UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No.  )
Filed by the Registrant ☒
Filed by a Party other than the Registrant
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Preliminary Proxy Statement

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

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material under §240.14a-12
DYNAVAX TECHNOLOGIES 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 paid previously with preliminary materials.
 
Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

DYNAVAX TECHNOLOGIES CORPORATION
2100 Powell Street, Suite 900
Emeryville, California 94608
NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS
To Be Held On May 26, 2022
Dear Stockholder:
You are cordially invited to attend the 2022 Annual Meeting of Stockholders (the “Annual Meeting”) of Dynavax Technologies Corporation, a Delaware corporation (the “Company”). The Annual Meeting will be held virtually on May 26, 2022, at 9:00 a.m. Pacific Time at www.virtualshareholdermeeting.com/DVAX2022. The Annual Meeting will be held online only and you will not be able to attend the Annual Meeting in person. You will be able to vote your shares electronically by Internet or by phone and submit questions online during the Annual Meeting by logging in to the website listed above using the 16-digit control number included in your Notice of Internet Availability of Proxy Materials, on your proxy card or on the instructions that accompanied our proxy materials. Online check-in will begin at 8:45 a.m. Pacific Time and should allow ample time for the check-in procedures. The Annual Meeting is being convened for the following purposes:
1.
To elect our five nominees for Class I directors to hold office until the 2025 Annual Meeting of Stockholders or until their respective successors are duly elected and qualified.
2.
To approve the amendment and restatement of the Dynavax Technologies Corporation 2018 Equity Incentive Plan to, among other things, increase the aggregate number of shares of common stock authorized for issuance under the plan by 15,000,000.
3.
To approve, on an advisory basis, the compensation of the Company’s named executive officers, as disclosed in the proxy statement accompanying this Notice.
4.
To ratify the selection of Ernst & Young LLP as the independent registered public accounting firm of the Company for its fiscal year ending December 31, 2022.
In addition, you will also be asked to conduct other business, if any, as may properly come before the Annual Meeting or any adjournment thereof.
These items of business are more fully described in the accompanying proxy statement.
The record date for the Annual Meeting is April 4, 2022 (the “Record Date”). Only stockholders of record at the close of business on that date may vote at the meeting or any adjournment thereof.
Important Notice Regarding the Availability of Proxy Materials for the 2022 Annual Meeting of Stockholders to Be Held Virtually at 9:00 a.m., Pacific Time, on May 26, 2022 at www.virtualshareholdermeeting.com/DVAX2022.
The Proxy Statement and Annual Report to Stockholders for the year ended December 31, 2021 are available at www.proxyvote.com.
The Board of Directors recommends that you vote FOR the proposals identified above.
 
By Order of the Board of Directors
 

 
Kelly MacDonald
 
Chief Financial Officer
Emeryville, California
April 14, 2022
Your vote is very important, regardless of the number of shares you own. Whether or not you expect to attend the virtual Annual Meeting, please complete, date, sign and return the proxy mailed to you, or vote over the Internet or by phone as instructed in these materials, as promptly as possible in order to ensure your representation at the Annual Meeting. Even if you have voted by proxy card or over the Internet or by phone, you may still vote electronically during the Annual Meeting.

DYNAVAX TECHNOLOGIES CORPORATION
2100 Powell Street, Suite 900
Emeryville, California 94608
PROXY STATEMENT
FOR THE 2022 ANNUAL MEETING OF STOCKHOLDERS
To be Held on May 26, 2022
QUESTIONS AND ANSWERS ABOUT THESE PROXY MATERIALS AND VOTING
Why did I receive a notice regarding the availability of proxy materials on the Internet?
We have sent you the proxy notice because the Board of Directors (the “Board”) of Dynavax Technologies Corporation (the “Company,” “Dynavax,” “we” or “us”) is soliciting your proxy to vote at the 2022 Annual Meeting of Stockholders (the “Annual Meeting”).
In accordance with the rules adopted by the Securities and Exchange Commission (the “SEC”), instead of mailing a printed copy of our proxy materials, including our annual report, we have decided to provide access to these materials via the Internet. Accordingly, on or about April 14, 2022, we will begin mailing a Notice Regarding Internet Availability of Proxy Materials (the “Notice”), to stockholders of record as of April 4, 2022 (the “Record Date”), and will have posted our proxy materials on the website referenced in the Notice (www.proxyvote.com). As more fully described in the Notice, all stockholders may choose to access our proxy materials on that website, and any stockholder may request a printed set of such materials 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 note that you do not need to attend the Annual Meeting to vote your shares. Instead, you may vote before the Annual Meeting by Internet, by phone or by proxy using a proxy card that you may request or that we may elect to deliver at a later time.
Will I receive any proxy materials by mail other than the Notice?
No, you will not receive any other proxy materials by mail unless you request a paper copy of the proxy materials.
How do I attend the Annual Meeting?
The Annual Meeting will be held virtually on May 26, 2022 at 9:00 a.m. Pacific Time at www.virtualshareholdermeeting.com/DVAX2022. The Annual Meeting will be held online only. During the meeting, you will be able to vote your shares electronically by Internet and submit questions online by logging in to the website listed above using the 16-digit control number included in the Notice, or you may vote before the meeting by using a proxy card that you may request or that we may elect to deliver at a later time. You may also vote by phone before the meeting by calling 1-800-690-6903. Online check-in for the Annual Meeting will begin at 8:45 a.m. Pacific Time and you should allow ample time for the check-in procedures. You may submit questions during the meeting by visiting www.virtualshareholdermeeting.com/DVAX2022. We will respond to as many appropriate inquiries at the Annual Meeting as time allows.
You may vote your shares electronically before the meeting by Internet, by phone or by proxy using a proxy card that you may request or that we may elect to deliver at a later time, and you do not need to access the virtual Annual Meeting to vote if you submitted your vote via Internet, phone or proxy card in advance of the Annual Meeting.
Who can vote at the Annual Meeting?
Only stockholders of record at the close of business on the Record Date will be entitled to vote at the Annual Meeting. On the Record Date, there were 126,311,669 shares of common stock outstanding and entitled to vote. A list of our stockholders of record will be open for examination by any stockholder beginning ten days
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prior to the Annual Meeting at our headquarters located at 2100 Powell Street, Suite 900, Emeryville, California 94608. If you would like to view the list, please contact our Corporate Secretary to schedule an appointment by calling (510) 848-5100 or writing to him at the address above. In addition, the list will be available for inspection by stockholders on the virtual meeting website during the Annual Meeting.
Stockholder of Record: Shares Registered in Your Name
If, on the Record Date, your shares were registered directly in your name with our transfer agent, Computershare, then you are a stockholder of record. As a stockholder of record, you may vote by Internet before or during the Annual Meeting, or before the Annual Meeting by using a proxy card that you may request or that we may elect to deliver at a later time. You may also vote by phone before the meeting by calling 1-800-690-6903. Whether or not you plan to attend, we urge you to fill out and return the proxy card or vote by Internet or by phone before the Annual Meeting to ensure your vote is counted.
Beneficial Owner: Shares Registered in the Name of a Broker or Bank
If, on the Record Date, your shares were not held 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. Simply follow the voting instructions in such notice to ensure that your vote is counted. The organization holding your account is considered to be the stockholder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to direct your broker or other agent regarding how to vote the shares in your account. You are also invited to attend the Annual Meeting. To vote live at the Annual Meeting, follow the instructions after logging into the meeting website.
What am I voting on?
We are asking you to vote on four proposals:
1.
To elect our five nominees for Class I directors to hold office until the 2025 Annual Meeting of Stockholders or until their respective successors are duly elected and qualified.
2.
To approve the amendment and restatement of the Dynavax Technologies Corporation 2018 Equity Incentive Plan to, among other things, increase the aggregate number of shares of common stock authorized for issuance under the plan by 15,000,000.
3.
To approve, on an advisory basis, the compensation of the Company’s named executive officers, as disclosed in the proxy statement accompanying this Notice.
4.
To ratify the selection of Ernst & Young LLP as the independent registered public accounting firm of the Company for its fiscal year ending December 31, 2022.
In addition, you will also be asked to conduct other business, if any, as may properly come before the Annual Meeting or any adjournment thereof.
What is the Board’s recommendation?
The Board recommends that you vote “For” each of the four proposals.
What if another matter is properly brought before the Annual Meeting?
The Board knows of no other matters that will be presented for consideration at the Annual Meeting. If any other matters are properly brought before the Annual Meeting, it is the intention of the persons named in the accompanying proxy to vote on those matters in accordance with her or his best judgment.
How do I vote?
You may either vote “For” all the nominees to the Board or you may “Withhold” your vote for any nominee you specify. For each of the other matters to be voted on, you may vote “For” or “Against” or abstain from voting. The procedures for voting are fairly simple:
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Stockholder of Record: Shares Registered in Your Name
If you are a stockholder of record, you may vote by Internet before or during the Annual Meeting, by phone before the Annual Meeting or by proxy before the Annual Meeting using a proxy card that you may request or that we may elect to deliver at a later time. Whether or not you plan to attend the Annual Meeting, we urge you to vote to ensure your vote is counted.
To vote using the proxy card, simply complete, sign and date the proxy card that may be delivered and return it promptly in the envelope provided. If you return your signed proxy card to us before the Annual Meeting, we will vote your shares as you direct.
To vote by phone, call 1-800-690-6903 free of charge and follow the recorded instructions. You will be asked to provide the control number from the Notice. Your telephone vote must be received by 11:59 p.m., Eastern Time on May 25, 2022 to be counted.
To vote through the Internet before the meeting, go to www.proxyvote.com and follow the on-screen instructions to complete an electronic proxy card. You will be asked to provide the control number from the Notice. Your Internet vote must be received by 11:59 p.m., Eastern Time on May 25, 2022 to be counted.
To vote through the Internet during the meeting, please visit www.virtualshareholdermeeting.com/DVAX2022 and have available the 16-digit control number included in your Notice.
Beneficial Owner: Shares Registered in the Name of Broker or Bank
If you are a beneficial owner of shares registered in the name of your broker or other agent, you should have received a notice containing voting instructions from that organization rather than from Dynavax. Simply follow the voting instructions in such notice to ensure that your vote is counted. To vote live at the Annual Meeting, follow the instructions after logging into the meeting website.
How many votes do I have?
On each matter to be voted upon, you have one vote for each share of common stock you own as of the Record Date.
What happens if I do not vote?
Stockholder of Record: Shares Registered in Your Name
If you are a stockholder of record and do not vote before the Annual Meeting by phone or by using a proxy card that you may request or that we may elect to deliver at a later time, or through the Internet before or at the Annual Meeting, your shares will not be voted.
Beneficial Owner: Shares Registered in the Name of Broker or Bank
If you are a beneficial owner and do not instruct your broker, bank, or other agent how to vote your shares, the question of whether your broker or nominee will still be able to vote your shares depends on whether the applicable stock exchange deems the particular proposal to be a “routine” matter. Brokers and nominees can use their discretion to vote “uninstructed” shares with respect to matters that are considered to be “routine,” but not with respect to “non-routine” matters. Under the rules and interpretations of the New York Stock Exchange, “non-routine” matters are matters that may substantially affect the rights or privileges of stockholders, such as mergers, stockholder proposals, elections of directors (even if not contested), executive compensation (including any advisory stockholder votes on executive compensation and on the frequency of stockholder votes on executive compensation), and certain corporate governance proposals, even if management-supported. Accordingly, your broker or nominee may not vote your shares on Proposals 1, 2 or 3 without your instructions, but may vote your shares on Proposal 4.
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What if I return a proxy card but do not make specific choices?
If you return a signed and dated proxy card or otherwise vote without marking any voting selections, your shares will be voted:
Proposal 1: “For” election of our five nominees as Class I directors;
Proposal 2: “For” approval of the amendment and restatement of the Dynavax Technologies Corporation 2018 Equity Incentive Plan to, among other things, increase the aggregate number of shares of common stock authorized for issuance under the plan by 15,000,000;
Proposal 3: “For” advisory approval of executive compensation; and
Proposal 4: “For” ratification of the selection of Ernst & Young LLP as the independent registered public accounting firm of the Company for its fiscal year ending December 31, 2022.
If any other matter is properly presented at the Annual Meeting or any adjournment(s) thereof, your proxyholder (one of the individuals named on your proxy card) will vote your shares at his or her discretion.
Who is paying for this proxy solicitation?
We will pay for the entire cost of soliciting proxies. In addition to these proxy materials, our directors and employees may also solicit proxies in person, by telephone, or by other means of communication. Directors and employees will not be paid any additional compensation for soliciting proxies. We may also reimburse brokerage firms, banks and other agents for the cost of forwarding proxy materials to beneficial owners. Furthermore, we have retained the services of Alliance Advisors, LLC in connection with stockholder outreach efforts discussed in this proxy statement, for which we estimate that we will pay a fee not to exceed $22,000, plus out-of-pocket expenses.
What does it mean if I receive more than one Notice?
If you receive more than one Notice, your shares may be registered in more than one name or are registered in different accounts. Please follow the voting instructions on each of the Notices to ensure that all of your shares are voted.
Can I change my vote after submitting my proxy?
Stockholder of Record: Shares Registered in Your Name
Yes. You can revoke your proxy at any time before the final vote at the meeting. If you are the record holder of your shares, you may revoke your proxy in any one of the following ways:
You may submit another properly completed proxy card with a later date.
You may submit a later-dated vote by telephone by calling 1-800-690-6903. You will need the 16-digit control number included on your Notice or your proxy card (if you received a printed copy of the proxy materials). Votes submitted by telephone must be received by 11:59 p.m., Eastern Time on May 25, 2022 to be counted.
You may grant a subsequent proxy through the Internet. You will need the 16-digit control number included on your Notice or your proxy card (if you received a printed copy of the proxy materials).
You may send a timely written notice that you are revoking your proxy to Dynavax Technologies Corporation, Attention: Corporate Secretary, 2100 Powell Street, Suite 900, Emeryville, California 94608.
You may virtually attend the Annual Meeting and vote by Internet by visiting www.virtualshareholdermeeting.com/DVAX2022. To attend the Annual Meeting, you will need the 16-digit control number included in your Notice, on your proxy card or on the instructions that accompanied your proxy materials. Simply attending the meeting will not, by itself, revoke your proxy.
Your most current proxy card or telephone vote or Internet proxy is the one that is counted.
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Beneficial Owner: Shares Registered in the Name of Broker or Agent
If your shares are held by your broker or bank as a nominee or agent, you should follow the instructions provided by your broker or bank.
When are stockholder proposals due for next year’s annual meeting?
To be considered for inclusion in next year’s proxy materials, your proposal must be submitted in writing by December 15, 2022 to Dynavax Technologies Corporation, Attention: Corporate Secretary, 2100 Powell Street, Suite 900, Emeryville, California 94608. However, if our 2023 Annual Meeting of Stockholders is not held between April 26, 2023 and June 25, 2023, then the deadline will be a reasonable time before we begin to print and send our proxy materials. If you wish to submit a proposal (including a director nomination) that is not to be included in next year’s proxy materials, you must do so no later than the close of business on February 25, 2023, and no earlier than the close of business on January 26, 2023. However, if our 2023 Annual Meeting of Stockholders is not held between April 26, 2023 and June 25, 2023, then you must submit your proposal (or director nomination) not earlier than the close of business on the 120th day prior to such annual meeting and not later than the close of business on the 90th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made.
How many votes are needed to approve each proposal?
Proposal 1: to elect our five nominees for Class I directors, the five nominees receiving the most “For” votes from the holders of shares present (either in person or represented by proxy) and cast for the election of directors 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, if a nominee receives a greater number of “Withhold” votes than “For” votes, such nominee will submit his or her offer of resignation for consideration by our Nominating and Corporate Governance Committee in accordance with our Majority Vote Policy discussed in more detail in the section entitled “Corporate Governance – Majority Vote Policy” in this proxy statement.
Proposal 2: to approve an amendment and restatement of the 2018 Equity Incentive Plan to, among other things, increase the aggregate number of shares of common stock authorized for issuance under the 2018 Equity Incentive Plan by 15,000,000, such amendment and restatement must receive “For” votes from the holders of a majority of shares present (either in person or by proxy) and entitled to vote on the matter at the meeting. If you return your proxy and select “Abstain,” it will have the same effect as an “Against” vote. Broker non-votes will have no effect.
Proposal 3: to approve, on an advisory basis, the 2021 compensation of the Company’s named executive officers, such advisory approval must receive “For” votes from the holders of a majority of shares present (either in person or by proxy) and entitled to vote on the matter at the meeting. If you return your proxy and select “Abstain” from voting, it will have the same effect as an “Against” vote. Broker non-votes will have no effect.
Proposal 4: to ratify the selection of Ernst & Young LLP as the Company’s independent registered public accounting firm for our fiscal year ending December 31, 2022, such ratification must receive “For” votes from the holders of a majority of shares present (either in person or by proxy) and entitled to vote on the matter at the meeting. If you return your proxy and select “Abstain” from voting, it will have the same effect as an “Against” vote. Broker non-votes will have no effect. However, as Proposal 4 is considered a “routine” matter, we do not expect to receive any broker non-votes.
What is the quorum requirement?
A quorum of stockholders is necessary to hold a valid Annual Meeting. A quorum will be present if stockholders holding at least a majority of the outstanding shares entitled to vote are present at the Annual Meeting in person or represented by proxy. On the Record Date, there were 126,311,669 shares outstanding and entitled to vote.
Your shares will be counted towards the quorum only if you submit a valid proxy (or one is submitted on your behalf by your broker, bank or other nominee) or if you vote at the Annual Meeting. Abstentions and broker
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non-votes will be counted towards the quorum requirement. If there is no quorum, the holders of a majority of shares present at the Annual Meeting in person or represented by proxy may adjourn the Annual Meeting to another date.
How can I find out the results of the voting at the Annual Meeting?
Preliminary voting results will be announced at the Annual Meeting. Final voting results will be published in a current report on Form 8-K within four business days following the voting. If we are unable to obtain final results in that time, we will announce the preliminary results and subsequently file a second current report on Form 8-K with the final results.
What proxy materials are available on the Internet?
The 2022 proxy statement and 2021 Annual Report on Form 10-K are available at http://investors.dynavax.com/annuals-proxies.cfm.
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PROPOSAL 1

