Eton Pharmaceuticals, Inc DEF 14A, filed Apr 26, 2024

Eton Pharmaceuticals, Inc. (ETON)

DEF 14A 2024-04-26 For: 2024-06-11

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Added on June 12, 2026

About this DEF 14A

Eton Pharmaceuticals, Inc filed this DEF 14A on April 26, 2024.

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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

☒	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

	●	To elect Norbert G. Riedel, Ph.D. and Sean E. Brynjelsen as Class III directors to hold office until the 2027 annual meeting of stockholders and until a successor is duly elected and qualified, or until earlier resignation or removal;

	●	To have an advisory vote to approve our executive compensation;

	●	To have an advisory vote on the frequency of advisory vote on executive compensation;

	●	To ratify the appointment of KMJ Corbin & Company LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2024; and

	●	To transact any other business that properly comes before the Annual Meeting (including adjournments and postponements thereof).

	Page
General Information	4
Householding	6
Proposal One - Election of Directors	7
Corporate Governance	9
Proposal Two - A dvisory Vote to Approve Executive Compensation	17
Proposal Three - Advisory Vote on Frequency of Future Votes to Approve Executive Compensation	18
Executive Officers	18
Executive Compensation	19
Report of the Compensation Committee of the Board of Directors	26
Security Ownership of Certain Beneficial Owners and Management	26
Section 16(A) Beneficial Ownership Reporting Compliance	27
Related Party Transactions	27
Transaction of Other Business	27
Proposal Four - Ratification of the Appointment of Our Independent Registered Public Accounting Firm	28
Report of the Audit Committee of the Board of Directors	29
Additional Information	30

Record Date:	April 12, 2024

Quorum:	A majority of the shares of all issued and outstanding stock entitled to vote on the record date must be present in person or represented by proxy to constitute a quorum.

Shares Outstanding:	25,688,062 shares of common stock outstanding as of April 12, 2024.

Voting:	There are four ways a stockholder of record can vote:

	(1)	By Internet: You may vote over the Internet by following the instructions provided in the Notice or, if you requested to receive your proxy materials by U.S. mail, by following the instructions on the proxy card.

	(2)	By Telephone: If you requested to receive your proxy materials by U.S. mail, you may vote by telephone by following the instructions on the proxy card.

	(3)	By Mail: If you requested to receive your proxy materials by U.S. mail, you may complete, sign and return the accompanying proxy card in the postage-paid envelope provided.

	(4)	Live: If you are a stockholder as of the record date and you attend the Annual Meeting virtually, you may vote live at the Annual Meeting. Submitting a proxy will not prevent stockholders from attending the Annual Meeting virtually, revoking their earlier-submitted proxy, and voting live at the Annual Meeting.

	In order to be counted, proxies submitted by telephone or Internet must be received by 11:59 p.m. central time on June 10, 2024. Proxies submitted by U.S. mail must be received before the start of the Annual Meeting.

	Unless you direct otherwise through your proxy voting instructions, the persons named as proxies will vote all proxies received “for” the election of each nominee. If any nominee is unable or unwilling to serve at the time of the Annual Meeting, the persons named as proxies may vote for a substitute nominee chosen by the present board of directors. In the alternative, the proxies may vote only for the remaining nominees, leaving a vacancy on the board of directors. The board of directors may fill such vacancy at a later date or reduce the size of the board of directors. We have no reason to believe that any of the nominees will be unwilling or unable to serve if elected as a director.

	If you hold your shares through a bank or broker, please follow their instructions.

Revoking Your Proxy	Stockholders of record may revoke their proxies by attending the Annual Meeting and voting in person, by delivering an instrument in writing revoking the proxy or by delivering another duly executed proxy bearing a later date to our corporate secretary before the vote is counted or by voting again using the telephone or Internet before the cutoff time (your latest telephone or Internet proxy is the one that will be counted). If you hold shares through a bank or broker, you may revoke any prior voting instructions by contacting that firm.

Votes Required to Adopt Proposals	Each share of our common stock outstanding on the record date is entitled to one vote on any proposal presented at the Annual Meeting:

	For Proposal One, the nominees receiving the plurality of votes properly cast will be elected as a director.

	For Proposal Two, a majority of the votes represented at a meeting at which a quorum is present properly cast is required to approve the advisory vote on executive compensation.

