. and Theravance Biopharma, Inc. and previously served as a member of the board of directors of the publicly-traded company Kalobios Pharmaceuticals, Inc. Dr. Smaldone Alsup holds an M.D. from the Yale School of Medicine and a B.A. in biology from Fordham College. We believe Dr. Smaldone Alsup is qualified to serve on our board due to her extensive regulatory and clinical experience in the life sciences industry, senior management experience in several companies in our industry and demonstrated leadership in her field.

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Class II Directors (Term Expires at 2023 Annual Meeting)

 

 

Age

 

 

Leslie V. Norwalk Esq. has served as a member of our board of directors since July 2019. Ms. Norwalk has served as strategic counsel to Epstein Becker & Green, P.C., a law firm with a focus on healthcare and life science, and two healthcare consulting agencies, EBG Advisors, Inc. and National Health Advisors, since September 2007. Additionally, since 2008, Ms. Norwalk has served as an advisor to several private equity firms. From 2006 to 2007, she was the acting administrator of the Centers for Medicare & Medicaid Services, where she managed the operations of federal health care programs, including Medicare and Medicaid. From 2002 to 2005, she was the agency's deputy administrator. Prior to that, Ms. Norwalk practiced law with Epstein Becker & Green, P.C., from 1996 to 2001. Ms. Norwalk also previously served in the George H.W. Bush Administration in the White House Office of Presidential Personnel and the Office of the US Trade Representative. Ms. Norwalk currently serves on the boards of directors of the publicly-traded companies Magellan Health, Inc., Providence Service Corporation, NuVasive, Inc., and Neurocrine Biosciences, Inc. and previously served on the board of directors of Endologix, Inc., Volcano Corporation and Press Ganey Holdings, Inc. Ms. Norwalk holds a  J.D. from the George Mason University School of Law and a B.A. from Wellesley College. We believe Ms. Norwalk is qualified to serve on our board due to her knowledge of, and experience with, the healthcare industry and government regulations.

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Liam Ratcliffe, M.D., Ph.D. has served as a member of our board of directors since October 2015. Dr. Ratcliffe has been Head of Access Biotechnology, a privately held group, since April 2019. From September 2008 to March 2019, Dr. Ratcliffe was a Managing Director and Member of New Leaf Venture Partners LLC, a venture capital firm. Previously, Dr. Ratcliffe was Senior Vice President and Development Head for Neuroscience, as well as Worldwide Head of Clinical Research and Development at Pfizer, Inc., a biopharmaceutical company. Dr. Ratcliffe currently serves on the board of directors of the publicly-traded company Passage Bio, Inc. and previously served on the board of directors of the publicly-traded companies Aptinyx, Inc., Array BioPharma Inc., Deciphera Pharmaceuticals, Inc., Edge Therapeutics, Inc. and Unum Therapeutics, Inc. Dr. Ratcliffe holds a Ph.D. in immunology and an M.D. from the University of Cape Town and an M.B.A. from the University of Michigan. We believe Dr. Ratcliffe is qualified to serve on our board due to his extensive experience in the venture capital industry, his medical and scientific background and training, and his service on the boards of directors of public and private biopharmaceutical companies.

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Timothy Shannon, M.D. has served as the Chairperson and a member of our board of directors since July 2013. Dr. Shannon has been a Non-Managing Member of Canaan Partners IX LLC, a Managing Member of Canaan Partners X LLC, and a Managing Member of Canaan Partners XI LLC, entities affiliated with Canaan Partners, a venture capital firm, since November 2009. From November 2010 to September 2013, Dr. Shannon was the President and Chief Executive Officer of Aldea Pharmaceuticals, a biotechnology company. Dr. Shannon was also Chief Executive Officer of Curagen Corporation from 2007 to 2009 and Chief Medical Officer at Curagen from 2002 to 2007. From 1992 to 2002, Dr. Shannon served in various senior research and development roles at Bayer Healthcare, including Senior Vice President of Worldwide Clinical Development. Dr. Shannon currently serves on the boards of directors of the publicly-traded company Ideaya Biosciences, Inc. and he previously served as a member of the boards of directors of the publicly-traded companies Curagen Corporation, Celldex Therapeutics, Inc., CytomX Therapeutics, Inc. and Nextcure, Inc. Dr. Shannon holds an M.D. from the University of Connecticut and a B.A. in chemistry from Amherst College. Dr. Shannon also served as our interim Chief Executive Officer from July 2013 to December 2014 during which period he was not entitled to severance pay, long-term health and pension benefits or other such standard provisions typically contained in contracts of permanent, non-temporary executives. We believe Dr. Shannon is qualified to serve on our board due to his extensive experience in the venture capital industry, his executive leadership experience, his medical background and training, and his service on the boards of other public and private biopharmaceutical companies.

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There are no family relationships between or among any of our directors or executive officers. The principal occupation and employment during the past five years of each of our directors was carried on, in each case except as specifically identified above, with a corporation or organization that is not a parent, subsidiary or other affiliate of us. There is no arrangement or understanding between any of our directors and any other person or persons pursuant to which he or she is to be selected as a director.

There are no material legal proceedings to which any of our directors is a party adverse to us or any of our subsidiaries or in which any such person has a material interest adverse to us or any of our subsidiaries. Phytomedics, Inc., where Dr. Smaldone Alsup served as chief executive officer, filed a voluntary petition for relief under Chapter 7 of the U.S. Bankruptcy Code in May 2011.

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Executive Officers Who Are Not Directors

Biographical information for our executive officers who are not directors is listed below.

 

 

Age

 

 

Sean Cassidy has served as our Chief Financial Officer since July 2013. Prior to joining Arvinas, Mr. Cassidy served as the Chief Financial Officer of Axerion Therapeutics, Inc., a biotechnology company, from June 2010 to June 2013. He was also the Chief Financial Officer of Curagen Corporation, a biopharmaceutical company, from January 2008 to December 2009. Mr. Cassidy is a certified public accountant and began his career at Deloitte & Touche LLP. Mr. Cassidy holds an M.B.A and a B.S. in Accounting from the University of Connecticut.

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Ronald Peck, M.D. has served as our Chief Medical Officer since July 2019.  Prior joining Arvinas, Dr. Peck served as Senior Vice President, Clinical Research at Tesaro, Inc., a biopharmaceutical company, from April 2017 to July 2019. He was also Chief Medical Officer of Kolltan Pharmaceuticals, Inc., a biopharmaceutical company, from August 2015 to December 2016. Dr. Peck served as Vice President, Yervoy Global Development Lead at Bristol Myers Squibb, a biopharmaceutical company, from December 2011 to May 2015. Dr. Peck holds an M.D. from Thomas Jefferson University Medical College and a B.S. in chemistry from Georgetown University.

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Ian Taylor, Ph.D. has served as our Chief Scientific Officer since March 2019. Dr. Taylor served as our Senior Vice President, Biology from January 2018 to March 2019, Vice President, Biology from August 2016 through December 2017, and Vice President, Pharmacology and Translational Medicine from June 2016 to July 2016. Immediately prior to joining Arvinas, Dr. Taylor served as Senior Director, Early Development Team Leader at Pfizer Inc., a biopharmaceutical company, from February 2007 to May 2016. Dr. Taylor holds a Ph.D. in molecular biology and genetics from Harvard University and a B.A. in Biochemistry from Bowdoin College.

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CORPORATE GOVERNANCE

Director Nomination Process

Our nominating and corporate governance committee is responsible for identifying individuals qualified to serve as directors, consistent with criteria approved by our board, and recommending the persons to be nominated for election as directors, except where we are legally required by contract, law or otherwise to provide third parties with the right to nominate.

The process followed by our nominating and corporate governance committee to identify and evaluate director candidates includes requests to board members and others for recommendations, meetings from time to time to evaluate biographical information and background material relating to potential candidates and interviews of selected candidates by members of the committee and our board. The qualifications, qualities and skills that our nominating and corporate governance committee believes must be met by a committee-recommended nominee for a position on our board of directors are as follows:

 

Nominees should have a reputation for integrity, honesty and adherence to high ethical standards.

 

Nominees should have demonstrated business acumen, experience and ability to exercise sound judgments in matters that relate to our current and long-term objectives and should be willing and able to contribute positively to our decision-making process.

 

Nominees should have a commitment to understand our company and our industry and to regularly attend and participate in meetings of our board of directors and its committees.