ELECTION OF DIRECTORS
Our Board is divided into three classes, and each class has a three-year term. Vacancies on the Board may be filled only by persons elected by a majority of the remaining directors. A director elected by the Board to fill a vacancy in a class, including vacancies created by an increase in the number of directors, shall serve for the remainder of the full term of that class and until the director’s successor is elected and qualified.
Our Board presently has eleven members. There are five Class I directors whose term of office expires in 2022: Julie Eastland, Andrew Hack, M.D., Ph.D., Brent MacGregor, Scott Myers and Elaine Sun, each of whom is a nominee for director and currently a director of the Company. Dr. Hack was nominated by our Nominating and Corporate Governance Committee and appointed to our Board in 2019, Ms. Eastland and Mr. MacGregor were nominated by our Nominating and Corporate Governance Committee and appointed to our Board in 2020, and Ms. Sun and Mr. Myers were nominated by our Nominating and Corporate Governance Committee and appointed to our Board in 2021, and this will be the first time each of them has stood for election. If each nominee is elected at the Annual Meeting, each of these nominees will serve until the 2025 Annual Meeting and until his or her successor is elected and has qualified, or, if sooner, until the director’s death, resignation or removal. We have a policy encouraging our directors’ attendance at our annual meetings. There were eight out of nine then-serving directors in attendance at our 2021 Annual Meeting.
Vote Required
Directors are elected by a plurality of the votes of the holders of shares present in person or represented by proxy and entitled to vote on the election of directors. The five nominees receiving the highest number of affirmative votes will be elected. Shares represented by executed proxies will be voted, if authority to do so is not withheld, for the election of the nominees named herein. Although the election of directors at the Annual Meeting is uncontested and directors are elected by a plurality of votes cast, and we therefore anticipate 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 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 than “For” votes. In such case, the Nominating and Corporate Governance Committee will then consider all the relevant facts and circumstances and recommend to the Board the action to be taken with respect to such offer of resignation. For more information on this policy see the section entitled “Corporate Governance – Majority Vote Policy.” If any nominee becomes unavailable for election as a result of an unexpected occurrence, your shares will be voted for the election of a substitute nominee proposed by our Board. Each person nominated for election has agreed to serve if elected. Our Board has no reason to believe that any nominee will be unable to serve.
Set forth below is certain biographical information as of April 4, 2022, regarding the experience, qualifications, attributes or skills that led our Nominating and Corporate Governance Committee to believe that each director or nominee should serve on the Board. There are no family relationships among any of our executive officers or directors.
Name
Age
Position
Julie Eastland
57
Director
Andrew Hack, M.D., Ph.D.
48
Director
Brent MacGregor
58
Director
Scott Myers
56
Director
Elaine Sun
51
Director
CLASS I DIRECTOR NOMINEES
Julie Eastland
Ms. Eastland has been a member of our Board since July 2020. Ms. Eastland has served as Chief Executive Officer of Harpoon Therapeutics, a publicly traded oncology company, since November 2021. Prior to Harpoon, Ms. Eastland served as Chief Operating Officer and Chief Financial Officer of ReCode Therapeutics, a privately-held genetics medicine company focused on delivery of novel, anti-viral lipid nanoparticles therapeutics
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for respiratory diseases, from October 2020 to November 2021. Prior to ReCode, Ms. Eastland served as Chief Financial Officer and Chief Business Officer of Rainier Therapeutics, a private biopharmaceutical company focused on FGFR3 bladder cancer, from September 2018 to January 2020. Prior to Rainier, she served as Chief Financial Officer and Chief Business Officer of Cascadian Therapeutics, a publicly traded company, from 2010 to March 2018. While at Cascadian, Ms. Eastland was instrumental in the negotiation and sale of the company to Seattle Genetics, primarily for tucatinib, a HER2 targeted breast cancer therapy now marketed as Tukysa. Prior to Cascadian, Ms. Eastland served as Chief Financial Officer and Vice President of Finance and Operations of VLST Corporation from 2006 to 2010, a privately-held biotechnology company, and held various financial and strategic management positions at publicly traded biotechnology companies including Dendreon and Amgen. Ms. Eastland received an M.B.A. from Edinburgh University Management School and a B.S. in finance from Colorado State University. She also serves on the boards of Harpoon Therapeutics and Graybug Vision. We believe that Ms. Eastland’s experience as a financial executive in the biopharmaceutical industry qualifies her to serve on our Board.
Andrew Hack, M.D., Ph.D.
Dr. Hack has been a member of our Board since August 2019. Since March 2019, Dr. Hack has served as a Managing Director of Bain Capital Life Sciences, LP, a private equity fund that invests in biopharmaceutical, specialty pharmaceutical, medical device, diagnostics, and enabling life science technology companies globally, and since August 2020 has served as Chief Financial Officer of BCLS Acquisition Corp., a special purpose acquisition company sponsored by an affiliate of Bain Capital Life Sciences, LP. From July 2015 to March 2019, he was Chief Financial Officer of Editas Medicine, Inc., where he had responsibility for finance, investor relations, business development, information technology, and operations. Previously, Dr. Hack served as a portfolio manager at Millennium Management, where he ran a market-neutral healthcare hedge fund focused on biotechnology, pharmaceutical, medical device and diagnostics, and life science tools companies from 2011 to 2015. Earlier in his investment career, he was a securities analyst at a number of healthcare-focused hedge funds and investment banks in New York. Prior to this, he was Director of Life Sciences at Reify Corporation, a life science tools and drug discovery company. Dr. Hack currently serves on the boards of directors of BCLS Acquisition Corporation, Mersana Therapeutics, Inc. and Nuvalent, Inc. He previously served on the boards of directors of Atea Pharmaceuticals, Inc. and Allena Pharmaceuticals, Inc. Dr. Hack received an M.D. and Ph.D. in Molecular Genetics and Cell biology from the University of Chicago, where he was named an inaugural Frank Family Scholar and received awards from the American Heart Association and American Society for Cell Biology. Dr. Hack received an M.D. and Ph.D. in Molecular Genetics and Cell Biology from the University of Chicago, as well as an A.B. in Biology with Special Honors. Serving as a director for other publicly-held biopharmaceutical companies provides Dr. Hack with alternate viewpoints on business strategy and board decision-making, which we believe enhances his contributions to our Board. Dr. Hack 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 and committee meetings in 2021. In accordance with our Board’s standard practice, Dr. Hack reviews scheduled Board and committee meeting dates a year in advance to confirm availability to participate and attend all our Board and committee meetings. Accordingly, we believe Dr. Hack’s financial background and extensive and diverse experience in the life sciences industry qualify him to serve on our Board.
Brent MacGregor
Mr. MacGregor has been a member of our Board since July 2020. Since November 2020, Mr. MacGregor has served as the CEO of Medical Developments International Ltd., an Australian-based company with marketed products in pain management, and respiratory ailments. He previously served as Senior Vice-President, Global Commercial Operations at Seqirus, a CSL Limited company, from January 2016 to June 2020. At Seqirus, Mr. MacGregor led a global team of 280 people in sales, marketing, commercial development, public policy and business development for a portfolio of seasonal influenza vaccines, an intra venous anti-viral product, a suite of in-licensed vaccines and pharmaceutical products, and a pandemic and pre-pandemic business. Prior to Seqirus, Mr. MacGregor was President and Global Head of Novartis Influenza Vaccines from January 2015 to January 2016, where he led integrated global operations of its influenza portfolio, through its acquisition by CSL Ltd, as well as serving in other roles with Novartis Vaccines from 2012 to 2014. Mr. MacGregor held several roles while at Sanofi Pasteur where he spent 17 years with his final role as President, Sanofi Pasteur KK, Tokyo,
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Japan. Mr. MacGregor received an M.B.A. from Northwestern University, Kellogg School of Management, a Master of Arts from University of Reading, Reading, England and a Bachelor of Arts from Carleton University, Ottawa, Canada. We believe that Mr. MacGregor’s experience as a vaccine executive qualifies him to serve on our Board.
Scott Myers
Mr. Myers has been the Chairperson of our Board since October 2021. Previously, he was the Chief Executive Officer and served on the board of directors of AMAG Pharmaceuticals, Inc. from April 2020 to November 2020, where he led its turnaround and strategic exit to Covis Pharma, S.à.r.l., a specialty pharmaceutical company, in November 2020. Mr. Myers has served as chairman of the board of directors of Rainier Therapeutics, Inc., an oncology biotechnology company focused on late-stage bladder cancer, from June 2018 to January 2020, and served as its Chief Executive Officer from September 2018 to January 2020. Mr. Myers led Rainier’s asset sale of vofatamab to Fusion Pharmaceuticals Inc. Prior to Rainier, Mr. Myers served as Chief Executive Officer, President and Director for Cascadian Therapeutics, Inc., an oncology company, from April 2016 through its acquisition by Seattle Genetics in March 2018. Mr. Myers is an independent director of Selecta Biosciences, a gene therapy-rare disease company. He is a non-executive chairman of the board of directors of Harpoon Therapeutics, Inc., an oncology company. Mr. Myers holds a B.A. in Biology from Northwestern University and an M.B.A. from the Graduate School of Business at the University of Chicago (Booth). We believe Mr. Myers extensive experience as a life sciences executive qualify him to serve on our Board.
Elaine Sun
Ms. Sun has been a member of our Board since December 2021. Since March 2022, Ms. Sun has served as the CFO and COO of Mammoth Biosciences, Inc. She previously served as Senior Vice President and Chief Financial Officer of Halozyme Therapeutics, Inc., from March 2020 to February 2022. Prior to joining Halozyme, from January 2017 to December 2019, Ms. Sun served in senior management positions at SutroVax, Inc. (now known as Vaxcyte, Inc.), a life sciences company specializing in developing novel vaccines, most recently serving as Chief Financial Officer and Chief Strategy Officer. From 2013 to December 2016, Ms. Sun was an independent financial advisory consultant for private and public healthcare companies. Previously, Ms. Sun served as Managing Director and Head of West Coast Healthcare at Evercore Partners, a leading independent investment banking advisory firm, where she led Evercore’s U.S. life sciences efforts, and Managing Director, Healthcare Investment Banking at Merrill Lynch & Co., Inc. Ms. Sun received her M.B.A. degree from Harvard Business School and her B.A. degree from Wellesley College. We believe that Ms. Sun’s financial expertise and experience in the life sciences industry qualify her to serve on our Board.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF EACH NAMED NOMINEE.
Information About Our Continuing Directors
Set forth below is certain biographical information as of April 4, 2022, for the remaining members of our Board whose term as a director will continue after the Annual Meeting.
Name
Age
Position
Francis R. Cano, Ph.D.
77
Director
Daniel L. Kisner, M.D.
75
Director
Peter R. Paradiso, Ph.D.
71
Director
Peggy V. Phillips
68
Director
Natale Ricciardi
73
Director
Ryan Spencer
44
Director and Chief Executive Officer
CLASS II DIRECTORS CONTINUING IN OFFICE UNTIL THE 2023 ANNUAL MEETING
Daniel L. Kisner, M.D.
Dr. Kisner has been a member of our Board since July 2010. From 2003 to 2010, Dr. Kisner served as a partner at Aberdare Ventures and prior to that as President and CEO of Caliper Technologies, leading its evolution from a start-up focused on microfluidic lab-on-chip technology to a publicly traded, commercial
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organization. Prior to Caliper, he was the President and Chief Operating Officer of Isis Pharmaceuticals, Inc., a biomedical pharmaceutical company. Previously, Dr. Kisner was Division Vice President of Pharmaceutical Development for Abbott Laboratories and Vice President of Clinical Research and Development at SmithKline Beckman Pharmaceuticals. In addition, he held a tenured position in the Division of Oncology at the University of Texas, San Antonio School of Medicine and is certified by the American Board of Internal Medicine in Internal Medicine and Medical Oncology. Additionally, he is currently serving on the boards of Histogen, Inc., a biotechnology company, Oncternal Therapeutics, a biotechnology company and Zynerba Pharmaceuticals, a biotechnology company. Dr. Kisner previously served as chairman of the board for Tekmira Pharmaceuticals, a biopharmaceutical company, until March 2015, and as a director of Lpath, Inc., a medical device company. He holds a B.A. from Rutgers University and an M.D. from Georgetown University. We believe that Dr. Kisner’s background with larger, complex technology-based organizations as well as his significant experience with corporate transactions, including investing in venture-backed life science companies provides the Board with insights for setting strategy of the Company and qualifies him to serve as a director.
Natale Ricciardi
Mr. Ricciardi has been a member of our Board since June 2013. Mr. Ricciardi spent his entire 39-year career at Pfizer Inc., a biopharmaceutical company, retiring in 2011 as a member of the Pfizer Executive Leadership Team. While holding the positions of President, Pfizer Global Manufacturing, and Senior Vice President of Pfizer Inc. from 2004 until 2011, Mr. Ricciardi was directly responsible for all of Pfizer’s internal and external supply organization, a global enterprise that grew to more than 100 manufacturing facilities supplying small and large molecule pharmaceuticals, vaccines, consumer, nutrition and animal health products. Mr. Ricciardi maintained responsibility for global manufacturing activities from 2004 through 2011. Previously, from 1999 to 2004, he had oversight for Pfizer’s U.S. manufacturing operations and from 1995 to 1999 was Vice President of Manufacturing for Pfizer’s Animal Health Group. Mr. Ricciardi serves on the board of directors of Prestige Consumer Healthcare, Inc., a public company that sells, manufactures and distributes consumer healthcare products. He also serves on the board of directors of Rapid Micro Biosystems, a public company that provides automated, growth-based, rapid microbial detection technology. He is currently on the Strategic Advisory Board of HealthCare Royalty Partners. Mr. Ricciardi earned a degree in Chemical Engineering from The City College of New York and an MBA in Finance and International Business from Fordham University. We believe Mr. Ricciardi’s 39-year career at Pfizer Inc., a leading pharmaceutical company, including his experience as a member of the Pfizer Executive Leadership Team and holding direct responsibility for all of Pfizer’s internal supply organization, including global manufacturing, provides the Board with insights for reviewing the operations of the Company and qualifies him to serve as a director.
Ryan Spencer
Mr. Spencer has been a member of our Board since December 2019. Mr. Spencer joined Dynavax in 2006 and has served as our Chief Executive Officer since December 2019, and as interim co-President between May and December 2019. At the time of his appointment as interim co-President in May 2019, Mr. Spencer served as Senior Vice President, Commercial where he was instrumental in leading the launch and commercialization of HEPLISAV-B. Throughout his time at Dynavax since November 2006, Mr. Spencer has held a variety of positions with increasing responsibility, building from a foundation in corporate finance to business strategy and investor relations, including Senior Director Strategic Planning until his promotion in September 2016 to Senior Product Director, followed by promotions in February 2017 to Vice President Corporate Strategy & Commercialization and in May 2019 to Senior Vice President, Commercial. Prior to joining Dynavax, Mr. Spencer was the Assistant Controller at QRS Corporation, a publicly-held technology company, and was a member of the audit practice at Ernst & Young. Mr. Spencer earned a B.A. in Business Economics from University of California, Santa Barbara. We believe that Mr. Spencer’s prior experience, including his financial and commercialization experience, his tenure at Dynavax and his role as a Chief Executive Officer qualifies him to serve as a director.
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CLASS III DIRECTORS CONTINUING IN OFFICE UNTIL THE 2024 ANNUAL MEETING
Francis R. Cano, Ph.D.
Dr. Cano has been a member of our Board since November 2009. Dr. Cano has been President and Founder of Cano Biotech Corp., a consulting firm focusing on the vaccine business, since 1996 and also serves on the board of Biomerica, Inc., a developer and manufacturer of diagnostic products. Previously, Dr. Cano served on the board of Arbor Vita Corporation, a biopharmaceutical company. From 1993 to 1996, Dr. Cano was President and Chief Operating Officer for Aviron, a biopharmaceutical company, which was later acquired by MedImmune in 2001. As a Co-Founder of Aviron, he completed two rounds of venture financing, a licensing agreement with SmithKline Biologicals and in-licensed Flu-Mist influenza vaccine from the National Institutes of Health. For 21 years, Dr. Cano worked with the Lederle Laboratories Division of American Cyanamid, including as its Vice President and General Manager of the Biologicals unit. He earned a Ph.D. in Microbiology from Pennsylvania State University, served as a Research Associate at Rutgers Institute of Microbiology, and holds a M.S. in Microbiology and a B.S. in Biology from St. John’s University. We believe that Dr. Cano’s experience as a founder of and advisor to established vaccine businesses provides significant insights for the strategy of the Company with respect to key technical and operational issues in vaccine development and qualifies him to serve as a director.
Peter Paradiso, Ph.D.
Dr. Paradiso has been a member of our Board since September 2020. Dr. Paradiso has worked in vaccine development for over 30 years. Since 2012, he has been the sole proprietor of Paradiso Biologics Consulting, LLC, and he also serves as a member of the Coalition for Epidemic Preparedness Innovations (CEPI) R&D and Manufacturing Investment Committee (RDMIC), which has been established to make investment decisions for vaccine R&D and manufacturing under the COVAX pillar of the ACT-Accelerator. In addition, he is Chairman of a Procurement Reference Group (PRG) to advise The United Nations Children's Fund (UNICEF) and The GAVI Alliance, formerly the Global Alliance for Vaccines and Immunisation (GAVI), on the procurement of rotavirus vaccines. Dr. Paradiso retired in 2012 from his position as Vice President, New Business and Scientific Affairs for Pfizer Vaccines, a Division of Pfizer, Inc. In this position, Dr. Paradiso was responsible for global scientific affairs and strategic planning within the vaccine research and development group and for commercial oversight of products in development. Dr. Paradiso received a Ph.D. in biochemistry from the University of Vermont College of Medicine and a B.S. in Chemistry from St. Lawrence University. We believe that Dr. Paradiso’s extensive experience in vaccine development can provide significant insights for the strategy of the Company with respect to key technical and operational issues in vaccine development and qualifies him to serve as a director.
Peggy V. Phillips
Ms. Phillips has been a member of our Board since August 2006. Ms. Phillips served on the board of directors of several biopharmaceutical companies: PhaseRx, Inc. from 2016 to 2018, Tekmira Pharmaceuticals from 2014 to 2015, Portola Pharmaceuticals from 2006 to 2013, as well as the Naval Academy Foundation from 2003 to 2011. From 1996 until 2002, she served on the board of directors of Immunex Corporation, a biotechnology company, and, from 1999, she served as its Chief Operating Officer until the company was acquired by Amgen in 2002. During her career at Immunex, she held positions of increasing responsibility in research, development, manufacturing, sales and marketing. As Senior Vice President for Pharmaceutical Development and General Manager for Enbrel ® from 1994 until 1998, she was responsible for clinical development and regulatory affairs as well as the launch, sales and marketing of the product. Prior to joining Immunex, Ms. Phillips worked at Miles Laboratories. Ms. Phillips holds a B.S. and a M.S. in microbiology from the University of Idaho. We believe that Ms. Phillips provides significant experience in development and commercialization of biotechnology products and that here background and experience with larger, complex organizations provides significant operational and strategic insights in assessing the strategy of the Company and qualifies her to serve as a director.
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PROPOSAL 2
APPROVAL OF AN AMENDMENT AND RESTATEMENT OF THE 2018 EQUITY INCENTIVE PLAN
The Board is requesting stockholder approval of an amendment and restatement of the Dynavax Technologies Corporation 2018 Equity Incentive Plan (the “2018 EIP”). We refer to such amendment and restatement of the 2018 EIP in this proxy statement as the “Amended 2018 EIP”.
The Amended 2018 EIP contains the following material changes from the 2018 EIP:
Subject to adjustment for certain changes in our capitalization, the aggregate number of shares of our common stock that may be issued under the Amended 2018 EIP will not exceed 30,040,250 shares (plus the Prior Plans’ Returning Shares (as defined below), as such shares become available from time to time), which is an increase of 15,000,000 shares over the aggregate number of shares of our common stock that may be issued under the 2018 EIP.
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 incentive stock options under the Amended 2018 EIP will be 32,600,000 shares, which is an increase of 15,000,000 shares over the aggregate maximum number of shares of our common stock that may be issued pursuant to the exercise of incentive stock options under the 2018 EIP.
Under the 2018 EIP, (i) the term “Prior Plan” means the Dynavax Technologies Corporation 2011 Equity Incentive Plan (the “2011 EIP”) or the Dynavax Technologies Corporation 2017 Inducement Award Plan (the “2017 Inducement Plan”), and (ii) certain shares of our common stock subject to any outstanding stock award granted under either of the Prior Plans become available again for issuance under the 2018 EIP. Under the Amended 2018 EIP, the term “Prior Plan” also includes the Dynavax Technologies Corporation 2021 Inducement Award Plan (the “2021 Inducement Plan”), such that certain shares of our common stock subject to any outstanding stock award granted under the 2021 Inducement Plan will also become available again for issuance under the Amended 2018 EIP. Such shares are described below in the definition of “Prior Plans’ Returning Shares”. The Board terminated the 2021 Inducement Plan effective as of April 3, 2022 and, therefore, there are no shares of our common stock available for grant under the 2021 Inducement Plan.
The 2018 EIP provides certain limits on non-employee director compensation. Specifically, the 2018 EIP provides that the aggregate value of all cash and equity-based compensation granted or paid by us to any individual for service as a non-employee director of the Board with respect to any fiscal year of the Company will not exceed (i) a total of $200,000 with respect to any such cash compensation and (ii) $800,000 in total value with respect to any such equity-based compensation (including awards granted under the 2018 EIP and any other equity-based awards), calculating the value of any such awards based on the grant date fair value of such awards for financial reporting purposes. The Amended 2018 EIP retains such limits, except that for any individual who is first appointed or elected to the Board during any fiscal year of the Company, the limit for such individual’s equity-based compensation will be $1,200,000 with respect to such fiscal year. The Board believes it is necessary and in the best interests of our stockholders to increase such limit to ensure that we are able to continue to attract highly qualified non-employee directors to the Board. The foregoing limits on non-employee director compensation (including the increased limit on equity-based compensation for newly appointed or elected directors) are not intended to serve as an increase in the annual amount of non-employee director compensation; rather, such limits were approved for the purpose of limiting the amount of compensation the Board can approve for non-employee directors each year.
Why We Are Asking Our Stockholders to Approve the Amended 2018 EIP
We are seeking stockholder approval of the Amended 2018 EIP primarily to increase the number of shares available for the grant of stock options, restricted stock unit awards and other awards by 15,000,000 shares, which will enable us to have a competitive equity incentive program to compete with our peer group for key talent.
Our stockholders’ approval of the Amended 2018 EIP will allow us to continue to grant stock options, restricted stock unit awards and other awards at levels determined appropriate by the Board or Compensation
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Committee. The Amended 2018 EIP will also allow us to further utilize a broad array of equity incentives in order to secure and retain the services of our employees and directors, and to continue to provide long-term incentives that align the interests of our employees and directors with the interests of our stockholders.
Stockholder Approval
If this Proposal 2 is approved by our stockholders, the Amended 2018 EIP will become effective as of the date of the Annual Meeting. In the event that our stockholders do not approve this Proposal 2, the Amended 2018 EIP will not become effective and the 2018 EIP will continue in its current form.
Why You Should Vote for the Amended 2018 EIP
The Amended 2018 EIP Combines Compensation and Governance Best Practices
The Amended 2018 EIP includes provisions that are designed to protect our stockholders’ interests and to reflect corporate governance best practices including:
Stockholder approval is required for additional shares. The Amended 2018 EIP does not contain an annual “evergreen” provision. The Amended 2018 EIP authorizes a fixed number of shares, so that stockholder approval is required to issue any additional shares from the plan.
Repricing is not allowed. The Amended 2018 EIP prohibits the repricing of stock options and stock appreciation rights without prior stockholder approval.
No discounted stock options or stock appreciation rights. All stock options and stock appreciation rights granted under the Amended 2018 EIP must have an exercise 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.
Reasonable share counting provisions. In general, when awards granted under the Amended 2018 EIP lapse or are canceled, the shares reserved for those awards will be returned to the share reserve and be available for future awards. However, any shares received from the exercise of stock options or withheld for taxes will not be returned to our share reserve.
Minimum vesting requirements. The Amended 2018 EIP provides that no award may vest until at least 12 months following the date of grant of such award, except that shares up to 5% of the share reserve of the Amended 2018 EIP may be issued pursuant to awards that do not meet such vesting requirements.
Limit on non-employee director compensation. The aggregate value of all cash and equity-based compensation granted or paid by us to any individual for service as a non-employee director of the Board with respect to any fiscal year of the Company will not exceed (i) a total of $200,000 with respect to any such cash compensation and (ii) $800,000 in total value with respect to any such equity-based compensation (including awards granted under the Amended 2018 EIP and any other equity-based awards), provided that for any individual who is first appointed or elected to the Board during any fiscal year of the Company, the limit for such individual’s equity-based compensation will be $1,200,000 with respect to such fiscal year, in each case calculating the value of any such awards based on the grant date fair value of such awards for financial reporting purposes.
Restrictions on dividends. The Amended 2018 EIP provides that (i) no dividends or dividend equivalents may be paid with respect to any shares of our common stock subject to an 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 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.
Specific disclosure of award vesting upon a corporate transaction or change in control. The Amended 2018 EIP specifically provides that if a corporate transaction or change in control (each, a “Transaction”) occurs and the surviving or acquiring corporation (or its parent company) does not assume or continue outstanding awards under the Amended 2018 EIP and/or any Prior Plan (i.e., the
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2011 EIP, the 2017 Inducement Plan or the 2021 Inducement Plan), or substitute similar stock awards for such outstanding awards, then with respect to any such awards that have not been assumed, continued or substituted and that are held by participants whose continuous service has not terminated prior to the Transaction, the vesting of such awards will be accelerated in full (and with respect to performance stock awards, vesting will be deemed to be satisfied at the target level of performance).
Overhang
The following table provides certain information regarding our equity incentive program.
As of April 4, 2022
Total number of shares of common stock subject to outstanding stock options
11,483,388
Weighted-average exercise price of outstanding stock options
$11.39
Weighted-average remaining term of outstanding stock options
4.57 years
Total number of shares of common stock subject to outstanding full value awards
3,600,664
Total number of shares of common stock available for grant under the 2018 EIP(1)
799,684
Total number of shares of common stock outstanding
126,311,669
Per-share closing price of common stock as reported on Nasdaq Capital Market
$11.56
(1)
As of April 4, 2022, there were no shares of common stock available for grant under any of our other equity incentive plans. The Board terminated the 2021 Inducement Plan effective as of April 3, 2022 and, therefore, there are no shares of our common stock available for grant under the 2021 Inducement Plan.
We Manage Our Equity Incentive Award Use Carefully and Dilution Is Reasonable
We continue to believe that equity incentive awards such as stock options and restricted stock unit awards are a vital part of our overall compensation program. Our compensation philosophy reflects broad-based eligibility for equity incentive awards, and we grant awards to substantially all of our employees. However, we recognize that equity incentive awards dilute existing stockholders, and, therefore, we must responsibly manage the growth of our equity compensation program. We are committed to effectively monitoring our equity compensation share reserve, including our “burn rate,” to ensure that we maximize stockholders’ value by granting the appropriate number of equity incentive awards necessary to attract, reward, and retain employees. In addition, the vesting of some of our equity awards granted to our named executive officers are contingent on meeting pre-defined performance criteria, thereby ensuring alignment with value creation.
The following table shows our responsible historical dilution and burn rate percentages.
As of December 31
2021
2020
2019
