DEF 14A 1 gern-def14a_20210511.htm DEF 14A gern-def14a_20210511.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 Pursuant to §240.14a-12

GERON CORPORATION

(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:

 

 

 

 


 

GERON CORPORATION

919 E. Hillsdale Blvd., Suite 250

Foster City, CA 94404

March 22, 2021

Dear Fellow Geron Stockholder:

You are cordially invited to attend the 2021 Annual Meeting of Stockholders (the “Annual Meeting”) of Geron Corporation to be held on Tuesday, May 11, 2021, at 8:00 a.m., Pacific Daylight Time. In light of the COVID-19 pandemic, for the safety of all our stockholders and personnel, and taking into account federal, state and local guidance, we have determined that the Annual Meeting will be held in a virtual meeting format only, via the Internet, with no physical in-person meeting. You will be able to attend and participate in the virtual Annual Meeting online by visiting www.virtualshareholdermeeting.com/GERN2021, where you will be able to listen to the meeting live, submit questions, and vote. You will not be able to attend the meeting in person. Instructions on how to participate in the virtual Annual Meeting and demonstrate proof of stock ownership are posted at www.virtualshareholdermeeting.com/GERN2021. The webcast of the virtual Annual Meeting will be archived for one year after the date of the virtual Annual Meeting at www.virtualshareholdermeeting.com/GERN2021.

As permitted by the rules of the Securities and Exchange Commission, we are pleased to furnish our proxy materials to stockholders primarily over the Internet. Consequently, most stockholders will receive a notice with instructions for accessing proxy materials and voting via the Internet, instead of paper copies of proxy materials. However, this notice will provide information on how stockholders may obtain paper copies of proxy materials if they choose. Stockholders who continue to receive hard copies of proxy materials may help us reduce costs by opting to receive future proxy materials by e-mail.

At this year’s Annual Meeting, the agenda includes the following items:

 

election of the two nominees for director named in the accompanying proxy statement to hold office as Class I members of the Board of Directors until the 2024 annual meeting of stockholders;

 

approval to increase the total number of authorized shares of our common stock from 450,000,000 to 675,000,0000 shares;

 

amendment of our 2018 Equity Incentive Plan to, among other items, increase the total number of shares of the Company’s common stock issuable thereunder by 12,500,000 shares;

 

advisory vote to approve named executive officer compensation; and

 

ratification of Ernst & Young LLP as our independent registered public accounting firm.

Your vote is important to us. Whether or not you plan to attend the virtual Annual Meeting, please vote electronically via the Internet or by telephone, or, if you requested paper copies of the proxy materials, please complete, sign, date and return the accompanying proxy card in the enclosed postage-paid envelope, as promptly as possible. Thank you for your ongoing support of, and continued interest in, Geron Corporation.

Sincerely,

 

John A. Scarlett, M.D.

Chairman of the Board, President and

Chief Executive Officer

 

 


 

 

GERON CORPORATION

919 E. Hillsdale Blvd., Suite 250

Foster City, CA 94404

 

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To Be Held on May 11, 2021

To the Stockholders of Geron Corporation:

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of GERON CORPORATION, a Delaware corporation (the “Company”), will be held on Tuesday, May 11, 2021, at 8:00 a.m., Pacific Daylight Time. In light of the COVID-19 pandemic, for the safety of all our stockholders and personnel, and taking into account federal, state and local guidance, we have determined that the Annual Meeting will be held in a virtual meeting format only, via the Internet, with no physical in-person meeting. You can attend virtual the Annual Meeting online, vote your shares electronically and submit your questions during the virtual Annual Meeting, by visiting www.virtualshareholdermeeting.com/GERN2021. You will need to have your 16-Digit Control Number included in the Notice of Internet Availability of Proxy Materials, on your proxy card or on the instructions that accompanied your proxy materials to join the virtual Annual Meeting.

The Annual Meeting will be held for the following purposes:

 

1.

To elect the two nominees for director named in the accompanying proxy statement (the “Proxy Statement”) to hold office as Class I members of the Board of Directors until the 2024 annual meeting of stockholders;

 

2.

To approve an amendment to the Company’s Restated Certificate of Incorporation to increase the total number of authorized shares of the Company’s common stock from 450,000,000 to 675,000,000 shares;

 

3.

To approve an amendment to the Company’s 2018 Equity Incentive Plan to, among other items, increase the number of shares of the Company’s common stock issuable thereunder by 12,500,000 shares;

 

4.

To approve, on an advisory basis, the compensation of the Company’s named executive officers, as disclosed in the Proxy Statement;

 

5.

To ratify the selection by the Audit Committee of the Board of Directors of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2021; and

 

6.

To transact such other business as may properly come before the Annual Meeting or any postponement or adjournment thereof.

The foregoing items of business are more fully described in the Proxy Statement accompanying this Notice.

The Board of Directors has fixed the close of business on March 18, 2021, as the record date for the determination of stockholders entitled to notice of and to vote at the virtual Annual Meeting and at any adjournment or postponement thereof. Each stockholder is entitled to one vote for each share of Common Stock held at that time.

Your Vote Is Important To Us. Whether or not you plan to attend the virtual Annual Meeting, please vote electronically via the Internet or by telephone, or, if you requested paper copies of the proxy materials, please complete, sign, date and return the accompanying proxy card in the enclosed postage-paid envelope, as promptly as possible. Stockholders who plan to attend the virtual Annual Meeting should follow the instructions at www.virtualshareholdermeeting.com/GERN2021 to submit questions and vote during the virtual Annual Meeting. You may log-in beginning at 7:30 a.m. Pacific Daylight Time, on May 11, 2021. You will not be able to attend the meeting in person.

 

By Order of the Board of Directors,

Stephen N. Rosenfield

Executive Vice President,

Chief Legal Officer and Corporate Secretary

 

Foster City, California

March 22, 2021

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting to Be Held on May 11, 2021

at www.virtualshareholdermeeting.com/GERN2021

Letter to Stockholders, Notice and 2021 Proxy Statement, and 2020 Annual Report on Form 10-K

are available at www.proxyvote.com.

YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN.

WHETHER OR NOT YOU EXPECT TO ATTEND THE VIRTUAL ANNUAL MEETING, WE URGE YOU

TO SUBMIT YOUR PROXY PROMPTLY IN ORDER TO ASSURE THAT A QUORUM IS PRESENT. EVEN IF YOU HAVE VOTED BY PROXY, YOU MAY STILL VOTE ONLINE IF YOU ATTEND THE VIRTUAL ANNUAL MEETING. PLEASE NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER NOMINEE AND YOU WISH TO VOTE AT THE VIRTUAL ANNUAL MEETING, YOU MUST OBTAIN A PROXY ISSUED IN YOUR NAME FROM THAT RECORD HOLDER.

 

 


 

TABLE OF CONTENTS

 

Description

Page

Questions and Answer About These Proxy Materials and Voting

2

 

 

Proposal 1: Election of Directors

10

 

 

Board Leadership and Governance

16

 

 

Other Corporate Governance Matters

22

 

 

Compensation of Directors

22

 

 

Proposal 2: Approval of an Amendment to Our Restated Certificate of Incorporation

26

 

 

Proposal 3: Approval of the Amendment to our 2018 Equity Incentive Plan

29

 

 

Proposal 4: Advisory Vote to Approve Named Executive Officer Compensation

43

 

 

Compensation Discussion and Analysis

45

 

 

Compensation Committee Report

61

 

 

Executive Compensation Tables and Related Narrative Disclosure

62

 

 

Proposal 5: Ratification of Selection of Independent Registered Public Accounting Firm

73

 

 

Principal Accountant Fees and Services

74

 

 

Audit Committee Report

75

 

 

Equity Compensation Plan Information

76

 

 

Security Ownership of Certain Beneficial Owners and Management

77

 

 

Delinquent Section 16(a) Reports

79

 

 

Certain Transactions

80

 

 

Other Matters

80

 

 

 

 


 

 

GERON CORPORATION

919 E. Hillsdale Blvd., Suite 250

Foster City, CA 94404

 

PROXY STATEMENT

FOR THE ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON MAY 11, 2021

 

QUESTIONS AND ANSWERS ABOUT THESE PROXY MATERIALS AND VOTING

Why am I receiving these materials?

You are receiving this annual meeting information and Proxy Statement from us because you owned shares of common stock, par value $0.001 per share, (“Common Stock”) of Geron Corporation, a Delaware corporation (“Geron,” the “Company,” “we” or “us”), as of March 18, 2021, the record date for our 2021 Annual Meeting of Stockholders (the “Annual Meeting”). The Geron Board of Directors (the “Board of Directors” or the “Board”) has made these materials available to you in connection with the Board’s solicitation of proxies for use at the Annual Meeting. You may vote by proxy over the Internet or by phone, or by mail if you requested printed copies of the proxy materials.

As permitted by the rules of the Securities and Exchange Commission (the “SEC”), we are providing our stockholders access to proxy materials via the Internet. Accordingly, we are sending by mail only a Notice of Availability of Proxy Materials (the “Notice”) to certain of our stockholders of record and posting our proxy materials online at www.proxyvote.com. Stockholders who previously requested to receive hard copies of proxy materials will receive a full set of proxy materials, instead of the Notice. We intend to distribute the Notice and the proxy materials on or about March 27, 2021 to all stockholders of record entitled to vote at the Annual Meeting.

What does it mean if I receive more than one set of proxy materials or more than one Notice, or combination thereof?

If you receive more than one set of proxy materials, or more than one Notice or a combination thereof, your shares may be registered in more than one name or may be registered in different accounts. Please follow the voting instructions on each set of proxy materials or Notices to ensure that all of your shares are voted.

Will I receive any proxy materials by mail other than the Notice?

No, you will not receive any other proxy materials by mail other than the Notice unless you request paper copies. This Proxy Statement and Geron’s 2020 Annual Report on Form 10-K are available at www.proxyvote.com. You may request a full set of proxy materials be sent to your specified postal or email address as follows:

 

by telephone: call 1-800-579-1639 free of charge and follow the instructions;

 

by Internet: go to www.proxyvote.com and follow the instructions; or

 

by e-mail: send an e-mail message to sendmaterial@proxyvote.com. Please send a blank e-mail and insert the 16-Digit Control Number located in your Notice in the subject line. Please make any such request on or before April 27, 2021 to facilitate timely delivery.

To sign up for electronic delivery of proxy materials, please follow the instructions provided with your proxy materials and on your proxy card or voting instruction card, to vote using the Internet and, when prompted, indicate that you agree to receive or access future stockholder communications electronically. Alternatively, you can go to www.proxyvote.com and enroll for online delivery of proxy materials. A stockholder’s election to receive proxy materials by mail or electronically by email will remain in effect until the stockholder terminates such election.

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What is the purpose of the Annual Meeting?

At our Annual Meeting, stockholders will act upon the matters described in this Proxy Statement. In addition, management will report on current events at Geron and respond to questions from stockholders.

How can I participate in the Annual Meeting?

In light of the COVID-19 pandemic, for the safety of all our stockholders and personnel, and taking into account federal, state and local guidance, we will be holding our Annual Meeting virtually, on Tuesday, May 11, 2021, at 8:00 a.m., Pacific Daylight Time, via the Internet at www.virtualshareholdermeeting.com/GERN2021. Online check-in will begin at 7:30 a.m. Pacific Daylight Time and you should allow ample time for the check-in procedures. At our virtual Annual Meeting, shareholders will be able to attend, vote and submit questions via the Internet. Whether or not you plan to attend the virtual Annual Meeting, we urge you to vote and submit your proxy in advance of the meeting by one of the methods described in these proxy materials.

You will not be able to attend the virtual Annual Meeting in person.

How do I ask questions at the virtual Annual Meeting?

Our virtual Annual Meeting allows stockholders to submit questions and comments before and during the virtual Annual Meeting. You may submit questions before the virtual Annual Meeting at www.virtualshareholdermeeting.com/GERN2021. During the virtual Annual Meeting, you may only submit questions in the question box provided at www.virtualshareholdermeeting.com/GERN2021. In both cases, stockholders must have available their 16-Digit Control Number provided in the Notice or your proxy card (if you received a printed copy of the proxy materials). We will respond to as many inquiries at the virtual Annual Meeting as time allows.

What if during the check-in time or during the virtual Annual Meeting I have technical difficulties or trouble accessing the virtual meeting website?

We will have technicians ready to assist you with any technical difficulties you may have accessing the virtual meeting website. 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 website log-in page.

What if I cannot virtually attend the Annual Meeting?

You may vote your shares electronically before the virtual Annual Meeting by Internet, or by telephone or by mail as described below. You do not need to access the virtual Annual Meeting to vote if you submitted your vote by Internet, by telephone or by mail in advance of the virtual Annual Meeting.

The virtual Annual Meeting will be archived for one year after the date of the virtual Annual Meeting at www.virtualshareholdermeeting.com/GERN2021.

Who can vote at the virtual Annual Meeting?

Only holders of record at the close of business on March 18, 2021 (the “Record Date”) will be entitled to notice of and to vote at the virtual Annual Meeting or any adjournment or postponement thereof. At the close of business on the Record Date, we had 318,530,740 shares of Common Stock outstanding.

Stockholder of Record: Shares Registered in Your Name

Each holder of record of Common Stock on the Record Date will be entitled to one vote for each share held on all matters to be voted upon at the virtual Annual Meeting. As a stockholder of record, you may vote at the virtual Annual Meeting, or prior to the virtual Annual Meeting, vote through the Internet or by telephone, or by mail using a proxy card that you received or that you may request. Whether or not you plan to attend the virtual Annual Meeting, we urge you vote by proxy through the Internet or by telephone as instructed below, or by completing a proxy card that you may request or that we may elect to deliver at a later time. Stockholders who attend the virtual Annual Meeting should follow the instructions at www.virtualshareholdermeeting.com/GERN2021 to vote during the virtual Annual Meeting. The stock transfer books will not be closed between the Record Date and the virtual Annual

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Meeting date. A complete list of stockholders entitled to vote at the virtual Annual Meeting will be available for examination at our principal executive offices at the address listed above for a period of ten days prior to the virtual Annual Meeting and will be available on the virtual meeting site at www.virtualshareholdermeeting.com/GERN2021.

Beneficial Owner: Shares Registered in the Name of a Broker or Bank

If on the Record Date your shares were held, not in your name, but rather in an account at a brokerage firm, bank, dealer or other similar organization, then you are the beneficial owner of shares held in “street name” and the Notice is being forwarded to you by that organization. The organization holding your account is considered to be the stockholder of record for purposes of voting during the virtual Annual Meeting. As a beneficial owner, you have the right to direct your broker or other agent regarding how to vote the shares in your account. You are also invited to attend the virtual Annual Meeting. However, since you are not the stockholder of record, you may only vote your shares during the virtual Annual Meeting if you request and obtain a valid 16-Digit Control Number from your broker or agent. Beneficial owners who attend the virtual Annual Meeting should follow the instructions at www.virtualshareholdermeeting.com/GERN2021 to vote during the virtual Annual Meeting.

What is the quorum requirement?

A quorum of stockholders is necessary to hold a valid meeting. In order to constitute a quorum and to transact business at the virtual Annual Meeting, the holders of a majority of the Common Stock issued and outstanding and entitled to vote must be present in person or represented by proxy. Virtual attendance at our Annual Meeting constitutes presence in person for purposes of a quorum at the meeting. Shares represented by proxies that reflect abstentions or “broker non-votes” will be counted as shares that are present and entitled to vote for purposes of determining the presence of a quorum.

What am I voting on at the virtual Annual Meeting? What is the Board’s recommendation on each of the proposals?

You are being asked to vote on five proposals, as follows:

 

Proposal
Number

 

Proposal

 

 

 

Board
Recommends

1

 

To elect the two nominees for director named in this Proxy Statement to hold office as Class I members of our Board of Directors until the 2024 annual meeting of stockholders.

 

 

 

FOR

BOTH

director

nominees

2

 

To approve an amendment to our Restated Certificate of Incorporation to increase the total number of authorized shares of our Common Stock from 450,000,000 to 675,000,000 shares.

 

 

 

FOR

3

 

To approve an amendment to our 2018 Equity Incentive Plan to, among other items, increase the total number of shares of Common Stock issuable thereunder by 12,500,000 shares.

 

 

 

FOR

 

4

 

To approve, on an advisory basis, the compensation of our named executive officers, as disclosed in this Proxy Statement.

 

 

 

FOR

5

 

To ratify the selection by the Audit Committee of the Board of Directors of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021.

 

 

 

FOR

 

 

4

 


How many votes are needed to approve each proposal? What is the effect of abstentions and broker non-votes on each of the proposals?  

The following table summarizes the minimum vote needed to approve each proposal and the effect of abstentions and broker non-votes on each of the proposals:

 

Proposal
Number

 

Proposal

 

Votes Required to Approve Proposal(1)

 

Effect of

Abstentions

 

Effect of Broker

Non-Votes

1

 

To elect the two nominees for director named in this Proxy Statement to hold office as Class I members of our Board of Directors until the 2024 annual meeting of stockholders.

 

The nominees receiving the most “FOR” votes properly cast in person or virtually or represented by proxy will be elected. Only votes “FOR” will affect the outcome of the vote; “WITHHOLD” votes will have no effect on the outcome of the vote. However, under our Corporate Governance Guidelines, any nominee for director who receives a greater number of “WITHHOLD” votes from his or her election than votes “FOR” such election is required to submit an offer of resignation for consideration by the Nominating and Corporate Governance Committee. In such case, the Nominating and Corporate Governance Committee will then consider all of the relevant facts and circumstances and recommend to the Board the action to be taken with respect to such offer of resignation.

 

Not applicable

 

No effect

2

 

To approve an amendment to our Restated Certificate of Incorporation to increase the total number of authorized shares of our Common Stock from 450,000,000 to 675,000,000 shares.

 

The affirmative vote of the holders of a majority of the outstanding shares entitled to vote on this matter.

 

Against

 

Not applicable(2)

3

 

To approve an amendment to the Company’s 2018 Equity Incentive Plan to, among other items, increase the total number of shares of the Company’s Common Stock issuable thereunder by 12,500,000 shares.

 

The affirmative vote of the holders of a majority of the shares having voting power present in person or virtually or represented by proxy at the Annual Meeting.

 

Against

 

No effect

4

 

To approve, on an advisory basis, the compensation of our named executive officers, as disclosed in this Proxy Statement.

 

The affirmative vote of the holders of a majority of the shares having voting power present in person or virtually or represented by proxy at the Annual Meeting.

 

Against

 

No effect

5

 

To ratify the selection by the Audit Committee of the Board of Directors of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021.

 

The affirmative vote of the holders of a majority of the shares having voting power present in person or virtually or represented by proxy at the Annual Meeting.

 

Against

 

Not applicable(2)

 

(1)

Virtual attendance at our Annual Meeting constitutes presence in person for purposes of the votes.  

(2)

This proposal is considered to be a “routine” matter under NYSE rules. Accordingly, if you hold your shares in street name and do not provide voting instructions to your broker, bank or other agent that holds

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your shares, your broker, bank or other agent has discretionary authority under NYSE rules to vote your shares on this proposal. For more information, see “If I am a beneficial owner of shares held in street name and I do not provide my broker or bank with my voting instructions, what happens?” and “What are broker non-votes?” below.

What are the choices in voting?

For Proposal 1, you may either vote “FOR” all nominees to the Board of Directors or you may “WITHHOLD” your vote for one or more nominees that you specify. For proposals 2, 3, 4 and 5, you may vote “FOR” the proposal or “AGAINST” the proposal or “ABSTAIN” from voting on the proposal.

Could other matters be decided at the virtual Annual Meeting?

Our Bylaws require that we receive advance notice of any proposal to be brought before the Annual Meeting by our stockholders, and we have not received notice of any such proposals. If any other matters were to be properly submitted for a vote at the virtual Annual Meeting, the proxy holders appointed by the Board will have the discretion to vote on those matters for you as they see fit. This includes, among other things, considering any motion to adjourn the virtual Annual Meeting to another time and/or place, including for the purpose of soliciting additional proxies for or against a given proposal.

How do I vote my shares and what are the voting deadlines?

Please refer to the proxy card for instructions on, and access information for, voting by telephone, over the Internet or by mail.

Stockholder of Record: Shares Registered In Your Name

You are a stockholder of record if, on the Record Date, your shares were registered directly in your name with our transfer agent, Computershare Trust Company, N.A. As a stockholder of record, there are several ways for you to vote your shares.

 

Via the Internet Before the Virtual Annual Meeting. You may vote by Internet at www.proxyvote.com, 24 hours a day, seven days a week. You will need the 16-Digit Control Number included on your Notice, your proxy card (if you received a printed copy of the proxy materials) or the instructions that accompanied your proxy materials to join the virtual Annual Meeting. Votes submitted through the Internet must be received by 11:59 p.m., Eastern Daylight Time, on May 10, 2021.

 

By Telephone. You may vote using a touch-tone telephone by calling 1-800-690-6903, 24 hours a day, seven days a week. You will need the 16-Digit Control Number included on your Notice, your proxy card (if you received a printed copy of the proxy materials) or the instructions that accompanied your proxy materials to join the virtual Annual Meeting. Votes submitted by telephone must be received by 11:59 p.m., Eastern Daylight Time, on May 10, 2021.

 

By Mail. If you received printed proxy materials, you may submit your vote by completing, signing, and dating each proxy card received and returning it in the postage-paid envelope. Sign your name exactly as it appears on the proxy card. Proxy cards submitted by mail must be received no later than close of business on May 10, 2021 to be voted at the virtual Annual Meeting.

 

Via the Internet During the Virtual Annual Meeting. Stockholders who attend the virtual Annual Meeting should follow the instructions at www.virtualshareholdermeeting.com/GERN2021 to vote during the virtual Annual Meeting. You will need the 16-Digit Control Number included on your Notice, your proxy card (if you received a printed copy of the proxy materials) or the instructions that accompanied your proxy materials to join the virtual Annual Meeting.