 

Nominees should have the interest and ability to understand the sometimes conflicting interests of our various constituencies, which include stockholders, employees, customers, governmental units, creditors and the general public, and to act in the interests of all stockholders.

 

Nominees should not have, nor appear to have, a conflict of interest that would impair the nominee’s ability to represent the interests of all of our stockholders and to fulfill the responsibilities of a director.

 

Nominees shall not be discriminated against on the basis of race, religion, national origin, sex, sexual orientation, disability or any other basis proscribed by law. The value of diversity on our board of directors is considered.

 

Nominees should normally be able to serve for at least five years before reaching the age of 75.

The nominating and corporate governance committee does not have a formal policy with respect to diversity, but believes that our board of directors, taken as a whole, should embody a diverse set of skills, experiences and backgrounds. In this regard, the nominating and corporate governance committee also takes into consideration the diversity (for example, with respect to gender, race and national origin) of our board members.

The nominating and corporate governance committee may use a third party search firm in those situations where particular qualifications are required or where existing contacts are not sufficient to identify an appropriate candidate.

At the Annual Meeting, stockholders will be asked to consider the election of Dr. Dixon who has been nominated for election as a director for the first time.  Dr. Dixon was appointed to the board in 2020.  She was initially recommended by the nominating and corporate governance committee.

Stockholders may recommend individuals to the nominating and corporate governance committee for consideration as potential director candidates. Any such proposals should be submitted to our corporate secretary at our principal executive offices and should include appropriate biographical and background material to allow the nominating and corporate governance committee to properly evaluate the potential director candidate and the number of shares of our stock beneficially owned by the stockholder proposing the candidate. The specific requirements for the information that is required to be provided for such recommendations to be considered are specified in our amended and restated by-laws and must be received by us no later than the date referenced below under the heading “Stockholder Proposals.” Assuming that biographical and background material has been provided on a timely basis, any recommendations received from stockholders will be evaluated in the same manner as potential nominees proposed by the nominating and corporate governance committee. If our board of directors determines to nominate a stockholder-recommended candidate and recommends his or her election, then his or her name will be included on our proxy card for the next annual meeting.

Director Independence

Rule 5605 of the Nasdaq Listing Rules requires a majority of a listed company’s board of directors to comprised independent directors within one year of listing. In addition, the Nasdaq Listing Rules require that, subject to specified exceptions, each member of a listed company’s audit, compensation and nominating and corporate governance committees be independent under the Securities Exchange

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Act of 1934, as amended, or the Exchange Act. Audit committee members must also satisfy independence criteria set forth in Rule 10A-3 under the Exchange Act, and compensation committee members must also satisfy the independence criteria set forth in Rule 10C-1 under the Exchange Act. Under Rule 5605(a)(2), a director will only qualify as an “independent director” if, in the opinion of our board of directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In order to be considered independent for purposes of Rule 10A-3, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee, accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries or otherwise be an affiliated person of the listed company or any of its subsidiaries. In order to be considered independent for purposes of Rule 10C-1, the board must consider, for each member of a compensation committee of a listed company, all factors specifically relevant to determining whether a director has a relationship to such company which is material to that director’s ability to be independent from management in connection with the duties of a compensation committee member, including, but not limited to: the source of compensation of the director, including any consulting, advisory or other compensatory fee paid by such company to the director; and whether the director is affiliated with the company or any of its subsidiaries or affiliates. In March 2021, our board of directors undertook a review of the independence of each director. Based upon information requested from and provided by each director concerning his or her background, employment and affiliations, including family relationships, our board of directors has determined that each of Messrs. Kennedy and Margus, Mss. Bain and Norwalk and Drs. Dixon, Morrison, Ratcliffe, Shannon and Smaldone Alsup is an “independent director” as defined under Nasdaq Listing Rules. Our board of directors previously made a similar determination of independence with respect to Jakob Loven, who served as a director until June 2020. Dr. Houston is not an independent director under these rules because he is our President and Chief Executive Officer. Our board of directors has also determined that Ms. Bain, Mr. Margus and Ms. Norwalk, who comprise our audit committee, and Drs. Shannon, Ratcliffe, and Smaldone Alsup, who comprise our compensation committee, satisfy the independence standards for such committees established by the SEC and the Nasdaq Listing Rules, as applicable. In making such determination, our board of directors considered the relationships that each such non-employee director has with our company and all other facts and circumstances our board of directors deemed relevant in determining independence, including the beneficial ownership of our capital stock by each non-employee director.

Board Committees

Our board of directors has established an audit committee, a compensation committee, and a nominating and corporate governance committee. Each of the audit committee, compensation committee, and nominating and corporate governance committee operates under a charter, and each such committee reviews its respective charter at least annually. A current copy of the charter for each of the audit committee, compensation committee, and the nominating and corporate governance committee is posted on the corporate governance section of the “Investors + Media” section on our website, which is located at http://www.arvinas.com.

Audit Committee

The members of our audit committee are Linda Bain, Bradley Margus and Leslie Norwalk. Ms. Bain is the chair of our audit committee. Our board of directors has determined that each of Ms. Bain, Mr. Margus and Ms. Norwalk is independent within the meaning of Rule 10A-3 under the Exchange Act. Our board of directors has determined that each of Ms. Bain and Mr. Margus is an “audit committee financial expert” as defined in applicable SEC rules. Our board of directors believes that the composition of our audit committee meets the requirements for independence under current Nasdaq and SEC rules and regulations. Our audit committee assists our board of directors in its oversight of our accounting and financial reporting process and the audits of our consolidated financial statements. The audit committee met six times during the year ended December 31, 2020, including telephonic and videoconference meetings. Our audit committee’s responsibilities include:

 

appointing, approving the compensation of, and assessing the independence of our registered public accounting firm;

 

overseeing the work of our independent registered public accounting firm, including through the receipt and consideration of reports from that firm;

 

reviewing and discussing with management and our independent registered public accounting firm our annual and quarterly financial statements and related disclosures;

 

monitoring our internal control over financial reporting, disclosure controls and procedures and code of business conduct and ethics;

 

overseeing our internal audit function, if any;

 

overseeing our risk assessment and risk management policies;

 

establishing policies regarding hiring employees from our independent registered public accounting firm and procedures for the receipt and retention of accounting related complaints and concerns;

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meeting independently with our internal auditing staff, if any, our independent registered public accounting firm and management;

 

reviewing and approving or ratifying any related person transactions; and

 

preparing the audit committee report required by Securities and Exchange Commission, or SEC, rules.

All audit services to be provided to us and all non-audit services to be provided to us by our registered public accounting firm must be approved in advance by our audit committee.

Compensation Committee

The members of our compensation committee are Liam Ratcliffe, M.D., Ph.D., Timothy Shannon, M.D. and Laurie Smaldone Alsup, M.D. Dr. Shannon is the chair of our compensation committee. Our board of directors has determined that each of Drs. Ratcliffe, Shannon and Smaldone Alsup is independent within the meaning of Rule 10C-1 under the Exchange Act. Our compensation committee assists our board of directors in the discharge of its responsibilities relating to the compensation of our executive officers. The compensation committee met five times during the year ended December 31, 2020, including telephonic and videoconference meetings. Our compensation committee’s responsibilities include:

 

reviewing and approving, or making recommendations to our board of directors with respect to, the compensation of our chief executive officer and our other executive officers;

 

overseeing an evaluation of our senior executives;

 

overseeing and administering our cash and equity incentive plans;

 

reviewing and making recommendations to our board of directors with respect to director compensation;

 

reviewing and discussing annually with management our “Compensation Discussion and Analysis” disclosure if and to the extent then required by SEC rules; and

 

preparing the compensation committee report if and to the extent then required by SEC rules.

The compensation committee meets regularly in executive session. However, from time to time, various members of management and other employees, as well as outside advisors or consultants, may be invited by the compensation committee to make presentations, to provide financial or other background information or advice, or to otherwise participate in compensation committee meetings. No officer may participate in, or be present during, any deliberations or determinations of the compensation committee regarding the compensation for such officer or any immediate family member of such officer. The charter of the compensation committee grants the compensation committee full access to all of our books, records, facilities, and personnel, as well as authority to obtain, at our expense, advice and assistance from internal and external legal, accounting, or other advisors and consultants, and other external resources that the compensation committee considers necessary or appropriate in the performance of its duties. In particular, the compensation committee may, in its sole discretion, retain compensation consultants to assist in its evaluation of executive and director compensation, including the authority to approve the consultant’s reasonable fees and other retention terms.