Full Dilution(1)
13.50%
15.62%
15.39%
Gross Burn Rate (as discussed in greater detail below)(2)
5.17%
3.39%
7.73%
(1)
Full Dilution is calculated as (shares available for grant + shares subject to outstanding equity incentive awards)/(weighted average common stock outstanding + shares available for grant + shares subject to outstanding equity incentive awards).
(2)
Gross Burn Rate is calculated as (shares subject to options granted + shares subject to other equity incentive awards granted)/weighted average common stock outstanding.
The Size of Our Share Reserve Increase Request Is Reasonable
If this Proposal 2 is approved by our stockholders, we will have 15,000,000 new shares available for grant after our Annual Meeting for a total of approximately 15,799,684 shares available for grant after our Annual Meeting (based on shares available under the 2018 EIP as of April 4, 2022) (plus the Prior Plans’ Returning Shares (as defined below), as such shares become available from time to time), and absent any unforeseen circumstances, we anticipate returning to stockholders for additional shares in 2024 or 2025.
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Burn Rate
The following table provides detailed information regarding the activity related to our equity incentive plans for fiscal years 2021, 2020 and 2019.
Fiscal Year 2021
Fiscal Year 2020
Fiscal Year 2019
Total number of shares of common stock subject to stock options granted
3,893,732
2,002,871
3,745,751
Total number of shares of common stock subject to full value awards granted
2,114,629
1,412,456
1,822,257
Weighted-average number of shares of common stock outstanding
116,264,340
100,752,729
72,023,571
Burn Rate
5.17%
3.39%
7.73%
Description of the Amended 2018 EIP
A summary of the principal features of the Amended 2018 EIP follows below. The summary is qualified by the full text of the Amended 2018 EIP that is attached as Appendix A to this proxy statement.
Purpose
The Amended 2018 EIP is designed to secure and retain the services of our employees and directors, provide incentives for our employees and directors to exert maximum efforts for the success of the Company and its affiliates, and provide a means by which our employees and directors may be given an opportunity to benefit from increases in the value of our common stock.
Types of Awards
The Amended 2018 EIP provides for the grant of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance stock awards, and other stock awards.
Shares Available for Awards
Subject to adjustment for certain changes in our capitalization, the aggregate number of shares of our common stock that may be issued under the Amended 2018 EIP will not exceed 30,040,250 shares (which is the sum of (i) 140,250 shares (the number of unallocated shares that were available for grant under the 2011 EIP as of the effective date of the 2018 EIP), (ii) 5,000,000 additional shares that were reserved as of the effective date of the 2018 EIP, (iii) 2,300,000 shares that were approved at the 2019 Annual Meeting, (iv) 7,600,000 shares that were approved at the 2020 Annual Meeting, and (v) 15,000,000 newly requested shares), plus the Prior Plans’ Returning Shares (as defined below), as such shares become available from time to time.
The term “Prior Plans’ Returning Shares” refers to the following shares of our common stock subject to any outstanding stock award granted under any of the Prior Plans: (i) any shares subject to such stock award that are not issued because such stock award expires or otherwise terminates without all of the shares covered by such stock award having been issued; (ii) any shares subject to such stock award that are not issued because such stock award is settled in cash; and (iii) any shares issued pursuant to such stock award that are forfeited back to or repurchased by us because of a failure to vest.
The following shares of our common stock (collectively, the “Amended 2018 EIP Returning Shares”) will also become available again for issuance under the Amended 2018 EIP: (i) any shares subject to a stock award granted under the Amended 2018 EIP that are not issued because such stock award expires or otherwise terminates without all of the shares covered by such stock award having been issued; (ii) any shares subject to a stock award granted under the Amended 2018 EIP that are not issued because such stock award is settled in cash; and (iii) any shares issued pursuant to a stock award granted under the Amended 2018 EIP that are forfeited back to or repurchased by us because of a failure to vest.
The following shares of our common stock will not become available again for issuance under the Amended 2018 EIP: (i) any shares that are reacquired or withheld (or not issued) by us to satisfy the exercise, strike or purchase price of a stock award granted under the Amended 2018 EIP or any Prior Plan (including any shares
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subject to such award that are not delivered because such award is exercised through a reduction of shares subject to such award); (ii) any shares that are reacquired or withheld (or not issued) by us to satisfy a tax withholding obligation in connection with a stock award granted under the Amended 2018 EIP or any Prior Plan; (iii) any shares repurchased by us on the open market with the proceeds of the exercise, strike or purchase price of a stock award granted under the Amended 2018 EIP or any Prior Plan; and (iv) in the event that a stock appreciation right granted under the Amended 2018 EIP or any Prior Plan is settled in shares, the gross number of shares subject to such award.
The number of shares of our common stock available for issuance under the Amended 2018 EIP will be reduced by: (i) one share for each share issued pursuant to an Appreciation Award granted under the Amended 2018 EIP; (ii) 1.28 shares for each share issued pursuant to a Full Value Award granted under the Amended 2018 EIP prior to May 30, 2019; and (iii) 1.40 shares for each share issued pursuant to a Full Value Award granted under the Amended 2018 EIP on or after May 30, 2019.
The number of shares of our common stock available for issuance under the Amended 2018 EIP will be increased by: (i) one share for each Prior Plans’ Returning Share or Amended 2018 EIP Returning Share subject to an Appreciation Award; (ii) 1.28 shares for each Prior Plans’ Returning Share or Amended 2018 EIP Returning Share subject to a Full Value Award that returned to the Amended 2018 EIP prior to May 30, 2019; and (iii) 1.40 shares for each Prior Plans’ Returning Share or Amended 2018 EIP Returning Share subject to a Full Value Award that returns to the Amended 2018 EIP on or after May 30, 2019.
Eligibility
All of our (including our affiliates’) employees and non-employee directors are eligible to participate in the Amended 2018 EIP and may receive all types of awards other than incentive stock options. Incentive stock options may be granted under the Amended 2018 EIP only to our (including our affiliates’) employees.
As of April 4, 2022, we (including our affiliates) had approximately 331 employees and 10 non-employee directors.
Non-Employee Director Compensation Limit
The aggregate value of all cash and equity-based compensation granted or paid by us to any individual for service as a non-employee director of the Board with respect to any fiscal year of the Company will not exceed: (i) a total of $200,000 with respect to any such cash compensation; and (ii) $800,000 in total value with respect to any such equity-based compensation (including awards granted under the Amended 2018 EIP and any other equity-based awards), provided that for any individual who is first appointed or elected to the Board during any fiscal year of the Company, the limit for such individual’s equity-based compensation will be $1,200,000 with respect to such fiscal year, in each case calculating the value of any such awards based on the grant date fair value of such awards for financial reporting purposes.
Administration
The Amended 2018 EIP will be administered by our Board, which may in turn delegate authority to administer the Amended 2018 EIP to a committee. Our Board has delegated concurrent authority to administer the Amended 2018 EIP to our Compensation Committee, but may, at any time, re-vest in itself some or all of the power delegated to our Compensation Committee. Our Board and Compensation Committee are each considered to be a Plan Administrator for purposes of this Proposal 2.
Subject to the terms of the Amended 2018 EIP, the Plan Administrator may determine the recipients, the types of awards to be granted, the number of shares of our common stock subject to or the cash value of awards, and the terms and conditions of awards granted under the Amended 2018 EIP, including the period of their exercisability and vesting. The Plan Administrator also has the authority to provide for accelerated exercisability and vesting of 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 Amended 2018 EIP.
The Plan Administrator may also delegate to one or more officers the authority to designate employees who are not officers to be recipients of certain stock awards and the number of shares of our common stock subject to
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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 officer. The officer may not grant a stock award to himself or herself.
Repricing; Cancellation and Re-Grant of Stock Awards
Under the Amended 2018 EIP, 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.
Minimum Vesting Requirements
Under the Amended 2018 EIP, no award may vest until at least 12 months following the date of grant of such award, except that shares up to 5% of the share reserve of the Amended 2018 EIP may be issued pursuant to awards that do not meet such vesting requirements.
Dividends and Dividend Equivalents
The Amended 2018 EIP provides that dividends or dividend equivalents may be paid or credited with respect to any shares of our common stock subject to an award, as determined by the Plan Administrator and contained in the applicable award agreement; provided, however, that (i) no dividends or dividend equivalents may be paid with respect to any such shares 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 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.
Stock Options
Stock options may be granted under the Amended 2018 EIP pursuant to stock option agreements. The Amended 2018 EIP permits the grant of stock options that are intended to qualify as incentive stock options (“ISOs”) and non-statutory stock options (“NSOs”).
The exercise price of a stock option granted under the Amended 2018 EIP may not be less than 100% of the fair market value of our common stock 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 Amended 2018 EIP may not exceed seven years from the date of grant and, in some cases (see “Limitations on Incentive Stock Options” below), may not exceed five years from the date of grant. Except as otherwise provided in a participant’s stock option agreement or other written agreement with us or one of our affiliates, if a participant’s service relationship with us or any of our affiliates (referred to in this Proposal 2 as “continuous service”) terminates (other than for cause and other than upon 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 or one of our affiliates, 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 12 months following the participant’s termination due to the participant’s disability or for up to 18 months following the participant’s death. Except as explicitly provided otherwise in a participant’s stock option agreement or other written agreement with us or one of our affiliates, if a participant’s continuous service is terminated for cause (as defined in the Amended 2018 EIP), all stock options held by the participant will terminate upon the 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 or one of our affiliates, 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 and other than upon the participant’s death or disability) would be
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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 Amended 2018 EIP 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 Amended 2018 EIP may vest and become exercisable in cumulative increments, as determined by the Plan Administrator at the rate specified in the stock option agreement (subject to the limitations described in “Minimum Vesting Requirements” above). Shares covered by different stock options granted under the Amended 2018 EIP 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 Amended 2018 EIP in its discretion. Generally, a participant may not transfer a stock option granted under the Amended 2018 EIP 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. Notwithstanding the foregoing, no option may be transferred to any financial institution without prior stockholder approval.
Limitations on Incentive Stock Options
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 or that of any affiliate unless the following conditions are satisfied:
the exercise price of the ISO must be at least 110% of the fair market value of our common stock on the date of grant; and
the term of the ISO must not exceed five years from the date of grant.
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 Amended 2018 EIP is 32,600,000 shares.
Stock Appreciation Rights
Stock appreciation rights may be granted under the Amended 2018 EIP 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 our common stock on the date of grant. The term of stock appreciation rights granted under the Amended 2018 EIP may not exceed seven years from the date of grant. The Plan Administrator may also impose restrictions or conditions upon the vesting of stock appreciation rights that it deems appropriate (subject to the limitations described in “Minimum Vesting Requirements” above). 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 Amended 2018 EIP.
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Restricted Stock Awards
Restricted stock awards may be granted under the Amended 2018 EIP 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 of our affiliates, 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 (subject to the limitations described in “Minimum Vesting Requirements” above). 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; provided, however, that no restricted stock award may be transferred to any financial institution without prior stockholder approval. 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 Amended 2018 EIP 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 (subject to the limitations described in “Minimum Vesting Requirements” above). Except as otherwise provided in a participant’s restricted stock unit award agreement or other written agreement with us or one of our affiliates, restricted stock units that have not vested will be forfeited upon the participant’s termination of continuous service for any reason.
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 (subject to the limitations described in “Minimum Vesting Requirements” above). In addition, to the extent permitted by applicable law and the performance stock award agreement, the Plan Administrator may determine that cash may be used in payment of performance stock awards.
Performance goals under the Amended 2018 EIP will be based on any one or more of the following performance criteria: (i) earnings (including earnings per share and net earnings); (ii) earnings before interest, taxes and depreciation; (iii) earnings before interest, taxes, depreciation and amortization (EBITDA); (iv) total stockholder return; (v) return on equity or average stockholder’s equity; (vi) return on assets, investment, or capital employed; (vii) stock price or stock price performance; (viii) margin (including gross margin); (ix) net income (before or after taxes); (x) operating income; (xi) operating income after taxes; (xii) pre-tax profit; (xiii) operating cash flow; (xiv) sales or revenue targets; (xv) increases in revenue or product revenue; (xvi) expenses and cost reduction goals; (xvii) improvement in or attainment of working capital levels; (xviii) economic value added (or an equivalent metric); (xix) market share; (xx) cash flow; (xxi) cash flow per share; (xxii) share price performance; (xxiii) debt reduction; (xxiv) implementation or completion of projects or processes; (xxv) customer satisfaction; (xxvi) stockholders’ equity; (xxvii) capital expenditures; (xxviii) debt levels; (xxix) operating profit or net operating profit; (xxx) workforce diversity; (xxxi) growth of net income or operating income; (xxxii) billings; (xxxiii) submission to, or approval by, a regulatory body (including but not limited to the U.S. Food and Drug Administration) of an applicable filing for a product candidate or other product development milestones; (xxxiv) acquisitions, divestitures, joint ventures, strategic alliances, licenses or collaborations; (xxxv) spin-offs, split-ups, reorganizations, recapitalizations, restructurings, financings (debt or equity) or refinancings; (xxxvi) manufacturing or process development, clinical trial, regulatory, intellectual property, compliance or research objectives; and (xxxvii) any other measures of performance selected by the Plan Administrator.
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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 is authorized to make appropriate adjustments in the method of calculating the attainment of performance goals for a performance period as follows: (i) to exclude restructuring and/or other nonrecurring charges; (ii) to exclude exchange rate effects, as applicable, for non-U.S. dollar denominated performance goals; (iii) to exclude the effects of changes to generally accepted accounting principles; (iv) to exclude the effects of any statutory adjustments to corporate tax rates; (v) to exclude the effects of items that are “unusual” in nature or occur “infrequently” as determined under generally accepted accounting principles; (vi) to exclude the dilutive effects of acquisitions or joint ventures; (vii) to assume that any business divested by the Company achieved performance objectives at targeted levels during the balance of a performance period following such divestiture; (viii) to exclude the effect of any change in the outstanding shares of our common stock by reason of any stock dividend or split, stock repurchase, reorganization, recapitalization, merger, consolidation, spin-off, combination or exchange of shares or other similar corporate change, or any distributions to common stockholders other than regular cash dividends; (ix) to exclude the effects of stock based compensation and/or the award of an annual cash incentive under our Annual Incentive Program; (x) to exclude the effect of any other unusual, non-recurring gain or loss or other extraordinary item; and (xi) to make other appropriate adjustments 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 Amended 2018 EIP. Subject to the terms of the Amended 2018 EIP (including the limitations described in “Minimum Vesting Requirements” above), 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/Recoupment
Awards granted under the Amended 2018 EIP will be subject to recoupment in accordance with 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 an award agreement, including a reacquisition right in respect of previously acquired shares 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 Amended 2018 EIP; (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 and Change in Control
The following provisions will apply to outstanding awards under the Amended 2018 EIP and any Prior Plan in the event of a corporate transaction (as defined in the Amended 2018 EIP and described below) or a change in control (as defined in the Amended 2018 EIP and described below) unless otherwise provided in the instrument evidencing the award, in any other written agreement between us or one of our affiliates and the participant, or in our director compensation policy. For purposes of this Proposal 2, the term “Transaction” will mean such corporate transaction or change in control.
In the event of a Transaction, any surviving or acquiring corporation (or its parent company) may assume or continue any or all outstanding awards under the Amended 2018 EIP and/or any Prior Plan, or may substitute
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similar stock awards for such outstanding awards (including, but not limited to, awards to acquire the same consideration paid to the stockholders of the Company pursuant to the Transaction), and any reacquisition or repurchase rights held by the Company in respect of shares issued pursuant to any outstanding awards under the Amended 2018 EIP and/or any Prior Plan may be assigned by the Company to the surviving or acquiring corporation (or its parent company). The terms of any such assumption, continuation or substitution will be set by the Plan Administrator.
In the event of a Transaction in which the surviving or acquiring corporation (or its parent company) does not assume or continue outstanding awards under the Amended 2018 EIP and/or any Prior Plan, or substitute similar stock awards for such outstanding awards, then with respect to any such awards that have not been assumed, continued or substituted and that are held by participants whose continuous service has not terminated prior to the effective time of the Transaction (the “Current Participants”), the vesting (and exercisability, if applicable) of such awards will be accelerated in full (and with respect to performance stock awards, vesting will be deemed to be satisfied at the target level of performance) to a date prior to the effective time of the Transaction (contingent upon the closing or completion of the Transaction) as the Plan Administrator will determine (or, if the Plan Administrator does not determine such a date, to the date that is five days prior to the effective time of the Transaction), and such awards will terminate if not exercised (if applicable) prior to the effective time of the Transaction in accordance with the exercise procedures determined by the Plan Administrator, and any reacquisition or repurchase rights held by the Company with respect to such awards will lapse (contingent upon the closing or completion of the Transaction).
In the event of a Transaction in which the surviving or acquiring corporation (or its parent company) does not assume or continue outstanding awards under the Amended 2018 EIP and/or any Prior Plan, or substitute similar stock awards for such outstanding awards, then with respect to any such awards that have not been assumed, continued or substituted and that are held by participants other than the Current Participants, such awards will terminate if not exercised (if applicable) prior to the effective time of the Transaction in accordance with the exercise procedures determined by the Plan Administrator; provided, however, that any reacquisition or repurchase rights held by the Company with respect to such awards will not terminate and may continue to be exercised notwithstanding the Transaction.
Notwithstanding the foregoing, in the event any outstanding award under the Amended 2018 EIP and/or any Prior Plan held by a participant will terminate if not exercised prior to the effective time of a Transaction, the Plan Administrator may provide that the participant may not exercise such award but instead will receive a payment, in such form as may be determined by the Plan Administrator, equal in value to the excess, if any, of (i) the value of the property the participant would have received upon the exercise of such award immediately prior to the effective time of the Transaction, over (ii) any exercise price payable by the participant in connection with such exercise.
Unless provided otherwise in the participant’s award agreement, in any other written agreement or plan with us or one of our affiliates, or in our director compensation policy, outstanding awards under the Amended 2018 EIP and any Prior Plan will not be subject to additional acceleration of vesting and exercisability upon or after a change in control.
For purposes of the Amended 2018 EIP, 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 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.
For purposes of the Amended 2018 EIP, a change in control generally will be deemed to occur in the event: (i) a person, entity or group acquires, directly or indirectly, our securities representing more than 50% of the combined voting power of our then outstanding securities, other than by virtue of a merger, consolidation, or similar transaction; (ii) there is consummated a merger, consolidation, or similar transaction and, immediately after the consummation of such transaction, our stockholders immediately prior thereto do not own, directly or indirectly, more than 50% of the combined outstanding voting power of the surviving entity or the parent of the surviving entity in substantially the same proportions as their ownership of our outstanding voting securities
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immediately prior to such transaction; (iii) there is consummated a sale or other disposition of all or substantially all of our consolidated assets, other than a sale or other disposition to an entity in which more than 50% of the entity’s combined voting power is owned by our stockholders in substantially the same proportions as their ownership of our outstanding voting securities immediately prior to such sale or other disposition; or (iv) over a period of 12 months or less, a majority of our Board becomes comprised of individuals whose nomination, appointment, or election was not approved by a majority of the Board members or their approved successors.
Plan Amendments and Termination
The Plan Administrator has the authority to amend or terminate the Amended 2018 EIP at any time. However, except as otherwise provided in the Amended 2018 EIP or an award agreement, no amendment or termination of the Amended 2018 EIP may materially impair a participant’s rights under his or her outstanding awards without the participant’s consent.
We will obtain stockholder approval of any amendment to the Amended 2018 EIP as required by applicable law and listing requirements. No incentive stock options may be granted under the Amended 2018 EIP after April 8, 2028, which is the tenth anniversary of the date the 2018 EIP was originally adopted by the Board.
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 Amended 2018 EIP. 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 particular situation, each participant should consult the participant’s tax adviser regarding the federal, state, local and other tax consequences of the grant or exercise of an award or the disposition of stock acquired under the Amended 2018 EIP. The Amended 2018 EIP is not qualified under the provisions of Section 401(a) of the Internal Revenue Code of 1986, as amended (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, the provisions of Section 162(m) of the Code 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 their 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.
We will generally be entitled to a tax deduction equal to the taxable ordinary income realized by the participant.
Incentive Stock Options
The Amended 2018 EIP 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
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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 realized by the participant, 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 stock award, to recognize ordinary income, as of the date the recipient receives the award, equal to the excess, if any, of the fair market value of the stock on the date the 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.
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 exemption 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 exemption to the requirements of Section 409A of the Code, 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.
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.
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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. We will generally be entitled to a tax deduction equal to the taxable ordinary income realized by the recipient of the stock appreciation right.
Section 162(m) Limitations
Under Section 162(m) of the Code (“Section 162(m)”), compensation paid to any publicly held corporation’s “covered employees” that exceeds $1 million per taxable year for any covered employee is generally non-deductible. Awards granted under the Amended 2018 EIP will be subject to the deduction limit under Section 162(m) and will not be eligible to qualify for the performance-based compensation exception under Section 162(m) pursuant to the transition relief provided by the Tax Cuts and Jobs Act.
New Plan Benefits under Amended 2018 EIP
Name and Position
Number of Shares
Ryan Spencer
Chief Executive Officer and Director
(1)
David F. Novack
President and Chief Operating Officer
(1)
Kelly MacDonald
Senior Vice President and Chief Financial Officer
(1)
Michael S. Ostrach
Former Senior Vice President, Chief Financial Officer and Chief Business Officer
(2)
Robert Janssen, M.D.
Senior Vice President and Chief Medical Officer
(1)
All current executive officers as a group
(1)
All current directors who are not executive officers as a group
(3)
All employees, including all current officers who are not executive officers, as a group
(1)
(1)
Awards granted under the Amended 2018 EIP to our executive officers and other employees are discretionary and are not subject to set benefits or amounts under the terms of the Amended 2018 EIP, and our Board and our Compensation Committee have not granted any awards under the Amended 2018 EIP subject to stockholder approval of this Proposal 2. Accordingly, the benefits or amounts that will be received by or allocated to our executive officers and other employees under the Amended 2018 EIP are not determinable.
(2)
Mr. Ostrach retired from the Company, effective April 1, 2021. Therefore, he is not eligible to receive any future awards under the Amended 2018 EIP.
(3)
Awards granted under the Amended 2018 EIP to our non-employee directors are discretionary and are not subject to set benefits or amounts under the terms of the Amended 2018 EIP. However, pursuant to our current compensation program for non-employee directors, the aggregate number of shares of our common stock subject to awards that will automatically be granted on an annual basis to all of our current directors who are not executive officers as a group will be as follows: (i) with respect to such awards to be granted on the date of the Annual Meeting, such aggregate number will be 277,500 shares (which consists of a stock option and a restricted stock unit award, together equal to the stock option equivalent of 30,000 shares of our common stock, for each of our current non-employee directors, other than Mr. Myers (who was appointed to the Board on October 19, 2021 and, therefore, is only eligible to receive such awards with an aggregate value equal to the stock option equivalent of 22,500 shares of our common stock) and Ms. Sun (who was appointed to the Board on December 10, 2021 and, therefore, is only eligible to receive such awards with an aggregate value equal to the stock option equivalent of 15,000 shares of our common stock)); and (ii) with respect to such awards to be granted on the date of each annual meeting of stockholders after the Annual Meeting, such aggregate number will be 300,000 shares (which consists of a stock option and a restricted stock unit award, together equal to the stock option equivalent of 30,000 shares of our common stock, for each of our current non-employee directors). On and after the date of the Annual Meeting, any such stock options and restricted stock unit awards will be granted under the Amended 2018 EIP if this Proposal 2 is approved by our stockholders. For additional information regarding our current compensation program for non-employee directors, please see “Director Compensation” below.
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Awards Granted under the 2018 EIP
The following table sets forth, for each of the individuals and various groups indicated, the total number of shares of our common stock subject to awards that have been granted under the 2018 EIP as of April 4, 2022.
2018 Equity Incentive Plan
Name and Position
Number of Shares
Ryan Spencer
Chief Executive Officer and Director
1,585,550
David F. Novack
President and Chief Operating Officer
992,000
Kelly MacDonald
Senior Vice President and Chief Financial Officer
122,500
Michael S. Ostrach
Former Senior Vice President, Chief Financial Officer and Chief Business Officer
385,000
Robert Janssen, M.D.
Senior Vice President and Chief Medical Officer
506,000
All current executive officers as a group
3,206,050
All current directors who are not executive officers as a group
708,928
Each nominee for election as a director:
 