The Internet and telephone voting procedures described above, which comply with Delaware law, are designed to authenticate stockholders’ identities, to allow stockholders to vote their shares, and to confirm that their instructions have been properly recorded. However, please be aware that you must bear any costs associated with your Internet access, such as usage charges from Internet access providers and telephone companies.

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Beneficial Owner: Shares Registered in the Name of a Broker or Bank

You are a beneficial owner, if on the Record Date, your shares were held in an account at a brokerage firm, bank, dealer, or other similar organization and not in your name. The organization holding your account is considered to be the stockholder of record for purposes of voting at the virtual Annual Meeting. Being a beneficial owner means that, like most stockholders, your shares are held in “street name” and these proxy materials are being forwarded to you by that organization.

As a beneficial owner, you should have received a Notice or voting instructions from the broker or other nominee holding your shares. You should follow the instructions in the Notice or voting instructions provided by your broker or nominee in order to instruct your broker or other nominee on how to vote your shares. The availability of telephone and Internet voting will depend on the voting process of the broker or nominee. Please contact your bank, broker or other agent if you have questions about their instructions on how to vote your shares. Please also note that since you are not the stockholder of record, you may only vote your shares during the virtual Annual Meeting if you request and obtain a valid 16-Digit Control Number from your broker or agent. Beneficial owners who attend the virtual Annual Meeting should follow the instructions at www.virtualshareholdermeeting.com/GERN2021 to vote during the virtual Annual Meeting. You will need the 16-Digit Control Number included on your Notice, your proxy card (if you received a printed copy of the proxy materials) or the instructions that accompanied your proxy materials to join the virtual Annual Meeting.

If you do not provide your broker or bank with instructions on how to vote your shares, your broker or bank will be able to vote your shares with respect to the approval of an amendment to our Restated Certificate of Incorporation to increase the total number of authorized shares of our Common Stock from 450,000,000 to 675,000,000 shares (Proposal 2) and ratification of the selection of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021 (Proposal 5). For more information, see “If I am a beneficial owner of shares held in street name and I do not provide my broker or bank with my voting instructions, what happens?” and “What are broker non-votes?” below.

Geron Plan Participants

As trustee of the Geron 401(k) Plan, Prudential Bank and Trust FSB will receive a proxy that incorporates all the shares owned by the Geron 401(k) Plan and will vote such proxy as directed by the Geron 401(k) sponsor.

If you purchased through the 2014 Employee Stock Purchase Plan and your shares are held in the name of a broker, please refer to the discussion above under “Beneficial Owner: Shares Registered in the Name of a Broker or Bank.”

If I am a stockholder of record and I do not vote, or if I return a proxy card or otherwise vote without giving specific voting instructions, what happens?

If you are a stockholder of record and you do not specify your vote on each proposal individually when voting via the Internet, over the telephone or if you sign and return a proxy card without giving specific voting instructions, then your shares will be voted in line with the Board’s recommendations above as described under “What am I voting on at the virtual Annual Meeting? What is the Board’s recommendation on each of the proposals?” If any other matter is properly presented at the virtual Annual Meeting, your proxyholder (one of the individuals named on your proxy card) will vote your shares using his or her best judgment.

If I am a beneficial owner of shares held in street name and I do not provide my broker or bank with my voting instructions, what happens?

If you are a beneficial owner of shares registered in the name of your broker, bank or other agent, and you do not instruct your broker, bank or other agent how to vote your shares, your broker, bank or other agent may still be able to vote your shares in its discretion. In this regard, under the rules of the New York Stock Exchange (NYSE), brokers, banks and other securities intermediaries that are subject to NYSE rules may use their discretion to vote your “uninstructed” shares with respect to matters considered to be “routine” under NYSE rules, but not with respect to “non-routine” matters. In this regard, Proposals 1, 3 and 4 are considered to be “non-routine” under NYSE rules meaning that your broker may not vote your shares on those proposals in the absence of your voting instructions. However, Proposals 2 and 5 are considered to be “routine” matters under NYSE rules meaning that if you do not return voting instructions to your broker by its deadline, your shares may be voted by your broker in its discretion on Proposals 2 and 5.

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If you are a beneficial owner of shares held in street name, in order to ensure your shares are voted in the way you would prefer, you must provide voting instructions to your broker, bank or other agent by the deadline provided in the proxy materials you receive from your broker, bank or other agent.

What are broker non-votes?

As discussed above, when a beneficial owner of shares held in street name does not give voting instructions to his or her broker, bank or other securities intermediary holding his or her shares as to how to vote on matters deemed to be “non-routine” under NYSE rules, the broker, bank or other such agent cannot vote the shares. These un-voted shares are counted as “broker non-votes.” Proposals 1, 3 and 4 are considered to be “non-routine” under NYSE rules and we therefore expect broker non-votes to exist in connection with those proposals.

As a reminder, if you are a beneficial owner of shares held in street name, in order to ensure your shares are voted in the way you would prefer, you must provide voting instructions to your broker, bank or other agent by the deadline provided in the materials you receive from your broker, bank or other agent.

Can I revoke or change my vote after I submit my proxy?

Stockholder of Record: Shares Registered in Your Name

If you are a stockholder of record, you may revoke or change your vote at any time before the final vote at the virtual Annual Meeting by:

 

signing and returning a new proxy card with a later date;

 

submitting a later-dated vote by telephone or via the Internet — only your latest Internet or telephone vote received by 11:59 p.m., Eastern Daylight Time, on May 10, 2021, will be counted. You will need the 16-Digit Control Number included on your Notice, your proxy card (if you received a printed copy of the proxy materials) or the instructions that accompanied your proxy materials;

 

attending the virtual Annual Meeting and voting again by following the instructions at www.virtualshareholdermeeting.com/GERN2021 to vote during the virtual Annual Meeting. To virtually attend the Annual Meeting, you will need the 16-Digit Control Number included on your Notice, your proxy card (if you received a printed copy of the proxy materials) or the instructions that accompanied your proxy materials; or

 

delivering a written revocation to our Corporate Secretary at Geron’s offices, 919 E. Hillsdale Blvd., Suite 250, Foster City, California 94404, before the virtual Annual Meeting.

Beneficial Owner: Shares Registered in the Name of a Broker or Bank

If you are a beneficial owner of your shares, you must contact the broker or other nominee holding your shares and follow their instructions for revoking or changing your vote.

How will your proxy be counted?

Votes will be counted by the Inspector of Election appointed for the virtual Annual Meeting, who will separately count “FOR,” “WITHHOLD” and broker non-votes with respect to Proposal 1 regarding the election of directors, and, with respect to Proposals 2, 3, 4 and 5, “FOR” and “AGAINST” votes, abstentions and, as applicable, broker non-votes.

Is my vote confidential?

Yes. Proxy cards and voting tabulations that identify stockholders by name are kept confidential. There are exceptions for contested proxy solicitations or when necessary to meet legal requirements. In addition, all comments written on a proxy card or elsewhere will be forwarded to management, but your identity will be kept confidential unless you ask that your name be disclosed.

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How can I find out the results of the voting at the virtual Annual Meeting?

Preliminary voting results will be announced at the virtual Annual Meeting. Final voting results will be published by Geron in a Current Report on Form 8-K, filed with the SEC, that we expect to file within four business days after the virtual Annual Meeting. If final voting results are not available to us in time to file a Current Report on Form 8-K within four business days after the virtual Annual Meeting, we intend to file a Current Report on Form 8-K to publish preliminary results and, within four business days after the final results are known to us, file an additional Current Report on Form 8-K to publish the final results.

Who is paying for this proxy solicitation?

We will pay the entire cost of solicitation of proxies, including preparation, assembly, printing and mailing of this Proxy Statement, the proxy card and any additional information furnished to stockholders. Copies of solicitation materials will be furnished to banks, brokerage houses, fiduciaries and custodians holding in their names shares of Common Stock beneficially owned by others to forward to such beneficial owners. In addition, we may reimburse persons representing beneficial owners of Common Stock for their costs of forwarding solicitation materials to such beneficial owners. The original solicitation of proxies by mail may be supplemented by solicitation by mail, telephone or other electronic means, or in person, by our directors, officers, or other regular employees, or at our request, by Alliance Advisors, LLC. No additional compensation will be paid to directors, officers or other regular employees for such services, but Alliance Advisors will be paid its customary fee, estimated to be $6,500, to render solicitation services.

When are stockholder proposals due for next year’s Annual Meeting?

See the sub-section entitled “Stockholder Nominations and Proposals for 2022 Annual Meeting” under the section entitled “Other Matters.”

How can I obtain a copy of Geron’s Annual Report on Form 10-K?

We will mail to you without charge, upon written request, a copy of our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC, as well as a copy of any exhibit specifically requested. Requests should be sent to: Corporate Secretary, Geron Corporation, 919 E. Hillsdale Blvd., Suite 250, Foster City, California 94404. A copy of our 2020 Annual Report on Form 10-K has also been filed with the SEC and may be accessed from the SEC’s homepage (www.sec.gov). You may also view and download our 2020 Annual Report on Form 10-K on our website at www.geron.com as well as www.proxyvote.com.

What is householding and how does it affect me?

Some brokers and other nominee record holders may be participating in the practice of “householding” proxy statements. This means that only one copy of this Proxy Statement and 2020 Annual Report on Form 10-K or the Notice may have been sent to multiple stockholders in a stockholder’s household. Once you have received notice from your broker that they will be “householding” communications to your address, “householding” will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in “householding” and would prefer to receive separate copies of the proxy statement, annual report or the notice of internet availability of proxy materials, please notify your broker or our Investor Relations department. We will promptly deliver copies of the Proxy Statement and our 2020 Annual Report on Form 10-K or the Notice to any stockholder who contacts us by electronic mail addressed to investors@geron.com, or by mail addressed to Investor Relations, Geron Corporation, 919 E. Hillsdale Blvd., Suite 250, Foster City, California 94404, requesting such copies. If you receive multiple copies of the proxy statement and annual report at your household and would like to receive a single copy of the proxy statement and annual report for your household in the future, you should contact your broker, other nominee record holder, or our Investor Relations department to request a single copy of the proxy statement and annual report.

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MATTERS TO BE CONSIDERED AT THE 2021 ANNUAL MEETING

PROPOSAL 1

ELECTION OF DIRECTORS

Board Structure

Our Board currently consists of seven directors, six of whom are “independent,” as that term is defined by Nasdaq Rule 5602(a)(2), and one of whom is an executive officer of the Company. Our Bylaws provide for the classification of the Board into three classes with staggered terms of office so that one class of the Board is elected annually, and each class of directors stands for election every three years.

The term of the Class I directors, John A. Scarlett, M.D. and Robert J. Spiegel, M.D., FACP, will expire at the Annual Meeting. Proxies may only be voted for the two Class I directors nominated for election at the Annual Meeting. The Class II directors, Dawn C. Bir and Elizabeth G. O’Farrell, have one year remaining on their terms of office. The Class III directors, Karin Eastham; V. Bryan Lawlis, Ph.D.; and Susan Molineaux, Ph.D. have two years remaining on their terms of office.

The following table provides summary information about each director nominee and currently serving director as of March 1, 2021:

 

 

 

 

Committee Memberships

 

Name and Principal Position

Age

Independent

AC

CC

NG

Other Public

Boards

2021 Director Nominees

 

 

 

 

 

 

John A. Scarlett, M.D.

70

No

 

 

 

2

Chairman of the Board, President, and Chief Executive Officer

 

 

 

 

 

 

Robert J. Spiegel, M.D., FACP

71

Yes

 

C

 

3

Independent Director

 

 

 

 

 

 

Currently Serving Directors

 

 

 

 

 

 

Dawn C. Bir

50

Yes

 

 

M

None

Chief Commercial Officer, Reata Pharmaceuticals, Inc.

 

 

 

 

 

 

Elizabeth G. O’Farrell

56

Yes

M, FE

 

 

2

Independent Director

 

 

 

 

 

 

Karin Eastham

71

Yes

C, FE

M

 

3

Retired C.P.A.

 

 

 

 

 

 

Lead Independent Director

 

 

 

 

 

 

V. Bryan Lawlis, Ph.D.  

69

Yes

M

M

 

3

Independent Director  

 

 

 

 

 

 

Susan M. Molineaux, Ph.D.

67

Yes

 

 

C

2

President, Chief Executive Officer and

 

 

 

 

 

 

Director, Calithera Biosciences, Inc.

 

 

 

 

 

 

Independent Director

 

 

 

 

 

 

 

 

AC: Audit Committee

 

C: Chair

 

 

 

 

 

 

 

CC: Compensation Committee

 

M: Member 

 

 

 

 

 

 

 

NG: Nominating and Corporate Governance Committee

 

FE: Financial Expert

 

 

 

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NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS

For a Three-Year Term Expiring at the

2024 Annual Meeting

The Board has selected two nominees for Class I directors: John A. Scarlett, M.D. and Robert J. Spiegel, M.D., FACP, both of whom were previously elected by stockholders.

Set forth below is a brief biography of each nominee for Class I director, the periods during which they have served as a director of Geron, and information furnished by them as to principal occupations and public company directorships held by them. The biographies below also include a discussion of the specific experience, qualifications, attributes or skills of each nominee that led the Nominating and Corporate Governance Committee and the Board to conclude, as of the date of this Proxy Statement, that each nominee for Class I director should continue to serve as a director. Each person nominated for election has consented to being named as a nominee in this Proxy Statement and has agreed to serve if elected, and the Board has no reason to believe that any nominee will be unable to serve.

It is a key objective of the Company to have a diverse Board, representing a range of expertise, skills, perspectives and experiences in areas that are relevant to the Company’s business and the needs of the Board. As stated in our Nominating and Corporate Governance Committee Charter and our Corporate Governance Guidelines, as part of the director search process, the Nominating and Corporate Governance Committee endeavors to consider qualified candidates, including women and candidates from underrepresented communities, who meet the relevant business and search criteria. In furtherance of the foregoing, where a third-party search firm is engaged and requested to furnish an initial list of possible candidates, such firm will be requested to include in such list women and candidates from underrepresented communities who meet such criteria.

Class I Director Nominees (Term Expiring at the 2024 Annual Meeting)

John A. Scarlett, M.D.

Experience

Dr. Scarlett has served as our Chairman of the Board since December 2018, our Chief Executive Officer and a director since joining Geron in September 2011, and President since January 2012. Dr. Scarlett also serves as a member of the boards of directors for Chiasma, Inc., a biopharmaceutical company focused on transforming injectable drugs into oral medications, since February 2015, and CytomX Therapeutics, Inc., an oncology-oriented company, since June 2016. Prior to joining Geron, Dr. Scarlett served as President, Chief Executive Officer and a member of the board of directors of Proteolix, Inc., a privately-held, oncology-oriented biopharmaceutical company, from February 2009 until its acquisition by Onyx Pharmaceuticals, Inc., an oncology-oriented biopharmaceutical company, in November 2009. From February 2002 until its acquisition by Ipsen, S.A. in October 2008, Dr. Scarlett served as the Chief Executive Officer and a member of the board of directors of Tercica, Inc., an endocrinology-oriented biopharmaceutical company, and also as its President from February 2002 through February 2007. From March 1993 to May 2001, Dr. Scarlett served as President and Chief Executive Officer of Sensus Drug Development Corporation, a privately-held company focused on endocrine disorders. In 1995, he co-founded Covance Biotechnology Services, Inc., a contract biopharmaceutical manufacturing operation, and served as a member of its board of directors from inception to 2000. From 1991 to 1993, Dr. Scarlett headed the North American Clinical Development Center and served as Senior Vice President of Medical and Scientific Affairs at Novo Nordisk Pharmaceuticals, Inc., a wholly-owned subsidiary of Novo Nordisk A/S, a global pharmaceutical company. Dr. Scarlett received his B.A. degree in chemistry from Earlham College and his M.D. from the University of Chicago, Pritzker School of Medicine.

Qualifications and Director Commitments

As the only management representative on the Board, Dr. Scarlett brings management’s perspective to the Board’s discussions about Geron’s business and strategic direction. In addition, the Board believes Dr. Scarlett’s deep understanding of what makes businesses work effectively and efficiently, as well as his medical background and extensive drug development experience, provide valuable insights to the Board. See discussion below regarding Board Leadership and Governance in connection with the appointment of a Lead Independent Director who provides leadership for the independent members of the Board.

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Serving as a director for other publicly-held biopharmaceutical companies provides Dr. Scarlett with alternate viewpoints on business strategy and board decision-making, which we believe enhances his contributions to our Board. Dr. Scarlett has demonstrated his ability to dedicate sufficient time and focus on his duties as a member of our Board and attended 100% of our Board meetings in 2020. In accordance with our Board’s standard practice, Dr. Scarlett reviews scheduled Board meeting dates a year in advance to confirm availability to participate and attend all our Board meetings, and prioritizes Geron’s meetings over Chiasma and CytomX board meetings. Accordingly, the Board believes Dr. Scarlet’s business and medical expertise acquired in successfully holding executive and leadership positions in biotechnology companies, and his demonstrated reliability and commitment to service on our Board, qualifies him to be elected as a director and Chairman of the Board.

Robert J. Spiegel, M.D., FACP

Experience

Dr. Spiegel has served as a director of Geron since May 2010. Dr. Spiegel currently serves as an Associate Professor at the Weill Cornell Medical School, a Senior Advisor to Warburg Pincus, a private equity firm, and an Advisor to the Israel Biotech Fund, a venture investment fund. He is also a member of the board of directors of Ayala Pharmaceuticals, a clinical-stage oncology company, since December 2017; Cyclacel Pharmaceuticals, Inc., a biopharmaceutical company developing targeted medicines for cancer and other proliferative diseases, since September 2018; Athenex, Inc., a global biopharmaceutical oncology company, since August 2020; and several privately-held biotechnology companies. He previously served as a director for Avior Computing Corporation, a privately-held governance risk and compliance process technology company, from October 2011 to November 2017; Talon Therapeutics, Inc., a biopharmaceutical company, from July 2010 to July 2013; Capstone Therapeutics Corp., a biotechnology company, from May 2010 to January 2012; Sucampo Pharmaceuticals, Inc., a biopharmaceutical company, from January 2015 to January 2018; and PDS Biotechnology Corporation (formerly Edge Therapeutics, Inc.), a biotechnology company, from August 2013 to March 2019; the Cancer Institute of New Jersey from 1999 to 2009; and Cancer Care New Jersey from 1995 to 2011. From March 2011 to April 2016, Dr. Spiegel served as Chief Medical Officer of PTC Therapeutics, Inc., a biopharmaceutical company focused on discovering and developing treatments for rare disorders. In 2009, after 26 years with the Schering-Plough Corporation (now Merck & Co.), a global healthcare company, Dr. Spiegel retired as Chief Medical Officer and Senior Vice President of the Schering-Plough Research Institute, the pharmaceutical research arm of the Schering-Plough Corporation. His career at Schering-Plough involved various positions, including Director of clinical research for oncology, Vice President of clinical research, and Senior Vice President of worldwide clinical research. Following a residency in internal medicine, Dr. Spiegel completed a fellowship in medical oncology at the National Cancer Institute, and from 1981 to 1999 he held academic positions at the National Cancer Institute and New York University Cancer Center. Dr. Spiegel holds a B.A. from Yale University and an M.D. from the University of Pennsylvania.

Qualifications

The Board believes Dr. Spiegel’s extensive medical experience developing oncology products, his deep understanding of pharmaceutical research and development, and broad expertise in gaining regulatory approval for drug candidates, enhances the Board’s ability to critically assess the progress and potential of imetelstat, and qualifies Dr. Spiegel to be elected as a director.

Vote Required

Directors are elected by a plurality of the votes of the holders of shares present in person or represented by proxy at the meeting. Each of the nominees receiving the highest number of “FOR” votes properly cast in person or by proxy at the meeting will be elected as a Class I director of Geron. In tabulating the voting results for the election of directors, only “FOR” and “WITHHOLD” votes and broker non-votes are counted. “WITHHOLD” votes and broker non-votes will not have any effect on the outcome of the election. In the event that any nominee should be unavailable for election as a result of an unexpected occurrence, shares that would have been voted for that nominee will instead be voted for the election of a substitute nominee, if any, proposed by the Nominating and Corporate Governance Committee and the Board.

Although the election of directors at the Annual Meeting is uncontested and directors are elected by a plurality of votes cast, and we therefore expect that each of the named nominees for director will be elected at the Annual Meeting, under our Corporate Governance Guidelines, any nominee for director is required to

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submit an offer of resignation for consideration by the Nominating and Corporate Governance Committee if such nominee for director (in an uncontested election) receives a greater number of “WITHHOLD” votes from his or her election than votes “FOR” such election. In such case, the Nominating and Corporate Governance Committee will then consider all of the relevant facts and circumstances and recommend to the Board the action to be taken with respect to such offer of resignation. Promptly following the Board’s decision, we would disclose that decision and an explanation of such decision in a filing with the SEC or a press release.

The Board of Directors Unanimously Recommends That

Stockholders Vote FOR the Election of all Nominees to the Board of Directors

MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE

AFTER THE ANNUAL MEETING

Set forth below is a brief biography of each continuing director composing the remainder of the Board with terms expiring as shown, including the periods during which they have served as a director of Geron, and information furnished by them as to principal occupations and public company directorships held by them. The biographies below also include a discussion of the specific experience, qualifications, attributes or skills of each continuing director that led the Nominating and Corporate Governance Committee and the Board to conclude, as of the date of this Proxy Statement, that the applicable director should continue to serve as a director.