The compensation committee engaged Radford, an AON Hewitt Company, as its compensation consultant during 2020. Our compensation committee considered the relationship that Radford has with us, the members of our board of directors and our executive officers. Based on the committee’s evaluation, the compensation committee has determined that no conflicts of interest exist between the company and Radford.

Radford assisted the committee in conducting a competitive compensation assessment for our executive officers for the fiscal year ended December 31, 2020. In evaluating the total compensation of our executive officers, the compensation committee, with the assistance of Radford, established a peer group of 22 publicly traded companies in the biopharmaceutical industry that comprised companies whose market capitalization, number of employees, maturity of product development pipeline and area of therapeutic focus are similar to ours.

Radford also supplemented the peer group information with published survey data, which provided a broader market representation of companies and deeper position reporting.

Historically, our compensation committee reviews all compensation components including base salary, bonus, benefits, equity incentives and other perquisites, as well as severance arrangements, change-in-control benefits and other forms of executive officer compensation and provides a recommendation on the compensation of our Chief Executive Officer to our board of directors. In addition, the compensation committee also considers matters related to individual compensation, such as compensation for new executive hires, as well as high-level strategic issues, such as the efficacy of our compensation strategy, potential modifications to that

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strategy, and new trends, plans, or approaches to compensation, at various meetings throughout the year. The compensation committee also makes recommendations to our board of directors regarding the compensation of non-employee directors and has the authority to administer our equity-based plans.

Under its charter, the compensation committee may form, and delegate authority to, subcommittees, consisting of independent directors, as it deems appropriate. Pursuant to our 2018 Stock Incentive Plan, the compensation committee has delegated to our Chief Executive Officer the authority to approve grants of stock options to new hire employees below the level of Vice President, subject to certain limitations for each level of employment and an annual aggregate maximum amount of awards that can be granted pursuant to such delegated authority.

Nominating and Corporate Governance Committee

The members of our nominating and corporate governance committee are Wendy Dixon, Ph.D., Edward Kennedy, Jr. and Briggs Morrison, M.D. Dr. Morrison is the chair of our nominating and corporate governance committee. The nominating and corporate governance committee met four times during the year ended December 31, 2020, including telephonic and videoconference meetings. Our nominating and corporate governance committee’s responsibilities include:

 

identifying individuals qualified to become members of our board of directors;

 

recommending to our board of directors the persons to be nominated for election as directors and to each of our board’s committees;

 

reviewing and making recommendations to our board with respect to our board leadership structure;

 

reviewing and making recommendations to our board with respect to management succession planning;

 

developing and recommending to our board of directors corporate governance principles; and

 

overseeing an annual evaluation of our board of directors.

Compensation Committee Interlocks

During 2020, the members of our compensation committee were Liam Ratcliffe, M.D., Ph.D., Timothy Shannon, M.D. and Laurie Smaldone Alsup, M.D.  None of our executive officers serves, or in the past has served, as a member of the board of directors or compensation committee (or other committee serving an equivalent function) of any entity that has one or more of its executive officers serving as a member of our board of directors or our compensation committee.  None of the members of our compensation committee is currently an officer or employee of our company.  Dr. Shannon previously served as our interim Chief Executive Officer from July 2013 to December 2014.

Board and Committee Meetings Attendance

The full board of directors met eight times during 2020. During 2020, each member of the board of directors attended in person or participated in 75% or more of the aggregate of (i) the total number of meetings of the board of directors (held during the period for which such person has been a director) and (ii) the total number of meetings held by all committees of the board of directors on which such person served (during the periods that such person served).

Director Attendance at Annual Meeting of Stockholders

Although we do not have a formal policy regarding attendance by members of our board of directors at our annual meeting of stockholders, we encourage all of our directors to attend. All of our directors attended our 2020 annual meeting of stockholders.

Code of Business Conduct and Ethics

We have adopted a written code of business conduct and ethics that applies to our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of the code is posted under the heading “Corporate Governance” on the Investors + Media section of our website, which is located at http://www.arvinas.com. If we make any substantive amendments to, or grant any waivers from, the code of business conduct and ethics for any officer or director, we will disclose the nature of such amendment or waiver on our website or in a current report on Form 8-K.

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Corporate Governance Guidelines

Our board of directors has adopted corporate governance guidelines to assist in the exercise of its duties and responsibilities and to serve the best interests of our company and our stockholders. The guidelines provide that:

 

our board’s principal responsibility is to oversee the management of our company;

 

except as required by Nasdaq rules, a majority of the members of our board must be independent directors;

 

the independent directors meet in executive session at least twice a year;

 

directors have full and free access to management and, as necessary, independent advisors; and

 

our nominating and corporate governance committee will oversee annual self-evaluations of the board to determine whether it and its committees are functioning effectively.

A copy of the corporate governance guidelines is posted under the heading “Corporate Governance” on the Investors + Media section of our website, which is located at http://www.arvinas.com.

Board Leadership Structure and Board’s Role in Risk Oversight

Our corporate governance guidelines provide that the roles of chairperson of the board and chief executive officer may be separated or combined. Our board of directors has considered its leadership structure and determined that, at this time, the roles of chairperson of the board of directors and chief executive officer should be separate. Separating the chairperson and the chief executive officer positions allows our Chief Executive Officer, Dr. Houston, to focus on running the business, while allowing our chairperson of the board of directors, Dr. Shannon, to lead our board in its fundamental role of providing advice to and oversight of management. As our board of directors has determined that each of our directors other than Dr. Houston is independent, our board of directors believes that the independent directors provide effective oversight of management. Our board of directors believes that its leadership structure is appropriate because it strikes an effective balance between strategic development and independent leadership and management oversight in the board process.

Risk is inherent with every business and how well a business manages risk can ultimately determine its success. We face a number of risks, including those described under “Risk Factors” in our 2020 Annual Report. Our board of directors is actively involved in oversight of risks that could affect us. This oversight is conducted primarily by our full board of directors, which has responsibility for general oversight of risks. Our board of directors oversees our risk management processes directly and through its committees. Our management is responsible for risk management on a day-to-day basis and our board and its committees oversee the risk management activities of management. Our board of directors satisfies this responsibility through full reports by each committee chair regarding the committee’s considerations and actions, as well as through regular reports directly from officers responsible for oversight of particular risks within our company. Our audit committee oversees risk management activities related to financial controls and legal and compliance risks. Our compensation committee oversees risk management activities relating to our compensation policies and practices. Our nominating and corporate governance committee oversees risk management activities relating to board composition and management succession planning. In addition, members of our senior management team attend our quarterly board meetings and are available to address any questions or concerns raised by the board on risk management and any other matters. Our board of directors believes that full and open communication between management and the board of directors is essential for effective risk management and oversight.

Communication with Our Directors

Any interested party with concerns about our company may report such concerns to the board of directors or the chair of the nominating and corporate governance committee, by submitting a written communication to the attention of such director at the following address:

c/o Arvinas, Inc.

5 Science Park

395 Winchester Ave.

New Haven, CT 06511

United States

You may submit your concern anonymously or confidentially by postal mail. You may also indicate whether you are a stockholder, customer, supplier, or other interested party.

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A copy of any such written communication may also be forwarded to our legal counsel and a copy of such communication may be retained for a reasonable period of time. The director may discuss the matter with our legal counsel, with independent advisors, with non-management directors, or with our management, or may take other action or no action as the director determines in good faith, using reasonable judgment, and discretion. Communications are forwarded to all directors if they relate to important substantive matters and include suggestions or comments that the chairperson of the board (if one is appointed and is an independent director), the lead director (if one is appointed) or otherwise the chairperson of the nominating and corporate governance committee, subject to the advice and assistance of counsel, consider to be important for the directors to know. In general, communications relating to corporate governance and corporate strategy are more likely to be forwarded than communications relating to ordinary business affairs, personal grievances and matters as to which we receive repetitive or duplicative communications.

 

 

 

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PROPOSAL NO. 2—ADVISORY VOTE ON EXECUTIVE COMPENSATION

We are providing our stockholders the opportunity to vote to approve, on an advisory, non-binding basis, the compensation of our executive officers named in the “2020 Summary Compensation Table” under “Executive and Director Compensation,” who we refer to as our “named executive officers,” as disclosed in this proxy statement in accordance with the SEC’s rules. This proposal, which is commonly referred to as “say-on-pay,” is required by Section 14A to the Exchange Act. Section 14A of the Exchange Act also requires that stockholders have the periodic opportunity to cast an advisory vote with respect to whether future executive compensation advisory votes will be held every one, two or three years, which is the subject of Proposal No. 3.