Julie Eastland
75,000
Andrew Hack, M.D., Ph.D.
58,750
Brent MacGregor
75,000
Scott Myers
55,714
Elaine Sun
55,714
Each associate of any executive officers, current directors or director nominees
Each other person who received or is to receive 5% of awards
All employees, including all current officers who are not executive officers, as a group
8,593,840
Vote Required
The affirmative vote of the holders of a majority of shares present (either in person or by proxy) and entitled to vote on the matter at the Annual Meeting will be required to approve this Proposal 2. Abstentions will be counted toward the tabulation of votes cast on proposals presented to the stockholders and will have the same effect as negative votes. Broker non-votes are counted towards a quorum but are not counted for any purpose in determining whether this Proposal 2 has been approved.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2.
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Equity Compensation Plan Information
The following table provides certain information about our equity compensation plans as of the fiscal year ended December 31, 2021.
Plan Category
Number of
securities to
be issued upon exercise
of outstanding options,
warrants and rights
Weighted-average
exercise price of
outstanding
options, warrants
and rights(3)
Number
of securities remaining
available for future
issuance under
equity compensation
plans (excluding
securities reflected in
the first column)
Equity compensation plans approved by security holders:
 
 
 
2011 Equity Incentive Plan
2,912,479
$18.66
2014 Employee Stock Purchase Plan(1)
$
1,038,313
2018 Equity Incentive Plan
5,273,049
$7.58
4,851,391
Equity compensation plans not approved by security holders:
 
 
 