Class II Directors (Term Expiring at the 2022 Annual Meeting)

Dawn C. Bir

Experience

Ms. Bir has served as a director of Geron since March 2019. Since September 2016, Ms. Bir has served as the Chief Commercial Officer of Reata Pharmaceuticals, Inc., a biopharmaceutical company, where she leads marketing, market access, sales, and commercial operations. From February 2013 to September 2016, Ms. Bir served as Vice President of Sales with Pharmacyclics LLC, an AbbVie company, where she built and led their first hematology national sales organization, and was responsible for the launch of IMBRUVICA in the United States and Puerto Rico. From October 2011 to February 2013, Ms. Bir served as Vice President of Sales & Marketing of SKY Pharmaceuticals Packaging, Inc. & Rx Pak, a unit within the U.S. pharmaceutical and specialty solutions division of McKesson Corporation, a global healthcare company, where she was responsible for two companies and revenue centers, and led multiple functions, including sales, marketing, contract management, project management and customer service. From 1996 to October 2011, Ms. Bir held several commercial and sales positions of increasing responsibility within Genentech, Inc., a member of the Roche Group, a global pharmaceutical company, and Bristol-Myers Squibb Company, a global pharmaceutical company. Ms. Bir holds a B.S. in Biology from Binghamton University.

Qualifications

The Board believes Ms. Bir’s extensive commercial, sales and marketing expertise, including with hematology-oncology products, broadens the Board’s ability to advise, evaluate and analyze future potential commercialization activities for imetelstat, especially in the United States, as well as to provide insights into the competitive landscape of other hematology-oncology products. This knowledge and experience, together with her strong leadership ability as a female executive in the healthcare industry, qualify Ms. Bir to serve as a director.

Elizabeth G. O’Farrell

Experience

Ms. O’Farrell has served as a director of Geron since March 2019. Ms. O’Farrell also serves as a member of the board of directors of Inhibikase Therapeutics, a pharmaceutical company innovating small-molecule kinase inhibitor therapeutics for treatment of neurological infections and neurodegenerative diseases, since December 2020 and LENSAR, Inc., a global medical technology company, since January 2021. In December 2017, Ms. O’Farrell retired from a 24-year career with Eli Lilly and Company, a global pharmaceutical company, where she held several senior management positions in finance and corporate governance, most recently serving as Chief Procurement Officer and Head of Global Shared Services from January 2012 to December 2017. Prior to that position, she also served as Senior Vice President, Policy and Finance; Senior

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Vice President, Finance; Chief Financial Officer, Lilly USA; Chief Financial Officer, Lilly Canada; and General Auditor. Before joining Eli Lilly, Ms. O’Farrell was an accountant with Boise Cascade Office Products, and served as an auditor at Whipple & Company, a professional accountancy firm, and Price Waterhouse, an international public accounting firm. Ms. O’Farrell holds a B.S. in accounting with honors and an M.B.A. in management information systems, both from Indiana University.

Qualifications

Ms. O’Farrell’s significant financial, operational and corporate governance expertise strengthens the Board’s collective knowledge related to compliance, financial reporting and internal controls. In addition, Ms. O’Farrell’s management and leadership experience, gained through the various management roles she has held, also provides unique and valuable insights to the Board regarding organizational development for a growing company, as Geron pursues late-stage development and potential commercialization of imetelstat. The Board believes Ms. O’Farrell’s knowledge and experience as a senior female executive with a long tenure at a large global pharmaceutical company qualify Ms. O’Farrell to serve as a director.

Class III Directors (Term Expiring at the 2023 Annual Meeting)

Karin Eastham

Experience

Ms. Eastham has served as a director of Geron since March 2009, and as Lead Independent Director of the Board since December 2018. Ms. Eastham also serves as a member of the boards of directors of Veracyte, Inc., a molecular diagnostics company, since December 2012; Nektar Therapeutics, a clinical-stage biopharmaceutical company, since September 2018; and Personalis, Inc., a diagnostic company developing genomic sequencing tools, since September 2019. Ms. Eastham previously served as a director of Illumina, Inc., a manufacturer of life science tools and reagents, from July 2004 to May 2019; MorphoSys AG, then a Frankfurt Stock Exchange-listed biotechnology company, from May 2012 to May 2017; Trius Therapeutics, Inc., a biopharmaceutical company, from 2009 until its sale in 2013; Amylin Pharmaceuticals, Inc., a biopharmaceutical company focused on diabetes and metabolic disorders, from 2005 until its sale in 2012; and Genoptix, Inc., a provider of specialized laboratory services, from 2008 until its sale in 2011. From 1976 until her retirement in September 2008, Ms. Eastham has held several senior management positions in the life sciences industry, including with the Burnham Institute for Medical Research, a non-profit corporation engaged in basic biomedical research; Diversa Corporation, a biotechnology company; CombiChem, Inc., a computational chemistry company; Cytel Corporation, a biopharmaceutical company; and Boehringer Mannheim Corporation, a biopharmaceutical company. Ms. Eastham holds a B.S. and an M.B.A. from Indiana University and is a retired Certified Public Accountant.

Qualifications and Director Commitments

Ms. Eastham has confirmed to our Board that she is fully committed to continuing to dedicate the required amount of time to fulfill her duties as the Lead Independent Director for Geron, as well as her roles as Chair of our Audit Committee and a member of our Compensation Committee. Serving on Geron’s Board for over 11 years, Ms. Eastham is the longest serving female director on our Board. Throughout this period, she has consistently demonstrated her ability to dedicate sufficient time and focus on her duties as a director of Geron, Chair of our Audit Committee and a member of our Compensation Committee. Ms. Eastham has attended 100% of the meetings for Geron’s Board, Audit Committee and Compensation Committee for each of the years ended December 31, 2020, 2019 and 2018. In accordance with our Board’s standard practice, Ms. Eastham reviews scheduled Geron Board and committee meeting dates a year in advance to confirm availability to participate and attend all Board and committee meetings. All the companies for which she serves as a director are located in the San Francisco Bay Area, enabling her to travel and regularly attend Geron’s Board and committee meetings.

The Board believes Ms. Eastham’s understanding of biotechnology companies, combined with her business leadership and financial experience, her contributions to the Board’s understanding of corporate governance and strategy for life science companies through her extensive experience as a director in the biopharmaceutical industry, and her strong senior management experience in the biopharmaceutical industry, particularly in key corporate finance and accounting positions, provides important perspectives to the Board. In addition, the Board believes Ms. Eastham’s financial expertise as a certified public accountant and deep business experience, as well as her demonstrated commitment to our Board and her extensive knowledge of

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Geron’s business and strategies, based on her service on Geron’s Board since 2009, qualifies her to serve as a director and serve as the Lead Independent Director.

V. Bryan Lawlis, Ph.D.

Experience

Dr. Lawlis has served as a director of Geron since March 2012. He also serves as a member of the boards of directors of BioMarin Pharmaceutical, Inc., a biopharmaceutical company specializing in rare genetic diseases, since June 2007; Coherus BioSciences, Inc., a biologics platform company specializing in biosimilars, since May 2014; Aeglea BioTherapeutics, Inc., a biotechnology company specializing in human enzyme therapeutics for rare genetic diseases and cancer, since July 2018; and several privately-held biotechnology companies. In addition, he serves as an advisor to Phoenix Venture Partners, a venture capital firm specializing in manufacturing technologies, since October 2015. Dr. Lawlis previously served as a director of KaloBios Pharmaceuticals, Inc., a biopharmaceutical company, from August 2013 to September 2014; and Sutro Biopharma, Inc., a biologics platform company specializing in therapeutics for cancer and autoimmune disorders, from January 2004 to June 2019. Dr. Lawlis was the President and Chief Executive Officer of Itero Biopharmaceuticals LLC, a privately-held, early stage biopharmaceutical company that he co-founded, from 2006 to 2011. Dr. Lawlis also held several senior management positions in the biopharmaceutical industry, including President and Chief Executive Officer of Aradigm Corporation, a specialty drug company focused on drug delivery technologies, and President and Chief Executive Officer of Covance Biotechnology Services, a contract biopharmaceutical manufacturing operation, which he co-founded. Dr. Lawlis holds a B.A. in microbiology from the University of Texas at Austin and a Ph.D. in biochemistry from Washington State University.

Qualifications

The Board believes Dr. Lawlis’ extensive experience in manufacturing biotechnology and other pharmaceutical products, as well as his expertise in the research and development of drug products and in the management and conduct of clinical trials and drug regulatory processes, qualifies Dr. Lawlis to serve as a director.

Susan M. Molineaux, Ph.D.

Experience

Dr. Molineaux has served as a director of Geron since September 2012. Dr. Molineaux has been Chief Executive Officer, President and a member of the board of directors of Calithera Biosciences, Inc., a biotechnology company developing oncology therapeutics, since co-founding the company in June 2010. She also serves as a member of the board of directors of Theravance Biopharma, Inc., a biopharmaceutical company located in South San Francisco, since April 2015, where she is a member of the Sciences and Technology Committee, and as a Scientific Advisor to Lightstone Ventures, a private life sciences investment company, since September 2016. Prior to Calithera, Dr. Molineaux co-founded Proteolix, Inc., a privately-held oncology-oriented biopharmaceutical company, where she served as Chief Scientific Officer from December 2003 until December 2005 and from February 2009 until November 2009, and as President and Chief Executive Officer from January 2006 until February 2009, until the company’s acquisition by Onyx Pharmaceuticals, Inc., a global oncology-oriented biopharmaceutical company, in November 2009. Previously, Dr. Molineaux held several senior management positions in the biopharmaceutical industry, including Vice President of Biology at Rigel Pharmaceuticals, Inc., a biopharmaceutical company focused on inflammatory and autoimmune diseases; Vice President of Biology at Praelux, Inc., a biopharmaceutical company; and Vice President of Drug Development at Praecis Pharmaceuticals, Inc., an oncology-focused biopharmaceutical company. Dr. Molineaux holds a B.S. in biology from Smith College, a Ph.D. in molecular biology from Johns Hopkins University, and completed a postdoctoral fellowship at Columbia University.

Qualifications and Director Commitments

Dr. Molineaux has confirmed to our Board that she is fully committed to continuing to dedicate the required amount of time to fulfill her duties as a director of Geron, including her role as Chair of our Nominating and Corporate Governance Committee. Dr. Molineaux has served on our Board for almost nine years, and during this time, she has thoroughly demonstrated her ability to dedicate sufficient time and focus on

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her duties as a director of Geron and Chair of our Nominating and Corporate Governance Committee. In each of the years ended December 31, 2020, 2019 and 2018, Dr. Molineaux attended 100% of the meetings for Geron’s Board and Geron’s Nominating and Corporate Governance Committee, 100% of the meetings for Calithera’s board, and 100% of the meetings for Theravance’s board and Theravance’s Science and Technology Committee. As President, Chief Executive Officer and director of Calithera, Dr. Molineaux does not serve on any Calithera board committees, and accordingly serves only on board committees for Geron and Theravance. Dr. Molineaux’s duties on Theravance’s Science and Technology Committee are limited in scope and therefore our Board believes that her membership on that committee does not interfere with her ability to reliably devote time to Geron’s Board, as well as Geron’s Nominating and Corporate Governance Committee. In accordance with our Board’s standard practice, Dr. Molineaux reviews scheduled Geron Board and committee meeting dates a year in advance to confirm availability to participate and attend all Board and committee meetings.

The Board believes Dr. Molineaux’s extensive experience in pharmaceutical and oncology drug development, and her expertise in managing and conducting clinical trials, qualifies Dr. Molineaux to serve as a director of the Company. The Board and the Nominating and Corporate Governance Committee also believe that Dr. Molineaux provides great value to the Board and contributes significantly to discussions and decision-making. Dr. Molineaux has extensive experience in the biotechnology industry, with current executive experience at Calithera. Accordingly, the Board believes that Dr. Molineaux’s contributions as a director are substantial, based upon her business and scientific expertise acquired in successfully holding executive and leadership positions in biotechnology companies, and her demonstrated reliability and commitment to service on our Board and Nominating and Corporate Governance Committee. Dr. Molineaux’s knowledge of the biotechnology industry and business, and healthcare related issues, combined with her experience as the chief executive officer of a public company, qualify her to serve as a director.

BOARD LEADERSHIP AND GOVERNANCE

We have an ongoing commitment to excellence in corporate governance and business practices. In furtherance of this commitment, we regularly monitor developments in the area of corporate governance and review our processes, policies and procedures in light of such developments. Key information regarding our corporate governance initiatives can be found on the Corporate Governance page under the Investor Relations section of our website at https://ir.geron.com/investors/corporate-governance/, including our Corporate Governance Guidelines, Code of Conduct, Insider Trading Policy, Privacy Policy and the charters for our Audit, Compensation and Nominating and Corporate Governance committees. We believe that our corporate governance policies and practices, including the substantial percentage of independent directors on our board of directors and the leadership provided by our Lead Independent Director, Ms. Eastham, empower our independent directors to effectively oversee our management – including the performance of our Chief Executive Officer – and provide an effective and appropriately balanced board governance structure.

Corporate Governance Guidelines

Our Board has adopted Corporate Governance Guidelines that set forth key principles to guide the operation of the Board and its committees in the exercise of their responsibilities to serve the interests of Geron and our stockholders. As stated in our Nominating and Corporate Governance Committee Charter and our Corporate Governance Guidelines, as part of the director search process, the Nominating and Corporate Governance Committee endeavors to consider qualified candidates, including candidates who self-identify their gender as female and candidates from underrepresented communities, who meet the relevant business and search criteria. In furtherance of the foregoing, where a third-party search firm is engaged and requested to furnish an initial list of possible candidates, such firm will be requested to include in such list candidates who self-identify their gender as female and candidates from underrepresented communities who meet such criteria.

The current form of the Corporate Governance Guidelines can be found on our website at https://ir.geron.com/investors/corporate-governance/. In addition, these guidelines are available in print to any stockholder who requests a copy. Please direct all requests to our Corporate Secretary, Geron Corporation, 919 E. Hillsdale Blvd., Suite 250, Foster City, California 94404.

Board Independence

In accordance with Nasdaq listing standards and Geron’s Corporate Governance Guidelines, a majority of the members of our Board must qualify as “independent” as defined by Nasdaq Rule 5605(a)(2). In keeping

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with these guidelines, a member of our Board may serve as a director of another company only to the extent such position does not conflict or interfere with such person’s service as a director of Geron. The Board consults with our legal counsel to ensure that the Board’s determinations regarding Board independence are consistent with relevant securities and other laws and regulations regarding the definition of “independent,” including those set forth in pertinent listing standards of Nasdaq, as in effect from time to time.

Consistent with these considerations, our Board has determined affirmatively that all nominees for election at the Annual Meeting, and all current and continuing directors, with the exception of Dr. Scarlett, are independent within the meaning of the Nasdaq listing standards. Dr. Scarlett, who is our Chairman of the Board, President and Chief Executive Officer, is the sole non-independent director, and the Board regularly meets in executive sessions outside the presence of Dr. Scarlett.

There are no family relationships between any director and any of our executive officers. There are no arrangements or agreements relating to compensation provided by a third party to any member of our Board, including current nominees for director, in connection with their candidacy or Board service to us.

Board Leadership Structure

In December 2018, Dr. Scarlett was appointed by the Board to serve as Chairman of the Board, in addition to his role as President and Chief Executive Officer of the Company. Particularly in light of the rapid growth the Company has experienced and expects to continue to experience as it advances development of imetelstat through two Phase 3 clinical trials and prepares for potential commercialization of imetelstat, the Board continues to believe that Dr. Scarlett is best suited to serve as our Chairman because he is the member of the Board who is most familiar with our business as a whole and the most capable of identifying and bringing to the attention of the full Board the strategic priorities and key issues facing the Company. The Board also believes that having Dr. Scarlett in a combined Chairman/Chief Executive Officer role helps provide strong, unified leadership for our management team. To counterbalance our Board’s decision to have a combined Chairman and Chief Executive Officer, the Company’s Corporate Governance Guidelines require that the Board appoint a Lead Independent Director when the role of Chairman is held by a director who does not qualify as an independent director. In December 2018, the Board appointed Ms. Eastham to serve as Lead Independent Director for the Board. In her role as Lead Independent Director, Ms. Eastham facilitates Board interactions and information flow. The structure also allows for a clear communication path for the non-employee directors, who may raise any issues or concerns that they have directly with the Lead Independent Director.

The Chairman of the Board has the authority, among other things, to call and preside over Board meetings, to set meeting agendas and to determine materials to be distributed to the Board. However, the Lead Independent Director provides active leadership on behalf of the independent directors on the Board. The Lead Independent Director, Ms. Eastham, with the Chairman, President and Chief Executive Officer, Dr. Scarlett, advises on Board meeting agendas and discussion priorities. In addition, the Lead Independent Director provides regular communications to directors between meetings, inviting comments, ideas and concerns from each non-employee director. The Lead Independent Director also has the following responsibilities:

 

Presiding at executive sessions of non-employee directors;

 

Serving as a liaison between the Board Chairman and non-employee directors;

 

Advising the Board Chairman regarding the impression of the non-employee directors as to the quality, quantity and timeliness of the flow of information from the Company that is necessary for the Board to effectively perform its duties; and

 

Accepting additional responsibilities as may be recommended from time-to-time by the Board or the non-employee directors of the Board.

Board Committees and Meetings

It is Geron’s policy to encourage directors to attend annual meetings of stockholders. All of our current directors attended our 2020 annual meeting of stockholders, which was conducted in a virtual meeting format. During the year ended December 31, 2020, the Board held seven meetings. Of these, the first meeting was in-person and subsequent meetings were conducted by videoconference due to the COVID-19 pandemic. The Board has an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee. During the year ended December 31, 2020, each of the current directors attended at least 75% of

17

 


the aggregate number of meetings of the Board and the committees on which the director served during the portion of the last fiscal year for which he or she was a director or committee member.

Below is a description of each committee of the Board. Each of the committees has authority to engage and determine the compensation for legal counsel or other experts or consultants, as it deems appropriate, to assist with fulfilling its responsibilities. The Board has determined that each member of each committee meets the applicable Nasdaq and SEC rules and regulations regarding “independence” and that each member is free of any relationship that would impair his or her individual exercise of independent judgement with regard to Geron.

Audit Committee

The Audit Committee operates under a written charter that satisfies the applicable standards of the SEC and Nasdaq. A copy of the Audit Committee charter is available on our website at https://ir.geron.com/investors/corporate-governance/. The Audit Committee held nine meetings in 2020, of which the first meeting was conducted in person and the remainder were conducted by videoconference due to the COVID-19 pandemic. The Audit Committee’s responsibilities include:

 

appointing or terminating, approving the compensation of, and assessing the qualifications, performance and independence of our independent registered public accounting firm;

 

pre-approving audit and permissible non-audit services and the terms of such services to be provided by our independent registered public accounting firm;

 

reviewing the plan and scope of the annual audit of financial statements with the independent registered public accounting firm and members of management;

 

reviewing and discussing with management and/or the independent registered public accounting firm, prior to public disclosure, our annual and quarterly financial statements and related disclosures in our Forms 10-K, Forms 10-Q, and earnings press releases, including critical accounting policies and practices used by us and information contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”;

 

recommending to the Board, based upon the Audit Committee’s review and discussions with management and the independent registered public accounting firm, whether our audited financial statements shall be included in our Annual Report on Form 10-K;

 

monitoring our internal control over financial reporting and disclosure controls and procedures, including reviewing management’s assessment and disclosures related to any significant changes, material weaknesses or significant deficiencies;

 

overseeing compliance with legal and regulatory requirements as they relate to our financial statements and accounting matters, including our insider trading compliance program;

 

establishing policies and procedures for the receipt and retention of whistleblower complaints and concerns and overall compliance with our Code of Conduct;

 

preparing the audit committee report required by the SEC to be included in our annual proxy statement;

 

reviewing and approving or ratifying any related party transactions;

 

overseeing financial and operational risk exposures and the actions management has taken to limit, monitor and control such exposures; and

 

reviewing risks relating to data privacy, technology and information security, including cyber-security, and back-up of information systems.

For the year ended December 31, 2020, Ms. Eastham, Ms. O’Farrell and Dr. Lawlis served on the Audit Committee. The Board has determined that all of the members of the Audit Committee are financially literate and that two members of the Audit Committee, Ms. Eastham and Ms. O’Farrell, have accounting and financial management expertise that qualifies each as an “Audit Committee Financial Expert,” as such term is defined in Item 407(d)(5) of Regulation S-K promulgated by the SEC. See more information about the Audit Committee in the section entitled “Audit Committee Report.”

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Compensation Committee

The Compensation Committee operates under a written charter that satisfies the applicable standards of the SEC and Nasdaq. A copy of the Compensation Committee charter is available on our website at https://ir.geron.com/investors/corporate-governance/. The charter of the Compensation Committee allows it to delegate responsibilities to a subcommittee of the Compensation Committee, but only to the extent consistent with our certificate of incorporation, Bylaws and Nasdaq rules. The Compensation Committee held five meetings in 2020, of which one was in person and the remainder were by videoconference. The Compensation Committee’s responsibilities include:

 

establishing and overseeing our executive compensation philosophy and strategy;

 

reviewing and approving the terms of any employment agreements, severance arrangements, change in control protections and other compensatory arrangements for our executive officers, including our Chief Executive Officer;

 

annually reviewing and recommending to the Board corporate goals and objectives relevant to the compensation of our executive officers, including our Chief Executive Officer;

 

reviewing and approving, or making recommendations to the Board with respect to, the compensation of our executive officers, including our Chief Executive Officer, based upon an annual evaluation of each individual’s performance;

 

overseeing and administering our cash and equity incentive plans, including establishing policies and procedures for the grant of equity-based awards and approving, or making recommendation to the full Board with respect to, the grant of such equity-based awards;

 

appointing, compensating and overseeing the work of any compensation and benefits consultants, legal counsel or other experts or advisors retained by the Compensation Committee, including an independence assessment as outlined by Nasdaq rules;

 

reviewing and discussing with management our compensation discussion and analysis disclosure to be included in our annual proxy statement;

 

reviewing and making recommendations to our Board regarding non-employee director compensation; and

 

reviewing and assessing the potential impact of our compensation practices on enterprise risk.