Our executive compensation programs are designed to attract, motivate, and retain our executive officers, who are critical to our success. Under these programs, our named executive officers are rewarded for the achievement of key strategic and business goals. The programs are designed to align the interests of our executives with those of our stockholders and consist of a combination of base salary, annual cash bonus, long-term equity incentive compensation and other employee benefits generally available to our employees.

The “Executive and Director Compensation” section of this proxy statement beginning on page 20, including “Compensation Discussion and Analysis,” describes in detail our executive compensation programs and the decisions made by the compensation committee and our board of directors with respect to the year ended December 31, 2020.

As we describe in the Compensation Discussion and Analysis, our executive compensation program embodies a pay-for-performance philosophy that supports our business strategy and aligns the interests of our executives with our stockholders. Our board of directors believes this link between compensation and the achievement of our key strategic and business goals has helped drive our performance over time. At the same time, we believe our program does not encourage excessive risk-taking by management.

Our board of directors is asking stockholders to approve a non-binding advisory vote on the following resolution:

RESOLVED, that the compensation paid to the company’s named executive officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation tables and any related material disclosed in this proxy statement, is hereby approved.

As an advisory vote, this proposal is not binding. Neither the outcome of this advisory vote nor of the advisory vote included in Proposal No. 3 overrules any decision by the company or our board of directors (or any committee thereof), creates or implies any change to the fiduciary duties of the company or our board of directors (or any committee thereof), or creates or implies any additional fiduciary duties for the company or our board of directors (or any committee thereof). However, our compensation committee and board of directors value the opinions expressed by our stockholders in their vote on this proposal and will consider the outcome of the vote when making future compensation decisions for named executive officers.

The board of directors recommends voting “FOR” Proposal No. 2 to approve our executive compensation.

 

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PROPOSAL NO. 3—ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION

We are asking our stockholders to cast a non-binding advisory vote regarding the frequency of future executive compensation advisory votes. Stockholders may vote for a frequency of every one, two, or three years, or may abstain.    

Our board of directors will take into consideration the outcome of this vote in making a determination about the frequency of future executive compensation advisory votes. However, because this vote is advisory and non-binding, the board of directors may decide that it is in the best interests of our stockholders and the company to hold the advisory vote to approve executive compensation more or less frequently. In the future, we will propose an advisory vote on the frequency of the executive compensation advisory vote at least once every six calendar years.

After careful consideration, our board of directors believes that an executive compensation advisory vote should be held every year, and therefore our board of directors recommends that you vote for a frequency of every ONE YEAR for future executive compensation advisory votes.

Our board of directors believes that an annual executive compensation advisory vote will facilitate more direct stockholder input about executive compensation. An annual executive compensation advisory vote is consistent with our policy of reviewing our compensation program annually, as well as seeking input from our stockholders on corporate governance and executive compensation matters. We believe an annual vote would be the best governance practice for our company at this time.

The board of directors recommends voting for a frequency of every “ONE YEAR” for Proposal No. 3.

 

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EXECUTIVE AND DIRECTOR COMPENSATION

Compensation Discussion and Analysis

This section discusses the material elements of our executive compensation policies and decisions for our executive officers named in the “2020 Summary Compensation Table” below, referred to herein as our “named executive officers,” and important factors relevant to an analysis of these policies and decisions. It provides qualitative information regarding the manner and context in which compensation is awarded to and earned by our named executive officers and is intended to place in perspective the information presented in the following tables and the corresponding narrative.

Executive Summary

Overview

Historically, our executive compensation program has reflected our growth and corporate goals. To date, the compensation of our named executive officers has consisted of a combination of base salary, annual cash bonus, long-term equity incentive compensation, and other employee benefits generally available to our employees. Our named executive officers are also entitled to certain compensation and benefits upon certain terminations of employment pursuant to their employment agreements as described below.

Our named executive officers for the year ended December 31, 2020 are as follows:

 

John Houston, President and Chief Executive Officer;

 

Sean Cassidy, Chief Financial Officer;

 

Ronald Peck, Chief Medical Officer; and

 

Ian Taylor, Chief Scientific Officer.

We note that because we only had four executive officers during our fiscal year ended December 31, 2020, we only had four named executive officers.

Our Company

We are a clinical-stage biopharmaceutical company dedicated to improving the lives of patients suffering from debilitating and life-threatening diseases through the discovery, development, and commercialization of therapies that degrade disease-causing proteins. We use our proprietary PROTAC® Discovery Engine platform to engineer proteolysis targeting chimeras, or PROTAC® targeted protein degraders, that are designed to harness the body’s own natural protein disposal system to selectively and efficiently degrade and remove disease-causing proteins. In addition to our robust preclinical pipeline of PROTAC® protein degraders against validated and “undruggable” targets, we have two clinical-stage programs: ARV-110 for the treatment of men with metastatic castrate-resistant prostate cancer; and ARV-471 for the treatment of patients with locally advanced or metastatic ER+/HER2- breast cancer..

Key Compensation Decisions and Action Regarding 2020 Executive Compensation

Our board of directors and compensation committee made several key compensation decisions regarding the 2020 compensation of our executives taking into account our compensation philosophy and objectives, the needs and performance of our company, individual performance, and other factors such as market data and industry best practices.

 

Base Salary Adjustments. The board of directors, upon recommendation by the compensation committee, reviewed and approved the base salary of our Chief Executive Officer and the compensation committee reviewed and approved the base salaries of our other named executive officers in early 2020. Our Chief Executive Officer and each of our other named executive officers received annual merit-based salary adjustments reflecting their performance and contributions and to maintain reasonable positioning relative to our peer companies.

 

Annual Cash Bonus. In February 2020, the board of directors, upon recommendation by the compensation committee, approved corporate goals, consisting of six corporate goals, each with its own weighting to reflect their importance to our business. These six goals related to clinical stage development, preclinical pipeline development, strategic and financial measures. In February 2021, the board of directors reviewed our achievements against our 2020 corporate goals and approved achievement of 161% of our 2020 corporate goals. The annual cash bonuses paid to our named executive officers in early 2021 for 2020 performance were based entirely on the achievement of these corporate performance goals.

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Long-Term Incentives. In early 2020, the board of directors, upon recommendation by the compensation committee, approved annual grants of stock options under the 2018 Incentive Plan to our Chief Executive Officer, and the compensation committee approved grants of stock options under the 2018 Incentive Plan to our other named executive officers.

Compensation Design

Compensation Philosophy and Objectives

The goal of our named executive officer compensation policies and programs is to pay for performance. Within this overarching principle, there are a number of key objectives that our policies and programs are designed to achieve:

 

Attract and retain individuals with superior ability, technical, and managerial experience;

 

Align the executives’ interests with those of our stockholders through long-term incentives linked to specific performance; and

 

Provide market competitive compensation to attract and retain highly qualified individuals who are capable of making significant contributions to the long-term success of the company.

Alignment with Company Strategy

Our named executive officer compensation policies and programs reinforce our pay-for-performance philosophy. While fixed compensation, such as base salary and benefits, are primarily designed to be competitive in the biopharmaceutical marketplace for employees, a substantial portion of our named executive officers’ compensation is linked to achieving scientific, business, organizational and operational goals.

We provide a significant portion of our executive compensation in the form of long-term incentives (stock options) that vest over time. These equity awards are a key aspect of our pay-for-performance philosophy and serve to align the interests of our named executive officers with our stockholders, as they are tied to future increases in the value of our stock. Further, we believe that equity awards with a time-based vesting feature promote retention because this feature incentivizes our named executive officers to remain in our employment during the vesting period. The annual cash bonuses paid to our named executive officers are based entirely on corporate performance goals established by the board of directors. Our executives make strategic decisions that influence the company, and we believe it is appropriate to reward performance against corporate performance goals in that case, in-line with our pay-for-performance philosophy.