	For Proposal Three, the advisory vote on the frequency of advisory vote on executive compensation, the option of one year, two years or three years that receives the highest number of votes cast by stockholders will be considered by the Board as the stockholders' recommendation as to the frequency of future Say-on-Pay votes.

	For Proposal Four, a majority of the votes represented at a meeting at which a quorum is present properly cast is required to ratify the appointment of KMJ Corbin & Company LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2024.

Effect of Abstentions and Broker Non-Votes		Votes withheld from any nominee, abstentions, and “broker nonvotes” (i.e., where a broker has not received voting instructions from the beneficial owner and for which the broker does not have discretionary power to vote on a particular matter) are counted as present for purposes of determining the presence of a quorum. Shares voting “withheld” and broker non-votes have no effect on (i) the election of directors or (ii) the advisory vote on frequency of advisory vote on executive compensation. Abstentions and broker non-votes will have the effect of a vote “against” (i) the advisory vote on executive compensation (ii) the appointment of KMJ Corbin & Company LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2024.

Voting Instructions		If you complete and submit your proxy voting instructions, the persons named as proxies will follow your instructions. If you submit proxy voting instructions but do not direct how your shares should be voted on each item, the persons named as proxies will vote FOR the election of the nominees for director and FOR the ratification of the appointment of KMJ Corbin & Company LLP as our independent registered public accounting firm. The persons named as proxies will vote on any other matters properly presented at the Annual Meeting in accordance with their best judgment, although we have not received timely notice of any other matters that may be properly presented for voting at the Annual Meeting.

Voting Results		We will announce preliminary results at the Annual Meeting. We will report final results by filing a Form 8-K within four business days after the Annual Meeting. If final results are not available at that time, we will provide preliminary voting results in the Form 8-K and will provide the final results in an amendment to the Form 8-K as soon as they become available.

Additional Solicitation/Costs		We are paying for the distribution of the proxy materials and solicitation of the proxies. As part of this process, we reimburse brokerage houses and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy and solicitation materials to our stockholders. Proxy solicitation expenses that we will pay include those for preparation, mailing, returning and tabulating the proxies. Our directors, officers, and employees may also solicit proxies on our behalf in person, by telephone, email or facsimile, but they do not receive additional compensation for providing those services.

Householding		Some banks, brokers, and other nominee record holders may be participating in the practice of “householding” proxy statements and annual reports. This means that only one copy of the Notice, Proxy Statement, and Annual Report on Form 10-K for the year ended December 31, 2023, as applicable, is being delivered to multiple stockholders sharing an address unless we have received contrary instructions. We will promptly deliver a separate copy of any of these documents to you if you write to us at Eton Pharmaceuticals, Inc., 21925 W. Field Parkway, Suite 235, Deer Park, Illinois 60010 Attn: Investor Relations, or call (847) 787-7361.

		If you want to receive separate copies of the Notice, Proxy Statement, or Annual Report on Form 10-K in the future, or if you are receiving multiple copies and would like to receive only one copy for your household, you should contact your bank, broker, or other nominee record holder, or you may contact us at the above address or telephone number.

Name	Age	Position
Class III directors whose terms will expire at the 2024 Annual Meeting
Norbert G. Riedel, Ph.D. ^(1)(2)(3)	66	Director, Chairman of the Board
Sean E. Brynjelsen	52	Director, President & CEO

Class I directors whose terms will expire at the 2025 Annual Meeting
Paul V. Maier ^(1)(2)(3)	76	Director

Class II director nominee whose term will expire at the 2026 Annual Meeting
Jenn Adams ^(1)(2)(3)	55	Director
Charles J. Casamento ^(1)(2)(3)	78	Director

	(1)	Member of the audit committee
	(2)	Member of the compensation committee
	(3)	Member of the nominating and corporate governance committee