For information on the Compensation Committee’s processes and procedures on the consideration and determination of executive compensation, see the sub-section entitled “Compensation Discussion and Analysis – Role of the Compensation Committee.” For information on the Compensation Committee’s processes and procedures with respect to non-employee director compensation matters, see the section entitled “Compensation of Directors.”

Compensation Committee Interlocks and Insider Participation

Drs. Lawlis and Spiegel and Ms. Eastham served on the Compensation Committee for the year ended December 31, 2020. Neither Drs. Lawlis or Spiegel, nor Ms. Eastham, is a former or current officer or employee of Geron. None of our executive officers serves as a member of a compensation committee of any entity that has one or more executive officers serving as a member of our Board or Compensation Committee.

Nominating and Corporate Governance Committee

The Nominating and Corporate Governance Committee operates under a written charter that satisfies the applicable standards of the SEC and Nasdaq. A copy of the Nominating and Corporate Governance Committee charter is available on our website at https://ir.geron.com/investors/corporate-governance/. The Nominating and Corporate Governance Committee held five meetings in 2020, of which one was conducted in person and the remainder were conducted by videoconference due to the COVID-19 pandemic. The Nominating and Corporate Governance Committee’s responsibilities include:

 

developing, reviewing and recommending to the Board a set of corporate governance guidelines and principles;

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creating and recommending to the Board criteria for Board and committee membership;

 

establishing procedures for identifying and evaluating individuals qualified to become members of the Board, including candidates who self-identify their gender as female and candidates from underrepresented communities and nominees recommended by stockholders;

 

recommending to the Board the persons to be nominated for election or re-election as directors;

 

reviewing and recommending to the Board the functions, duties and compositions of the Board committees;

 

considering and reporting to the Board any questions of possible conflicts of interest of Board members; and

 

assessing the performance of the Board, the Board committees and individual directors.

Specific qualifications and the process for recommending director candidates are provided in more detail under the sub-sections entitled “Other Matters – Director Nominees Recommended by Stockholders” and “Other Matters – Director Qualifications.”

For the year ended December 31, 2020, Dr. Molineaux and Ms. Bir served on the Nominating and Corporate Governance Committee.

Board’s Role in Risk Oversight

Geron is subject to a variety of risks, including those described under the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020. Some risks may be readily perceived and even quantified, while others are unexpected or unforeseeable. Risks can be external or can arise as a result of our internal business or financial activities.

The Board and our executive management team work together to manage our risks. It is management’s responsibility to identify various risks facing the Company, bring the Board’s attention to material risks, and implement appropriate risk management policies and procedures to manage risk exposure on a day-to-day basis. The Board has an active role in overseeing our risk management process directly or through its committees.

The Board has delegated responsibility for the oversight of specific risks to the Board committees as follows:

 

The Audit Committee oversees management of financial risks. In addition to fulfilling its responsibilities for the oversight of our financial reporting processes and annual audit of Geron’s financial statements, the Audit Committee also reviews with the Company’s independent registered public accounting firm and the Company’s management the adequacy and effectiveness of our policies and procedures to assess, monitor and manage fraud risk and our ethical compliance program. The Audit Committee takes appropriate actions to set the best practices and highest standards for quality financial reporting, sound business risk practices, including practices related to cyber-security, and ethical behavior.

 

The Compensation Committee is responsible for overseeing the management of risks relating to our employment policies and executive compensation plans and arrangements. In connection with structuring the executive compensation program, the Compensation Committee, together with the Board, considers whether the elements of such program, individually or in the aggregate, encourage our executive officers to take unnecessary risks. For further information, see the sub-section entitled “Risk Assessment of Compensation Policies and Practices.”

 

The Nominating and Corporate Governance Committee manages Geron’s corporate governance practices. The Nominating and Corporate Governance Committee also reviews risks associated with the independence of the Board, potential conflicts of interest and risks relating to management and Board succession planning. In addition, the Board delegated to the Nominating and Corporate Governance Committee the responsibility for overseeing the management of risks associated with the COVID-19 pandemic.

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While each committee is responsible for evaluating certain risks and overseeing the management of such risks within its respective oversight area, the entire Board is regularly informed through committee reports about such risks.

Risk Assessment of Compensation Policies and Practices

The Compensation Committee maintains a pay for performance compensation philosophy, but also recognizes that providing certain types of compensation incentives may inadvertently motivate individuals to act in ways that could be detrimental to the Company in order to maximize individual compensation. To minimize such risk, the Compensation Committee annually evaluates our compensation philosophy generally as it relates to all employees, as well as individual compensation elements of base salary, annual performance-based bonuses, equity awards, severance and change in control benefits and other benefits to ensure each is evaluated against appropriate standards and that such incentives provide for the achievement of target goals that are balanced between short-term rewards and long-term enhancement of stockholder value.

The Compensation Committee believes the following elements of our compensation program mitigate the risks associated with our compensation practices:

 

setting annual base salaries consistent with the responsibilities of our Principal Executive Officer, Principal Financial Officer and our three other most highly compensated executive officers at December 31, 2020 (our “Named Executive Officers”), and market comparables to ensure that our Named Executive Officers are not motivated to take excessive risks to achieve a reasonable level of financial security;

 

establishing corporate goals for our annual performance-based bonus program that are consistent with our annual operating and strategic plans and are designed to achieve a proper risk/reward balance without excessive risk taking;

 

requiring an executive officer to forfeit his or her entire annual performance-based bonus if we determine that such executive officer has engaged in any misconduct intended to affect the payment of his or her annual performance-based bonus, or has otherwise engaged in any act or omission that would constitute cause for termination of his or her employment, as defined by his or her employment agreement;

 

having a mix of fixed and variable, annual and long-term and cash and equity compensation elements to encourage strategies and actions that balance short-term and long-term best interests;

 

granting stock option awards which provide value only if the market price of our Common Stock increases to encourage our executive officers to take a long-term view of our business and performance-based stock option awards that only vest upon the attainment of specific strategic milestones;

 

absence of employment agreements or contracts that contain multi-year guarantees of salary increases, or non-performance-based bonuses or equity compensation;

 

emphasizing pay equity amongst our employees and with reference to external comparators; and

 

having available, to the Compensation Committee and the Board, the discretion to measure and calculate achievement of corporate goals and other corporate performance measures, which prevents the compensation program from being susceptible to manipulation by a single employee.

The Compensation Committee has reviewed our compensation policies and practices as they relate to all employees and has determined that such policies and practices do not present any risks that are reasonably likely to have a material adverse effect on Geron, and instead, encourage behaviors that support sustainable value generation. In addition, the Compensation Committee has reviewed and evaluated our executive compensation program and believes that our executive compensation policies and practices do not encourage inappropriate actions or risk taking by our executive officers.

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OTHER CORPORATE GOVERNANCE MATTERS

Code of Conduct

In 2003, we adopted a Code of Conduct, which is available in its entirety on the Corporate Governance page in the Investor Relations section of our website at www.geron.com and to any stockholder otherwise requesting a copy. All our directors, employees, executive officers, including our Chief Executive Officer and Chief Financial Officer, are required to adhere to the Code of Conduct in discharging their work-related responsibilities. Employees are required to report any conduct they believe in good faith to be an actual or apparent violation of the Code of Conduct. Amendments to the Code of Conduct, and any waivers from the Code of Conduct granted to our directors or executive officers, will be made available through our website as they are adopted. Accordingly, we intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding an amendment to, or waiver from, a provision of the Code of Conduct by posting such information on our website at www.geron.com.

Whistleblower Policy

In keeping with the Sarbanes-Oxley Act of 2002, the Audit Committee has established procedures for the receipt and handling of complaints received by us regarding accounting, internal accounting controls, auditing matters, questionable financial practices or violations of our Code of Conduct (“complaints”). Contact information for an external hotline that is maintained by an independent third party has been distributed to all employees and consultants to allow for the confidential, anonymous submission of complaints by our employees and consultants. Any complaints received by this hotline are reviewed by the Audit Committee and our Chief Legal Officer.

Prohibitions on Derivative, Hedging, Monetization and Other Transactions

We maintain an insider trading compliance policy that applies to all directors and employees, including our executive officers, which prohibits certain transactions in our Common Stock, including short sales, puts, calls or other transactions involving derivative securities, hedging or monetization transactions, purchases of our Common Stock on margin or borrowing against an account in which our Common Stock is held, or pledging our Common Stock as collateral for a loan. Our Audit Committee oversees compliance with our insider trading compliance program, including approval of any material updates to the insider trading compliance program. Our Chief Legal Officer serves as our insider trading compliance officer and reports, at least once annually, to the Audit Committee on his monitoring of the insider trading compliance program. In addition, the Audit Committee meets with the compliance officer outside of the presence of any other executive officers. A copy of our insider trading compliance policy is available on our website at https://ir.geron.com/investors/corporate-governance/.

Communications with the Board

Stockholders wishing to communicate with the Board, or with a specific Board member, may do so by writing to the Board, or to the individual Board member, and delivering the communication in person or mailing it to: Board of Directors, c/o Stephen N. Rosenfield, Corporate Secretary, Geron Corporation, 919 E. Hillsdale Blvd., Suite 250, Foster City, California 94404. All mail addressed in this manner will be delivered to the Chair of the Board or Chairs of the Board committees with responsibilities touching most closely on the matters addressed in the communication. From time to time, the Board may change the process by which stockholders may communicate with the Board or its members. Please refer to our website for any changes to this process.

COMPENSATION OF DIRECTORS

The Compensation Committee determines non-employee director compensation, which the full Board reviews and approves upon recommendation from the Compensation Committee. When considering non-employee director compensation decisions, the Compensation Committee believes it is important to be informed as to current compensation practices of comparable publicly-held companies in the life sciences industry, especially to understand the demand and competitiveness for attracting and retaining an individual with each of the non-employee director’s specific expertise and experience. Our compensation arrangements for non-employee directors are set forth in our Non-Employee Director Compensation Policy (the “Director Compensation Policy”). The Director Compensation Policy outlines cash and equity compensation automatically payable to non-employee directors of the Board, unless such non-employee director declines

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receipt of such cash or equity compensation by written notice to us. Traditionally, the Compensation Committee has reviewed our non-employee director compensation relative to industry practices every other year.

In January 2020, the Compensation Committee requested Radford, which is part of the Rewards Solutions practice at Aon plc, the independent compensation consultant engaged by the Compensation Committee (“Radford”), conduct a review of non-employee director compensation in comparison to our 2019 peer group. Based on this review, and guidance from Radford, effective February 12, 2020, the Board approved an amendment to the Director Compensation Policy to increase the size of the Annual Grant (described below) from 70,000 to 83,000 shares of the Company’s Common Stock. For further discussion of the defined peer group recommended by Radford, see the sub-section entitled “Compensation Discussion and Analysis – Process for Setting Executive Compensation – Use of Market Data and Peer Group Analysis.”

Cash Compensation

The following table describes the annual cash compensation applicable to each role performed by non-employee directors as outlined in the Director Compensation Policy in effect for the year ended December 31, 2020 (“2020 fiscal year”):

 

Non-Employee Director Role

 

Base Retainer

 

 

Additional Retainer

 

Board member

 

$

42,500

 

 

N/A

 

Chairman of the Board

 

N/A

 

 

$

35,000

 

Lead Independent Director

 

N/A

 

 

$

25,000

 

Audit Committee Chair(1)

 

N/A

 

 

$

25,000

 

Compensation Committee Chair(1)

 

N/A

 

 

$

15,000

 

Nominating and Corporate Governance Committee Chair(1)

 

N/A

 

 

$

10,000

 

Audit Committee member

 

N/A

 

 

$

12,500

 

Compensation Committee member

 

N/A

 

 

$

7,500

 

Nominating and Corporate Governance Committee member

 

N/A

 

 

$

5,000

 

 

(1)

Committee Chair does not also receive additional Committee member compensation.

Under the Director Compensation Policy, annual non-employee director cash compensation is paid quarterly in arrears in cash, or, at each director’s election, in fully vested shares of our Common Stock. In 2020, such Common Stock was issued under the Directors’ Market Value Stock Purchase Plan (the “Directors Market Value Plan”), which the Board adopted in October 2018, based on the “market value” on the purchase date (which generally means the consolidated closing bid price per share of our Common Stock as reported by Nasdaq on the purchase date).

Additionally, under the Director Compensation Policy, non-employee directors are eligible to receive equity grants, as more fully described below under the sub-section entitled “Equity Compensation.” Non-employee directors also receive reimbursement for out-of-pocket expenses incurred in connection with attendance at meetings of the Board.

Director Compensation Table

The following table provides compensation information for the 2020 fiscal year, for each non-employee director of the Board who served in such capacity during the 2020 fiscal year. Dr. Scarlett does not receive any compensation for his Board service.

 

Non-Employee Director

 

Fees Earned

or Paid in Cash

($) (1)

 

 

 

Option Awards

($)(2)

 

 

Total

($)

 

Bir, Dawn

 

 

47,500

 

 

 

 

81,747

 

 

 

129,247

 

Eastham, Karin

 

 

100,000

 

 

 

 

81,747

 

 

 

181,747

 

Lawlis, V. Bryan

 

 

62,500

 

 

 

 

81,747

 

 

 

144,247

 

Molineaux, Susan

 

 

52,500

 

 

 

 

81,747

 

 

 

134,247

 

O'Farrell, Elizabeth

 

 

55,000

 

 

 

 

81,747

 

 

 

136,747

 

Spiegel, Robert

 

 

57,500

 

(3)

 

 

81,747

 

 

 

139,247

 

 

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(1)

Consists of the annual retainer fee for service as a member of the Board of Directors or any Board committee. For further information concerning such fees, see the section above entitled “Cash Compensation.”

(2)

Amounts do not reflect dollar amounts actually received by our non-employee directors and instead, in accordance with SEC rules, represent the aggregate grant date fair value of stock option awards granted to our non-employee directors during 2020, as calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“FASB ASC Topic 718”). Refer to Note 9 of the financial statements in our Annual Report on Form 10-K for the year ended December 31, 2020 regarding assumptions underlying the valuation of stock option awards and the calculation method. For information regarding the aggregate number of stock option awards held by the non-employee directors of the Board at December 31, 2020, see the sub-section entitled “Outstanding Equity Awards at Fiscal Year-End for Non-Employee Directors.”

(3)

Includes fees paid in stock in lieu of cash through the issuance of an aggregate 17,986 shares of Common Stock under the Directors Market Value Plan.

Equity Compensation

Terms of Awards

Pursuant to the Director Compensation Policy, each individual who first becomes a non-employee director receives an initial stock option grant and thereafter each non-employee director is eligible to receive stock option grants on an annual basis. Non-employee director stock options are currently granted pursuant to the 2018 Equity Incentive Plan, in accordance with the Director Compensation Policy. The following describes the equity compensation arrangements as outlined in the Director Compensation Policy in effect for the 2020 fiscal year:

 

Initial Grant. Each individual who first becomes a non-employee director, whether by election by Geron’s stockholders or by appointment by the Board to fill a vacancy, automatically will be granted an option to purchase 120,000 shares of Common Stock on the date such individual first becomes a non-employee director (the “Initial Grant”). The Initial Grant vests annually over three years upon each anniversary of the date of appointment to the Board, subject to the non-employee director’s continuous service through each applicable vesting date.

 

Annual Grant. On the date of each annual meeting of our stockholders, each non-employee director (other than any director receiving an Initial Grant on the date of such annual meeting) who is then serving as a non-employee director and who will continue as a non-employee director following the date of such annual meeting automatically will be granted an option to purchase 83,000 shares of our Common Stock (the “Annual Grant”). The Annual Grant vests in full on the earlier of (i) the date of the next annual meeting of our stockholders or (ii) the first anniversary of the date of grant, subject to the non-employee director’s continuous service through such applicable vesting date.

 

Exercise Price and Term of Options. The exercise price of all options granted under the 2018 Equity Incentive Plan is equal to the fair market value of a share of our Common Stock as determined under the 2018 Equity Incentive Plan. Options granted under the 2018 Equity Incentive Plan have a term of ten years from the date of grant, unless terminated earlier.

 

Exercise Period Post-Termination. The options granted pursuant to the 2018 Equity Incentive Plan remain exercisable until the earlier of the original expiration date of the option or 36 months following the optionee’s termination of service as our non-employee director.

As noted above, under the Directors Market Value Plan, to the extent permitted by the Director Compensation Policy, the cash compensation payable to a non-employee director who has properly and timely elected to receive such cash compensation instead in the form of shares of our Common Stock will be used to purchase shares of Common Stock from Geron under the Directors Market Value Plan on the date that such cash compensation is payable to the non-employee director under the Director Compensation Policy.

Effect of Certain Corporate and Termination Events

As set forth in each option agreement under the 2018 Equity Incentive Plan, the vesting for each Initial Grant and Annual Grant will accelerate in full in the event of a Change in Control of Geron (as defined in the

24

 


2018 Equity Incentive Plan and described below under the sub-section entitled “Potential Payments Upon Termination or Change in Control”). In addition, in the event a non-employee director experiences a termination of service as a result of such director’s total and permanent disability (as defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the “Code”)) or death, the portion of each outstanding option held by such director that would have vested during the 36 months after the date of such director’s termination of service, will automatically vest.

Option Grants to Non-Employee Directors in 2020

The following table sets forth the following information with respect to non-employee directors (six persons) for the 2020 fiscal year: (i) stock options granted under the 2018 Equity Incentive Plan; and (ii) the grant date fair value of stock options granted.

 

Non-Employee Director

 

Grant

Date (2)

 

Option Awards

Granted

During 2020

(#)

 

 

Grant Date Fair Value of

Option Awards Granted

During 2020

($)(1)

 

Bir, Dawn

 

6/5/20

 

 

83,000

 

 

 

81,747

 

Eastham, Karin

 

6/5/20

 

 

83,000

 

 

 

81,747

 

Lawlis, V. Bryan

 

6/5/20

 

 

83,000

 

 

 

81,747

 

Molineaux, Susan

 

6/5/20

 

 

83,000

 

 

 

81,747

 

O'Farrell, Elizabeth

 

6/5/20

 

 

83,000

 

 

 

81,747

 

Spiegel, Robert

 

6/5/20

 

 

83,000

 

 

 

81,747

 

 

(1)

Amounts do not reflect dollar amounts actually received by our non-employee directors and instead, in accordance with SEC rules, represent the grant date fair value of each stock option granted in 2020 calculated in accordance with FASB ASC Topic 718. Refer to Note 9 of the financial statements in our Annual Report on Form 10-K for the year ended December 31, 2020 regarding assumptions underlying the valuation of stock option awards and the calculation method.

(2)

Stock options vest on the earlier of: (i) the date of the next annual meeting or (ii) the first anniversary of the date of grant of such option, subject to the non-employee director’s continuous service to the Company through such applicable vesting date.

Option Exercises in 2020

For the 2020 fiscal year, no options were exercised by any non-employee directors.

Outstanding Equity Awards at Fiscal Year-End for Non-Employee Directors

The following table sets forth stock options outstanding for each non-employee director included in the Director Compensation Table above as of December 31, 2020.

 

 

 

Option Awards Outstanding

as of December 31, 2020

 

Non-Employee Director

 

Exercisable (#)

 

 

Unexercisable (#)

 

Bir, Dawn

 

 

110,000

 

 

 

163,000

 

Eastham, Karin

 

 

413,000

 

 

 

83,000

 

Lawlis, V. Bryan

 

 

450,000

 

 

 

83,000

 

Molineaux, Susan

 

 

415,000

 

 

 

83,000

 

O'Farrell, Elizabeth

 

 

110,000

 

 

 

163,000

 

Spiegel, Robert

 

 

275,000

 

 

 

83,000

 

 

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PROPOSAL 2

APPROVAL OF AN AMENDMENT TO OUR

RESTATED CERTIFICATE OF INCORPORATION

TO INCREASE THE TOTAL NUMBER OF AUTHORIZED SHARES OF COMMON STOCK

The Board has determined that it is in the Company’s best interests and in the best interests of our stockholders to amend our Restated Certificate of Incorporation to increase our authorized number of shares of Common Stock from 450,000,000 shares to 675,000,000 shares. On February 2, 2021, the Board adopted resolutions approving the proposed amendment to our Restated Certificate of Incorporation, in substantially the form of Appendix 1 hereto. At that time, the Board determined the proposed amendment and increase of the Common Stock to be advisable and in the best interests of the Company and our stockholders and is accordingly submitting the proposed amendment and increase of the Common Stock for approval by our stockholders.

If stockholders approve this proposal, we expect to file the amendment to our Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to increase the total number of authorized shares of our Common Stock as soon as practicable following stockholder approval. In this regard, upon filing of the amendment to our Restated Certificate of Incorporation with the Secretary of State of the State of Delaware, Section A of Article IV of the Restated Certificate of Incorporation would be amended as follows, with the proposed additions double-underlined and proposed deletions stricken through:

“(A) Class of Stock. The Corporation is authorized to issue two classes of stock to be designated, respectively, “Common Stock” and “Preferred Stock.” The total number of shares which the Corporation is authorized to issue is Four Hundred Fifty-Three Million (453,000,000)Six Hundred and Seventy-Eight Million (678,000,000) shares. Four Hundred Fifty Million (450,000,000)Six Hundred and Seventy-Five Million (675,000,000) shares shall be Common Stock, par value $0.001 per share, and Three Million (3,000,000) shares shall be Preferred Stock, par value $0.001 per share.”

Of the 450,000,000 shares of our Common Stock currently authorized, as of the close of business on March 1, 2021, there were 318,527,540 shares of Common Stock issued and outstanding, which does not include the following:

 

49,593,614 shares of our Common Stock issuable upon the exercise of options outstanding, having a weighted-average exercise price of $2.11 per share;

 

8,335,239 shares of our Common Stock issuable upon the exercise of an outstanding pre-funded warrant with an exercise price of $0.001 per share;

 

58,217,200 shares of our Common Stock issuable upon the exercise of outstanding warrants with a weighted average exercise price of $1.32 per share; and

 

an aggregate of 2,798,650 shares of our Common Stock reserved for future issuance under our 2014 Employee Stock Purchase Plan, the 2018 Plan (not including share increase subject to approval in Proposal 3), the Directors Market Value Plan, and the 2018 Inducement Award Plan.