The total target compensation (base salary, target annual cash bonuses and equity incentive awards) for our Chief Executive Officer and our other named executive officers in 2020 was primarily performance-based, as shown in the charts below:

 

 

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The compensation committee uses a comparative framework to assess the named executive officers’ total compensation mix, but does not have a pre-established policy for allocating total compensation. Rather, based on blended peer group and broader market data, market competitiveness, expected future contribution, experience, impact and individual performance, and internal parity relative to similar positions within the company, the compensation committee subjectively determines the appropriate level and mix of total compensation, keeping in mind our pay-for-performance compensation philosophy. We believe that this approach results in compensation that:

 

is at an appropriate level to attract and retain individuals with superior ability, technical, and managerial experience;

 

provides the appropriate incentives to our executives to make significant contributions to the long-term success of the company, while avoiding incentives for inappropriate risk-taking; and

 

is fair and competitive without being excessive.

Elements of Executive Compensation

The primary elements of our executive compensation program are:

 

Element

  

Purpose

  

Key Features and Timing

Base Salary (fixed cash)

  

Provide competitive, fixed compensation to attract and retain top executive talent

  

•   Cash-based

•   Initial base salaries are set at the time of hire, and adjustments to base salaries are considered in conjunction with changes in job responsibilities or annually as part of our merit increase process

 

 

 

Annual Cash Bonus (at-risk cash)

  

Performance-contingent compensation to motivate and reward individual for attaining rigorous corporate performance goals that relate to our key business objectives

  

•   Cash-based

•   Based on corporate and individual performance

•   Generally measured and paid out on an annual basis, typically annually following the close of the previous fiscal year

 

 

 

Long-term Incentives (at-risk equity)

  

Variable incentive compensation to promote performance, support retention, and create stockholder alignment

  

•   Equity-based

•   Granted in time-based stock options

•   Based on blended peer group and broader market data, market competitiveness, expected future contribution, experience, impact and individual performance, and internal parity relative to similar positions within the company

•   Generally granted at the time of hire, and annually following the close of the previous fiscal year

 

2020 Compensation Decisions and Outcomes

Role of our Compensation Committee and Executive Officers

Our compensation committee, comprised entirely of independent directors, is responsible for overseeing our compensation philosophy and operates under a written charter. Among other things, the role of our compensation committee is to seek to ensure that compensation decisions represent sound fiscal policy and enable us to attract and motivate qualified personnel, review and approve the compensation of executives other than our Chief Executive Officer, and recommend to the board of directors the compensation of the Chief Executive Officer and the board of directors. As necessary, and if deemed appropriate by our compensation committee, the compensation committee may also make recommendations to the full board of directors for approval of certain compensation decisions relating to our named executive officers. The board of directors retains authority to approve the compensation of our Chief Executive Officer, upon recommendation by the compensation committee.

In making its executive compensation determinations, our compensation committee and, if applicable, the full board of directors, considers recommendations from our Chief Executive Officer for our named executive officers (other than himself). In making his recommendations, our Chief Executive Officer has access to various third-party compensation surveys and compensation data provided by our compensation committee’s compensation consultant, as described below. While our Chief Executive Officer discusses his recommendations for the other named executive officers with our compensation committee, he does not participate in the deliberations concerning, or the determination of, his own compensation. From time to time, various other members of management and other employees as well as outside advisors or consultants may be invited by our compensation committee to make presentations, provide financial or other background information or advice or otherwise participate in compensation committee meetings. No named executive officer is present during voting or deliberations on his own compensation.

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Role of our Compensation Consultant

As a part of reviewing, recommending and determining (as applicable) compensation for our named executive officers, the compensation committee has engaged Radford, an AON Hewitt Company, as an independent compensation consultant. Radford provides analysis and recommendations to the compensation committee regarding:

 

trends and emerging topics with respect to executive compensation;

 

peer group selection for executive compensation benchmarking;

 

compensation practices of our peer group;

 

compensation programs for executives, directors and all of our employees; and

 

stock utilization and related metrics.

When requested, Radford consultants attend meetings of the compensation committee, including executive sessions in which executive compensation issues are discussed. Radford is engaged by the compensation committee and meets with management for purposes of gathering information for its analyses and recommendations.

In determining to engage Radford, the compensation committee reviewed the independence of Radford taking into consideration relevant factors, including the absence of other services provided to the company by Radford, the amount of fees the company paid to Radford as a percentage of Radford’s total revenue, the policies and procedures of Radford that are designed to prevent conflicts of interest, any business or personal relationship of the individual compensation advisors employed by Radford with an executive officer of the company, any business or personal relationship the individual compensation advisors employed by Radford have with any member of the compensation committee, and any stock of the company owned by Radford or the individual compensation advisors employed by Radford. The compensation committee has determined, based on its analysis in light of all relevant factors, including the factors listed above, that the work of Radford and the individual compensation advisors employed by Radford as compensation consultants to the compensation committee has not created any conflicts of interest, and that Radford is independent pursuant to the independence standards set forth in The Nasdaq Global Market listing standards promulgated pursuant to Section 10C of the Exchange Act.

Executive Compensation Process

The compensation committee compares our executive compensation against a peer group to determine market trends and competitiveness. On an annual basis, the compensation committee reviews the companies in our peer group, as well as Radford’s recommendations regarding which companies should be included in the peer group. The compensation committee may also adjust the peer group to ensure it properly reflects the market in which we compete for executive talent.

For purposes of compensation for 2020, in September 2019, the compensation committee retained Radford to evaluate our executive compensation program and recommend a course of action for 2020. In determining the 2020 base salaries, annual cash bonuses and long-term incentives for our named executive officers, our compensation committee relied on the following peer group, or the 2020 Peer Group:

 

 

 

 

 

 

Acceleron Pharma

  

Fate Therapeutics

  

REGENXBIO

Adverum Biotechnologies

  

Homology Medicines

  

Rubius Therapeutics

Arcus Biosciences

  

Intellia Therapeutics

  

Syros Pharmaceuticals

Audentes Therapeutics

  

Kura Oncology

  

Voyager Therapeutics

CytomX Therapeutics

  

MieraGTx

  

Wave Life Sciences

Denali Pharmaceuticals

  

Molecular Templates

  

Zymeworks

Dicerna Pharmaceuticals

  

Pieris Pharmaceuticals

  

 

Epizyme

 

Ra Pharmaceuticals

 

 

 

Radford focused on developing a peer group that:

 

comprised companies operating in the biotechnology and pharmaceutical industries;

 

captured comparable companies in terms of market capitalization, revenue, employee size and stage of development; and

 

allowed for sufficient room for the company to grow.

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The 2020 Peer Group was oriented around pre-commercial biotechnology companies in a comparable range to our market capitalization and headcount.  Specifically, the 2020 Peer Group represents a group of pre-commercial biotechnology companies with a median market capitalization of $896.5 million and a median of 124 employees.  

Based on the 2020 Peer Group, Radford prepared an assessment that included pay levels and compensation practices from public SEC filings. Radford supplemented the 2020 Peer Group proxy information with data from the Radford Global Life Sciences Survey, comprising 102 companies with a median headcount of 149 and a median market capitalization of $910 million, which provides a broader market representation of companies and deeper position reporting. To arrive at competitive market compensation, market data collected from the peer group and the Radford Global Life Sciences Survey was blended equally to form a composite assessment.

In analyzing and setting our executive compensation program for 2020, the board of directors and the compensation committee, as applicable, compared certain aspects of our named executive officers’ compensation to the compensation levels included in this composite assessment. Based on the results of the assessment, the board of directors and the compensation committee, as applicable, determined that compensation levels for our named executive officers in 2020 generally reflected market competitive ranges.

Base Salaries

The base salary for our Chief Executive Officer is determined annually by the board of directors, upon recommendation by the compensation committee. Base salaries for our named executive officers other than our Chief Executive Officer are recommended by our Chief Executive Officer to the compensation committee for approval. Each such determination is based on the scope of each officer’s responsibilities along with his respective experience and contributions to the company during the prior year. When reviewing base salaries, the board of directors and compensation committee, as applicable, takes factors into account such as blended peer group and broader market data, market competitiveness, expected future contribution, experience, impact and individual performance, and internal parity relative to similar positions within the company, but does not assign any specific weighting to any factor.

The following table presents the base salaries for each of our named executive officers for the years 2019 and 2020, as approved by the board of directors and compensation committee, as applicable. The 2019 base salaries became effective on January 1, 2019. The 2020 base salaries became effective on January 1, 2020.