Summary of Director Qualifications and Experience	Sean Brynjelsen	Norbert Riedel	Charles Casamento	Paul Maier	Jenn Adams
*Large Company Experience as Executive or Board Member* is important because of the complex and unique management requirements for a public company	X	X	X	X	X
*Pharmaceutical Industry Experience* facilitates relevant, efficient and effective discourse relating to our business and strategy.	X	X	X	X	X
*Financial Literacy* is necessary to understand our financial reports, internal controls, and the complex transactions we conduct regularly.	X	X	X	X	X
*Public Company Governance Experience* assists directors with diligent management of accountability, transparency and protection of stockholder interests.		X	X	X
*Regulatory Experience* allows our directors to provide oversight of our regulated activities and risk management.	X	X	X	X	X
*Extensive Knowledge of Eton History* allows our Board of Directors to learn from our history and what works for our company.	X	X	X	X

Board Diversity Matrix
	As of April 25, 2024				As of April 27, 2023
Total Number of Directors:	5 ⁽¹⁾				5
	Female	Male	Non-Binary	Did Not Disclose Gender	Female	Male	Non-Binary	Did Not Disclose Gender
Part I: Gender Identity:	–	–	–	–	–	–	–	–
Directors	1	4	–	–	1	4	–
Part II: Demographic Background:	–	–	–	–	–	–	–	–
African American or Black	–	–	–	–	–	–	–	–
Alaskan Native or Native American	–	–	–	–	–	–	–	–
Asian (other than South Asian)	–	–	–	–	–	–	–	–
South Asian	–	–	–	–	–	–	–	–
Hispanic or Latinx	–	–	–	–	–	–	–	–
Native Hawaiian or Pacific Islander	–	–	–	–	–	–	–	–
White	1	3	–	–	1	3	–	–
Two or More Races or Ethnicities	–	–	–	–	–	–	–	–
LGBTQ+	–				–
Did Not Disclose Demographic Background	1				1

Name	Fees Earned or Paid in Cash ($)		Option Awards ($)		Total ($)
Jennifer Adams		65,000		54,100		119,100
Charles J. Casamento		72,800		54,100		126,900
Paul V. Maier		75,400		54,100		129,500
Norbert G. Riedel, Ph.D.		101,400		54,100		155,500

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

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

	●	reviewing the overall audit plan with our independent registered public accounting firm and members of management responsible for preparing our financial statements;

	●	reviewing and discussing with management and our independent registered public accounting firm our annual and quarterly financial statements and related disclosures as well as critical accounting policies and practices used by us;

	●	coordinating the oversight and reviewing the adequacy of our internal control over financial reporting;


	●	establishing policies and procedures for the receipt and retention of accounting-related complaints and concerns;

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

	●	monitoring the integrity of our financial statements and our compliance with legal and regulatory requirements as they relate to our financial statements and accounting matters;

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

	●	reviewing all related person transactions for potential conflict of interest situations and approving all such transactions; and

	●	reviewing quarterly earnings releases.

	●	annually reviewing and recommending to the board of directors the corporate goals and objectives relevant to the compensation of our Chief Executive Officer;

	●	evaluating the performance of our chief executive officer in light of such corporate goals and objectives and based on such evaluation (i) reviewing and determining the cash compensation of our chief executive officer and (ii) reviewing and approving grants and awards to our chief executive officer under equity-based plans;

	●	reviewing and approving the cash compensation of our other executive officers;

	●	reviewing and establishing our overall management compensation, philosophy and policy;

	●	overseeing and administering our compensation and similar plans;

	●	evaluating and assessing potential and current compensation advisors in accordance with the independence standards identified in the applicable Nasdaq rules;

	●	reviewing and approving our policies and procedures for the grant of equity-based awards;

	●	reviewing and recommending to the board of directors the compensation of our directors;

	●	preparing our compensation committee report, if and when required by SEC rules;

	●	reviewing and discussing annually with management our “Compensation Discussion and Analysis,” if and when required by SEC rules, to be included in our annual proxy statement; and

	●	reviewing and approving the retention or termination of any consulting firm or outside advisor to assist in the evaluation of compensation matters.