2017 Inducement Award Plan(2)
124,000
$17.55
2021 Inducement Award Plan(4)
2,088,800
$11.31
1,161,200(5)
Total:
10,398,328
$11.55
7,050,904
(1)
As of December 31, 2021, an aggregate of 1,038,313 shares remained available for future issuance under the 2014 Employee Stock Purchase Plan, and as of April 4, 2022, up to a maximum of 956,312 shares may be purchased in the current purchase period.
(2)
In order to induce qualified individuals to join our Company, on November 28, 2017, our Board adopted the 2017 Inducement Award Plan (the “2017 Inducement Plan”), which provided for the issuance of up to 1,200,000 shares of Company common stock to new employees of the Company. Stockholder approval of the 2017 Inducement Plan was not required under Nasdaq Marketplace Rule 5635(c)(4). Upon the effectiveness of the 2018 Equity Incentive Plan, no additional awards were granted under the 2017 Inducement Plan. All shares currently subject to awards outstanding under the 2017 Inducement Plan, which awards expire or are forfeited, are included in the reserve for the 2018 Equity Incentive Plan to the extent such shares would otherwise return to such plan. Awards granted under the 2017 Inducement Plan have a term of 10 years. Exercisability, option price and other terms are determined by the plan administrator, but the option price cannot be less than 100% of fair market value of those shares on the date of grant. Stock options granted under the 2017 Inducement Plan generally vest over a period of four years, with the exception of performance-based awards which will vest upon achievement of certain performance conditions.
(3)
2,888,126 shares subject to restricted stock units (RSUs) were granted under the 2018 Equity Incentive Plan. Since these awards have no exercise price, they are not included in the weighted-average exercise price calculation.
(4)
In January 2021, our Board adopted the 2021 Inducement Award Plan, under which we initially reserved 1,500,000 shares of common stock, and which we later approved to increase to an aggregate of 3,250,000 shares of common stock for issuance to be used exclusively for grants of awards to individuals who were not previously employees or directors of the Company. Stockholder approval of the 2021 Inducement Plan was not required under Nasdaq Marketplace Rule 5635(c)(4). The 2021 Inducement Plan provides for the issuance of NSOs, restricted stock awards, RSUs, stock appreciation rights, performance stock awards and other stock awards exclusively to individuals who were not previously employees or directors of the Company, or who had experienced a bona fide period of non-employment, as an inducement material to the individual’s entry into employment with us within the meaning of Nasdaq Marketplace Rule 5635(c)(4). The terms of awards under the 2021 Inducement Plan are substantially similar to those of the 2018 Equity Incentive Plan, including the treatment of awards upon change in control transactions. As of December 31, 2021, options to purchase 2,088,800 shares were outstanding under the 2021 Inducement Plan. All options granted under the 2021 Plan have a maximum term of seven years. Awards under the 2021 Inducement Plan may be amended by the Board at any time or from time to time in accordance with the terms of the 2021 Inducement Plan and applicable law.
(5)
The Board terminated the 2021 Inducement Plan effective as of April 3, 2022 and, therefore, there are no shares available for grant under the 2021 Inducement Plan as of such date.
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PROPOSAL 3

ADVISORY VOTE ON EXECUTIVE COMPENSATION
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act and Section 14A of the Exchange Act of 1934, Dynavax stockholders are being asked to approve, on an advisory basis, the compensation of our named executive officers as disclosed in this proxy statement, which is commonly referred to as a “say-on-pay vote.” This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers, which results from our compensation philosophy, policies and practices as discussed in this proxy statement. The compensation of our named executive officers subject to the say-on-pay vote is described in the Compensation Discussion and Analysis, the accompanying tables, and the related narrative disclosure contained in this proxy statement.
Our Compensation Committee is responsible for designing and administering our executive compensation programs. Our Compensation Committee firmly believes that Dynavax’s executive compensation programs should reward our named executive officers for performance, and that when key performance objectives are not achieved, the compensation of our named executive officers should reflect as much. We believe that the compensation of our named executive officers, as disclosed in this proxy, reflects this philosophy. In addition, our Compensation Committee believes that the compensation programs for our named executive officers have been instrumental in helping Dynavax be able to attract, retain and motivate our executive team, thereby enabling our company to be in a position to move forward with our business strategy.
Our Board is now asking our stockholders to indicate their support for the compensation of our named executive officers as described in this proxy statement by casting a non-binding advisory vote “For” the following resolution:
“RESOLVED, that the compensation paid to Dynavax’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.”
Although this vote is advisory and the outcome is not binding on our Board, the views expressed by our stockholders, whether through this vote or otherwise, are important to us. As a result, the Board and the Compensation Committee will carefully review the results of this vote, and they will consider these results in making future decisions about our executive compensation programs and arrangements.
Unless our Board modifies its policy on the frequency of future advisory votes on the compensation of our named executive officers, which are currently submitted to stockholders on an annual basis, the next advisory vote on the compensation of our named executive officers will be held at the 2023 annual meeting of stockholders.
Vote Required
Approval of this advisory proposal requires the affirmative vote of the holders of a majority of shares present (either in person or by proxy) and entitled to vote on the matter at the Annual Meeting. Abstentions will be counted toward the tabulation of votes cast on proposals presented to the stockholders and will have the same effect as negative votes. Broker non-votes are counted towards a quorum but are not counted for any purpose in determining whether this Proposal 3 has been approved.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 3.
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PROPOSAL 4

RATIFICATION OF SELECTION OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has selected Ernst & Young LLP (“Ernst & Young”), as our independent registered public accounting firm for the fiscal year ending December 31, 2022. Ernst & Young has audited our financial statements since 2002. Representatives of Ernst & Young are expected to be present at the Annual Meeting. Ernst & Young will have an opportunity to make a statement if it so desires and will be available to respond to appropriate questions.
If the stockholders fail to ratify the selection of Ernst & Young, the Audit Committee will reconsider whether or not to retain that firm. Even if the selection is ratified, the Audit Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and its stockholders.
Vote Required
The affirmative vote of the holders of a majority of the shares present (either in person or by proxy) and entitled to vote on the matter at the Annual Meeting will be required to ratify the selection of Ernst & Young. Abstentions will be counted toward the tabulation of votes cast on proposals presented to the stockholders and will have the same effect as negative votes. Broker non-votes are counted towards a quorum but are not counted for any purpose in determining whether this matter has been approved; however, Proposal 4 is considered a “routine” matter, and therefore no broker non-votes are expected in connection with this Proposal 4.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 4.
AUDIT FEES
In connection with the audit of our 2022 financial statements, we entered into an engagement agreement with Ernst & Young which sets forth the terms by which Ernst & Young will perform audit services for us.
The following table represents aggregate fees billed to the Company for the fiscal years ended December 31, 2021 and 2020 by Ernst & Young, our principal auditors. The Audit Committee pre-approved all service fees described below.
Fiscal Year Ended
2021
2020
Audit Fees(1)
$1,598,508
$1,729,615
Audit Related Fees
Tax Fees(2)
71,685
72,167
All Other Fees(3)
1,340
2,000
Total Fees
$1,671,533
$1,803,782
(1)
Audit fees include fees for the audit of our consolidated financial statements and interim reviews of our quarterly financial statements, including compliance with the provisions of Section 404 of the Sarbanes-Oxley Act as well as fees related to registration statements, consents and other services related to SEC matters.
(2)
Tax fees include Section 382 study and other tax advisory services.
(3)
All other fees represent subscription fees for an online accounting research tool and related database.
PRE-APPROVAL POLICIES AND PROCEDURES
Our Audit Committee has adopted a policy and procedures for the pre-approval of audit and non-audit services rendered by our independent registered public accounting firm, Ernst & Young. Under the policy, the Audit Committee pre-approves specified services in the defined categories of audit services, audit-related services, tax services and all other services up to specified amounts. Pre-approval may be given as part of the Audit Committee’s approval of the scope of the engagement of the independent registered public accounting firm or on an interim basis by the Audit Committee Chair, as needed and on a case-by-case basis before the independent registered public accounting firm is engaged to provide each service.
The Audit Committee has determined that services rendered by Ernst & Young are compatible with maintaining the principal auditors’ independence.
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EXECUTIVE OFFICERS
The following table sets forth certain information with respect to our executive officers as of April 4, 2022:
Name
Age
Position
Ryan Spencer(1)
44
Chief Executive Officer and Director
David F. Novack
60
President and Chief Operating Officer
Kelly MacDonald
38
Senior Vice President, Chief Financial Officer
Robert Janssen, M.D.
68
Chief Medical Officer and Senior Vice President, Clinical Development, Medical and Regulatory Affairs
(1)
Please see “Proposal 1 – Election of Directors” in this proxy statement for more information about Mr. Spencer.
David F. Novack – President and Chief Operating Officer
Mr. Novack joined Dynavax in March 2013 as Senior Vice President, Operations and Quality, served as an interim co-President between May and December 2019, and has served as our President and Chief Operating Officer since December 2019. Mr. Novack was formerly with Novartis Vaccines & Diagnostics where he served since 2009 as the Global Head of Technical Operations for Diagnostics and previously from 2007 to 2009 as the Global Head of Vaccine Manufacturing Strategy. Prior to Novartis, Mr. Novack was the Vice President, Business Development for Vaxin, Inc., a vaccine company, from 2004 to 2006. From 1993 until 2004, Mr. Novack worked at MedImmune, formerly Aviron, serving in several capacities including business development, manufacturing, contract operations, and supply chain. Previously, from 1989 to 1993, Mr. Novack was with American Cyanamid Company in various roles. Mr. Novack received a B.S. in Biology from State University of New York and an M.B.A. from Columbia University.
Kelly MacDonald – Senior Vice President, Chief Financial Officer
Ms. MacDonald joined Dynavax in March 2021 as Senior Vice President, Chief Financial Officer, and Principal Financial Officer. Prior to Dynavax, Ms. MacDonald worked at Ironwood Pharmaceuticals, Inc. where she spent nearly eight years and held roles of increasing responsibility. In her final role at Ironwood Ms. MacDonald served as Chief Accounting Officer and Vice President, Finance where she led the Company’s corporate accounting and finance processes, enterprise risk management, treasury and capital allocation strategy. While at Ironwood, she also had various other finance and accounting managerial roles where she provided financial advice on the company’s strategic planning, accounting policies, R&D portfolio management, global business development, product launches and commercial execution. Prior to that, Ms. MacDonald spent nearly seven years at PriceWaterhouseCoopers, LLP, ultimately serving as a Manager in the Health Industries Assurance Practice, primarily serving clients in life sciences and technology sectors. Ms. Macdonald is a CPA and holds a Master of Business Administration from the Isenberg School of Management at the University of Massachusetts and a Bachelor of Science in Accounting from Fairfield University.
Robert Janssen, M.D. – Chief Medical Officer and Senior Vice President, Clinical Development, Medical and Regulatory Affairs
Dr. Janssen was appointed Chief Medical Officer and Senior Vice President, Clinical Development, Medical and Regulatory Affairs in January 2018. Dr. Janssen was appointed Chief Medical Officer and Vice President, Clinical Development and Regulatory Affairs in July 2013. He served as Dynavax’s Vice President, Medical Affairs since November 2012 and was previously Senior Director, Clinical Development at Dynavax from 2010 through 2012, during which time he was extensively involved with Phase 3 clinical development of HEPLISAV-B and its U.S. and European licensing applications. Prior to joining Dynavax, Dr. Janssen was Vice President, Medical Affairs at Gilead from 2008 to 2010 where he was responsible for oversight of physician and health care provider education focused on HIV and hepatitis B therapies. Until 2008, Dr. Janssen spent 23 years at the U.S. Centers for Disease Control and Prevention (“CDC”), most recently as the Director of the Division of HIV/AIDS Prevention from 2000 to 2008. Under his leadership, the CDC first explored HIV treatment as a mode of HIV prevention and launched several of the earliest Phase 3 trials of pre-exposure prophylaxis for HIV. Dr. Janssen received a Bachelor of Arts degree with Honors in Humanities from Stanford University and his M.D. degree from the University of Southern California. He is a neurologist with training in virology received at the University of Pennsylvania. Dr. Janssen has been the beneficiary of numerous honors and awards during his career. He has published over 130 scientific articles in a variety of journals and has served as a reviewer for leading scientific journals.
29