 

Named Executive Officer

 

2019

Annualized

Salary

($)

 

 

January

2020

% of Base

Salary

 

 

Adjustment

Amount

($)

 

 

2020

Annualized

Salary

($)

 

 

Nature of

Increase

John Houston

 

 

540,000

 

 

 

4.5

 

 

 

24,300

 

 

 

564,300

 

 

Merit increase

Sean Cassidy

 

 

344,000

 

 

 

9.0

 

 

 

31,000

 

 

 

375,000

 

 

Merit increase and market adjustment

Ronald Peck

 

 

400,000

 

 

 

4.5

 

 

 

18,000

 

 

 

418,000

 

 

Merit increase

Ian Taylor

 

 

315,000

 

 

 

26.9

 

 

 

85,000

 

 

 

400,000

 

 

Merit increase and market adjustment

 

Annual Cash Bonuses

Under our annual cash incentive program, cash incentive awards are determined by multiplying the target cash incentive award for each executive officer by a corporate performance factor established by our compensation committee based on our performance as measured against our corporate goals. In addition, our Chief Executive Officer and compensation committee have the discretion to adjust the size of individual awards upward or downward based on individual performance. The compensation committee sets the target cash incentive award opportunity at the beginning of the year, based primarily on data provided by Radford.

During the last quarter of each year, our senior management team evaluates our company performance and each executive officer’s individual contribution to our corporate performance, and, as applicable, such officer’s achievement of individual objectives for that year. Based on this evaluation, our Chief Executive Officer recommends to our compensation committee any cash awards under our annual cash incentive program. Our compensation committee then carefully reviews overall corporate performance and evaluates each individual executive officer’s contributions to our corporate performance.

In February 2021, our compensation committee met with our Chief Executive Officer as part of its annual compensation review and discussed our corporate performance in 2020, the individual performance of our officers and the Chief Executive Officer’s recommendations for cash incentive awards for each of our executive officers other than the Chief Executive Officer. As part of its

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evaluation of our corporate performance, the committee noted various performance outcomes during 2020 and that we made significant progress on our clinical development and business goals:

 

Goal

 

Allocation

(%)

 

 

Actual Level

of

Achievement

(%)

 

ARV-110 & ARV-471 Development

 

 

65

%

 

 

105

%

•  Robust external data releases

 

 

 

 

 

 

 

 

Preclinical Pipeline

 

 

25

%

 

 

36

%

•   Clinical candidate nomination and target degradation progress

 

 

 

 

 

 

 

 

Financial & Business Development

 

 

10

%

 

 

20

%

•   Financing execution

 

 

 

 

 

 

 

 

 

Based on our overall performance during 2020, our compensation committee determined that a corporate performance factor of 161% was appropriate and granted cash incentive awards to our executives based on that factor.  

 

Name

 

2020 Target

%

 

 

2020 Target

$

 

 

Actual

Bonus

for 2020

 

 

Ratio %

 

John Houston, Ph.D.

 

 

50

%

 

 

282,150

 

 

 

454,300

 

 

 

161

%

Sean Cassidy

 

 

40

%

 

 

150,000

 

 

 

242,000

 

 

 

161

%

Ronald Peck, M.D.

 

 

40

%

 

 

167,200

 

 

 

269,200

 

 

 

161

%

Ian Taylor, Ph.D.

 

 

40

%

 

 

160,000

 

 

 

257,700

 

 

 

161

%

 

Long-term Incentives

Our equity awards program is designed to:

 

reward demonstrated leadership and performance;

 

align our executive officers’ interests with those of our stockholders;

 

retain our executive officers through the term of the awards;

 

maintain competitive levels of executive compensation; and

 

motivate our executive officers for outstanding future performance.

The market for qualified and talented executives in the biopharmaceutical industry is highly competitive and we compete for talent with many companies that have greater resources than we do. Accordingly, we believe equity compensation is a crucial component of any competitive executive compensation package we offer.

Historically, our equity awards have generally taken the form of stock options. We typically make equity award grants to each of our executive officers upon commencement of employment, annually in conjunction with our review of executive compensation, in connection with a promotion, or as a special incentive.

All equity awards to our executive officers are approved by our compensation committee and, other than equity awards to new hires, are typically granted by our compensation committee in the first quarter of the year. The size of equity awards varies among our executive officers based on their positions and annual performance assessments. All stock options granted to our executive officers have exercise prices equal to the fair market value of our common stock on the date of grant, so that the recipient will not realize any value from his options unless our share price increases above the exercise price on the date of grant. Accordingly, this portion of our executive officers’ compensation is at risk and is directly aligned with stockholder value creation.

In addition, equity grants to our executive officers typically vest over four years, which we believe provides an incentive to our executives to add value over the long-term and to remain with our company. Typically, the stock options we grant to our executives have a ten-year term and vest as to 25% of the shares on the first anniversary of their grant date and then in equal monthly installments thereafter until the fourth anniversary of such date. Vesting of option grants to employees ceases upon termination of employment and exercise rights typically cease three months following termination of employment, except in the case of death or disability, for grants made under our 2018 stock incentive plan, or our 2018 Plan. Prior to the exercise of an option, the stock option holder does not have

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any rights as a stockholder with respect to the shares subject to such option, including voting rights or the right to receive dividends or dividend equivalents. The compensation committee may approve different award types in the future as part of the overall compensation strategy. Awards made in connection with a new, extended or expanded employment relationship may involve a different mix of equity awards, depending on the compensation committee’s assessment of the total compensation package being offered.

In connection with the annual review of each executive officer’s individual performance and consistent with our compensation philosophy, in February 2020, our compensation committee approved annual equity incentive awards for our named executive officers. The annual equity incentive awards granted to our named executive officers are set forth in the table below:

 

Named Executive Officer

 

Stock Options

 

John Houston, Ph.D.

 

 

235,000

 

Sean Cassidy

 

 

75,000

 

Ronald Peck, M.D.

 

 

75,000

 

Ian Taylor, Ph.D.

 

 

75,000

 

 

Other Benefits

Other compensation to our executives consists primarily of the broad-based benefits we provide to all full-time employees in the United States, including medical, dental and vision insurance, health spending accounts, short and long-term disability, accidental death and dismemberment, and life insurance, an employee stock purchase plan and a 401(k) plan. Pursuant to our 2018 employee stock purchase plan, or 2018 ESPP, employees, including our named executive officers, would have an opportunity to purchase our common stock at a discount on a tax-qualified basis through payroll deductions.  The 2018 ESPP is designed to qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code. The purpose of the 2018 ESPP is to encourage our employees, including our named executive officers, to become our stockholders and better align their interests with those of our other stockholders. We make discretionary matching contributions and other employer contributions on behalf of eligible employees under our 401(k) plan. For fiscal year 2020, we matched a portion of eligible employee contributions equal to 100% of the first 4% of eligible contributions pursuant to our 401(k) plan’s matching formula.

Currently, we do not view perquisites or other personal benefits as a significant component of our executive compensation program. Accordingly, we do not provide perquisites to our named executive officers, except in situations where we believe it is appropriate to assist an individual in the performance of his duties, to make him more efficient and effective, and for recruitment and retention purposes. None of our named executive officers received perquisites or other personal benefits with an aggregate value of $10,000 or more in 2020. All future practices with respect to perquisites or other personal benefits will be approved and subject to periodic review by our compensation committee.

Tax and Accounting Considerations

While our compensation committee generally considers the tax and accounting implications of its executive compensation decisions, neither element was a material consideration in the compensation awarded to our named executive officers in 2020.

Compensation Practices and Risk

As part of its responsibilities, the compensation committee reviews the impact of our executive compensation program and the associated incentives to determine whether they present a significant risk to us. The compensation committee has concluded, based on its reviews and analysis of our compensation policies and procedures, that such policies and procedures are not reasonably likely to have a material adverse effect on us. In making this determination, our compensation committee considered the following:

 

our use of different types of compensation vehicles provides a balance of long-term and short-term incentives with fixed and variable components;

 

our grant of equity-based awards with time-based vesting, which encourage our named executive officers to look to long-term appreciation in equity values;

 

our annual bonus determinations for each employee are dependent on the achievement of company goals, which we believe promote long-term value;

 

our compensation committee’s ability to exercise discretion in determining cash bonus payouts and long-term incentive awards for executive officers other than the Chief Executive Officer;

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our system of internal control over financial reporting and Code of Conduct, among other things, reduce the likelihood of manipulation of our financial performance to enhance payments under any of our incentive plans; and

 

prohibition on hedging or pledging of company stock.