	●	Company stock performance relative to its peer group of companies;

	●	Financial revenue and profitability for the year;

	●	U.S. Food and Drug Administration (“FDA”) product approvals received; and

	●	Product candidate licensing/acquisitions activity

Name and Principal Position ⁽¹⁾	Year	Salary ($)		Non-Equity Incentive Compensation ($) ⁽²⁾		Stock Awards ($) ⁽³⁾		Option Awards ($) ⁽³⁾		All Other Compensation ($) ⁽⁴⁾		Total ($)
Sean E. Brynjelsen	2023		591,862		334,355		—		807,628		13,200		1,747,045
President and Chief Executive Officer	2022		569,541		286,385		289,300		962,115		12,200		2,119,541

James R. Gruber	2023		379,167		162,075		—		230,698		13,200		785,140
Chief Financial Officer	2022		254,648		101,111		105,200		248,100		3,786		712,845

David C. Krempa	2023		372,583		162,075		—		171,222		13,200		719,080
Chief Business Officer	2022		307,875		108,675		105,200		382,855		12,200		916,805

(1)	The EIP provides that an additional number of shares will automatically be added to the shares authorized for issuance under the EIP on January 1 of each calendar year, from January 1, 2019 through January 1, 2028. The number of shares added each year will be equal to the lesser of: (a) 4% of the total number of shares of capital stock outstanding on December 31 of the preceding calendar year; or (b) such lesser number of shares of Common Stock as is determined by the Board for the applicable year.
(2)	Consists of 4,839,226 non-qualified stock options (“NQSOs”) and 349,205 restricted stock units (“RSUs”)
(3)	The weighted average exercise price for the 4,839,226 NQSOs is $4.57 per share and there is no exercise price associated with the RSUs. The weighted average exercise price of the NQSOs and RSUs combined is $4.27 per share.
(4)	Represents 623,514 shares of Common Stock reserved for future grant under the ESPP. The ESPP provides that an additional number of shares will automatically be added to the shares authorized for issuance under the ESPP on January 1 of each calendar year, from January 1, 2019 through January 1, 2028. The number of shares of Common Stock added each year will be equal to the lesser of: (a) 1% of the total number of shares of capital stock outstanding on December 31 of the preceding calendar year; (b) 150,000 shares; or (c) a lesser number of shares of Common Stock as is determined by the Board that is less than (a) and (b).

		Option Awards							Stock Awards
Name	Grant Date	Number of Securities Underlying Unexercised Options (#) Exercisable		Number of Securities Underlying Unexercised Options (#) Unexercisable		Option Exercise Price ($)		Option Expiration Date	Number of Shares or Units of Stock That Have Not Vested (#)		Market Value of Shares or Units of Stock That Have Not Vested ($)
Sean E. Brynjelsen	7/12/2022									82,500		361,350
	2/20/2023		72,996		277,385		3.47	2/19/2033
	2/7/2022		381,792		34,708		3.78	2/6/2032
	5/3/2021		245,000		0		8.61	5/2/2031
	3/12/2020		490,000		0		3.58	3/11/2030
	2/20/2019		250,000		0		7.31	2/19/2029
	11/10/2017		200,000		0		1.37	11/9/2027

James R. Gruber	7/12/2022									30,000		131,400
	2/20/2023		20,851		79,235		3.47	2/19/2033
	4/11/2022		12,500		87,500		3.81	4/10/2032

David C. Krempa	7/12/2022									30,000		131,400
	2/20/2023		15,476		58,807		3.47	2/19/2033
	2/7/2022		69,243		89,027		3.78	2/6/2032
	10/29/2021		20,000		0		5.76	10/28/2031
	5/3/2021		56,667		28,333		8.61	5/2/2031
	3/12/2020		140,683		15,517		3.58	3/11/2030
	2/20/2019		95,000		0		7.31	2/19/2029
	11/10/2017		25,000		0		1.37	11/9/2027
	8/7/2017		25,000		0		1.38	8/6/2027

	●	developing and recommending to the board of directors criteria for board and committee membership;

	●	establishing procedures for identifying and evaluating board of director candidates, including nominees recommended by stockholders;

	●	reviewing the composition of the board of directors to ensure that it is composed of members containing the appropriate skills and expertise to advise us;

	●	identifying individuals qualified to become members of the board of directors;

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

	●	developing and recommending to the board of directors a code of business conduct and ethics and a set of corporate governance guidelines; and

	●	overseeing the evaluation of our board of directors and management.

	(1)	We do not have any other executive officers that are required to be included in the Summary Compensation Table.

	(2)	The amounts reflected in 2023 and 2022 reflect the discretionary performance bonus awards for each year that were paid in 2024 and 2023, respectively.