The proposed amendment to our Restated Certificate of Incorporation would increase the number of shares of Common Stock that we are authorized to issue from 450,000,000 shares of Common Stock to 675,000,000 shares of Common Stock, representing an increase of 225,000,000 shares of authorized Common Stock, with a corresponding increase in the total authorized capital stock, which includes Common Stock and Preferred Stock, from 453,000,000 shares to 678,000,000 shares.

Reasons for the Increase in Authorized Shares

Over the past several years, our authorized Common Stock has allowed us the flexibility to pursue a number of financing transactions that were key to support the imetelstat program, while at the same time enabling us to continue to provide the employee equity incentives that we deem necessary to attract and retain key employees. Unless stockholders approve this proposal, we will not have sufficient unissued and unreserved authorized shares of Common Stock to support the growth needed to continue advancing the development of our sole product candidate, imetelstat, and conduct the activities necessary to potentially commercialize imetelstat by engaging in similar financing transactions in the future, and to respond to compensatory needs by

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implementing new or revised equity compensation plans or arrangements, all of which could severely harm our business, our prospects and the future of imetelstat.

Geron’s vision is to be recognized as a leader in the treatment of hematologic malignancies. Geron is committed to improving and extending the lives of patients by changing the course of these diseases by targeting telomerase. We are currently focused on the development and potential commercialization of imetelstat, a first-in-class telomerase inhibitor, and are conducting two ongoing Phase 3 clinical trials that are intended to enable registration:  (i) IMerge Phase 3 in Low or Intermediate-1 risk myelodysplastic syndromes (“lower risk MDS”), and (ii) IMpactMF in Intermediate-2 or High-risk myelofibrosis (“refractory MF”).

In 2021, we have begun preparations for the future submissions of a New Drug Application (an “NDA”) for imetelstat in the United States, and a Marketing Authorization Application (an “MAA”) in Europe, for imetelstat in lower risk MDS, both of which we plan to submit in 2023, assuming enrollment in IMerge Phase 3 is completed by end of 2021, and top-line results from IMerge Phase 3 are available in 2023 supporting such submissions. We intend to discuss with the United States Food and Drug Administration (the “FDA”) options for a rolling submission process, as allowed under imetelstat’s Fast Track designation in lower risk MDS. Under either a six-month priority review or a standard ten-month review process, upon potential approval by the FDA, we expect that commercial launch of imetelstat in lower risk MDS could occur in the United States in 2024. In Europe, we anticipate review of the MAA by the European Medicines Agency (the “EMA”) could take approximately 12 months and commercial launch of imetelstat in lower risk MDS in Europe could occur in 2024.

If imetelstat is approved for marketing by regulatory authorities, we plan to commercialize imetelstat ourselves in the United States and may seek potential commercialization partners for territories outside of the United States. Given these plans, we have developed a potential commercial launch plan, which includes potential financing needs that are driven by the achievement of certain clinical milestones, such as top-line results. If top-line results are available after the end of 2022, we will require additional capital to reach top-line results. In any event, we will require substantial additional funding to further advance the imetelstat program, including completing IMpactMF and conducting the clinical, regulatory and potential commercialization activities necessary to bring imetelstat to market in lower risk MDS and refractory MF. In addition, our ability to commercialize imetelstat in the United States, if regulatory approval is granted, depends on us being able to establish sales and marketing capabilities.

To date, we have not derived any revenue from sales of any products. Our operations to date have been limited to organizing and staffing our company, acquiring, developing and securing our technology, undertaking non-clinical studies and clinical trials of our sole product candidate, imetelstat, and past product candidates that we have subsequently discontinued, and engaging in research and development under collaboration agreements. Since our inception, we primarily have financed our operations through the sale of equity securities, interest income on our marketable securities and payments we received under our collaborative and licensing arrangements. We have a credit facility up to $75 million under which we have drawn $25 million. The other tranches available to be drawn under the credit facility are conditioned on achievement of certain clinical and regulatory milestones. We have no committed sources of capital. Until we can generate sufficient product revenues, if ever, we expect to finance future cash needs through public or private equity or equity-linked offerings, debt financings or collaboration and licensing arrangements (which arrangements can also involve the possibility of an equity investment).

As of the date of this proxy statement, the Board has no definitive plans, arrangements or understandings to issue any of the additional shares of Common Stock that would be available as a result of the approval of this Proposal 2, other than pursuant to our various employee and director equity plans and pursuant to our At Market Issuance Sales Agreement, or the Sales Agreement, with B. Riley Securities, Inc., under which we may elect to issue and sell shares of our Common Stock having an aggregate offering price of up to approximately $83 million as of the date of this proxy statement. Our Board believes it would be appropriate to have additional shares available to provide further flexibility to promptly and appropriately use our Common Stock for business and financial purposes in the future, as well as to have sufficient shares available to provide appropriate equity incentives for our employees and other eligible service providers. The additional shares of Common Stock, if approved, may be used for various purposes without further stockholder approval. These purposes may include raising capital; providing equity incentives to employees, officers, directors, consultants and/or advisors; establishing licensing arrangements with other companies; expanding our business through the acquisition of other businesses, products or technologies; and other purposes.

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If the Board determines that raising additional capital through issuing the additional shares of Common Stock is desirable, we want to be able to act quickly if market conditions are favorable. Given the number of shares of our Common Stock currently available for issuance, the Company might not be able to raise future capital without first obtaining stockholder approval for an increase in the number of authorized shares of Common Stock. The cost, prior notice requirements and delay involved in obtaining stockholder approval at the time that corporate action may be necessary or desirable could eliminate our ability to opportunistically capitalize on market windows. In addition, our success depends in part on our continued ability to attract, retain and motivate highly qualified management and clinical personnel, and if this proposal is not approved by our stockholders, the lack of unissued and unreserved authorized shares of Common Stock to provide future equity incentive opportunities that the Compensation Committee deems appropriate could adversely impact our ability to achieve these goals. In summary, if stockholders do not approve this proposal, we may not be able to access the capital markets; continue to conduct the research and development and clinical and regulatory activities necessary to bring imetelstat to market; enter into licensing arrangements; attract, retain and motivate employees, officers, directors, consultants and/or advisors; and pursue other business opportunities that are integral and critical to our growth and success, all of which could severely harm our business, our prospects and the future of imetelstat.

Effects of the Increase in Authorized Shares

The additional Common Stock to be authorized by adoption of the amendment would have rights identical to the current outstanding Common Stock of the Company. Adoption of the proposed amendment and issuance of the Common Stock would not affect the rights of the holders of currently outstanding Common Stock, except for effects incidental to increasing the number of shares of the Common Stock outstanding, such as dilution of the earnings per share and voting rights of current holders of Common Stock. The additional shares of Common Stock authorized by the approval of this proposal could be issued by the Board without further vote of our stockholders except as may be required in particular cases by our Restated Certificate of Incorporation, applicable law, regulatory agencies or Nasdaq rules. Under our Restated Certificate of Incorporation, stockholders do not have preemptive rights to subscribe to additional securities that may be issued by us, which means that current stockholders do not have a prior right thereunder to purchase any new issue of Common Stock in order to maintain their proportionate ownership interests in the Company.

The increase in our authorized shares of Common Stock could also have an anti-takeover effect, in that additional shares could be issued (within the limits imposed by applicable law) in one or more transactions that could make a change in control or takeover of the Company difficult. For example, additional shares could be issued by us so as to dilute the stock ownership or voting rights of a person seeking to obtain control of the Company. Similarly, the issuance of additional shares to certain persons allied with our management could have the effect of making it more difficult to remove our management by diluting the stock ownership or voting rights of persons seeking to cause such removal. Although this proposal to approve the amendment of our Restated Certificate of Incorporation to increase the total number of authorized shares of Common Stock has been prompted by business and financial considerations and not by the threat of any hostile takeover attempt (nor is the Board currently aware of any such attempts directed at us), and the Board does not intend or view the proposed increase in the number of authorized shares of our Common Stock as an anti-takeover measure, stockholders should nevertheless be aware that approval of this proposal could facilitate future efforts by us to deter or prevent changes in control, including transactions in which our stockholders might otherwise receive a premium for their shares over then-current market prices.

Vote Required

The affirmative vote of the holders of a majority of outstanding shares of Common Stock will be required to approve this proposal. Abstentions will have the same effect as a vote against this proposal.

The Board of Directors Unanimously Recommends That

Stockholders Vote FOR Proposal 2

 

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PROPOSAL 3

APPROVAL OF THE AMENDMENT TO OUR 2018 EQUITY INCENTIVE PLAN

The Company’s stockholders are being asked to approve an amendment to the Company’s 2018 Equity Incentive Plan, as amended in June 2020 (the “2018 Plan”) at the Annual Meeting to (i) increase the number of shares issuable thereunder by 12,500,000 shares of our Common Stock and (ii) establish 95,000,000 shares as the maximum number of shares that may be subject to awards granted in the form of “incentive stock options” as defined in Section 422 of the Code. The Board approved the foregoing amendment to the 2018 Plan to ensure that the Company can continue to grant stock options in order to provide long-term incentives to our employees, non-employee directors and consultants. Our continued ability to offer equity awards under the 2018 Plan is critical to our ability to attract, motivate and retain qualified employees, non-employee directors and consultants, particularly as we grow and in light of the highly competitive market for talent in which we operate.

Shares Available for Future Awards

The Board believes that additional shares are necessary to meet the Company’s anticipated equity compensation needs. The proposed increase is expected to last approximately one year. This estimate is based on a forecast that takes into account our anticipated rate of growth in hiring, required stock option grants under the Non-Employee Director Compensation Policy, and our historical forfeiture rates. We have also considered stockholder feedback in determining an appropriate number of shares to seek to add to the 2018 Plan.

The 2018 Plan was initially adopted by the Board in March 2018 and approved by our stockholders in May 2018. The 2018 Plan was amended in February 2020 to increase the total number of shares of Common Stock issuable thereunder by 5,700,000 shares, and the foregoing amendment was approved by our stockholders in June 2020.

Upon adoption, the 2018 Plan had an initial new share reserve of 10,000,000 shares of Common Stock. The aggregate number of shares of our Common Stock that may be issued under the 2018 Plan also included, as of the effective date of the 2018 Plan: (i) 2,895,419 unallocated shares that were remaining available for the grant of awards under our 2011 Equity Incentive Plan (the “2011 Plan”) as of the effective date of the 2018 Plan in May 2018; and (ii) certain shares subject to outstanding awards granted under the 2011 Plan and our 1992 Stock Option Plan, our 1996 Directors’ Stock Option Plan and our Amended and Restated 2002 Equity Incentive Plan (together, the “Prior Plans”) that may become available for grant under the 2018 Plan as such shares become available from time to time (as further described below under “Summary of the 2018 Equity Incentive Plan – Stock Subject to the 2018 Plan”). In June 2020, the Company’s stockholders approved an amendment to the 2018 Plan to increase the share reserve by 5,700,000 shares. As of March 1, 2021, only 607,011 shares remained available for grant under the 2018 Plan (plus the Prior Plans’ Returning Shares (as defined and further described below under “Summary of the 2018 Equity Incentive Plan – Stock Subject to the 2018 Plan”) as such shares become available from time to time).

Why You Should Vote to Approve the Amendment to the 2018 Plan

Equity Awards Are a Key Component of Our Compensation Philosophy

Our Board believes that the issuance of equity awards is a key element underlying our ability to attract, retain and motivate key personnel, non-employee directors and consultants because of the strong competition for highly trained and experienced individuals among biotechnology companies, especially in the San Francisco Bay Area and northern New Jersey. In addition, because of the highly regulated and complex industry that we operate in, our success depends on our ability to attract and retain individuals with deep experience in our industry. Without such key personnel, non-employee directors and consultants, we might not achieve our development and commercialization plans. Therefore, the Board believes that the proposed amendment to the 2018 Plan to increase the number of shares issuable under the 2018 Plan is in the best interests of the Company and its stockholders and recommends a vote in favor of this Proposal 3.

Approval by our stockholders of the proposed amendment to increase the number of shares issuable under the 2018 Plan will allow us to continue to attract and retain highly trained and experienced individuals who are critical to our success, through the grant of equity awards at levels determined appropriate by our Board or Compensation Committee. The amended 2018 Plan will also allow us to utilize equity awards as long-term incentives to secure and retain the services of our employees, non-employee directors and consultants,

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consistent with our compensation philosophy and common compensation practice for companies headquartered in the San Francisco Bay Area. To date, we have relied significantly on equity awards in the form of stock option grants to attract and retain key employees, non-employee directors and consultants, all of whom are critical to our success. We believe the use of stock option grants strongly aligns the interests of our employees with those of our stockholders by placing a considerable proportion of our employees’ total compensation “at risk” because their compensation, in the form of stock options, is contingent on the appreciation in value of our Common Stock. In addition, we believe stock option grants encourage employee ownership in Geron and promote retention through the reward of long-term Company performance.

The 2018 Plan Requires Additional Shares to Meet our Forecasted Equity Needs

As described above, the 2018 Plan had 607,011 shares remaining available for grant as of March 1, 2021 (plus the Prior Plans’ Returning Shares (as defined and further described below under “Summary of the 2018 Equity Incentive Plan – Stock Subject to the 2018 Plan”) as such shares become available from time to time). Subject to adjustment for certain changes in our capitalization, if this Proposal 3 is approved by our stockholders, then under the 2018 Plan, we will have 12,500,000 new shares available for grant after our Annual Meeting for a total of approximately 13,107,011 shares available for grant after our Annual Meeting (based on shares available under the 2018 Plan as of March 1, 2021) (plus the Prior Plans’ Returning Shares (as defined and further described below under “Summary of the 2018 Equity Incentive Plan – Stock Subject to the 2018 Plan”) as such shares become available from time to time).

Our 2018 Inducement Award Plan (the “Inducement Plan”) allows us to grant nonstatutory stock options to new employees as a material inducement to their joining the Company. Such grants to new employees assist us in meeting a portion of our equity compensation needs, but only with respect to a limited group. To meet the growing hiring needs of the Company, the Compensation Committee approved an increase of 1,300,000 shares for the Inducement Plan in February 2020 and an increase of 800,000 shares in February 2021. As of March 1, 2021, 556,267 shares remained available for grant in the Inducement Plan.

We currently forecast granting stock options representing approximately 9,000,000 shares over the next one-year period, or approximately 2.8% of our Common Stock outstanding as of March 1, 2021. Given the expansion of our Company to advance the development of imetelstat on our own, we have more employees than in prior years which creates greater equity compensation requirements. In addition, because imetelstat is currently being evaluated in two Phase 3 clinical trials: IMerge in lower risk MDS and IMpactMF in refractory MF, our current hiring needs require highly trained regulatory, and clinical personnel with expertise in late-stage drug development, as well as individuals with experience in pre-commercial activities in preparation for potential commercialization of imetelstat.

We also anticipate option cancellations of approximately 100,000 shares in 2021 based on current projections. If our expectation for forfeitures is accurate, our net grants (grants less forfeitures and cancellations) over the next one-year period will be approximately 8,900,000 shares, or approximately 2.8% of our Common Stock outstanding as of March 1, 2021.

We currently intend to reserve the additional shares being requested under this Proposal 3 for issuance under our 2018 Plan to meet our estimated near-term equity compensation needs for our current and future employees, non-employee directors and consultants.

We operate in a highly competitive industry and geography for employee talent and do not expect required rates of compensation to decline. One alternative to using equity awards would be to significantly increase cash compensation. We do not believe this would be in our best interests or the best interest of our stockholders, because it would significantly impact our financial resources to further advance the imetelstat program. As a biotechnology company with locations in the San Francisco Bay Area and northern New Jersey, we believe that a combination of equity and cash compensation is more appropriate and preferable and meets the expected regional recruiting standards needed to enable us to attract, retain and motivate employees. Any significant increase in cash compensation in lieu of equity awards would reduce the cash otherwise available for advancing the development of imetelstat and potential pre-commercial activities. Furthermore, we do not believe a cash-oriented compensation program would provide the same value to us or our stockholders with respect to long-term employee retention or serve to align employees’ interests with those of our stockholders, in comparison to a program that includes equity awards.

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We Carefully Manage the Use of Equity Awards, and the Size of our Share Reserve is Reasonable

Our compensation philosophy reflects broad-based eligibility for equity awards, and we grant stock options to all of our employees and non-employee directors. However, we recognize that stock options dilute existing stockholders, and, therefore, we responsibly manage the growth of our equity compensation program. We are committed to effectively monitoring the share reserves for our equity plans, including our “burn rate,” to ensure that we maximize stockholders’ value by granting the appropriate number of stock options necessary to attract, reward, and retain employees, non-employee directors and consultants. For the year ended December 31, 2020, our three-year average burn rate was at the 25th percentile of the defined peer group market data provided by Radford, our compensation consultant. The burn rate includes stock option grants from the 2018 Plan and the Inducement Plan. Our stock options outstanding as of December 31, 2020 were below the 50th percentile of the defined peer group market data provided by Radford. Despite the fact that many of our stock options have exercise prices greater than the closing price of our common stock as reported by the Nasdaq Global Select Market in 2020, we have not repriced any stock options. In addition, the current burn rate and stock options outstanding reflects the recent growth of the Company as we rebuild internal development capability through hiring to advance development of imetelstat and prepare for potential commercialization of imetelstat. In 2020 and 2019, we recruited highly qualified and experienced professionals to drive each development function, including clinical operations, regulatory affairs, clinical science, biometrics and data management, manufacturing, quality, translational research, program management and commercial to support the development of imetelstat and potential commercialization of imetelstat. Many of these personnel had previous experience with imetelstat through a prior collaboration with Janssen Biotech, Inc., which facilitates our ability to advance the imetelstat program.

The tables below show our historical overhang and burn rate percentages under the current 2018 Plan and reflect the responsible actions we have taken in the past regarding our stock option grants.

Equity Awards Outstanding and Overhang

 

 

 

As of

March 1, 2021

 

2018 Plan Information

 

 

 

 

Total number of shares of Common Stock subject to outstanding stock options

 

 

20,056,518

 

Weighted-average exercise price per share of outstanding stock options

 

$1.63

 

Weighted-average remaining term of outstanding stock options

 

8.6 years

 

Total number of shares of Common Stock subject to outstanding full value awards

 

None

 

Total number of shares of Common Stock available for grant

 

 

607,011

 

 

 

 

 

 

Plan Information for Other Equity Plans

 

 

 

 

Total number of shares of Common Stock subject to outstanding stock options

 

 

29,537,096

 

Weighted-average exercise price per share of outstanding stock options

 

 

$2.43

 

Weighted-average remaining term of outstanding stock options

 

5.3 years

 

Total number of shares of Common Stock subject to outstanding full value awards

 

None

 

Total number of shares of Common Stock available for grant(1)

 

 

556,267

 

 

 

 

 

 

Total number of shares of Common Stock outstanding

 

 

318,527,540

 

Per-share closing price of Common Stock as reported on the Nasdaq Global Select Market

 

$1.86

 

 

(1)

Excludes 682,508 shares available under the 2014 Employee Stock Purchase Plan and 952,864 shares available under the Directors’ Market Value Purchase Plan.

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Burn Rate

The following table provides detailed information regarding the activity related to our 2018 Plan for the 2020 fiscal year.

 

 

 

For the Year Ended

December 31, 2020

 

Total number of shares of common stock subject to stock options granted

 

 

5,183,931

 

Total number of shares of common stock subject to full value awards granted

 

 

 

Weighted-average number of shares of common stock outstanding

 

 

271,460,265

 

Burn rate

 

 

1.9

%

The 2018 Plan Incorporates Good Compensation and Governance Practices

The 2018 Plan includes many provisions designed to protect our stockholders’ interests and to reflect corporate governance best practices.

 

Administration by the Board or an independent committee of the Board.  The 2018 Plan is administered by our Board, which may delegate authority to administer the 2018 Plan to an independent Board committee. The Board has delegated authority to administer the 2018 Plan to the Compensation Committee, which consists of three “non-employee directors” within the meaning of Rule 16b-3 under the Exchange Act. The Board retains the authority to concurrently administer the 2018 Plan and may, at any time, revest in the Board some or all of the powers previously delegated to the Compensation Committee or any other committee.

 

Repricing is not allowed.  The 2018 Plan prohibits the repricing of outstanding stock options and stock appreciation rights, and the cancellation of any outstanding stock options or stock appreciation rights that have an exercise or strike price greater than the then-current fair market value of our Common Stock in exchange for cash or other stock awards under the 2018 Plan, without prior stockholder approval.

 

Stockholder approval is required for additional shares or any material amendment.  The 2018 Plan does not contain an annual “evergreen” provision. The 2018 Plan authorizes a fixed number of shares, so that stockholder approval is required to issue any additional shares, allowing our stockholders to have direct input on our equity compensation program. Consistent with Nasdaq rules, the 2018 Plan requires stockholder approval of any material revisions to the 2018 Plan. In addition, certain other amendments to the 2018 Plan require stockholder approval.

 

Awards subject to forfeiture/clawback.  Awards granted under the 2018 Plan are subject to recoupment in accordance with any clawback provisions in a participant’s employment agreement or other agreement with the Company, or any clawback policy that we are required to adopt pursuant to the listing standards of any national securities exchange or association on which our securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable law. In addition, we may impose other clawback, recovery or recoupment provisions in a stock award agreement, including a reacquisition right in respect of previously acquired shares or other cash or property upon the occurrence of cause.

 

No single trigger accelerated vesting upon change in control.  The 2018 Plan does not provide for any automatic mandatory vesting of awards upon a change in control.

 

No liberal change in control definition.  The change in control definition in the 2018 Plan is not a “liberal” definition. A change in control transaction must actually occur in order for the change in control provisions in the 2018 Plan to be triggered.