Overview of Our Other Policies and Practices

Highlighted policies and practices that we use to ensure effective governance of compensation plans and decisions include:

 

our compensation committee has the authority to hire independent counsel and other advisors;

 

our compensation committee conducts a regular review and assessment of risk as it relates to our compensation policies and practices;

 

as part of our Insider Trading Policy, our executive officers are prohibited from engaging in any hedging transactions of our common stock, including using prepaid variable forward contracts, equity swaps, collars, and exchange funds;

 

we have no perquisites other than broad-based health, relocation, 401(k) plan and insurance-related benefits that we make available to all of our employees;

 

our 2018 Plan prohibits option repricing (absent stockholder approval) and option backdating;

 

our employment agreements do not provide for tax gross-ups;

 

all of our non-employee directors are independent, including all members of our compensation committee; and

 

if we are required to restate our financial results due to our material noncompliance with any financial reporting requirements under the applicable securities laws as a result of misconduct, our Chief Executive Officer and Chief Financial Officer may be legally required to reimburse us for any bonus or other incentive-based or equity-based compensation they receive in accordance with the provisions of section 304 of the Sarbanes-Oxley Act of 2002. Additionally, we intend to implement a Dodd-Frank Wall Street Reform and Consumer Protection Act-compliant clawback policy after the SEC issues final rules regarding such requirements.

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2020 Summary Compensation Table

The following table sets forth information regarding compensation awarded to, earned by or paid to each of our named executive officers during the fiscal years ended December 31, 2020, December 31, 2019 and December 31, 2018 (unless otherwise specified).

 

Name and Principal Position

 

Year

 

Salary

($)

 

 

Stock

Awards

($)(1)

 

 

Option

Awards

($)(2)

 

 

Nonequity

Incentive Plan

Compensation

($)(3)

 

 

Bonus

($)

 

Total ($)

 

John Houston, Ph.D.

 

2020

 

 

564,300

 

 

 

 

 

 

6,989,781

 

 

 

454,300

 

 

 

 

8,008,381

 

President and Chief

 

2019

 

 

527,500

 

 

 

1,356,013

 

 

 

3,180,326

 

 

 

422,000

 

 

 

 

5,485,839

 

Executive Officer

 

2018

 

 

427,770

 

 

 

942,373

 

 

 

4,631,313

 

 

 

278,100

 

 

 

 

6,279,556

 

Sean Cassidy,

 

2020

 

 

375,000

 

 

 

 

 

 

2,231,063

 

 

 

242,000

 

 

 

 

2,848,063

 

Chief Financial Officer

 

2019

 

 

336,500

 

 

 

371,034

 

 

 

1,095,988

 

 

 

215,400

 

 

 

 

2,018,922

 

 

 

2018

 

 

265,753

 

 

 

799,498

 

 

 

1,597,453

 

 

 

138,200

 

 

 

 

2,800,904

 

Ronal Peck, M.D., Chief

 

2020

 

 

418,000

 

 

 

 

 

 

2,231,063

 

 

 

269,200

 

 

 

 

2,918,263

 

Medical Officer (4)

 

2019

 

 

174,282

 

 

 

426,370

 

 

 

1,213,594

 

 

 

100,300

 

 

3,000(5)

 

 

1,917,546

 

 

 

2018

 

 

 

 

 

 

 

 

 

 

 

Ian Taylor, Ph.D., Chief

 

2020

 

 

400,000

 

 

 

 

 

 

2,231,063

 

 

 

257,700

 

 

 

 

2,888,763

 

Scientific Officer

 

2019

 

 

315,000

 

 

 

207,965

 

 

 

817,152

 

 

 

193,800

 

 

 

 

1,533,917

 

 

 

2018

 

 

286,713

 

 

 

562,647

 

 

 

998,224

 

 

 

137,800

 

 

 

 

1,985,384

 

 

(1)

With respect to 2019, reflects the aggregate grant date fair value of restricted stock units, or RSUs, granted during the year in question, and with respect to 2018, reflects the aggregate grant date fair value of incentive units granted during the year in question, in each case calculated in accordance with the provisions of Financial Accounting Standards Board Accounting Standard Codification Topic 718, Compensation – Stock Compensation.  See Note 11 to our audited consolidated financial statements appearing in our 2020 Annual Report for assumptions underlying the valuation of equity awards.

(2)

Reflects the aggregate grant date fair value of option awards granted during the year in question calculated in accordance with the provisions of Financial Accounting Standards Board Accounting Standard Codification Topic 718, Compensation-Stock Compensation.  See Note 11 to our audited consolidated financial statements appearing in our 2020 Annual Report for assumptions underlying the valuation of equity awards.  All options were issued at exercise prices equal to the fair market value of our common stock on the date of grant.  

(3)

The amounts reported in the “Non-Equity Incentive Plan Compensation” column represent awards to our named executive officers under our annual performance-based cash bonus program. See “—Annual Cash Bonuses” for a description of this program. Annual performance-based bonus compensation for 2020 was earned in 2020 and paid in 2021. Annual performance-based bonus compensation for 2019 was earned in 2019 and paid in 2020. Annual performance-based bonus compensation for 2018 was earned in 2018 and paid in 2019.

(4)

Dr. Peck became our Chief Medical Officer on July 29, 2019.

(5)

The amount reported represents a signing bonus paid to Dr. Peck in connection with the commencement of his employment in July 2019.

26


 

Grants of Plan-Based Awards

The following table sets forth information regarding non-equity and equity awards granted to each of our named executive officers during the year ended December 31, 2020. All non-equity incentive plan awards were made pursuant to our annual cash incentive plan described in more detail above. We granted stock option awards to our named executive officers in 2020 in recognition of performance in 2019.  All stock options granted in 2020 consisted of options to purchase shares of our common stock with an exercise price equal to the fair market value of our common stock on the date of grant. All such equity awards were granted under our 2018 Incentive Plan, unless otherwise disclosed below. The vesting schedule of each option included in the following table is described in the footnotes to the Outstanding Equity Awards at Fiscal Year-End table.

 

Name

 

Grant Date

 

Compensation

Committee

Approval

Date

 

Estimated

Future

Payouts

Under

Non-Equity

Incentive

Plan

Awards (1)

Target

($)

 

 

All Other

Option

Awards:

Number of

Securities

Underlying

Options

(#)

 

 

Exercise or

Base Price

of Option

Awards

($/Share)

 

 

Grant Date Fair

Value of

Stock

and Options

Awards (2)

 

John Houston

 

2/27/2020

 

2/27/2020

 

 

282,150

 

 

 

235,000

 

 

 

47.38

 

 

 

6,989,781

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sean Cassidy

 

2/27/2020

 

2/25/2020

 

 

150,000

 

 

 

75,000

 

 

 

47.38

 

 

 

2,231,063

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ronald Peck

 

2/27/2020

 

2/25/2020

 

 

167,200

 

 

 

75,000

 

 

 

47.38

 

 

 

2,231,063

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ian Taylor

 

2/27/2020

 

2/25/2020

 

 

160,000

 

 

 

75,000

 

 

 

47.38

 

 

 

2,231,063

 

 

(1)

These amounts relate to our annual cash incentive plan.  The amounts shown in this column represent the 2021 target payout amount based on the target percentage applied to each named executive officer’s base salary as of December 31, 2020, assuming 100% corporate achievement. As described in more detail above, in 2020 each of our named executive officers, other than Dr. Houston, had an individual bonus target of 40% of his base salary, which was tied solely to the achievement of our corporate goals for 2020 (which was not determined as of December 31, 2020).  Dr. Houston had an individual bonus target of 50% of his base salary, was likewise tied solely to the achievement of our corporate goals for 2020 (which was not determined as of December 31, 2020). Actual amounts paid to each named executive officer under our annual cash incentive plan are included in the “Non-Equity Incentive Plan Compensation” column of the 2020 Summary Compensation Table above.

(2)

Reflects the fair value of time-based stock option awards on the date of grant calculated in accordance with ASC 718. For a discussion of the assumptions used in the valuation of the time-based stock option awards granted to our named executive officers in 2020, see footnote 1 to the 2020 Summary Compensation Table above.

27


 

Outstanding Equity Awards at 2020 Fiscal Year End

The following table sets forth information regarding outstanding equity awards held by our named executive officers as of December 31, 2020.