	(3)	Amounts shown in this column do not reflect dollar amounts actually received by our named executive officers. Instead, these amounts reflect the aggregate grant date fair value of each award computed in accordance with the provisions of FASB ASC Topic 718. Assumptions used in the calculation of these amounts are included in Note 8 and Note 9 of our financial statements for the periods ending ended December 31, 2023, and December 31, 2022, respectively.

	(4)	These amounts reflect contributions by us to each officer’s 401(k) account.

Year	Summary Compensation Table Total for Principal Executive Officer (“PEO”)⁽¹⁾	Compensation Actually Paid to PEO⁽²⁾	Average Summary Compensation Table Total for Non-PEO Named Executive Officers (“NEOs”)⁽³⁾	Average Compensation Actually Paid to Non-PEO NEOs⁽³⁾	Net Income (Loss) (thousands)⁽⁴⁾
2023	$1,747,045	$2,258,856	$752,110	$1,037,017	($936)
2022	$2,119,541	$1,700,769	$814,825	$584,117	($9,021)

Year	Less: Grant Date Value of Equity Awards	Year-End Fair Value of Equity Awards Granted During Year That Remained Unvested as of Last Day of Year	Change in Fair Value From Last Day of Prior Year to Last Day of Year of Unvested Equity Awards	Vesting-Date Fair Value of Equity Awards Granted During Year that Vested During Year	Change in Fair Value from Last Day of Prior Year to Vesting Date of Unvested Equity Awards that Vested During Year	Dividends on Unvested Awards	Total Adjustments
2023	($807,628)	$807,468	$166,636	$187,804	$157,531	—	$511,811
2022	($1,251,415)	$673,908	($48,439)	$297,486	($90,312)	—	($418,772)

	●	each person known by us to be the beneficial owner of more than 5% of our common stock;
	●	our named executive officers;
	●	each of our directors and director nominees; and
	●	all executive officers and directors as a group.

	Number of Shares		Percentage of Shares
Name and Address of Beneficial Owner ⁽¹⁾	Beneficially Owned		Beneficially Owned
Opaleye L.P. One Boston Place, 26th Floor Boston, MA 02108		2,524,887		9.83	%
Harrow Health, Inc.		1,982,000		7.72	%
102 Woodmont Blvd., Suite 610 Nashville, TN 37205
Named Executive Officer, Other Executive Officers and Directors:
Sean E. Brynjelsen ⁽²⁾		2,849,986		10.38	%
James R. Gruber ⁽³⁾		115,936		*
David C. Krempa ⁽⁴⁾		543,589		2.06	%
Jenn Adams ⁽⁵⁾		94,378		*
Charles J. Casamento ⁽⁶⁾		237,975		*
Paul V. Maier ⁽⁶⁾		229,300		*
Norbert G. Riedel, Ph.D. ⁽⁶⁾		229,300		*
All executive officers and directors as a group (7 persons)		4,300,464		14.89	%

*	Less than 1%
(1)	Unless otherwise indicated, the address for each reporting person is c/o Eton Pharmaceuticals, Inc. 21925 W. Field Parkway, Suite 235, Deer Park, Illinois 60010.
(2)	Includes 1,742,171 vested stock options and 32,875 stock options which vest within 60 days of April 12, 2024. Excludes 642,968 stock options and 82,500 restricted stock units which vest after June 11, 2024.
(3)	Includes 93,135 vested stock options and 10,198 stock options which vest within 60 days of April 12, 2024. Excludes 251,430 stock options and 30,000 restricted stock units which vest after June 11, 2024.
(4)	Includes 503,528 vested stock options and 19,260 stock options which vest within 60 days of April 12, 2024. Excludes 270,642 stock options and 30,000 restricted stock units which vest after June 11, 2024.
(5)	Includes 80,000 vested stock options and 14,378 stock options which vest within 60 days of April 12,2024. Excludes 38,755 stock options which vest after June 11, 2024.
(6)	Includes 139,555 vested stock options and 5,000 stock options which vest within 60 days of April 12, 2024. Includes 25,000 shares issuable upon settlement of a restricted stock unit award at retirement from our board and excludes 20,000 stock option shares which vest after June 11, 2024.

	2023		2022
Audit Fees	$	161,800	$	118,175
Tax Fees		11,500		12,900
Total	$	173,300	$	131,075