COMPENSATION DISCUSSION AND ANALYSIS
Overview
This Compensation Discussion and Analysis discusses our executive compensation philosophy and practices and provides an overview of the Compensation Committee’s 2021 decisions for the following named executive officers (“NEOs”) whose compensation is set forth in the Summary Compensation Table and other related tables contained in this proxy statement:
Ryan Spencer, Chief Executive Officer and Director;
David F. Novack, President and Chief Operating Officer;
Kelly MacDonald, Senior Vice President, Chief Financial Officer1
Michael S. Ostrach, former Senior Vice President, Chief Financial Officer and Chief Business Officer2; and
Robert Janssen, M.D., Chief Medical Officer and Senior Vice President, Clinical Development, Medical and Regulatory Affairs.
Overview
We believe that 2021 was a transformational year for Dynavax. As the year started, the COVID-19 pandemic was still spreading rapidly and the first COVID-19 vaccines had only recently been approved in the U.S. with limited availability. With respect to adult hepatitis B vaccines in the U.S., including our product HEPLISAV-B, utilization was still well below rates seen before the pandemic in our estimation, and social distancing, remote work environments and other safeguards continued to present headwinds to direct sales efforts, compared to conditions that existed prior to the pandemic.
Recognizing that adult hepatitis B vaccine utilization would likely remain depressed during 2021, we focused our efforts on growing market share for HEPLISAV-B, in recognition that expanding our market share at times of low utilization could potentially reap amplified benefits if and when utilization returned to more normal levels. In addition to our focus on expanding our share of the then-current market, we undertook further efforts to help achieve a favorable recommendation at the ACIP.
In anticipation of an expanded recommendation by the CDC Advisory Committee on Immunization Practices (“ACIP”), and the market expansion that we expected would follow, we reorganized our sales to team during the summer of 2021 to prepare for the recommendation and we added approximately 35 additional field sales positions who were directly focused on HEPLISAV-B sales efforts. We also made substantial investments in our Dusseldorf facility to expand operations and increase yields in our antigen manufacturing operations, which we believed would increase our output and decrease or cost per dose by utilizing more efficient processes.
In November of 2021 the ACIP provided a universal recommendation that all adults aged 19-59 should be vaccinated against hepatitis B. We believe that the ACIP’s universal recommendation expanded the market for people who should be vaccinated against hepatitis B by shifting from a more complicated risk-based approach to a simpler age-based recommendation that expanded the overall pool of persons who should be vaccinated and also made patient identification and prescribing practices easier.
In parallel, to better support our collaboration partners focused on developing COVID-19 vaccines, we undertook to bring up a second supplier of CpG 1018 adjuvant, and we now have two qualified suppliers to help support our COVID-19 vaccine supply business. Building on the efforts undertaken in 2020 to establish COVID-19 adjuvant supply relationships, we saw two of our collaboration partners receive emergency use authorizations for their COVID-19 vaccines, and two more are working to achieve emergency use authorizations. Sales to these partners generated significant revenue and cash in 2021, and we finished the year with a strong balance sheet.
In addition to adding significant cash reserves, we further strengthened our financial position by refinancing our outstanding term loan and replacing it with lower-interest convertible debt which we believe will save approximately $7 million dollars per year in interest expense.
(1)
Ms. MacDonald joined Dynavax in March 2021.
(2)
Mr. Ostrach retired from Dynavax in April 2021.
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Key 2021 Highlights and Performance Against Core Priorities
During 2021, our business strategy focused on three key pillars to advance our business: (i) continued commercialization and market share expansion to drive growth for HEPLISAV-B in the U.S., (ii) advancing our CpG 1018 adjuvant supply strategy for COVID-19 vaccines and (iii) building an innovative clinical pipeline leveraging our proven adjuvant technology while strengthening our financial profile. A summary of our accomplishments against these pillars during 2021 and early 2022 to help create this long-term value appears below:
Maximize Growth of HEPLISAV-B [Hepatitis B Vaccine (Recombinant), Adjuvanted]
We recognized approximately $61.9 million in product revenue related to sales of HEPLISAV-B in the U.S. during the year ended December 31, 2021, representing a 72% increase compared to the year ended December 31, 2020, despite COVID-19 headwinds.
In April 2021, we announced the results of the post-marketing study assessing the rates of occurrence of acute myocardial infarction (“AMI”) in persons receiving HEPLISAV-B compared with Engerix-B, showing evidence there is no increased risk of AMI associated with vaccination with HEPLISAV-B compared to Engerix-B.
In November 2021, the ACIP recommended that all adults aged 19-59 be vaccinated against hepatitis-B. This universal recommendation created a significantly expanded market opportunity in the U.S., compared to the more limited prior recommendation to vaccinate at-risk populations, which we believe has greatly simplified prescribing practices.
Expand CpG 1018 Adjuvant Supply Business for COVID-19 Vaccines
We recognized approximately $375.2 million in product revenue related to sales of CpG 1018 adjuvant to our global portfolio of partners developing COVID-19 vaccines during the year ended December 31, 2021, compared to just $3.3 million in 2020.
Two of our adjuvant collaborators’ COVID-19 vaccine candidates, utilizing our CpG 1018 adjuvant, were approved for emergency use during the year ended December 31, 2021; additional collaborators’ successful Phase 3 clinical data consistently demonstrated the value of CpG 1018 adjuvant across multiple vaccine platforms.
We continued to expand our manufacturing capacity to meet our partners’ needs for adjuvant in 2022 and beyond.
Drive Innovation Through Clinical Pipeline Expansion and Discovery
We continued enrollment and made progress on our Tdap-1018 Phase 1 clinical trial evaluating the safety, tolerability, and immunogenicity of the vaccine, with topline data in adults and adolescents expected during 2022.
In September 2021, we entered into a fully-funded collaboration with the U.S. Department of Defense to conduct a Phase 2 clinical trial for a plague vaccine utilizing our CpG 1018 adjuvant, which is expected to start in 2022.
During 2021, we further invested in our pre-clinical and clinical collaborations and discovery efforts, including our ongoing collaboration with Mount Sinai investigating universal and seasonal influenza.
In January 2022, we announced the initiation of a Phase 1 clinical trial evaluating the safety, tolerability, and immunogenicity of our investigational shingles vaccine program utilizing our CpG 1018 adjuvant.
Corporate and Financial Highlights
We delivered net income of $76.7 million during the year ended December 31, 2021, representing our first full year of profitability in company history;
We generated $335.5 million in positive cash flow from operations during the year ended December 31, 2021, and ended the year with $546.0 million in cash, cash equivalents and marketable securities;
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In May 2021, we increased the funding under our arrangement with Coalition for Epidemic Preparedness Innovations (“CEPI”) to approximately $176.4 million, which supported the advance manufacturing cost of CpG 1018 adjuvant sold to or reserved for certain of our collaborators working to advance COVID-19 vaccine candidates utilizing our CpG 1018 adjuvant.
We added two additional directors with deep financial and industry experience that we believe can help future strategy and execution as we invest in future growth. We also strengthened our management and clinical teams, which we believe will provide a strong foundation for future operations.
Our stock price increased by 187% during the year, from a closing price of $4.90 on the Nasdaq Stock Market on December 31, 2020 to a closing price of $14.07 on December 31, 2021.
Compensation Governance Highlights
What we do
What we do not do
Design executive compensation program to align pay with performance
No excessive change in control or severance payments (no cash severance multiplier greater than 1.75x base + target bonus); no single trigger change in control cash payments
Prohibit hedging and pledging by executive officers and directors
No repricing of underwater stock options without stockholder approval
Grant equity awards with performance-based vesting
No tax gross-ups
Conduct an annual say-on-pay vote
No excessive perquisites
Seek input from, listen to and respond to stockholders
No guaranteed bonuses
Consideration of Our Prior Say-on-Pay Votes and Related Stockholder Engagement
In 2016, our Board of Directors adopted, and our stockholders approved, a policy that we would hold a say-on-pay vote on a yearly basis. Since adjusting to an annual say-on-pay practice, we have experienced continued favorable voting results with our say-on-pay practices. The results of the past three years’ voting have been 75%, 92%, and 95% in fiscal years 2019, 2020, and 2021, respectively, of stockholders voting in favor of our pay practices.
We routinely seek and obtain feedback from our stockholders throughout the course of the year. In addition, we seek feedback from the governance teams of our largest institutional stockholders each year pertaining to executive compensation as well as other topics of interest to them. In early 2022, we reached out to engage with the governance teams of our 22 largest investors, representing approximately 63% of our shares outstanding. We spoke with 100% of the stockholders that wanted to provide us with feedback at that time about our executive compensation practices or other governance practices. During these discussions, which included an opportunity for detailed questions, none of our stockholders expressed any concerns about our executive compensation practices. Additionally, we considered feedback from Institutional Shareholder Services and Glass Lewis, as well as the voting results of the prior year’s say-on-pay proposal. Accordingly, we determined not to make any significant changes to our executive compensation policies or decisions as a result of our say-on-pay vote and stockholder feedback; however, we will monitor and continually evaluate our compensation program going forward in light of our stockholders' views and our transforming business needs.
Executive Compensation Philosophy and Objectives
We believe our NEOs’ compensation should align our executives’ interests with that of our stockholders over the long-term through achievement of strategic corporate objectives that are fundamental to our business and that are intended to create long-term stockholder value. Our executive compensation programs are designed to be competitive with our peer group to enable us to attract, motivate, reward, and retain outstanding talent. Our compensation programs are based on the following key principles:
Link a direct and meaningful proportion of pay with performance and achievement of corporate and individual goals;
Clearly align our executives’ interests with those of our stockholders through equity compensation;
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Achieve a mix of overall compensation that is competitive in the industry in which we compete for executive talent; and
Recognize individual contributions, teamwork and corporate performance.
Compensation-Setting Process
Role of the Compensation Committee and Management
The Compensation Committee oversees and administers our executive compensation programs. The Compensation Committee acts pursuant to a charter adopted by our Board, which can be found at our website, www.dynavax.com. The Compensation Committee generally determines the compensation to be paid to the executive officers, including our NEOs. Either the Compensation Committee or the independent members of our Board, upon recommendation from the Compensation Committee, approve certain compensation of our CEO, and references in this Compensation Discussion and Analysis to our Board approving our CEO’s compensation refer to the independent members of our Board.
The Compensation Committee (and the Board, with respect to our CEO) approves our corporate goals and the individual goals of our NEOs after considering the Company’s recommendations on these matters. The Compensation Committee annually reviews the base salaries, cash incentives and equity compensation of our NEOs and periodically reviews other elements of our compensation. Compensation decisions are based primarily on the following:
Peer and Industry Data – The Compensation Committee uses peer and industry data provided by its consultant, Arnosti Consulting Inc. (“Arnosti”), as a reference in setting base salaries and target cash compensation, determining appropriate levels and mix of equity compensation and determining the type and portion of compensation tied to performance goals.
Annual Performance Reviews – The Chair of the Compensation Committee conducts annual performance reviews of our CEO taking into consideration feedback obtained during the course of the year from the independent members of our Board and the CEO’s direct reports. Our CEO conducts and presents the performance reviews of the other NEOs to the Compensation Committee after the end of each fiscal year. In reviewing and determining the compensation of each NEO, the Compensation Committee also considers individual factors, such as potential for future contributions to Company growth, industry experience and retention concerns.
CEO Recommendations – The Compensation Committee seeks input from our CEO for setting the salary and target cash compensation levels for the other NEOs, and also for purposes of setting annual performance metrics and target amounts under our annual incentive program.
Role of Compensation Consultant
Arnosti has been the Compensation Committee’s independent compensation consultant since 2010, and the Compensation Committee meets regularly with Arnosti, both with and without management present, depending upon the topic being discussed.
During the first quarter of 2021, the Compensation Committee reviewed whether the work of Arnosti as a compensation consultant raised any conflict of interest, taking into consideration the following factors:
The provision of other services to the Company;
The amount of fees paid to Arnosti by the Company relative to Arnosti total revenue;
Arnosti’s policies and procedures that are designed to prevent conflicts of interest;
Any business or personal relationship of Arnosti or the individual compensation advisors employed by Arnosti with a member of the Compensation Committee, or with an executive officer of the Company; and
Any Company stock owned by Arnosti or the individual compensation advisors contracted by Arnosti.
Based on the Compensation Committee’s review of this information, it determined the work of Arnosti and the individual compensation advisors contracted by Arnosti as compensation consultant to the Compensation
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Committee, did not create any conflict of interest. The Compensation Committee has the sole authority to direct, terminate or continue Arnosti’s services, although the Company pays the cost for Arnosti’s services.
In 2021, Arnosti provided advice to the Compensation Committee on several different aspects of its responsibilities related to our compensation programs and practices. Specifically, during 2021, Arnosti assisted the Compensation Committee as follows:
Provided recommendations to the Compensation Committee on refining our peer group;
Provided general information concerning executive compensation trends and developments;
Reviewed and analyzed compensation levels of our NEOs in comparison to those of our peer companies;
Provided the Board with a review of competitive data from the peer group on Board compensation; and
Reviewed the Compensation Discussion and Analysis for inclusion in our proxy statement.
2021 Peer Group and Use of Market Data
Our Compensation Committee primarily uses relevant publicly disclosed market data for a general understanding of executive market compensation practices and our positioning within the market, including within our peer group. Our Compensation Committee believes that over-reliance on benchmarking could result in compensation that is unrelated to the value delivered by the NEOs because compensation benchmarking does not take the specific performance of the NEOs, or the performance of the Company in its unique circumstances, into account.
Our Compensation Committee does not have a specific target compensation level for the NEOs or otherwise use a formulaic approach to setting pay at a particular positioning within the market data; rather, the Compensation Committee reviews a range of market data reference points including relevant Radford Global Life Sciences survey data as well as data from the Company’s peer group with respect to total target cash compensation (including both base salary and the annual target performance bonus) and equity compensation (valued based on disclosed grant date fair value and also considered as shares as a percentage of total common shares outstanding) to support its compensation decisions.
For 2021, our Compensation Committee approved a peer group of biotechnology companies at a similar stage of their life-cycle with which we compete for executive talent that were of similar size to the Company in terms of market capitalization (targeting .3x to 3x our own market capitalization, with some exceptions for companies it felt were nonetheless good comparators), product portfolio, pipeline and number of employees. To align with our strategic plan at that time, which included commercialization of HEPLISAV-B in the U.S. and Europe, our peer group included companies that:
Were commercial-stage companies having already filed for an investigational new drug;
Were pure-play vaccine developers; and
Had their own manufacturing operations, where possible.
The change in our peer group from 2020 to 2021 included removing 2 companies for various reasons including market caps that were out of range or because such companies were not yet in, or not very close to, commercial stage. The companies that were removed were Acorda Therapeutics, Inc. and Five Prime Therapeutics, Inc. The following 3 companies were added to the peer group: Aerie Pharmaceuticals, Inc., Corcept Therapeuitcs, Inc. and Zogenix, Inc. As of August 2020, the point at which the Compensation Committee approved the 2021 peer group, the companies in the 2021 peer group had market capitalizations ranging between $73.5 million to $7.1 billion, and the median market capitalization of our peer group was $1.145 billion. At the same point in time, our market capitalization was $1.096 billion. The following table lists our 2021 peer group:
Adamas Pharmaceuticals Inc.
Aerie Pharmaceuticals, Inc.
Akebia Therapeutics, Inc.
AMAG Pharmaceuticals, Inc.
Ardelyx, Inc.
Biocryst Pharmaceuticals, Inc.
ChemoCentryx, Inc.
 
Clovis Oncology, Inc.
Corcept Therapeutics, Inc.
Eagle Pharmaceuticals, Inc.
Heron Therapeutics, Inc.
Immunogen, Inc.
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Karyopharm Therapeutics, Inc.
Macrogenics, Inc.
 
Momenta Pharmaceuticals, Inc.
Novavax, Inc.
Portola Pharmaceuticals, Inc.
Puma Biotechnology, Inc.
Retrophin, Inc.
Rigel Pharmaceuticals, Inc.
Theravance Biopharma, Inc.
Zogenix, Inc.
Elements of Executive Compensation
Our executive team continues to manage a changing and increasingly complex business. We strive to recognize these efforts by compensating our NEOs for the demands and risks associated with our business through three primary elements that are designed to reward performance in a simple and straightforward manner – base salaries, annual performance-based cash incentives and long-term equity incentive awards.
During our annual stockholder outreach in recent years, including in 2021 and in early 2022, our key stockholders did not express any concerns over the elements of our executive compensation program, including our use of a mix of time-based stock options and performance-based RSUs. In 2021, our performance-based RSUs once again included meaningful performance goals that must be met within a designated performance period in order for any vesting or payout to occur. In 2021 we also introduced time-based RSUs as part of our compensation mix. As reflected in the chart below, we continued to utilize performance-based vesting for a portion of our long-term equity incentive awards in 2021.
The table below summarizes the purpose and key characteristics of each of our compensation elements.
Element
Purpose
Key Characteristics
Base Salary
Provides a fixed level of compensation for performing the essential elements of the job; gives executives a degree of certainty in light of having a majority of their total compensation at risk.
Fixed compensation that is reviewed annually and adjusted if and when appropriate; reflects each NEO’s performance, experience, skills, level of responsibility and the breadth, scope and complexity of the position as well as the competitive marketplace for executive talent specific to our industry.
Annual Cash Incentive Program
Motivates executive officers to achieve corporate and, as applicable, individual business goals, which we believe increase stockholder value, while providing flexibility to respond to opportunities and changing market conditions.
Annual cash incentive based on corporate performance, and, as applicable, individual performance compared to pre-established goals. For 2021, each of our Chief Executive Officer’s and President and Chief Operating Officer’s annual incentive was based on corporate goals only.

Corporate goals focus on overarching objectives for the Company which we believe support long-term value, while individual objectives are aligned to corporate objectives and other strategic priorities of the Company.

Corporate goals are aligned with our business strategy and weighted by relative importance so that overall corporate achievement can be objectively measured.
Long-Term Equity Incentive Awards (Stock Options)
Motivates executive officers to achieve our business objectives by tying incentives to the appreciation of our common stock over the long term.
Stock options are granted with an exercise price equal to the fair market value on the date of grant vesting over three years; the ultimate value realized, if any, depends on the appreciation of our common stock price following grant. If our stock price does not
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Element
Purpose
Key Characteristics
 
 
appreciate, there is no value realized. In determining the aggregate size of equity grants in any given year, the Compensation Committee generally considers the same factors described above under “Base Salaries” as well as the criticality of the executive to the long-term achievement of corporate goals.

In 2021, we targeted roughly 50% of our NEO’s annual equity grant value to be time-based options.

From time to time, we may also use special grants of stock options to encourage retention or for other purposes as determined by the Board. No such special stock options were granted to NEOs in 2021.
Long-Term Equity Incentives (RSUs)
Motivates executive officers to achieve our corporate objectives by tying compensation to the performance of our common stock over the long term; provides motivation for our executive officers to remain with the Company by mitigating near-term swings in incentive values during periods when market volatility weighs on our stock price.
Restricted stock unit awards may vest based on continued service over a specified period of time and/or achievement of performance goals; the ultimate value realized varies with our common stock price. During 2021 we granted time-based and performance-based RSUs to NEOs.

In 2021, we targeted roughly 25% of our NEO’s annual equity grant value to be time-based RSUs, and 25% to be performance-based RSU awards. Time-based RSUs generally vest in three annual installments on each anniversary of the grant date and performance-based RSUs generally vest upon the Compensation Committee’s certification of achievement of pre-established performance goals over performance periods as discussed below.

From time to time, we may also use special RSU awards to encourage retention or for other purposes as determined by the Board. No such special RSUs were granted to NEOs in 2021.
Other Compensation
Our executive officers generally participate in the same benefits offered to all other employees, which promote employee health and welfare and assist in attracting and retaining our executive officers.
Indirect compensation element consisting of programs such as medical, vision, dental, life and accidental death, long-term care and disability insurance as well as a 401(k) plan with a Company matching contribution, and other plans and programs made available to all regular full-time employees.

In addition, we provide our executive officers with supplemental long-term
36

Element
Purpose
Key Characteristics
 
 
disability insurance benefits which we believe are reasonable in amount and customary in our industry.
Severance and Change in Control Benefits
Serves our retention objectives by helping our named executive officers maintain continued focus and dedication to their responsibilities to maximize stockholder value, including in the event of a transaction that could result in a change in control of our Company.
Provides protection in the event of a termination of employment under specified circumstances, including following a change in control of our Company as described below under “Potential Payments Upon Change in Control or Involuntary Termination.”
2021 Executive Compensation Decisions
Total Target Cash Compensation – Base Salaries and Target Bonus Percentages
When determining 2021 base salary and target bonus percentage adjustments, the Compensation Committee considered each individual’s performance and criticality, each individual’s industry experience and tenure, internal pay equity, and retention concerns. The Compensation Committee also reviewed a range of market data reference points with respect to total target cash compensation (including both base salary and the annual target performance bonus).
In the early part of 2021, the Compensation Committee (and the Board with respect to Mr. Spencer) evaluated the 2020 compensation of each of our then-serving NEOs and approved base salary increases as shown in the table below and a target bonus increase for Mr. Spencer (increased from 60% to 70% of base salary) and Mr. Novack (increased from 55% to 60% of base salary).
Unless otherwise noted below, the target bonuses and 2021 base salaries were effective as of January 1, 2021.
The Compensation Committee, and the Board, with respect to Mr. Spencer, determined the base salary, target bonus and resulting 2021 total target cash compensation for each NEO in its discretion. In determining NEO total compensation and the components thereof, the Compensation Committee, and in the case of Mr. Spencer, the Board, considers disclosed peer group and survey data; each NEO’s industry experience, expertise, and tenure with the Company; internal pay equity; and the Company’s annual salary budget. The increases in total target cash that the Compensation Committee (and the Board with respect to Mr. Spencer) approved varied in amounts for each NEO, based on individual considerations for each NEO applying the factors listed above and the resulting amounts that the Compensation Committee (and the Board with respect to Mr. Spencer) felt was appropriate in order to provide adequate retentive and incentive value to each NEO. For Mr. Spencer, the Compensation Committee and the Board approved the 23.8% increase in total target cash compensation primarily due to its desire to move his target cash compensation closer to the 25th percentile relative to other CEOs at peer companies. For Ms. MacDonald, the Compensation Committee determined her base salary and target bonus in connection with her commencement of employment with us based on the general factors described above for the other NEOs and the amount it felt necessary and appropriate to serve as an inducement to recruit and retain her in her role as Senior Vice President, Chief Financial Officer.
Name
2021 Base Salary
% Increase
from Prior
Year Salary
2021 Target
Bonus
% Increase from
Prior Year Total
Cash Target
Ryan Spencer
$600,000
16.5%
70%
23.8%
David F. Novack
$519,750
5%
60%
8.4%
Kelly MacDonald
$375,000
0%(1)
50%
0%(1)
Michael S. Ostrach
$478,330(2)
3%
50%
3.0%
Robert Janssen, M.D.
$480,938
3%
50%
3.0%
(1)
Ms. MacDonald joined the Company during 2021; Ms. MacDonald’s 2021 base salary and 2021 target bonus were determined in connection with her hire and effective for the portion of 2021 during which she was employed with us.
(2)
Mr. Ostrach retired from the Company on April 1, 2021 and as a result, ceased receiving 2021 base salary payments as of his retirement, and was not eligible for, and did not receive, an annual incentive award pursuant to our annual cash incentive plan for 2021. Mr. Ostrach’s retirement benefits are discussed further in the section entitled “Involuntary Termination” below.
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2021 Annual Cash Incentive – Structure, Goals and Payout Decision
Structure. Neither Mr. Spencer nor Mr. Novack carried individual goals separate from the Company’s corporate objectives for 2021. We believe that this aligned their incentive compensation fully with the completion of corporate goals that measure business performance and are intended to drive long term stockholder value. For our other NEOs, their annual cash incentive payout is typically based on the achievement of pre-established corporate and individual goals. Our Chief Executive Officer typically recommends individual goals for each of the other NEOs, which are aligned with our business strategy and linked with corporate goals, and our Compensation Committee approves these goals. The individual goals for the NEOs are in addition to the general responsibilities each officer has for managing his or her respective functional or operational area. In early 2021, the Compensation Committee established corporate and, for NEOs other than Messrs. Spencer and Novack, individual goals to align NEO annual cash incentive compensation with respective performance toward these goals. For 2021, Ms. MacDonald’s and Dr. Janssen’s respective annual cash incentive opportunity was based on a weighting of 80% corporate and 20% individual goals. Due to Mr. Ostrach’s retirement in April 2021, he was not eligible for incentive pay for 2021.
Our corporate goal set included base goals and stretch goals. Base goals in the aggregate were set to be appropriately difficult to require substantial effort during the year to help create long-term value and to advance our business in the best interests of stockholders. The base goals were designed to represent, if fully achieved, what would be in our view a very successful year for the Company. We also provided stretch goals as an additional incentive for over-achievement. The stretch goals, if achieved, were intended to provide additive amounts to increase the total bonus opportunity to beyond the base target of 100% to appropriately reward value creation beyond our base target set. The base goals and the stretch goals were all set at the same time, in early 2021. The maximum possible payout was subject to a cap of 175% of each individual’s target bonus, pursuant to the terms of our bonus plan. Importantly, we did not make any adjustments to our goals during 2021, due to complications arising from the COVID-19 pandemic, or otherwise. All goals, stretch goals included, were set at the same time and were tied to specific performance metrics. No purely discretionary bonuses or accelerators were provided as part of the 2021 bonus program.
Because we are a fully-integrated biopharmaceutical company with a marketed product and ongoing vaccine development program, our corporate goals were directly aligned with specific strategic objectives with an eye toward matters that management could influence or control. We believe that our focus on these goals, and our respective performance in pursuing them, properly aligned management’s interests with those of our shareholders and helped to increase shareholder value.
In February 2022, the Compensation Committee evaluated the accomplishments and performance of the Company against these pre-established corporate goals. With respect to each of the categories of corporate goals below, the Compensation Committee took into consideration each of the goals identified and the level of completion in making an overall determination of goal achievement for each category.
2021 Corporate Goals and Achievements. For 2021, our corporate strategy focused on three key pillars: (i) continued commercialization and market share expansion to drive growth for HEPLISAV-B in the U.S., (ii) advancing our CpG 1018 adjuvant supply strategy for COVID-19 vaccines and (iii) building an innovative clinical pipeline leveraging our proven adjuvant technology. Accordingly, our corporate goals were designed to further build on these three pillars of our strategy, and to strengthen our overall financial position. After its consideration of the Company’s performance, as more specifically described in the following chart, the Compensation Committee rated our overall 2021 corporate achievement at 140%.
Corporate Goal
Weight*
Corporate Achievement
Corporate Achievement Percentage
Overall Weighted Achievement
Advance HEPLISAV-B Sales

• Achieve $60-65 million in HEPLISAV-B full-year net
sales (25%).
• Achieve 35% market share in field targeted accounts, or those customers that we
40%
The Compensation Committee determined that we achieved the goals in this category at an overall percentage of 96%. In determining this percentage, the Compensation Committee considered several factors,
including:
96%
38%
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Corporate Goal
Weight*
Corporate Achievement
Corporate Achievement Percentage
Overall Weighted Achievement
believe represent, in the aggregate, approximately 60% of hepatitis B vaccine doses administered in the U.S. (15%).
 