 

No discounted stock options or stock appreciation rights.  All stock options and stock appreciation rights granted under the 2018 Plan must have an exercise or strike price equal to or greater than the fair market value of our Common Stock on the date the stock option or stock appreciation right is granted.

 

No liberal share counting or recycling of appreciation awards.  The following shares will not become available again for issuance under the 2018 Plan: (i) shares underlying stock options or stock appreciation rights that are reacquired or withheld (or not issued) by us to satisfy the exercise or purchase price of a stock award; (ii) shares underlying stock options or stock appreciation rights that are reacquired or withheld (or not issued) by us to satisfy a tax withholding obligation in

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connection with a stock award; and (iii) any shares repurchased by us on the open market with the proceeds of the exercise or purchase price of a stock option or a stock appreciation right.

 

Fungible share counting. The 2018 Plan contains a “fungible share counting” structure, whereby the number of shares of our Common Stock available for issuance under the 2018 Plan will be reduced by (i) one share for each share issued pursuant to a stock option or stock appreciation right with an exercise price that is at least 100% of the fair market value of our Common Stock on the date of grant (an “Appreciation Award”) granted under the 2018 Plan and (ii) 2.0 shares for each share issued pursuant to a stock award that is not an Appreciation Award (a “Full Value Award”) granted under the 2018 Plan. As part of such fungible share counting structure, the number of shares of our Common Stock available for issuance under the 2018 Plan will be increased by (i) one share for each share that becomes available again for issuance under the terms of the 2018 Plan subject to an Appreciation Award and (ii) 2.0 shares for each share that becomes available again for issuance under the terms of the 2018 Plan subject to a Full Value Award.

 

Termination of stock options and stock appreciation rights on a participant’s termination for cause. If a participant’s service is terminated for cause, which is defined under the 2018 Plan as (i) the participant’s conviction of any crime involving fraud, dishonesty or moral turpitude; (ii) the participant’s attempted commission of or participation in a fraud or act of dishonesty against the Company resulting in material harm to the business of the Company; (iii) the participant’s intentional, material violation of any contract or agreement with the Company, or any statutory duty the participant owes to the Company; or (iv) the participant’s conduct that constitutes gross misconduct, insubordination, incompetence or habitual neglect of duties and that results in material harm to the business of the Company, the participant’s stock options and stock appreciation rights terminate immediately, and the participant is prohibited from exercising his or her stock options and stock appreciation rights.

 

Restrictions on dividends. The 2018 Plan provides that (i) no dividends or dividend equivalents may be paid with respect to any shares of our Common Stock subject to a stock award before the date such shares have vested, (ii) any dividends or dividend equivalents that are credited with respect to any such shares will be subject to all of the terms and conditions applicable to such shares under the terms of the applicable stock award agreement (including any vesting conditions), and (iii) any dividends or dividend equivalents that are credited with respect to any such shares will be forfeited to us on the date such shares are forfeited to or repurchased by us due to a failure to vest.

Summary of the 2018 Equity Incentive Plan

The following is a summary of the principal features of the 2018 Plan, as amended, together with the applicable tax implications with respect to the 2018 Plan. The summary is qualified by reference to the full text of the 2018 Plan, as amended, which is attached as Appendix B to this proxy statement.

General

The 2018 Plan provides for grants to employees of the Company and any parent or subsidiary of the Company (including officers and employee directors) of “incentive stock options” within the meaning of Section 422 of the Code, and for grants of non-qualified stock options and stock purchase rights to employees (including officers and employee directors) and consultants (including non-employee directors) of the Company or any parent or subsidiary of the Company. See “Federal Income Tax Aspects” below for information concerning the tax treatment of incentive stock options, non-qualified stock options and stock purchase rights.

Purpose

The 2018 Plan is designed to secure and retain the services of our employees, non-employee directors and consultants, provide incentives for our employees, non-employee directors and consultants to exert maximum efforts for the success of our Company and our affiliates, and provide a means by which our employees, non-employee directors and consultants may be given an opportunity to benefit from increases in the value of our Common Stock. The 2018 Plan is also designed to align employees’ interests with stockholder interests.

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Administration

The 2018 Plan is administered by our Board, which may in turn delegate authority to administer the 2018 Plan to a committee of non-employee directors. The Board has delegated authority to administer the 2018 Plan to the Compensation Committee of the Board. Our Board may, at any time, revest in itself some or all of the power delegated to such a committee. The Board and any committee of non-employee directors to whom the Board may delegate authority to administer the 2018 Plan are each considered to be a Plan Administrator for purposes of this Proposal 3. Subject to the terms of the 2018 Plan, the Plan Administrator may determine the recipients, the types of stock awards to be granted, the number of shares of our Common Stock subject to or the cash value of stock awards, and the terms and conditions of stock awards granted under the 2018 Plan, including the period of their exercisability and vesting. The Plan Administrator also has the authority to provide for accelerated exercisability and vesting of stock awards. Subject to the limitations set forth below, the Plan Administrator also determines the fair market value applicable to a stock award and the exercise or strike price of stock options and stock appreciation rights granted under the 2018 Plan.

The Plan Administrator may also delegate to one or more executive officers the authority to designate employees who are not executive officers to be recipients of certain stock awards and the number of shares of our Common Stock subject to such stock awards. Under any such delegation, the Plan Administrator will specify the total number of shares of our Common Stock that may be subject to the stock awards granted by such executive officer. The executive officer may not grant a stock award to himself or herself.

Eligibility

Employees, non-employee directors, and consultants are eligible to participate in the 2018 Plan. As of March 1, 2021, all of our 63 employees (including 7 executive officers), 6 non-employee directors (including currently serving and nominee non-employee directors) and approximately 50 consultants are currently eligible to participate in the 2018 Plan and may receive all types of stock awards other than incentive stock options, under the 2018 Plan. Incentive stock options may be granted under the 2018 Plan only to our employees, including our executive officers.

Stock Subject to the 2018 Plan

Subject to adjustment for certain changes in our capitalization, the aggregate number of shares of our Common Stock that may be issued under the 2018 Plan (the “Share Reserve”) if this Proposal 3 is approved by our stockholders will not exceed the sum of: (i) 2,895,419 (which is the number of unallocated shares that remained available for the grant of new stock awards under the 2011 Plan as of the effective date of the 2018 Plan), (ii) 10,000,000 shares (which is the number of new shares that were reserved as of the effective date of the 2018 Plan), (iii) the 5,700,000 shares approved by our stockholders in June 2020; (iv) the 12,500,000 newly-requested shares that are the subject of this Proposal 3, and (v) any Prior Plans’ Returning Shares (as defined below), as such shares become available from time to time.

The “Prior Plans’ Returning Shares” are shares subject to outstanding stock awards granted under the Prior Plans that, from and after the effective date of the 2018 Plan, (i) expire or terminate for any reason prior to exercise or settlement, (ii) are forfeited, cancelled or otherwise returned to us because of the failure to meet a contingency or condition required for the vesting of such shares, or (iii) other than with respect to outstanding stock options and stock appreciation rights granted under the Prior Plans with an exercise or strike price of at least 100% of the fair market value of the underlying Common Stock on the date of grant (“Prior Plans’ Appreciation Awards”), are reacquired or withheld (or not issued) by us to satisfy a tax withholding obligation in connection with a stock award.

The number of shares of our Common Stock available for issuance under the 2018 Plan will be reduced by (i) one share for each share of Common Stock issued pursuant to a stock option or stock appreciation right with an exercise or strike price of at least 100% of the fair market value of the underlying Common Stock on the date of grant, and (ii) 2.0 shares for each share of Common Stock issued pursuant to a Full Value Award (i.e., any stock award that is not a stock option or stock appreciation right with an exercise or strike price of at least 100% of the fair market value of the underlying Common Stock on the date of grant).

If (i) any shares of Common Stock subject to a stock award are not issued because the stock award expires or otherwise terminates without all of the shares covered by the stock award having been issued or is settled in cash, (ii) any shares of Common Stock issued pursuant to a stock award are forfeited back to or

34

 


repurchased by us because of the failure to meet a contingency or condition required for the vesting of such shares, or (iii) with respect to a Full Value Award, any shares of Common Stock are reacquired or withheld (or not issued) by us to satisfy a tax withholding obligation in connection with the award, then such shares will again become available for issuance under the 2018 Plan (collectively, the “2018 Plan Returning Shares”). For each 2018 Plan Returning Share subject to a Full Value Award, or Prior Plans’ Returning Share subject to a stock award other than a Prior Plans’ Appreciation Award, the number of shares of Common Stock available for issuance under the 2018 Plan will increase by 2.0 shares.

Any shares of Common Stock reacquired or withheld (or not issued) by us to satisfy the exercise or purchase price of a stock award will no longer be available for issuance under the 2018 Plan, including any shares subject to a stock award that are not delivered to a participant because the stock award is exercised through a reduction of shares subject to the stock award. In addition, any shares reacquired or withheld (or not issued) by us to satisfy a tax withholding obligation in connection with a stock option or stock appreciation right granted under the 2018 Plan or a Prior Plans’ Appreciation Award, or any shares repurchased by us on the open market with the proceeds of the exercise or strike price of a stock option or stock appreciation right granted under the 2018 Plan or a Prior Plans’ Appreciation Award will no longer be available for issuance under the 2018 Plan.

If this Proposal 3 is approved by our stockholders, subject to adjustment, as described below, no more than 95,000,000 shares of our Common Stock may be delivered in satisfaction of incentive stock options awarded under the 2018 Plan.

The Common Stock issuable under the 2018 Plan may be shares of authorized but unissued or reacquired Common Stock, including shares repurchased by the Company on the open market or otherwise. The closing price of our Common Stock, as reported on the Nasdaq Global Select Market on March 1, 2021, was $1.86 per share.

Repricing; Cancellation and Re-Grant of Stock Options or Stock Appreciation Rights

Under the 2018 Plan, the Plan Administrator does not have the authority to reprice any outstanding stock option or stock appreciation right by reducing the exercise or strike price of the stock option or stock appreciation right or to cancel any outstanding stock option or stock appreciation right that has an exercise or strike price greater than the then-current fair market value of our Common Stock in exchange for cash or other stock awards without obtaining the approval of our stockholders. Such approval must be obtained within 12 months prior to such an event.

Stock Options

Stock options may be granted under the 2018 Plan pursuant to stock option agreements. The 2018 Plan permits the grant of stock options that are intended to qualify as incentive stock options (“ISOs”) and nonstatutory stock options (“NSOs”).

The exercise price of a stock option granted under the 2018 Plan may not be less than 100% of the fair market value of the Common Stock subject to the stock option on the date of grant and, in some cases (see “Limitations on Incentive Stock Options” below), may not be less than 110% of such fair market value.

The term of stock options granted under the 2018 Plan may not exceed ten years and, in some cases (see “Limitations on Incentive Stock Options” below), may not exceed five years. Except as otherwise provided in a participant’s stock option agreement or other written agreement with us, if a participant’s service relationship with us (referred to in this Proposal 3 as “continuous service”) terminates (other than for cause or the participant’s death or disability), the participant may exercise any vested stock options for up to three months following the participant’s termination of continuous service. Except as otherwise provided in a participant’s stock option agreement or other written agreement with us, if a participant’s continuous service terminates due to the participant’s disability or death (or the participant dies within a specified period, if any, following termination of continuous service), the participant, or his or her beneficiary, as applicable, may exercise any vested stock options for up to 24 months following the participant’s termination due to the participant’s disability or following the participant’s death. Except as explicitly provided otherwise in a participant’s stock option agreement or other written agreement with us, if a participant’s continuous service is terminated for cause (as defined in the 2018 Plan), all stock options held by the participant will terminate upon the

35

 


participant’s termination of continuous service and the participant will be prohibited from exercising any stock option from and after such termination date. Except as otherwise provided in a participant’s stock option agreement or other written agreement with us, the term of a stock option may be extended if the exercise of the stock option following the participant’s termination of continuous service (other than for cause or the participant’s death or disability) would be prohibited by applicable securities laws or if the sale of any Common Stock received upon exercise of the stock option following the participant’s termination of continuous service (other than for cause) would violate our insider trading policy. In no event, however, may a stock option be exercised after its original expiration date.

Acceptable forms of consideration for the purchase of our Common Stock pursuant to the exercise of a stock option under the 2018 Plan will be determined by the Plan Administrator and may include payment: (i) by cash, check, bank draft or money order payable to us; (ii) pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board; (iii) by delivery to us of shares of our Common Stock (either by actual delivery or attestation); (iv) by a net exercise arrangement (for NSOs only); or (v) in other legal consideration approved by the Plan Administrator.

Stock options granted under the 2018 Plan may become exercisable in cumulative increments, or “vest,” as determined by the Plan Administrator at the rate specified in the stock option agreement. Shares covered by different stock options granted under the 2018 Plan may be subject to different vesting schedules as the Plan Administrator may determine.

The Plan Administrator may impose limitations on the transferability of stock options granted under the 2018 Plan in its discretion. Generally, a participant may not transfer a stock option granted under the 2018 Plan other than by will or the laws of descent and distribution or, subject to approval by the Plan Administrator, pursuant to a domestic relations order or an official marital settlement agreement. However, the Plan Administrator may permit transfer of a stock option in a manner that is not prohibited by applicable tax and securities laws. In addition, subject to approval by the Plan Administrator, a participant may designate a beneficiary who may exercise the stock option following the participant’s death.

Limitations on Incentive Stock Options

In accordance with current federal tax laws, the aggregate fair market value, determined at the time of grant, of shares of our Common Stock with respect to ISOs that are exercisable for the first time by a participant during any calendar year under all of our stock plans may not exceed $100,000. The stock options or portions of stock options that exceed this limit or otherwise fail to qualify as ISOs are treated as NSOs. No ISO may be granted to any person who, at the time of grant, owns or is deemed to own stock possessing more than 10% of our total combined voting power unless the following conditions are satisfied:

 

the exercise price of the ISO must be at least 110% of the fair market value of the Common Stock subject to the ISO on the date of grant; and

 

the term of the ISO must not exceed five years from the date of grant.

If this Proposal 3 is approved by our stockholders, subject to adjustment for certain changes in our capitalization, the aggregate maximum number of shares of our Common Stock that may be issued pursuant to the exercise of ISOs under the 2018 Plan is 95,000,000 shares.

Stock Appreciation Rights

Stock appreciation rights may be granted under the 2018 Plan pursuant to stock appreciation right agreements. Each stock appreciation right is denominated in common stock share equivalents. The strike price of each stock appreciation right will be determined by the Plan Administrator, but will in no event be less than 100% of the fair market value of the Common Stock subject to the stock appreciation right on the date of grant. The Plan Administrator may also impose restrictions or conditions upon the vesting of stock appreciation rights that it deems appropriate. The appreciation distribution payable upon exercise of a stock appreciation right may be paid in shares of our Common Stock, in cash, in a combination of cash and stock, or in any other form of consideration determined by the Plan Administrator and set forth in the stock appreciation right agreement. Stock appreciation rights will be subject to the same conditions upon termination of continuous service and restrictions on transfer as stock options under the 2018 Plan.

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Restricted Stock Awards

Restricted stock awards may be granted under the 2018 Plan pursuant to restricted stock award agreements. A restricted stock award may be granted in consideration for cash, check, bank draft or money order payable to us, the participant’s services performed for us, or any other form of legal consideration acceptable to the Plan Administrator. Shares of our Common Stock acquired under a restricted stock award may be subject to forfeiture to or repurchase by us in accordance with a vesting schedule to be determined by the Plan Administrator. Rights to acquire shares of our Common Stock under a restricted stock award may be transferred only upon such terms and conditions as are set forth in the restricted stock award agreement. A restricted stock award agreement may provide that any dividends paid on restricted stock will be subject to the same vesting conditions as apply to the shares subject to the restricted stock award. Upon a participant’s termination of continuous service for any reason, any shares subject to restricted stock awards held by the participant that have not vested as of such termination date may be forfeited to or repurchased by us.

Restricted Stock Unit Awards

Restricted stock unit awards may be granted under the 2018 Plan pursuant to restricted stock unit award agreements. Payment of any purchase price may be made in any form of legal consideration acceptable to the Plan Administrator. A restricted stock unit award may be settled by the delivery of shares of our Common Stock, in cash, in a combination of cash and stock, or in any other form of consideration determined by the Plan Administrator and set forth in the restricted stock unit award agreement. Restricted stock unit awards may be subject to vesting in accordance with a vesting schedule to be determined by the Plan Administrator. Dividend equivalents may be credited in respect of shares of our Common Stock covered by a restricted stock unit award, provided that any additional shares credited by reason of such dividend equivalents will be subject to all of the same terms and conditions of the underlying restricted stock unit award. Except as otherwise provided in a participant’s restricted stock unit award agreement or other written agreement with us, restricted stock units that have not vested will be forfeited upon the participant’s termination of continuous service for any reason.

Performance Awards

The 2018 Plan allows us to grant performance stock awards. A performance stock award is a stock award that is payable (including that may be granted, may vest, or may be exercised) contingent upon the attainment of pre-determined performance goals during a performance period. A performance stock award may require the completion of a specified period of continuous service. The length of any performance period, the performance goals to be achieved during the performance period, and the measure of whether and to what degree such performance goals have been attained will be determined by the Plan Administrator in its discretion. In addition, to the extent permitted by applicable law and the applicable stock award agreement, the Plan Administrator may determine that cash may be used in payment of performance stock awards.

Performance goals under the 2018 Plan will be based on any one or more of the following performance criteria: (i) net earnings (either before or after one or more of the following: (A) interest, (B) taxes, (C) depreciation and (D) amortization); (ii) gross or net sales or revenue; (iii) net income (either before or after taxes); (iv) adjusted net income; (v) operating earnings or profit; (vi) cash flow (including, but not limited to, operating cash flow and free cash flow); (vii) return on assets; (viii) return on capital; (ix) return on stockholders’ equity; (x) total stockholder return; (xi) return on sales; (xii) gross or net profit or operating margin; (xiii) costs; (xiv) funds from operations; (xv) expenses; (xvi) working capital; (xvii) earnings per share; (xviii) adjusted earnings per share; (xix) price per share; (xx) regulatory body approval for commercialization of a product; (xxi) positive results from clinical trials; (xxii) initiation of clinical trials; (xxiii) implementation, completion or maintenance of critical projects or relationships; (xxiv) closing of significant financing; (xxv) execution or completion of strategic initiatives; (xxvi) market share; (xxvii) economic value; (xxviii) cash flow return on capital; (xxix) return on net assets; and (xxx) other measures of performance selected by the Plan Administrator.

Performance goals may be based on a company-wide basis, with respect to one or more business units, divisions, affiliates or business segments, and in either absolute terms or relative to the performance of one or more comparable companies or the performance of one or more relevant indices. The Plan Administrator may, in its sole discretion, provide that one or more objectively determinable adjustments shall be made to one or more of the performance goals. Such adjustments may include one or more of the following: (i) items related to a change in accounting principles; (ii) items relating to financing activities; (iii) expenses for restructuring or productivity initiatives; (iv) other non-operating items; (v) items related to acquisitions; (vi) items attributable to

37

 


the business operations of any entity acquired by the Company during the performance period; (vii) items related to the disposal of a business or segment of a business; (viii) items related to discontinued operations that do not qualify as a segment of a business under applicable accounting standards; (ix) items attributable to any stock dividend, stock split, combination or exchange of stock occurring during the performance period; (x) any other items of significant income or expense which are determined to be appropriate adjustments; (xi) items relating to unusual or extraordinary corporate transactions, events or developments, (xii) items related to amortization of acquired intangible assets; (xiii) items that are outside the scope of the Company’s core, on-going business activities; (xiv) items related to acquired in-process research and development; (xv) items relating to changes in tax laws; (xvi) items relating to major licensing or partnership arrangements; (xvii) items relating to asset impairment charges; (xviii) items relating to gains or losses for litigation, arbitration and contractual settlements; (xix) items relating to any other unusual or nonrecurring events or changes in applicable laws, accounting principles or business conditions; or (xx) any other items selected by the Plan Administrator.

In addition, the Plan Administrator retains the discretion to reduce or eliminate the compensation or economic benefit due upon the attainment of any performance goals and to define the manner of calculating the performance criteria it selects to use for a performance period.

Other Stock Awards

Other forms of stock awards valued in whole or in part by reference to, or otherwise based on, our Common Stock may be granted either alone or in addition to other stock awards under the 2018 Plan. Subject to the terms of the 2018 Plan, the Plan Administrator will have sole and complete authority to determine the persons to whom and the time or times at which such other stock awards will be granted, the number of shares of our Common Stock to be granted and all other terms and conditions of such other stock awards.

Clawback Policy

Stock awards granted under the 2018 Plan will be subject to recoupment in accordance with any clawback provisions in a participant’s employment agreement or other agreement with the Company or any clawback policy that we are required to adopt pursuant to the listing standards of any national securities exchange or association on which our securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable law. In addition, the Plan Administrator may impose other clawback, recovery or recoupment provisions in a stock award agreement as the Plan Administrator determines necessary or appropriate, including a reacquisition right in respect of previously acquired shares of our Common Stock or other cash or property upon the occurrence of cause.

Changes to Capital Structure

In the event of certain capitalization adjustments, the Plan Administrator will appropriately adjust: (i) the class(es) and maximum number of securities subject to the 2018 Plan; (ii) the class(es) and maximum number of securities that may be issued pursuant to the exercise of ISOs; and (iii) the class(es) and number of securities and price per share of stock subject to outstanding stock awards.