 

 

 

 

 

 

 

Option Awards

 

 

 

 

Stock Awards

 

Name

 

Number of

Securities

underlying

unexercised

options (#)

exercisable

 

 

Number of

securities

underlying

unexercised

options (#)

unexercisable

 

 

Option

exercise

price

($)

 

 

Option

expiration

date

 

Number of

shares

that

have not

vested (#)

 

Market

value

of shares

that have

not vested

($)

 

John Houston, Ph.D.

 

 

85,992

 

 

2,228(1)

 

 

 

16.00

 

 

9/25/2028

 

 

 

 

 

 

 

 

 

91,355

 

 

41,525(2)

 

 

 

16.00

 

 

9/25/2028

 

 

 

 

 

 

 

 

 

162,857

 

 

37,583(3)

 

 

 

16.00

 

 

9/25/2028

 

 

 

 

 

 

 

 

 

13,360

 

 

 

 

 

 

16.00

 

 

9/25/2028

 

 

 

 

 

 

 

 

 

13,360

 

 

 

 

 

 

16.00

 

 

9/25/2028

 

 

 

 

 

 

 

 

 

111,386

 

 

143,211(4)

 

 

 

19.36

 

 

2/28/2029

 

 

 

 

 

 

 

 

 

 

 

 

235,000(5)

 

 

 

47.38

 

 

2/26/2030

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,505(6)

 

 

382,610

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

76,023(7)

 

 

6,456,633

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

20,980(8)

 

 

1,781,831

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

52,531(9)

 

 

4,461,458

 

Sean Cassidy

 

 

6,815

 

 

 

 

 

 

 

16.00

 

 

9/25/2028

 

 

 

 

 

 

 

 

 

12,447

 

 

10,249(10)

 

 

 

16.00

 

 

9/25/2028

 

 

 

 

 

 

 

 

 

31,710

 

 

 

 

 

 

16.00

 

 

9/25/2028

 

 

 

 

 

 

 

 

 

56,216

 

 

25,554(11)

 

 

 

16.00

 

 

9/25/2028

 

 

 

 

 

 

 

 

 

108

 

 

1,409(12)

 

 

 

16.00

 

 

9/25/2028

 

 

 

 

 

 

 

 

 

38,391

 

 

49,361(12)

 

 

 

19.36

 

 

2/28/2029

 

 

 

 

 

 

 

 

 

 

 

 

75,000(14)

 

 

 

47.38

 

 

2/26/3030

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,762(15)

 

 

234,577

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12,915(15)

 

 

1,096,871

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,176(17)

 

 

354,668

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

14,374(18)

 

 

1,220,784

 

Ronald Peck, M.D.

 

 

25,565

 

 

46,619(19)

 

 

 

26.58

 

 

7/28/2029

 

 

 

 

 

 

 

 

 

 

 

 

75,000(20)

 

 

 

47.38

 

 

2/26/2030

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12,031(21)

 

 

1,021,793

 

Ian Taylor, Ph.D.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

595

 

 

705(22)

 

 

 

16.00

 

 

9/26/2028

 

 

 

 

 

 

 

 

 

11,648

 

 

 

 

 

 

 

16.00

 

 

9/26/2028

 

 

 

 

 

 

 

 

 

21,078

 

 

9,582(23)

 

 

 

16.00

 

 

9/26/2028

 

 

 

 

 

 

 

 

 

27,743

 

 

16,647(24)

 

 

 

16.00

 

 

9/26/2028

 

 

 

 

 

 

 

 

 

28,624

 

 

36,803(25)

 

 

 

19.36

 

 

2/28/2029

 

 

 

 

 

 

 

 

 

 

 

 

75,000(26)

 

 

 

16.00

 

 

2/26/2030

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,381(27)

 

 

117,288

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,845(28)

 

 

411,486

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,786(29)

 

 

576,335

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8,056(30)

 

 

684,196

 

 

(1)

25% of the shares underlying this option vested on January 5, 2018, and the remainder vest in equal monthly increments until January 5, 2021.

(2)

25% of the shares underlying this option vested on March 31, 2019, and the remainder vest in equal monthly increments until March 31, 2022.

(3)

25% of such shares underlying this option vested on September 15, 2018, and the remainder vest in equal monthly increments until September 15, 2021.

(4)

25% of the shares underlying this option vested on March 1, 2020, and the remainder vest in equal monthly increments until March 1, 2023.

28


 

(5)

25% of the shares vested on February 27, 2021 and the remainder vest in equal monthly increments until February 27, 2024.

(6)

25% of the shares vested on September 5, 2018, and the remainder vest in equal monthly increments until September 5, 2021.

(7)

25% of the shares vested on September 15, 2018, and the remainder vest in equal monthly increments until September 15, 2021.

(8)

25% of the shares vested on March 31, 2019, and the remainder vest in equal monthly increments until March 31, 2022.

(9)

25% of the shares underlying this RSU vested on March 1, 2020 and the remainder vest in equal annual increments until March 1, 2023.

(10)

25% of the shares underlying this option vested on June 28, 2019, and the remainder vest in equal month increments until June 28, 2022.

(11)

25% of the shares underlying this option vested on March 31, 2019, and the remainder vest in equal monthly increments until March 31, 2022.

(12)

25% of the shares underlying this option vested on January 1, 2019, and the remainder vest in equal monthly increments until January 1, 2022.

(13)

25% of the shares underlying this option vested on March 1, 2020, and the remainder vest in equal monthly increments until March 1, 2023.

(14)

25% of the shares vested on February 27, 2021, and the remainder vest in equal monthly increments until February 27, 2024.

(15)

25% of the shares vested on January 1, 2019, and the remainder vest in equal monthly increments until January 1, 2022.

(16)

25% of the shares vested on March 31, 2019, and the remainder vest in equal monthly increments until March 31, 2022.

(17)

25% of the shares vested on June 28, 2019, and the remainder vest in equal monthly increments until June 28, 2022.

(18)

25% of the shares underlying this RSU vested on March 1, 2020, and the remainder vest in equal annual increments until March 1, 2023.

(19)

25% of the shares underlying this option vest on July 29, 2020, and the remainder vest in equal monthly increments until July 29, 2023.

(20)

25% of the shares underlying this option vest on February 27, 2021, and the remainder vest in equal monthly increments until February 27, 2024.

(21)

25% of the shares underlying this RSU vest on July 29, 2020, and the remainder vest in equal annual increments until July 29, 2023

(22)

25% of the shares underlying this option vested on January 1, 2019, and the remainder vest in equal monthly increments until January 1, 2022.

(23)

25% of the shares vested on March 31, 2019, and the remainder vest in equal monthly increments until March 31, 2022.

(24)

25% of the shares underlying this option vested on June 28, 2019, and the remainder vest in equal month increments until June 28, 2022.

(25)

25% of the shares underlying this option vested on March 1, 2020, and the remainder vest in equal monthly increments until March 1, 2023.

(26)

25% of the shares underlying this option vested on February 27, 2021, and the remainder vest in equal monthly increments until February 27, 2024.

(27)

25% of the shares vested on January 1, 2019, and the remainder vest in equal monthly increments until January 1, 2022.

(28)

25% of the shares vested on March 31 2019, and the remainder vest in equal monthly increments until March 31, 2022.

(29)

25% of the shares vested on June 28, 2019, and the remainder vest in equal monthly increments until June 28, 2022.

(30)

25% of the shares underlying this RSU vested on March 1, 2020, and the remainder vest in equal annual increments until March 1, 2023.

29


 

Option Exercises and Stock Vested Table

The following table sets forth certain information regarding the exercise of options to purchase our common stock and the vesting of restricted stock and RSUs that were held by our named executive officers during the year ended December 31, 2020.

 

 

 

Option Awards

 

 

Stock Awards

 

Name

 

Number

of Shares

Acquired

on

Exercise

(#)

 

 

 

Value

Realized

on

Exercise (1)

($)

 

 

Number

of Shares

Acquired

on Vesting

(#)

 

 

Value

Realized

on

Vesting

($)

 

John Houston

 

 

6,250

 

(2)

 

 

119,563

 

 

 

189,711

 

 

 

7,306,431

 

Sean Cassidy

 

 

12,392

 

 

 

 

230,113

 

 

 

21,061

 

 

 

807,884

 

Ronald Peck

 

 

 

 

 

 

 

 

 

4,010

 

 

 

110,756

 

Ian Taylor