• HEPLISAV-B net sales of $62 million (a 72% increase over prior year) despite overall reduced vaccine utilization compared to pre-pandemic levels.
• 34% field targeted market share achieved, representing considerable growth versus 26% in 2020, despite COVID headwinds.
 
 
Ensure long-term growth of HEPLISAV-B sales in the U.S.
• Stay on track to achieve policy goals for 2021 – ACIP universal recommendation (10%).
Stretch:preferential language included as part of universal recommendation (+10%).
• Work to create further future growth opportunities by way of a beneficial recommendation from the ACIP and/or filing a Dialysis sBLA. Meet with FDA regarding Dialysis sBLA, close out HBV-24 activities, prepare CSR in 2021 (10%)
Stretch: File dialysis sBLA in 2021 based on negotiations with FDA to accept preliminary safety data in initial filing. sBLA means the supplemental biologics license application to be submitted to the FDA to permit the licensure to manufacture a product using the given manufacturing process. (+5%)
20%
The Compensation Committee determined that we achieved the goal in this category at an overall percentage of 75%. In determining this percentage, the Compensation Committee considered several factors, including:
• ACIP universal recommendation was fully achieved, albeit without preferential language.
• Dialysis goal was credited 50% for progress made.
75%
15%
Drive Long-Term Growth of Our Vaccine Business
• Complete Adjuvanted Tdap
Phase 1 last patient out in
30%
The Compensation Committee determined that we achieved the goal in this category at an overall
percentage of 108%. In
108%
32%
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Corporate Goal
Weight*
Corporate Achievement
Corporate Achievement Percentage
Overall Weighted Achievement
2021 and initiate challenge study (10%)
• Formally advance a new vaccine development candidate (5%)
Stretch: Advance or acquire a vaccine product candidate that will be phase 2 ready in 2022
(+5%)
Stretch: Acquire a phase 3 program or an approved vaccine (+10%)
• CpG 1018 adjuvant to be included in at least one commercially available COVID-19 vaccine (10%).
Stretch: CpG 1018 adjuvant included in a second commercially available vaccine (+5%):
• Execute HEPLISAV-B commercial collaboration in Europe; out-license in additional territory (5%).
 
determining this percentage, the Compensation Committee considered several factors, including
• Tdap Phase 1 progressed, but last patient out was delayed to first quarter 2022 due to COVID impact on enrollment; challenge study was initiated.
• Shingles program was advanced for clinical development and the first stretch goal was achieved with plague program contract, expected to begin Phase 2 trials during 2022.
• Credited 150% for including CpG 1018 adjuvant in two commercially available vaccines produced by Medigen and Bio E.
• HEPLISAV-B goal credited 50% for completing Bavarian Nordic agreement for Europe, but no second territory covered.
 
 
Strengthen our financial position and organization
• End 2021 with specified cash and equivalents based on approved plan (5%).
• Increase organizational strength and capabilities through the completion of succession plans for Sr. Director level and above, and create individual development plans for all people leaders (5%).
• Stretch: Refinance or replace outstanding term loan debt on favorable terms. (+5%)
• Super Stretch Goal: Generate total revenue of more than $300 million in 2021 (+25%).
10%
The Compensation Committee determined that we achieved the goal in this category at an overall percentage of 137%. In determining this percentage, the Compensation Committee considered several factors, including:
• Cash and equivalents exceeded the goal significantly.
• Refinanced term loan debt favorably.
• Total revenue of $439 million far exceeded goal of $300 million.
• Significantly strengthened technical, clinical and administrative functions through key hires.
• Succession plans developed to provide retention with clear career paths.
137%
14%
40

Corporate Goal
Weight*
Corporate Achievement
Corporate Achievement Percentage
Overall Weighted Achievement
Additive Stretch Goals Achieved and Credited
• Plague Program (+5%)
• Revenue Achievement of $427 million (+25%)
 
The Compensation Committee determined that achievement of the pre-determined stretch goals (i) for the contract for the plague program would add 5% above the base target and (ii) the revenue achievement well in excess of the pre-set revenue goal would add 36% above the base target.
 
+41%
Total
100%
 
 
140%
*
percentages in this column represent target base goals, and do not include amounts attributable to stretch goals.
2021 Individual Goals. As described above, Messrs. Spencer and Novack did not have individual goals, and their respective incentive compensation was based solely on achievement of our corporate goals.
At the beginning of each year, our Chief Executive Officer typically recommends individual goals for each the remaining NEOs, which are aligned with our business strategy and linked to corporate goals, and our Compensation Committee approves these goals. The individual goals for our NEOs include critical responsibilities that each NEO has that go beyond the corporate goals and are significant to our success. Established in May 2021, the 2021 individual goals for the NEOs named below focused on objectives linked to their functional expertise and responsibility as well as our then-current business strategy. These specific goals were in addition to the general responsibilities each NEO had for managing his or her respective functional operational area, including through the period of significant change as we continued to adapt to the pandemic, engaging a nearly fully-remote workforce and scaling our business to help support COVID-19 pandemic-level adjuvant supply. As mentioned, due to Mr. Ostrach’s retirement in April 2021, he was not eligible for incentive compensation for 2021, so there are no individual goals reported for him below.
While individual goals and performance results relate to advancing our corporate goals and business strategy, the Compensation Committee structures individual goals to be targeted to each applicable NEO’s expertise and responsibility and evaluates achievement based on each applicable NEO’s individual efforts and performance results. Thus, as is the case with respect to the 2021 goals, there will be circumstances where the individual goal achievement may exceed corporate goal achievement, and there will be instances where the corporate goal achievement may surpass the individual goal grading. In February 2022, based on the recommendation of Mr. Spencer, as well as the observations by Compensation Committee members of these officers and its own assessment of each NEO’s effectiveness, the Compensation Committee determined the level of achievement of each NEO’s 2021 individual goals as follows:
Name
Individual Goals
Individual Achievement
Individual Achievement Percentage
Kelly MacDonald
Deliver cash and financial metrics set forth in Board-approved Operating Plan, ensuring adherence to all SEC and Sarbanes-Oxley Act (“SOX”) compliance requirements (20%):
• End 2021 with at least 24 months cash based on approved plan
• External Reporting: Prepare high-quality SEC filings without significant deficiencies or material weakness
• ERM: Establish Enterprise Risk Management program in the second half of 2021
• SOX: Prioritize process simplification to
decrease financial close cycle time from
Met all goals, and exceeded goals for the year, as follows:
• Exceeded all aspects of her goal to deliver cash and financial metrics set forth in the Board-approved Operating Plan, ensuring adherence to all SEC and SOX compliance requirements
• Filings produced timely with no reported
deficiencies
150%
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Name
Individual Goals
Individual Achievement
Individual Achievement Percentage
 
10 to 7 (or fewer) days
• Tax Strategy: Prepare roadmap and tax strategy to protect net operation losses and research and development credits, complete 382 assessment
Tax and Financial Health (20%):
• Close process reduced by 3 days, allowing greater time for review
• Improved tax strategy and enhanced tax function
 
 
• Establish, ex-US tax considerations in connection with the transition to profitability and increased ex-US-related economics.
• Complete a structured review of available options to strengthen balance sheet, improve cost of capital and make recommendations to the Board or committee thereof in first half of 2021
Improve our financial performance monitoring capabilities at the enterprise leadership level and support decision-making (20%):
• Establish quarterly reporting to management focusing on risks/opportunities and tracking vs. Operating Plan and forecast
• Report risks/opportunities vs Operating Plan to Audit Committee quarterly
• Improve enterprise-wide financial acumen through cost center budget reporting, long-range plan process and routine finance business partner meetings
Serve as enterprise leader; support strategic framework to drive long term value (20%):
• Prepare and present valuation modeling, develop a disciplined approach to capital allocation, investing in opportunities to grow the business through organic and, as applicable, inorganic investment opportunities to drive long-term value and support return on investment analysis on HEPLISAV-B marketing mix and salesforce investment (with advisor)
• Increase organizational strength within finance (20%):
• Develop integrated talent and capability plans for our finance team.
• Actively support equality, diversity, inclusion initiatives, in collaboration with human resources business partners.
• Strengthen interpersonal collaboration and connectivity for team, especially while we remain a disparate workforce
• Successful debt refinancing and expansion of banking relationships and enhanced analyst coverage of our stock
• Substantial contribution to efforts centered around diversity, equity and inclusion
 
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Name
Individual Goals
Individual Achievement
Individual Achievement Percentage
Robert Janssen, M.D.
Ensure long-term growth of HEPLISAV-B (50%)
• Support policy plan to facilitate ACIP decision-making for universal adult hepatitis-B vaccination
• Medical affairs engagement to ensure HEPLISAV-B is appropriately represented by key opinion leaders and in government and society guidelines to support continued product expansion
• Update CDC Pink sheets to include 2 dose adult hepatitis B schedule
• Update the hepatitis B guidelines for the National Kidney Foundation and American Diabetes Association to include 2 dose regimen
• Implement a defined plan for key opinion leader and society goals, activities, and measurement
• Develop optimal dialysis US regulatory filing strategy and prepare sBLA for filing by February 2022
Drive the long-term growth of our vaccine business (30%)
• Complete Tdap-1018 Phase 1 study with last patient out in 2021
• Develop human challenge for TdaP-1018 vaccine for initiation of a clinical trial in Q4 2021/Q1 2022 in acellular pertussis primed adults
• Determine regulatory pathway through meeting with regulators to enable phase 1 clinical trial initiation in Q4 2021 for Zoster-1018 vaccine
• Identify options to address combo hepatitis A/B competition through new product development or clinical data with monovalent hepatitis A
Strengthen organization (20%)
• Hire open leadership positions and grow function to support new clinical trials
• Implement a Relationship Management tool for Medical Affairs to provide measurement of activities and institutional knowledge of contacts and interactions
• Evaluate needs in Drug Safety to meet increasing reporting responsibilities with EU launch and global COVID-19 vaccine trials
• Provide oversight to Regulatory Affairs to ensure optimal regulatory strategies and on time filings.
Met all goals, and exceeded goals for the year, as follows:
• Long-term growth of HEPLISAV-B substantially supported through efforts to facilitate and obtain ACIP universal recommendation for hepatitis B vaccines
• Strengthened management and Medical Affairs teams by hiring a seasoned VP of Medical Affairs
• Successfully implemented a new relationship management tool
• Ensured Drug Safety team was able to successfully meet an increased workload
125%
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After making these determinations regarding levels of corporate and individual performance achieved against the pre-established performance goals, the Compensation Committee (and the Board with respect to Mr. Spencer) reviewed and approved the annual cash incentive payouts noted below. As noted above, for the NEOs other than Messrs. Spencer and Novack, the cash incentive payouts were based 80% on achievement of corporate goals and 20% on individual performance.
2021 Actual Annual Cash Incentive Paid
2021 Target Annual Cash Incentive
Achievement of Corporate Goals
Achievement of Individual Goals
Total(1)
Name
% of Base
Salary
$(1)
% of Target
Annual Cash
Incentive
$(1)
% of Target
Annual Cash
Incentive
$(1)
Ryan Spencer(2)
70%
$420,000
140 %
588,000
NA
NA
$588,000
David F. Novack(2)
60%
$311,850
140 %
436,590
NA
NA
$436,590
Kelly MacDonald (3)
50%
$156,250
140%
175,000
150%
$46,875
$221,875
Michael S. Ostrach(4)
50%
$239,165
NA
NA
NA
NA
NA
Robert Janssen, M.D.
50%
$240,469
140%
$269,325
125%
$60,177
$329,443
(1)
Amounts are rounded to nearest dollar.
(2)
Messrs. Spencer and Novack did not have separate individual goals, only corporate goals.
(3)
Ms. MacDonald’s bonus was prorated from her start date of March 1, 2022. The amounts in the table above for target annual incentive and actual annual incentive paid reflect pro-ration for the portion of the year in which Ms. MacDonald was employed with us.
(4)
Due to his retirement in April 2021, Mr. Ostrach was not eligible for, and did not receive, an annual incentive award. Mr. Ostrach’s retirement benefits are discussed further in the section entitled “Involuntary Termination” below.
Long-Term Equity Incentive Awards
In making annual long-term equity incentive awards to our NEOs in early 2021, the Compensation Committee considered each NEO’s total equity outstanding as of December 31, 2020, performance during 2020 where applicable, the potential amount that could be realized at different hypothetical stock prices upon exercise of those awards and each NEO’s percentage of ownership of the Company. The Compensation Committee also reviewed market and peer group data reference points with respect to an approximation of grant date fair value and shares as a percentage of total common shares outstanding. Additionally, the Compensation Committee considered the mix of stock options and RSUs granted in 2020. The Compensation Committee made final determinations based on its judgment in accordance with our pay-for-performance philosophy and the need to retain and motivate these highly experienced and essential members of our management team.
For 2021, the Compensation Committee (and the Board with respect to Mr. Spencer) determined to grant each NEO’s annual long-term incentive compensation with a mix of stock options and RSUs. Specifically, in February 2021, the Compensation Committee approved annual equity grants for the NEOs in the form of time-based stock options and time-based and performance-based RSUs, with stock options representing 50% of the aggregate target award value, time-based RSUs representing 25% of the aggregate target award value and performance-based RSUs representing the remaining 25% of the aggregate target award value. This particular mix was chosen, and time-based RSUs were added to the mix in 2021, in order to provide appropriate retention incentives and the opportunity for our NEOs to realize value directly in line with our stock price, particularly in light of historic volatility in our stock price.
The time-based stock options granted in 2021 vest over three years, with one-third of the shares vesting on each anniversary of the grant date and the remainder vesting in equal monthly installments thereafter, subject to the NEO’s continuous service with us through the vesting date. The time-based RSUs granted in 2021 vest over three years, with one-third of the shares vesting on each anniversary of the grant date.
The performance-based RSUs granted in 2021 would vest solely upon the Compensation Committee’s certification that our:
weighted average share price was in excess of $10.00 per share for a 90-day period prior to the end of 2023.
When this goal was initially formulated, our stock had traded substantially lower than $10.00 per share for the most of the trailing 18 months with significant volatility. The Compensation Committee determined that this goal was appropriately difficult to achieve in the prescribed performance period and required the NEOs to stretch well beyond the Company’s natural trajectory to achieve them. Particularly, the goal represented (i) a 116%
44