Corporate Transaction

In the event of a corporate transaction (as defined in the 2018 Plan and described below), the Board will have the discretion to take one or more of the following actions with respect to outstanding stock awards (contingent upon the closing or completion of such corporate transaction), unless otherwise provided in the stock award agreement or other written agreement with the participant or unless otherwise provided by the Board at the time of grant:

 

arrange for the surviving or acquiring corporation (or its parent company) to assume or continue the award or to substitute a similar stock award for the award (including an award to acquire the same consideration paid to our stockholders pursuant to the corporate transaction);

 

arrange for the assignment of any reacquisition or repurchase rights held by us with respect to the stock award to the surviving or acquiring corporation (or its parent company);

38

 


 

accelerate the vesting (and, if applicable, the exercisability) of the stock award and provide for its termination prior to the effective time of the corporate transaction;

 

arrange for the lapse, in whole or in part, of any reacquisition or repurchase rights held by us with respect to the award;

 

cancel or arrange for the cancellation of the stock award, to the extent not vested or exercised prior to the effective time of the corporate transaction, in exchange for such cash consideration, if any, as the Board may consider appropriate; and

 

make a payment, in such form as may be determined by the Board, equal to the excess, if any, of (i) the value of the property the participant would have received upon the exercise of the stock award immediately prior to the effective time of the corporate transaction, over (ii) any exercise price payable in connection with such exercise.

The Board is not obligated to treat all stock awards or portions of stock awards in the same manner. The Board may take different actions with respect to the vested and unvested portions of a stock award.

For purposes of the 2018 Plan, a corporate transaction generally will be deemed to occur in the event of the consummation of: (i) a sale or other disposition of all or substantially all of our consolidated assets; (ii) a sale or other disposition of at least 90% of our outstanding securities; (iii) a merger, consolidation or similar transaction following which we are not the surviving corporation; or (iv) a reverse merger, consolidation or similar transaction following which we are the surviving corporation but the shares of our Common Stock outstanding immediately prior to the transaction are converted or exchanged into other property by virtue of the transaction.

Change in Control

Under the 2018 Plan, a stock award may be subject to additional acceleration of vesting and exercisability upon or after a change in control (as defined in the 2018 Plan and described below) as may be provided in the participant’s stock award agreement, in any other written agreement with us or in our Director Compensation Policy, but in the absence of such provision, no such acceleration will occur.

For purposes of the 2018 Plan, a change in control generally will be deemed to occur upon the first to occur of an event set forth in any one of the following: (i) as a result of any merger or consolidation, the voting securities of the Company outstanding immediately prior thereto represent less than 49% of the combined voting power of the voting securities of the Company or such surviving or acquiring entity outstanding immediately after such transaction; (ii) a majority of our Board becomes comprised of individuals whose nomination, appointment, or election was not approved by at least two-thirds of the Board members or their approved successors; (iii) any individual, entity or group becomes the beneficial owner of more than 20% of the then outstanding shares of Common Stock of the Company; (iv) any sale of all or substantially all of the assets of the Company; or (v) the complete liquidation or dissolution of the Company.

The acceleration of vesting of a stock award in the event of a corporate transaction or a change in control event under the 2018 Plan may be viewed as an anti-takeover provision, which may have the effect of discouraging a proposal to acquire or otherwise obtain control of us.

Plan Amendments and Termination

The Plan Administrator will have the authority to amend or terminate the 2018 Plan at any time. However, except as otherwise provided in the 2018 Plan or a stock award agreement, no amendment or termination of the 2018 Plan may materially impair a participant’s rights under his or her outstanding stock awards without the participant’s consent. We will obtain stockholder approval of any amendment to the 2018 Plan as required by applicable law and listing requirements. No incentive stock options may be granted under the 2018 Plan after the tenth anniversary of the date the 2018 Plan was adopted by our Board.

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U.S. Federal Income Tax Consequences

The following is a summary of the principal United States federal income tax consequences to participants and us with respect to participation in the 2018 Plan. This summary is not intended to be exhaustive and does not discuss the income tax laws of any local, state or foreign jurisdiction in which a participant may reside. The information is based upon current federal income tax rules and therefore is subject to change when those rules change. Because the tax consequences to any participant may depend on his or her personal circumstances, each participant should consult the participant’s tax adviser regarding the federal, state, local and other tax consequences of the grant or exercise of a stock award or the disposition of stock acquired under the 2018 Plan. The 2018 Plan is not qualified under the provisions of Section 401(a) of the Code and is not subject to any of the provisions of the Employee Retirement Income Security Act of 1974. Our ability to realize the benefit of any tax deductions described below depends on our generation of taxable income as well as the requirement of reasonableness and the satisfaction of our tax reporting obligations.

Nonstatutory Stock Options

Generally, there is no taxation upon the grant of an NSO if the stock option is granted with an exercise price equal to the fair market value of the underlying stock on the grant date. Upon exercise, a participant will recognize ordinary income equal to the excess, if any, of the fair market value of the underlying stock on the date of exercise of the stock option over the exercise price. If the participant is employed by us or one of our affiliates, that income will be subject to withholding taxes. The participant’s tax basis in those shares will be equal to his or her fair market value on the date of exercise of the stock option, and the participant’s capital gain holding period for those shares will begin on that date.

Subject to the requirement of reasonableness, the provisions of Section 162(m) of the Code (“Section 162(m)”), and the satisfaction of a tax reporting obligation, we will generally be entitled to a tax deduction equal to the taxable ordinary income realized by the participant.

Incentive Stock Options

The 2018 Plan provides for the grant of stock options that are intended to qualify as “incentive stock options,” as defined in Section 422 of the Code. Under the Code, a participant generally is not subject to ordinary income tax upon the grant or exercise of an ISO. If the participant holds a share received upon exercise of an ISO for more than two years from the date the stock option was granted and more than one year from the date the stock option was exercised, which is referred to as the required holding period, the difference, if any, between the amount realized on a sale or other taxable disposition of that share and the participant’s tax basis in that share will be long-term capital gain or loss.

If, however, a participant disposes of a share acquired upon exercise of an ISO before the end of the required holding period, which is referred to as a disqualifying disposition, the participant generally will recognize ordinary income in the year of the disqualifying disposition equal to the excess, if any, of the fair market value of the share on the date of exercise of the stock option over the exercise price. However, if the sales proceeds are less than the fair market value of the share on the date of exercise of the stock option, the amount of ordinary income recognized by the participant will not exceed the gain, if any, realized on the sale. If the amount realized on a disqualifying disposition exceeds the fair market value of the share on the date of exercise of the stock option, that excess will be short-term or long-term capital gain, depending on whether the holding period for the share exceeds one year.

For purposes of the alternative minimum tax, the amount by which the fair market value of a share of stock acquired upon exercise of an ISO exceeds the exercise price of the stock option generally will be an adjustment included in the participant’s alternative minimum taxable income for the year in which the stock option is exercised. If, however, there is a disqualifying disposition of the share in the year in which the stock option is exercised, there will be no adjustment for alternative minimum tax purposes with respect to that share. In computing alternative minimum taxable income, the tax basis of a share acquired upon exercise of an ISO is increased by the amount of the adjustment taken into account with respect to that share for alternative minimum tax purposes in the year the stock option is exercised.

We are not allowed a tax deduction with respect to the grant or exercise of an ISO or the disposition of a share acquired upon exercise of an ISO after the required holding period. If there is a disqualifying disposition of a share, however, we will generally be entitled to a tax deduction equal to the taxable ordinary income

40

 


realized by the participant, subject to the requirement of reasonableness, the provisions of Section 162(m), and provided that either the employee includes that amount in income or we timely satisfy our reporting requirements with respect to that amount.

Restricted Stock Awards

Generally, the recipient of a restricted stock award will recognize ordinary income at the time the stock is received equal to the excess, if any, of the fair market value of the stock received over any amount paid by the recipient in exchange for the stock. If, however, the stock is not vested when it is received (for example, if the employee is required to work for a period of time in order to have the right to sell the stock), the recipient generally will not recognize income until the stock becomes vested, at which time the recipient will recognize ordinary income equal to the excess, if any, of the fair market value of the stock on the date it becomes vested over any amount paid by the recipient in exchange for the stock. A recipient may, however, file an election with the Internal Revenue Service, within 30 days following his or her receipt of the restricted stock award, to recognize ordinary income, as of the date the recipient receives the restricted stock award, equal to the excess, if any, of the fair market value of the stock on the date the restricted stock award is granted over any amount paid by the recipient for the stock.

The recipient’s basis for the determination of gain or loss upon the subsequent disposition of shares acquired from a restricted stock award will be the amount paid for such shares plus any ordinary income recognized either when the stock is received or when the stock becomes vested.

Subject to the requirement of reasonableness, the provisions of Section 162(m), and the satisfaction of a tax reporting obligation, we will generally be entitled to a tax deduction equal to the taxable ordinary income realized by the recipient of the restricted stock award.

Restricted Stock Unit Awards

Generally, the recipient of a restricted stock unit award structured to comply with the requirements of Section 409A of the Code or an exception to Section 409A of the Code will recognize ordinary income at the time the stock is delivered equal to the excess, if any, of the fair market value of the stock received over any amount paid by the recipient in exchange for the stock. To comply with the requirements of Section 409A of the Code, the stock subject to a restricted stock unit award may generally only be delivered upon one of the following events: a fixed calendar date (or dates), separation from service, death, disability or a change in control. If delivery occurs on another date, unless the restricted stock unit award otherwise complies with or qualifies for an exception to the requirements of Section 409A of the Code (including delivery upon achievement of a performance goal), in addition to the tax treatment described above, the recipient will owe an additional 20% federal tax and interest on any taxes owed.

The recipient’s basis for the determination of gain or loss upon the subsequent disposition of shares acquired from a restricted stock unit award will be the amount paid for such shares plus any ordinary income recognized when the stock is delivered.

Subject to the requirement of reasonableness, the provisions of Section 162(m), and the satisfaction of a tax reporting obligation, we will generally be entitled to a tax deduction equal to the taxable ordinary income realized by the recipient of the restricted stock unit award.

Stock Appreciation Rights

Generally, if a stock appreciation right is granted with an exercise price equal to the fair market value of the underlying stock on the grant date, the recipient will recognize ordinary income equal to the fair market value of the stock or cash received upon such exercise. Subject to the requirement of reasonableness, the provisions of Section 162(m), and the satisfaction of a tax reporting obligation, we will generally be entitled to a tax deduction equal to the taxable ordinary income realized by the recipient of the stock appreciation right. 

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New Plan Benefits Under the 2018 Plan

The following table sets forth certain information regarding future benefits under the 2018 Plan, as amended:

 

Name and Position

Number of

Shares

John A. Scarlett, M.D.

    Chairman of the Board, President and Chief Executive Officer

(1)

Olivia K. Bloom

    Executive Vice President Finance, Chief Financial Officer and Treasurer

(1)

Andrew J. Grethlein, Ph.D.

    Executive Vice President, Chief Operating Officer

(1)

Aleksandra Rizo, Ph.D., M.D.

    Executive Vice President, Chief Medical Officer

(1)

Melissa A. Kelly Behrs

    Executive Vice President, Chief Business Officer

(1)

All current executive officers as a group

(1)

All current directors who are not executive officers as a group

(2)

All current employees who are not executive officers as a group

(1)

 

 

(1)

Awards granted under the 2018 Plan to our executive officers and other employees are discretionary and are not subject to set benefits or amounts under the terms of the 2018 Plan, and we have not granted any awards under the 2018 Plan subject to stockholder approval of this Proposal 3. Accordingly, the future benefits or amounts that will be received by or allocated to our executive officers and other employees under the 2018 Plan are not determinable.

 

(2)

As described above in this proxy statement under “Compensation of Directors,” pursuant to the Director Compensation Policy, on the date of each annual meeting of our stockholders, including this Annual Meeting, each current non-employee director (other than any director receiving an initial grant on the date of such annual meeting) who is then serving as a non-employee director and who will continue as a non-employee director following the date of such annual meeting automatically will be granted an option to purchase 83,000 shares of our Common Stock (the “Annual Grant”). Under the current terms of our Director Compensation Policy, the aggregate number of shares subject to such Annual Grants that will automatically be granted to all of our current directors who are not executive officers as a group will be 498,000 shares each year.

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2018 Plan Benefits

The following table presents certain information with respect to cumulative stock options that have been granted under the 2018 Plan as of March 1, 2021:

 

 

 

Cumulative

 

 

 

 

 

 

 

Number of Shares

 

 

 

 

 

 

 

Subject to Stock

 

 

Per Share

 

 

 

Options Granted

 

Weighted Average

Name and Position

 

Under the 2018 Plan

 

Exercise Price

John A. Scarlett M.D.

 

 

 

3,732,750

 

 

 

 

$

1.51

 

   Chairman of the Board, President and

 

 

 

 

 

 

 

 

 

 

 

     Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

 

Olivia K. Bloom

 

 

 

1,641,375

 

 

 

 

$

1.58

 

   Executive Vice President, Finance, Chief Financial

 

 

 

 

 

 

 

 

 

 

 

     Officer and Treasurer

 

 

 

 

 

 

 

 

 

 

 

Andrew J. Grethlein, Ph.D.

 

 

 

1,641,375

 

 

 

 

$

1.58

 

   Executive Vice President, Chief Operating Officer

 

 

 

 

 

 

 

 

 

 

 

Aleksandra Rizo, Ph.D., M.D.

 

 

 

591,375

 

 

 

 

$

1.68

 

   Executive Vice President, Chief Medical Officer

 

 

 

 

 

 

 

 

 

 

 

Melissa A. Kelly Behrs

 

 

 

1,641,375

 

 

 

 

$

1.58

 

   Executive Vice President, Chief Business Officer

 

 

 

 

 

 

 

 

 

 

 

All current executive officers as a group

 

 

 

11,189,625

 

 

 

 

$

1.58

 

All current directors who are not executive officers as a group

 

 

 

1,438,000

 

 

 

 

$

1.88

 

Each nominee for election as a director:

 

 

 

 

 

 

 

 

 

 

 

John A. Scarlett M.D.

 

 

 

3,732,750

 

 

 

 

$

1.51

 

Robert J. Spiegel, M.D.

 

 

 

223,000

 

 

 

 

$

2.08

 

Each associate of any current executive officers,

   current directors or director nominees

 

 

 

 

 

 

$

 

Each other person who received or is to receive 5% of awards

 

 

 

 

 

 

$

 

All current employees who are not executive officers

   as a group

 

 

 

7,089,767

 

 

 

 

$

1.65

 

 

 

 

 

 

 

 

 

 

Required Vote and Board of Directors Recommendation

Approval of this Proposal 3 requires the affirmative vote of the holders of a majority of the shares having voting power present in person or represented by proxy at the Annual Meeting. Abstentions will have the same effect as a vote against this proposal, and broker non-votes will have no effect on the outcome of this proposal.

The Board of Directors Unanimously Recommends That
Stockholders Vote FOR Proposal 3

PROPOSAL 4

ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION

As required by Section 951 of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Board is requesting stockholders to vote, on a non-binding advisory basis, to approve the compensation paid to Geron’s Named Executive Officers, as disclosed in this Proxy Statement. This proposal, commonly known as a “say-on-pay” proposal, gives stockholders the opportunity to express their views on the compensation of Geron’s Named Executive Officers.

This vote is not intended to address any specific item of compensation, but rather the overall compensation of our Named Executive Officers and our executive compensation philosophy, policies and

43

 


practices described in this Proxy Statement. The overall compensation of our Named Executive Officers subject to the vote is disclosed in this Proxy Statement in the sections entitled “Compensation Discussion and Analysis” and “Executive Compensation Tables and Related Narrative Disclosure.”

The Compensation Committee continually reviews our executive compensation program to determine whether such program achieves our desired goals of aligning our executive compensation strategy and structure with the Company’s stockholders’ interests and current market practices. As discussed in detail in the section entitled “Compensation Discussion and Analysis” of this Proxy Statement, Geron’s executive compensation strategy and structure is designed to motivate our executive team to create long-term value for our stockholders through the achievement of strategic business objectives, while effectively managing the risks and challenges inherent in a late-stage clinical biopharmaceutical company. As the long-term success of Geron depends on the talents of our employees, our compensation structure plays a significant role in our ability to attract, retain and motivate the highest quality workforce in a competitive employment environment in both the San Francisco Bay Area and northern New Jersey, while also promoting a high-performance culture. The Compensation Committee believes the emphasis on pay for performance in Geron’s executive compensation program strongly aligns with the long-term interests of our stockholders. Please read the “Compensation Discussion and Analysis” section of this Proxy Statement for additional details about our executive compensation program, including information about the 2020 compensation of our Named Executive Officers.

Advisory Vote

We recommend stockholder approval of the 2020 compensation of our Named Executive Officers as disclosed in this Proxy Statement pursuant to the SEC’s compensation disclosure rules, which disclosure includes the section entitled “Compensation Discussion and Analysis,” and the compensation tables and accompanying narrative disclosures within the section entitled “Executive Compensation Tables and Related Narrative Disclosure” of this Proxy Statement.

Accordingly, the Board recommends that stockholders vote in favor of the following resolution:

“RESOLVED, that the stockholders approve, on a non-binding advisory basis, the compensation paid to Geron’s Named Executive Officers, as disclosed in the Compensation Discussion and Analysis section, the tabular disclosure regarding such compensation and the accompanying narrative disclosure set forth in the Proxy Statement relating to the Company’s 2021 Annual Meeting of Stockholders.”

Approval of the above resolution requires the affirmative vote of the holders of a majority of the shares having voting power present in person or represented by proxy at the Annual Meeting. Abstentions will have the same effect as a vote against this proposal, and broker non-votes will have no effect on the outcome of this proposal.

As this is an advisory vote, the outcome of the vote is non-binding on us with respect to future executive officer compensation decisions, including those related to our Named Executive Officers, or otherwise. However, the Board and the Compensation Committee will review the results of the vote and take them into account when considering future executive officer compensation policies and decisions.

Unless the Board modifies its policy on the frequency of future advisory votes on the compensation of our Named Executive Officers, the next advisory vote on the compensation of our Named Executive Officers will be held at next year’s annual meeting of stockholders.

The Board of Directors Unanimously Recommends That

Stockholders Vote FOR Proposal 4

44

 


COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and Analysis section presents and discusses our executive compensation policies and practices and the compensation decisions relating to our “Named Executive Officers” (as defined below) for the 2020 fiscal year, and includes the following:

 

an executive summary of the business activities which influenced 2020 compensation decisions and important features of our executive compensation program;

 

philosophy, objectives and key elements of our executive compensation program;

 

process for setting executive compensation, including the role of the Compensation Committee, management and independent compensation consultant;

 

a detailed discussion and analysis of the Compensation Committee’s specific decisions about 2020 compensation for each of our Named Executive Officers; and

 

a description of other compensation considerations and practices.

The following executive officers are collectively referred to herein as our Named Executive Officers:

 

Dr. John A. Scarlett, Chairman of the Board, Chief Executive Officer and President;

 

Ms. Olivia K. Bloom, Executive Vice President, Finance, Chief Financial Officer and Treasurer;

 

Dr. Andrew J. Grethlein, Executive Vice President, Chief Operating Officer;

 

Dr. Aleksandra Rizo, Executive Vice President, Chief Medical Officer; and

 

Ms. Melissa A. Kelly Behrs, Executive Vice President, Chief Business Officer.

Executive Summary

Business Highlights that Impacted 2020 Executive Compensation

Our executive compensation program in 2020 was highly influenced by our vision to be recognized as a leader in the treatment of hematologic malignancies and our current plans to develop and potentially commercialize imetelstat, a first-in-class telomerase inhibitor. In furtherance of that vision and those plans, we accomplished the following key activities in 2020:

 

Advanced clinical development of imetelstat with the opening for screening and enrollment of IMpactMF, a Phase 3 clinical trial in refractory myelofibrosis (“MF”).

 

Achieved 50% enrollment in ongoing IMerge Phase 3 clinical trial in lower risk myelodysplastic syndromes (“MDS”).

 

Presented updated clinical data and analyses from Phase 2 trials of imetelstat in MF and MDS at medical conferences in June and December 2020.

 

Obtained Orphan Drug designation from the European Commission for imetelstat to treat MDS.

 

Obtained clearance from the United States Food and Drug Administration (“FDA”) on IMpactMF trial protocol that we believe may support, if the trial is successful, the registration of imetelstat in refractory MF.

 

Completed validation of imetelstat inventory purchased from our former collaborator to ensure uninterrupted supply for ongoing and future clinical trials and validated manufacturing processes at contract manufacturing vendors to enable future production of imetelstat.

 

Developed strategic plan for evolving the company from clinical to commercial activities, including commercial launch plans for imetelstat in MDS and MF.

 

Raised capital to fund operations through the end of 2022.

 

Performed seamless transition to remote working environment for all company operations upon COVID-19 “shelter-in-place” orders to enable achievement of above accomplishments.

45

 


Consistent with prior years, in 2020, we faced persistent retention and recruitment challenges as the marketplace for qualified executive officers with broad experience in a small company environment continued to be highly competitive in both the San Francisco Bay Area and northern New Jersey, fueled in part by robust growth in both the technology and biopharmaceutical industries and high demand for experienced personnel by newly public entities, especially in the healthcare sector. These retention challenges were heightened due to the COVID-19 pandemic, as companies broadened their recruiting geography because personnel became increasingly able to work remotely. In addition, we designed 2020 executive compensation to incentivize and reward past and future achievements that position us to advance the development of imetelstat in MDS and MF, as well as establish a foundation for future growth into potential commercialization.

Our corporate goals for 2020 primarily focused on advancing the IMerge Phase 3 clinical trial, gaining FDA clearance on a Phase 3 trial protocol in refractory MF and opening that trial for screening and enrollment, developing strategies for maximizing the value of imetelstat, formulating launch plans for commercialization and raising capital to support these goals. The COVID-19 pandemic created unforeseen risks and obstacles to clinical trial activities, as well as disruption to business operations and financial markets in 2020. Despite these challenges, we advanced imetelstat development toward realizing our vision. The Compensation Committee and independent members of the Board (the “Independent Board”), evaluated our achievements in 2020 and determined that we achieved 140% of our 2020 corporate goals, which included achievement of certain stretch goals outlined at the beginning of the year. For details regarding our 2020 corporate goal achievements, see the sub-section entitled “Compensation Discussion and Analysis – 2020 Corporate Goal Achievement Factor.”

Important Features of Our Executive Compensation Program

The Compensation Committee has structured our executive compensation program to ensure that our executive officers, including our Named Executive Officers, are compensated in a manner consistent with stockholder interests, competitive pay practices and applicable requirements of regulatory bodies. To help us accomplish these important objectives, we have adopted the following policies and practices over time:

 

What We Do:

What We Don’t Do:

  

Emphasize pay for performance using a mix of annual and long-term metrics

  

Approve automatic or guaranteed annual salary increases

  

Conduct competitive benchmarking to ensure executive officer compensation is aligned to market

  

Permit automatic or guaranteed bonuses or long-term incentive awards

  

Require a compensation recoupment (i.e., clawback) with respect to all our executive officers

  

Provide for tax gross-ups

  

Appoint only independent directors to the Compensation Committee

  

Reprice options without stockholder approval

  

Engage an independent compensation consultant reporting directly to the Compensation Committee

  

Allow hedging or pledging of Company stock

  

Annually assess risk in our compensation programs and identify mitigation strategies

  

Grant stock options with an exercise price less than fair market value

  

Conduct annual say-on-pay vote

 

 

 

Say-on-Pay Vote

At our 2020 Annual Meeting, we sought an advisory vote from our stockholders regarding the compensation of our Named Executive Officers. The 2020 “say-on-pay” proposal was approved, with approximately 79.4% of the votes cast supporting the proposal. The Compensation Committee considers the results of the advisory vote as it completes its annual review of each pay element and the compensation packages provided to our Named Executive Officers. The Compensation Committee considered the outcome of the 2020 “say-on–pay” vote and did not make any changes to Geron’s executive compensation program for 2020 as a result of the vote; however the Compensation Committee continues to monitor and evaluate our compensation program going forward in light of our stockholders’ views and our evolving needs and business strategy to ensure our compensation program aligns with the interests of our stockholders.

46

 


Our Executive Compensation Program

Philosophy and Objectives

We believe that the leadership of our current executive team will be vital as we advance imetelstat through Phase 3 clinical trials and, if imetelstat is approved in the future by regulatory authorities, commercialize in the United States and potentially seek commercialization partners for territories outside of the United States. Our industry is highly scientific, clinical, regulated and dynamic, which requires an executive team that is exceptionally educated, dedicated and experienced. We also believe that the work of our executive officers, including our Named Executive Officers, toward accomplishing our corporate goals is highly collaborative and team-oriented, requiring our executive officers to perform duties and responsibilities outside those of his or her job title, as such job titles are commonly understood in the industry. Given the highly collaborative teamwork of our executive officers, including our Named Executive Officers, and the benefit we believe is conveyed to the Company by retaining the team intact, the Compensation Committee has concluded that retention and internal pay equity among the executive team are key factors in compensation decisions.

Our executive compensation program has the following general objectives:

 

Objectives

Description

Pay for Performance

We tie annual performance-based bonuses to the successful achievement of individual and corporate goals

Alignment to Stockholders’ Interests

We structure long-term incentives (i.e., stock options) such that benefits are only attained upon appreciation of stock value

Competitiveness

We compare our practices with appropriate peer companies to ensure annual and long-term compensation correspond with industry and market standards

Internal Fairness

We assess total compensation packages across the executive team for consistency

We believe that these objectives align with our compensation philosophy and serve to help attract, motivate and retain executive officers, including our Named Executive Officers, who drive strategic clinical and business objectives and build long-term stockholder value.

Compensation Components

The primary components of our executive compensation program consist of elements that are available to all employees, including base salary, annual performance-based bonuses, stock options and broad-based benefits. To help retain and motivate our executive officers, including our Named Executive Officers, we target total compensation that is competitive with both the San Francisco Bay Area and northern New Jersey biotechnology employment markets through the utilization of a mix of short- and long-term compensation, fixed and variable pay and cash and equity-based compensation. We believe a mixture of these components supports our objectives to (1) pay for performance, (2) align with stockholders’ interests, (3) remain competitive in the marketplace and (4) maintain internal fairness. “Total compensation,” as referred to in this Compensation Discussion and Analysis, consists of annual base salary, annual performance-based bonus and the grant date fair value of stock options as reported in the sub-section entitled “Summary Compensation Table.”

47

 


In the table below, we describe each compensation component, when it is paid, how we determine the amount or size of each component, and why we pay each component.

 

 

/---------Fixed Pay-------/

/-------------------Variable Pay (At Risk)----------------/

 

Base Salary

Performance-Based Bonus(1)

Stock Options

Form

Cash

Cash

Equity

When paid/vested

Ongoing, twice monthly

Annual

Fully vested after 4-years of continuous service

How determined

Competitive data

Scope of responsibilities

Work experience

Critical skills

Internal equity

Individual performance

Target awards are set as a percent of salary based on competitive data

Award payouts are based on achievement of weighted corporate and individual goals

CEO bonus tied 100% to corporate goal achievement

Based on competitive data and industry standards

Takes into consideration potential projected benefit upon stock price appreciation

Why paid

Provides competitive levels of fixed pay to attract and retain executives

Motivates attainment of critical near-term priorities by linking annual company and individual performance to an annual incentive

Promotes retention of key talent, aligns executive and stockholder interests and encourages employee ownership in Geron

 

(1)

Defined as non-equity incentive plan compensation in the Summary Compensation Table.

Allocating Amongst Compensation Components

The Compensation Committee does not have any formal policies for allocating total compensation among the various components of the executive compensation program. Instead, the Compensation Committee uses its judgment, in consultation with Radford, to establish a mix of current, short-term and long-term incentive compensation, and cash and equity compensation for each Named Executive Officer. In setting the annual level of total compensation for our Named Executive Officers, the Compensation Committee considers various factors, which typically include:

 

defined peer group market data provided by Radford;

 

corporate performance, including performance in light of current business challenges;

 

our level of achievement of our corporate goals;

 

internal pay equity among Named Executive Officers;

 

each executive officer’s individual performance;

 

the criticality of each executive officer’s skill set, and the need to retain such skills;

 

executive officer stock ownership information;

 

analyses of historical executive officer compensation levels and current company-wide compensation levels; and

 

trends for executive compensation for our industry and in our local employment markets.

Each of these factors is considered in the context of our overall compensation philosophy and objectives in determining executive compensation structure, as well as balancing against Geron’s financial resources and ability to award cash and equity incentives.

48

 


Process for Setting Executive Compensation

Role of the Compensation Committee

Appointed by our Board, the members of our Compensation Committee are independent of our management and meet the Nasdaq listing standards for independence. The Compensation Committee acts on behalf of the Board to oversee the compensation policies and practices applicable to all of our employees, including the administration of our equity plans and employee benefit plans. Typically, the Compensation Committee meets at least once quarterly, and may meet with greater frequency if necessary. The agenda for each meeting is usually developed by the Chair of the Compensation Committee, in consultation with the Chief Executive Officer, Vice President of Human Resources, Chief Legal Officer and our independent compensation consultant, Radford. The Compensation Committee also meets in executive session without the presence of any employees. Historically, the Compensation Committee makes decisions related to executive compensation after conducting multiple meetings during the fourth quarter of the calendar year and the first quarter of the ensuing year.

Role of Independent Compensation Consultant

The Compensation Committee actively reviews and assesses our executive compensation program in light of the highly competitive employment environment in the San Francisco Bay Area and northern New Jersey, the challenges of recruiting, motivating and retaining our executive officers, including our Named Executive Officers, in an industry such as ours, which has much longer business cycles than other commercial industries, and evolving compensation governance and best practices. To assist with this assessment, the Compensation Committee has the authority to retain special counsel and other experts, including compensation consultants, to support their responsibilities in determining executive officer compensation and related benefits. Since December 2011, the Compensation Committee has retained Radford as its independent compensation consultant due to its extensive analytical and compensation expertise in the biotechnology and pharmaceutical industry. Although the Company pays the costs of Radford’s services, the Compensation Committee has the sole authority to engage and terminate Radford’s services, as well as to approve fees for Radford’s services. Radford makes recommendations to the Compensation Committee, but it has no authority to make compensation decisions on behalf of the Compensation Committee or the Company. The Compensation Committee, at its discretion, may communicate and meet with Radford with no Company employees present.

In February 2020, the Compensation Committee reviewed information from Radford about potential conflicts of interest and analyzed whether the work of Radford as a compensation consultant raised any conflict of interest, taking into consideration the following six factors:

 

(i)

the provision of other services to Geron by Radford or any other Aon plc company or their affiliates (collectively, the “Radford Affiliates”);

 

(ii)

the amount of fees Geron paid to Radford or any Radford Affiliate as a percentage of the firm’s total revenue;

 

(iii)

Radford’s policies and procedures to prevent conflicts of interest;

 

(iv)

any business or personal relationship of Radford, any Radford Affiliates or the individual compensation advisors employed by Radford with an executive officer of the Company;

 

(v)

any business or personal relationship of the individual compensation advisors employed by Radford with any member of the Compensation Committee; and

 

(vi)

any Geron Common Stock owned by the individual compensation advisors employed by Radford.

Based on these factors, the Compensation Committee determined that there were no conflicts of interest with respect to the provision of services by Radford to the Compensation Committee. In 2020, fees paid to Radford for their services as a compensation consultant to the Compensation Committee amounted to less than 1.0% of Radford’s total revenue for the same period and were less than $120,000. In February 2021, the Compensation Committee performed a similar analysis of Radford’s independence, and determined that there were no conflicts of interest with respect to the provision of services by Radford to the Compensation Committee.

49

 


For 2020, Radford provided the following services to the Compensation Committee: 

 

reviewed emerging trends and topics regarding executive and non-employee director compensation;

 

recommended the companies to comprise a defined peer group to reference in determining executive and non-employee director compensation;

 

provided compensation data and practices related to executive officers for the defined peer group based on data from SEC filings and Radford’s Life Sciences Survey;

 

conducted a competitive review of the compensation of our executive officers and non-employee directors, including advising on the design and structure of compensation; and

 

prepared an analysis of share usage under our equity incentive plan in comparison to the defined peer group based on data from SEC filings.

Role of Management

To aid the Compensation Committee in its responsibilities, during the first quarter of each year, the Chief Executive Officer, with assistance from the Chief Legal Officer and Vice President of Human Resources, provides the Compensation Committee with recommendations relating to the level of achievement the Company has attained with respect to our annual corporate goals. In addition, the Chief Executive Officer presents to the Compensation Committee written assessments of the performance and achievements, including support of our corporate values, for each of the Named Executive Officers (other than himself) for the prior year and recommends an individual performance factor and the corporate values performance factor for each Named Executive Officer (other than himself). The Compensation Committee gives considerable weight to the Chief Executive Officer’s performance evaluations of the other Named Executive Officers, since he has direct knowledge of the criticality of their work, performance and contributions. The Compensation Committee does not consult with any other executive officer with regard to its decisions. The Compensation Committee reviews the individual performance factor and the corporate values performance factor for each of the Named Executive Officers (other than the Chief Executive Officer) and adjusts the factors as it deems appropriate prior to approval. The Chief Executive Officer does not participate in the Compensation Committee’s or Board’s deliberations or decisions with regard to his own compensation, which is recommended by the Compensation Committee to, and approved by the Independent Board.

Use of Market Data and Peer Group Analysis

When considering executive compensation, the Compensation Committee believes it is important to be informed as to current compensation practices of comparable publicly traded companies in the life sciences industry and to understand the demand and competition that the Company faces in attracting and retaining individuals with specific expertise and experience.

In November 2019, based on the recommendation of Radford, the Compensation Committee determined that a defined peer group was appropriate to reference in connection with making 2020 executive officer compensation decisions. With the assistance of Radford, the Compensation Committee considered several factors in determining the companies to be included in the defined peer group for 2020 executive compensation decisions, including stage of development, market capitalization, number of employees, public status and length of time being public, primary location of operations and level of research and development expenditures and revenue. The following companies were identified by the Compensation Committee as the defined peer group for 2020 executive compensation decisions:

 

Ardelyx, Inc.

GlycoMimetics, Inc.

Rigel Pharmaceuticals, Inc.

AVEO Pharmaceuticals, Inc.

La Jolla Pharmaceutical Company

Sesen Bio, Inc.

ChemoCentryx, Inc.

MediciNova, Inc.

Stemline Therapeutics, Inc.

CymaBay Therapeutics, Inc.

MEI Pharma, Inc.

Syndax Pharmaceuticals, Inc.

Cytokinetics, Incorporated

Odonate Therapeutics, Inc.

TG Therapeutics, Inc.

Eiger BioPharmaceuticals, Inc.

 

 

50

 


 

As of December 31, 2019, the average of the 30-day average market capitalization of these peer group companies was $424 million. These peer group companies had an average number of 73 full-time employees based on their most recent annual reports, compared to our 30-day average market capitalization of $283 million and 53 full-time employees. The market data supplied by Radford for the defined peer group provides information on the total compensation paid to executive officers in comparable positions and responsibilities. In 2020, as in prior years, the Compensation Committee believes considering Radford’s market data, along with other factors as outlined below under “2020 Base Salaries,” including individual performance and overall Company performance; internal pay equity; tenure, experience, skills and responsibilities; managerial leadership; and the cost of living in the San Francisco Bay Area and northern New Jersey, are important to understand when setting total compensation for our Named Executive Officers because competition for executive management is intense in our industry and in our geographic areas, and continued leadership from our Named Executive Officers is critical to our success.

Setting Base Salaries

The Compensation Committee (or the Independent Board with respect to the Chief Executive Officer, upon recommendation from the Compensation Committee), in consultation with Radford, sets base salaries for our Named Executive Officers when they join our Company or upon promotion. In addition, at the beginning of each calendar year, the Compensation Committee, in consultation with Radford (or the Independent Board with respect to our Chief Executive Officer, upon recommendation from the Compensation Committee), reviews and determines base salaries for our Named Executive Officers. The Compensation Committee (or the Independent Board with respect to our Chief Executive Officer, upon recommendation from the Compensation Committee) considers various factors, as noted above, in determining whether any base salary adjustments are necessary. The Compensation Committee does not apply any specific formulas in determining increases in base salaries for our Named Executive Officers and instead employs a holistic analysis of multiple relevant factors using its professional judgement and experience in determining base salary increases. Increases in base salary typically are effective as of January 1st of each calendar year.

Assessing Annual Corporate Performance

At the beginning of each calendar year, the Chief Executive Officer develops, with input from our Named Executive Officers, our annual corporate goals, including recommended weightings for each goal. The weighting for each corporate goal depends on its importance and business value for Geron and our stockholders. In addition, each goal is established with criteria to measure target goal accomplishment (100%), as well as criteria to measure stretch goal accomplishment (up to an additional 50% in the aggregate in certain cases). The Chief Executive Officer submits the corporate goals and recommended weightings to the Compensation Committee and the Independent Board for their review and approval. The Compensation Committee and Independent Board review the corporate goals and weightings and modify them as they deem appropriate prior to approval.

During the first quarter of the year, as part of the annual year-end performance review process, the Compensation Committee evaluates our achievement of the corporate goals for the preceding year. To aid the Compensation Committee in its responsibilities, the Chief Executive Officer, with assistance from the Chief Legal Officer and Vice President of Human Resources, provides the Compensation Committee with recommendations relating to the achievement the Company has attained with respect to our annual corporate goals, known as the corporate goal achievement factor. The Compensation Committee does not use a rigid formula to determine the corporate goal achievement factor, and to date, has not established a minimum threshold or maximum value that may be potentially realized for the corporate goal achievement factor. Also, the Compensation Committee can take into account additional achievements by the Company not originally set forth in the annual corporate goals. The corporate goal achievement factor can range from 0% to 150%. The Compensation Committee evaluates the corporate goal achievement factor, and recommends the corporate goal achievement factor to the Independent Board, who has the final approval. In assessing the corporate goal achievement factor, the Compensation Committee and Independent Board consider the following:

 

the degree of success in achieving each corporate goal;

 

the degree of difficulty in achieving the corporate goal;

 

whether significant unforeseen obstacles or favorable circumstances altered the expected difficulty of achieving the desired results;

51

 


 

other conditions that may have made the stated goal more or less important to our success; and

 

any other significant company accomplishments not included in the formal goals, but nonetheless deemed important to our near- and long-term success.

The Compensation Committee recommends the corporate goal achievement factor to the Independent Board, which considers the recommendation of the Compensation Committee and may accept or modify such recommendation before approval. The Independent Board has the discretion to approve a corporate goal achievement factor above the maximum range in extraordinary circumstances where it determines such an increase is warranted. Calculation of annual performance-based bonuses for all employees, including our Named Executive Officers, generally occurs at the beginning of each calendar year based on performance of the prior year. Payment of annual performance-based bonuses typically occurs in the first quarter of the calendar year.

Determining Equity Grants

The Compensation Committee (or the Independent Board with respect to our Chief Executive Officer, upon recommendation from the Compensation Committee), in consultation with Radford, determines the size of any stock option grant according to each executive officer’s position. To do so, the Compensation Committee considers numerous factors, as outlined below under “2020 Stock Option Grants” and has the discretion to give relative weight to each of these factors as it sets the size of the stock option grant to appropriately create an opportunity for future reward based on increasing stockholder value. There is no set formula for the granting of stock options to employees, including our Named Executive Officers; however, we reference the grant ranges based on the market data provided by Radford for each position. While we have not adopted formal stock ownership or holding guidelines, our Named Executive Officers generally have held a substantial portion of the stock options they have received, even long after the stock options have vested, which helps to maintain alignment between the interests of our Named Executive Officers and those of our stockholders over the longer term.

Stock Option Granting Practices

Our general policy is to grant stock options on fixed dates determined in advance. All required approvals are obtained in advance of or on the actual grant date. The exercise price of all stock option grants, including to executive officers, is equal to the closing price of Geron Common Stock as reported by the Nasdaq Global Select Market on the date of grant. Geron’s standard vesting schedule for the first stock option grant awarded to newly hired employees, including executive officers, provides that 12.5% of the shares granted will vest six months after the vesting commencement date of the grant, and the remaining shares will vest in equal monthly installments over the following 42 months, so that vesting is complete four years from the date of grant, provided the employee continues to provide services to the Company during that time. Additional stock option grants made after an employee, including an executive officer, has provided services to the Company for more than six months, generally vest monthly from the date of grant over four years.

The Compensation Committee (or the Independent Board with respect to our Chief Executive Officer, upon recommendation from the Compensation Committee) grants stock options to newly hired and existing executive officers. Other than stock option grants to new hires, stock option grants to executive officers are generally approved once a year (typically near the beginning of the year). If an executive officer is promoted, a stock option will normally be granted at the time of such promotion, or, in rare circumstances, for recognition of outstanding performance.

We recognize that public disclosure of important information about the Company in close proximity to an executive stock option grant may appear to be an effort to time the dissemination of such information to a grantee’s benefit (even if no such benefit was intended). Accordingly, we have a general practice whereby if the Compensation Committee (or the Independent Board, in the case of the Chief Executive Officer, upon recommendation from the Compensation Committee) approves annual stock option grants to our executive officers when our trading window is closed, then such annual stock option grant will be made on the second trading day following our trading window re-opening. This practice is intended to allow the market to absorb the disclosure of financial and other information that was the basis of the closure of the trading window, so the market price of our Common Stock reflects our then-current results and prospects at the time the annual stock option grant is made and the exercise price is set. As a result, the timing of annual stock option grants to our continuing executive officers is not coordinated in a manner that intentionally benefits our executive officers.

52

 


Compensation Decisions in 2020

2020 Base Salaries

The Compensation Committee believes base salaries should be consistent with the base salaries provided by companies in our defined peer group. In February 2020, the Compensation Committee performed its annual analysis of base salaries for all of our executive officers, including the Named Executive Officers, using the defined peer group market data provided by Radford. The market data analysis showed that at the end of 2019, the base salary of all of our Named Executive Officers was at the 75th percentile of the defined peer group market data provided by Radford.

The Compensation Committee concluded, with respect to each Named Executive Officer whose base salary was at the 75th percentile of the defined peer group market data provided by Radford, that such base salary appropriately reflected the broad responsibilities of each Named Executive Officer and the level of difficulty required to achieve the individual’s goals for 2020. In addition to the market data analysis, the Compensation Committee considered a number of other factors, including:

 

the individual performance of each Named Executive Officer in 2019;

 

internal pay equity among our Named Executive Officers;

 

tenure, experience, skills and responsibilities of each Named Executive Officer;

 

managerial leadership exhibited by each Named Executive Officer;

 

expected cost of living increases in the San Francisco Bay Area and northern New Jersey;

 

annual corporate goals and 2019 Company performance;

 

2020 corporate goals and the expected requisite output from each Named Executive Officer to achieve such goals; and

 

the anticipated level of difficulty in replacing an executive officer with someone of comparable experience and skill, especially given significant uncertainty and related risks associated with our future operations.

Given the collaborative team-oriented effort required to achieve our corporate goals, the broad job responsibilities of our Named Executive Officers, and the desire for internal pay equity among the executive team and to remain competitive in the marketplace, and based on guidance provided by Radford, the Compensation Committee and, with respect to Dr. Scarlett, the Independent Board, approved an overall increase of 3.5% to 2019 base salaries, reflecting a market competitive merit increase and a cost of living adjustment.

The following base salaries for our Named Executive Officers were effective as of January 1, 2020.

 

Named Executive Officer

 

2019

Base Salary

 

 

 

Salary

Increase (%)

 

 

2020

Base Salary

 

 

John A. Scarlett, M.D.

 

$

690,000

 

 

 

3.5%

 

 

$

714,150

 

 

Olivia K. Bloom

 

$

460,000

 

 

 

3.5%

 

 

$

476,100

 

 

Andrew J. Grethlein, Ph.D.

 

$

460,000

 

 

 

3.5%