increase in value of our stock relative to the closing price of $4.62 per share on the first trading day of 2021, (ii) a 95% increase in value of our stock relative to the closing price of $5.12 on January 20, 2021 when the goal was first proposed to the Committee, and (iii) a 58% increase in value of our stock relative to the closing price of $6.31 on January 29, 2021 when the goal was submitted to the Compensation Committee for final approval. Moreover, the Compensation Committee believed that the 90-day period to maintain the target price was significant in light of the historic performance and volatility in our stock price, would not reward anomalous or unsustained spikes in our share price and would only reward sustained value creation. No performance-based RSUs would vest if the performance goal was not achieved, and no more than 100% of performance-based RSUs would be eligible to vest, even upon achievement in excess of the performance goal. Our 2018 EIP provides that all grants are subject to twelve months minimum vesting, therefore even if the performance goal was achieved sooner, the grant could not vest for at least one year from grant.
The table below describes the stock options and RSUs granted to our NEOs in fiscal year 2021. Our Compensation Committee used its subjective judgement to determine the size of awards it believed were appropriate for each named executive officer, weighing the factors described above and in particular, the peer group data, each NEO’s current equity holdings, including the significant amount of deeply underwater options held by our NEOs , and its desire to provide strong retentive value. Each of the 2021 equity awards listed below were granted in February 2021, except as otherwise noted.
Name
Time-Based Stock
Option Awards
(# of shares)
Time-Based RSU
Awards
(# of shares)
Performance-Based
RSU Awards
(# of shares)
Ryan Spencer
250,000
89,250
89,250
David F. Novack
150,000
52,500
52,500
Kelly MacDonald(1)
350,000
Michael S. Ostrach
85,000
30,000
30,000
Robert Janssen, M.D.
85,000
30,000
30,000
(1)
Reflects Ms. MacDonald’s new hire grant. The Compensation Committee determined the size and form of Ms. MacDonald’s new hire grant as part of the negotiations pertaining to her commencement of employment and based on the amount and form the Compensation Committee felt was necessary and appropriate to serve as an initial inducement to recruit and retain Ms. MacDonald, after considering peer market data, internal equity among the executive team and her total compensation opportunity.
Other Executive Compensation Matters
Equity Compensation Policies
Our Compensation Committee approves equity awards for NEOs and authorizes the Chief Executive Officer to approve equity awards for all other employees based on approved pools for annual and new hire grants. Awards for senior vice president and above are approved either at a regularly-scheduled meeting of the Compensation Committee or by unanimous written consent. The effective date of the grant is generally the date of the meeting, or the date the last person executes the unanimous written consent.
The exercise price of stock options is not less than the closing price of our common stock on the Nasdaq Capital Market on the grant date of the stock option. We have no practice of timing grants of stock options or restricted stock awards to coordinate with the release of material non-public information, and we have not timed the release of material non-public information for purposes of affecting the value of the compensation awarded to our NEOs or any other employee.
We encourage our NEOs to hold a significant equity interest in our Company, but we have not set specific stock ownership guidelines.
Compensation Recovery Policy
Amounts paid and awards granted under our equity plans will be subject to recoupment in accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act and any applicable regulations under the Securities Act of 1933, as amended (the “Securities Act”), any clawback policy the Company adopts or as is required by applicable law. In addition, as a public company subject to the provisions of Section 304 of the Sarbanes-Oxley Act of 2002, if we are required as a result of misconduct to restate our financial results due to our material noncompliance with any financial reporting requirements under the federal securities laws, our chief executive officer and chief financial officer may be legally required to reimburse us for any bonus or other
45

incentive-based or equity-based compensation they receive. In addition, we will comply with the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act once the SEC final regulations on the subject become effective.
New Hire Compensation
In connection with Ms. MacDonald’s commencement of employment with us in March 2021, pursuant to her offer letter with us, she received an initial base salary, target bonus and new hire stock option award, a $15,000 sign-on bonus and certain relocation benefits to assist her in moving from Boston to our Company headquarters in the San Francisco Bay Area, including a tax gross up of $865 to alleviate additional costs Ms. MacDonald incurred as a result of our requiring her relocation. The gross up on the relocation benefit was deemed appropriate in this instance because the benefit was modest and it made Ms. MacDonald whole for her out of pocket expenses associated with relocating cross-country. Both of Ms. MacDonald’s sign-on bonus and relocation benefits are repayable to us if Ms. MacDonald voluntarily terminates her employment with us within 12 months of her start date. Ms. MacDonald also became eligible for potential severance benefits pursuant to a Management Agreement on the same terms as our NEOs other than Messrs. Spencer and Novack. The Compensation Committee determined the new hire compensation for Ms. MacDonald, in its discretion, as part of the negotiations pertaining to her recruitment and commencement of employment. The Compensation Committee felt the sign-on bonus and relocation benefits were necessary to recruit and retain Ms. MacDonald and reasonable in light of peer market data, internal equity among the executive team and her total compensation opportunity.
Severance Payouts to Departing NEOs
In September 2020, Mr. Ostrach informed the Company of his planned future retirement, and he and the Company entered into an amendment and restatement of his Management Continuity and Separation Agreement (the “Restated Management Agreement”). The Restated Management Agreement provided certain benefits if Mr. Ostrach did not retire before March 31, 2021, because the Compensation Committee felt it was critical to retain Mr. Ostrach for an extended period to help identify his successor and assist with transition of his responsibilities. Effective April 1, 2021, Mr. Ostrach retired from Dynavax. Mr. Ostrach received the severance pay and benefits upon such retirement that he was entitled to pursuant to his Restated Management Agreement with the Company, as discussed further in the section entitled “Involuntary Termination” below. Following his retirement, Mr. Ostrach provided certain consulting services to us to further assist with the transition of his responsibilities, and to advise on intellectual property and other matters. His consulting agreement provides for an hourly rate of $500 per hour, and under the terms of the agreement he was expected to provide no more than 40 hours of service per month.
Tax and Accounting Implications
Accounting for Stock-Based Compensation
Under Financial Accounting Standard Board ASC Topic 718 (“ASC 718”), we are required to estimate and record an expense for each award of equity compensation over the vesting period of the award. We record share-based compensation expense on an ongoing basis according to ASC 718. The accounting impact of our compensation programs is one of many factors that the Compensation Committee considers in determining the structure and size of our executive compensation programs.
Deductibility of Executive Compensation
Under Section 162(m), compensation paid to each of the Company’s “covered employees” that exceeds $1 million per taxable year is generally non-deductible unless the compensation qualifies for (i) certain grandfathered exceptions (including the “performance-based compensation” exception) for certain compensation paid pursuant to a written binding contract in effect on November 2, 2017 and not materially modified on or after such date or (ii) the reliance period exception for certain compensation paid by corporations that became publicly held on or before December 20, 2019.
Although the Compensation Committee will continue to consider tax implications as one factor in determining executive compensation, the Compensation Committee also looks at other factors in making its decisions and retains the flexibility to provide compensation for the Company’s named executive officers in a manner consistent with the goals of the Company’s executive compensation program and the best interests of the
46

Company and its stockholders, which may include providing for compensation that is not deductible by the Company due to the deduction limit under Section 162(m). The Compensation Committee also retains the flexibility to modify compensation that was initially intended to be exempt from the deduction limit under Section 162(m) if it determines that such modifications are consistent with the Company’s business needs.
Compensation Risk Analysis
During fiscal 2021, our Compensation Committee reviewed our compensation policies as generally applicable to our employees in order to determine whether any such programs were likely to present a material risk to the Company. As part of its assessment, the Compensation Committee considered, among other things, the allocation of compensation among base salary and short- and long-term compensation, our approach to establishing Company-wide and individual financial, operational and other performance targets, and the nature of our key performance metrics. As a result of this review and analysis, the Compensation Committee determined that our policies and programs do not encourage excessive or inappropriate risk taking, and that the level of risk that they do encourage is not reasonably likely to have a material adverse effect on the Company.
Compensation Committee Report
In early 2022, the Compensation Committee discussed with management the Compensation Discussion and Analysis, contained in this proxy statement. Based on this review and discussion, the Compensation Committee has recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement and incorporated into our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
The material in this report is not “soliciting material,” is furnished to, but not deemed “filed” with, the SEC and is not deemed to be incorporated by reference in any filing of the Company under the Securities Act or the Exchange Act, other than the Company’s Annual Report on Form 10-K, where it shall be deemed to be “furnished,” whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
Ms. Peggy V. Phillips, Chairperson
Mr. Natale Ricciardi
Dr. Daniel Kisner, M.D.
47

SUMMARY COMPENSATION TABLE
The following table sets forth all of the compensation awarded to, or earned by, our NEOs during the fiscal years ended December 31, 2021, 2020 and 2019.
Name and Principal Position
Year
Salary
Bonus
Stock Awards(1)
Option
Awards(2)
Non-Equity
Incentive
Compensation(3)
All Other
Compensation(4)
Total
Ryan Spencer
Chief Executive
Officer and Director
2021
$600,000
$1,605,608
$1,720,450
$588,000
$5,431(11)
$4,519,489
2020
$515,000
$206,451
$455,338
$342,990
$2,000
$1,521,779
2019
$391,212
$654,375
$1,957,520
$152,375
$2,000
$3,157,482
David F. Novack
President and Chief Operating Officer
2021
$519,750
$935,025
$1,013,100
$436,590
$13,635(12)
$2,918,100
2020
$495,000
$189,700
$523,742
$302,198
$2,000
$1,512,640
2019
$465,886
$272,220
$1,701,362
$229,382
$2,000
$2,670,850
Kelly MacDonald(5)
Senior Vice President and Chief Financial Officer
2021
$312,500
$15,000(9)
$
$2,250,920
$221,875
$4,042(10)
$2,804,337
Michael S. Ostrach(6)
Former Senior Vice President, Chief Financial Officer and Chief Business Officer
2021
$77,626
$534,300
$731,762(8)
$
$650,711(7)
$1,994,399
2020
$464,398
$135,500
$381,896
$254,955
$2,000
$1,238,749
2019
$450,872
$230,340
$611,433
$209,665
$2,000
$1,504,310
Robert Janssen, M.D.
Senior Vice President and Chief Medical Officer
2021
$480,938
$534,300
$574,090
$329,443
$6,793(13)
$1,925,564
2020
$466,930
$135,500
$381,896
$256,345
$2,000
$1,242,671
2019
$453,330
$272,220
$722,602
$210,798
$2,000
$1,660,950
(1)
Represents the aggregate grant date fair value of RSUs granted in the fiscal year in accordance with ASC 718. See note 15 of our “Notes to Consolidated Financial Statements” in our Annual Report on Form 10-K filed with the SEC on February 28, 2022 for a discussion of assumptions we made in determining the compensation costs included in this column. With regard to awards with performance-based vesting, the grant date fair value assumes the highest level of achievement had been met. For further discussion of these performance-based RSUs, see the section entitled “Compensation Discussion and Analysis – 2021 Executive Compensation Decisions – Long-Term Equity Incentive Awards.”
(2)
Represents the aggregate grant date fair value of option awards granted in the fiscal year in accordance with ASC 718. See note 15 of our “Notes to Consolidated Financial Statements” in our Annual Report on Form 10-K filed with the SEC on February 28, 2022 for a discussion of assumptions we made in determining the compensation costs included in this column.
(3)
Represents the annual cash incentive bonuses earned pursuant to our annual cash incentive bonus plan for services rendered in the fiscal year. For further discussion see the section entitled “Compensation Discussion and Analysis – 2021 Executive Compensation Decisions – 2021 Annual Incentive Program – Structure, Goals and Payout Decision.”
(4)
Unless otherwise stated, represents $2,000 401(k) matching contribution for each NEO made by the Company in the fiscal year.
(5)
Ms. MacDonald was appointed as our Senior Vice President and Chief Financial Officer on January 19, 2021, effective upon her start date of March 1, 2021.
(6)
Mr. Ostrach retired as our Senior Vice President, Chief Financial Officer and Chief Business Officer, effective April 1, 2021. Following his retirement, he has continued to provide certain services as a strategic adviser/independent consultant.
(7)
Represents (i) payments under the Restated Management Agreement of $478,330 in accrued severance payments, representing 12 months of base salary and $72,501 of COBRA premiums, (ii) $2,000 in 401(k) matching contribution made by the Company in the fiscal year (iii) $96,631 in consulting fees paid for services as a strategic adviser/independent consultant following Mr. Ostrach’s retirement and (iv) $1,248 of premiums for supplemental long-term disability insurance that is provided to certain members of our management.
(8)
Includes $157,672 of incremental fair value, computed in accordance with ASC 718, in connection with the modification of equity awards granted to Mr. Ostrach which provided for an additional six months of vesting on all time-based stock options outstanding at the time of Mr. Ostrach’s retirement; and an extension of exercise period for stock options upon the earlier of (i) the date on which the original term of such stock options would otherwise expire and (ii) 12 months following the date of Mr. Ostrach’s retirement
(9)
Represents a sign-on bonus paid in connection with Ms. MacDonald’s recruitment.
(10)
Includes $1,929 of relocation reimbursement and $865 of relocation tax gross-up impact, as well as, $1,248 of premiums for supplemental long-term disability insurance that is provided to certain members of our management.
(11)
Includes (i) $2,000 in 401(k) matching contribution made by the Company in the fiscal year and (ii) $11,635 of premiums for supplemental long-term disability insurance that is provided to certain members of our management.
(12)
Includes (i) $2,000 in 401(k) matching contribution made by the Company in the fiscal year and (ii) $3,431 of premiums for supplemental long-term disability insurance that is provided to certain members of our management.
(13)
Includes (i) $2,000 in 401(k) matching contribution made by the Company in the fiscal year and (ii) $4,793 of premiums for supplemental long-term disability insurance that is provided to certain members of our management.
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GRANTS OF PLAN BASED AWARDS
The following table shows certain information regarding grants of plan-based awards to our NEOs during the fiscal year ended December 31, 2021.
Name
Grant Date
Date of Board
or
Compensation
Committee
Action to
Grant Award
Estimated
Future
Payouts
Under
Non-Equity
Incentive
Plan
Awards
Target(1)
($)
Estimated
Future
Payouts
Under
Non-Equity
Incentive
Plan
Awards
Max
($)
Estimated
Future
Payouts
Under
Equity
Incentive
Plan
Awards
Target(2)
(#)
All Other
Stock
Awards:
Number of
Shares of
Stock
or Units
(#)
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)
Exercise
or Base
Price of
Option
Awards
($/Share)
Grant Date
Fair Value
of RSU and
Option
Awards(3) ($)
Ryan Spencer
$420,000
$735,000
2/4/2021
2/4/2021
250,000
$9.59
$1,720,450
2/4/2021
2/4/2021
89,250
$749,700
2/4/2021
2/4/2021
89,250
$855,908
David F. Novack
$311,850
$545,738
2/3/2021
2/3/2021
150,000
$9.41
$1,013,100
2/3/2021
2/3/2021
52,500
$441,000
2/3/2021
2/3/2021
52,500
$494,025
Kelly MacDonald
$156,250
$273,438
3/1/2021
3/1/2021
350,000
$8.90
$2,250,920
Michael S. Ostrach
$239,165
$418,539
2/3/2021
2/3/2021
85,000
$9.41
$574,090
2/3/2021
2/3/2021
30,000
$252,000
2/3/2021
2/3/2021
30,000
$282,300
4/1/2021(5)
4/1/2021(5)
14,666
$10.47
$98,101(4)
4/1/2021(6)
4/1/2021(6)
17,500
$5.42
$59,571(4)
Robert Janssen, M.D.
$240,469
$420,821
2/3/2021
2/3/2021
85,000
$9.41
$574,090
2/3/2021
2/3/2021
30,000
$252,000
2/3/2021
2/3/2021
30,000
$282,300
(1)
Represents the target and maximum level of cash incentive award in fiscal year 2021 as further described under “Compensation Discussion and Analysis – Elements of Executive Compensation”; our annual cash incentive program does not specify a minimum level..
(2)
Represents the number of PSUs granted in the fiscal year that are subject to performance-based vesting, as described in the “Compensation Discussion and Analysis.”
(3)
Represents the aggregate grant date fair value of awards granted in fiscal year 2021 in accordance with ASC 718. See Note 15 of our “Notes to Consolidated Financial Statements” in our Annual Report on Form 10-K filed with the SEC on February 28, 2022 for a discussion of the assumptions we made in determining the compensation costs included in this column. With regard to awards with performance-based vesting, the grant date fair value assumes the highest level of achievement had been met, as reported in the “Summary Compensation Table.” For further discussion of these performance-based RSUs, see the section entitled “Compensation Discussion and Analysis – 2021 Executive Compensation Decisions – Long-Term Equity Incentive Awards.”
(4)
Represents incremental fair value, computed in accordance with ASC 718, in connection with the modification of equity awards granted to Mr. Ostrach which provided for an additional six months of vesting on all time-based stock options outstanding at the time of Mr. Ostrach’s retirement; and an extension of exercise period for stock options upon the earlier of (i) the date on which the original term of such stock options would otherwise expire and (ii) 12 months following the date of Mr. Ostrach’s retirement.
(5)
Represents the modification date of option awards previously granted on February 22, 2019.
(6)
Represents the modification date of option awards previously granted on February 12, 2020.
NARRATIVE DISCLOSURE TO SUMMARY COMPENSATION TABLE AND GRANTS OF PLAN BASED AWARDS TABLE
The material terms of NEO annual compensation and the explanations of the amounts of base salary, annual cash-based incentives, and equity-based awards in proportion to total compensation are described under “Compensation Discussion and Analysis” in this proxy statement. Our severance and change in control benefits are described under “Summary of Change in Control and Involuntary Termination Arrangements” in this proxy statement.
As discussed in the “Compensation Discussion and Analysis,” the fiscal year 2021 cash incentive amounts were paid pursuant to the annual cash incentive compensation program, based on the achievement of certain
49

corporate and individual goals. Equity-based awards represent a mix of time-based options and time-based and performance-based RSUs, as described in the “Compensation Discussion and Analysis” and were granted in 2021 under our 2018 Plan, and in the case of Ms. MacDonald, the 2021 Inducement Plan. The terms of awards granted under the 2021 Inducement Plan are substantially similar to those of the 2018 Plan, including the treatment of awards upon termination of service and upon a change in control transaction.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
The following table shows certain information regarding outstanding equity awards for NEOs as of December 31, 2021.
Option Awards
Stock Awards
Name
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
Option
Exercise
Price
($)
Vesting
Commencement
Date
Option
Expiration
Date
Number of
Shares or
Units that
Have Not
Vested (#)
Market
Value
of Stock
that
Have Not
Vested ($)(1)
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares or
Other
Rights
that Have
Not
Vested (#)
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares or
Other
Rights
that Have
Not
Vested ($)
Ryan Spencer
 
4,500
$36.80
2/1/2012
1/31/2022
 
 
2,000
$42.60
10/22/2012
10/21/2022
 
 
5,250
$30.60
2/6/2013
2/5/2023
 
 
3,500
$16.70
2/6/2014
2/5/2024
 
 
9,500
$16.00
2/9/2015
2/8/2025
 
 
2,000
$30.49
9/10/2015
9/9/2025
 
 
56,000
$16.45
2/1/2018
1/31/2025
 
(2)
41,666
8,334
$3.81
6/14/2019
6/13/2026
 
(2)
266,666
133,334
$6.80
12/16/2019
12/15/2026
 
(5)
20,833
$293,120
 
(2)
79,444
50,556